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Cost Of Money
Test Description: WISE test questions
Instructions: Answer all questions to get your test result.
1) To determine the time value of money of depositing $100 in a savings account, a person needs to know the interest rate and
A
her total income
B
whether the account is FDIC protected
C
the rate of inflation
D
whether the bank offers overdraft protection
2) Which type of financial institution usually pays the highest rate of interest on a savings account balances?
A
savings and loan associations
B
commercial banks
C
credit unions
D
investment firm money market accounts
3) Which investment would you choose today if you believe interest rates will go up?
A
Stocks
B
Long-term bonds
C
Variable-rate loans
D
Short-term savings instruments
4) Which of the following is the federal law that requires the cost of credit be disclosed to consumers in bold print on loan agreement?
A
Truth in Lending Act
B
Equal Credit Opportunity Act
C
Fair Credit Reporting Act
D
Fair Debt Collection Practices Act
5) Why might rising interest rates depress stock prices:
A
rising interest rates can result in higher business profits
B
rising interest rates can result in lower business profits
C
rising interest rates usually means the economy has less
D
stock investors are luredaway from interest-paying investments to stocks
6) The Rule of 72 is an easy way to
A
calcualte the length of time it takes to pay off a credit balance
B
calculate how much tax you will owe on the interest earned
C
approximate your savings balance each year
D
calculate how fast your savings will double in value at given interest rates
7) The information that a lender must disclose to consumers applying for a cash loan is
A
full dollar amount being paid back on the loan over its life
B
the formula for compunded interest
C
the tax obligations
D
the annual percentage rate (APR) and/or the finance charge
8) Who benefits the most from inflation?
A
persons on fixed incomes
B
long-term fixed rate borrowers
C
the government
D
lenders
9) A person is convinced that a lending institution is charging too much interest on a loan. This person whould be aware that
A
there are state usury laws.
B
interset rates depend entirely on the borrower's ability to pay back the loan
C
lending institutions all have their rates of interest set by the SEC
D
the Federal Trade Commission has laws against intimidating borrowers
10) Lamar believes that interst rates are going to fall in the near future and remain low for a considerable period of time. She should invest in
A
a short-term, fixed rate certificate of deposit
B
a variable rate of certificate of deposit
C
nothing, she should put her money under the mattress
D
a long-term, fixed rate certificate of deposit
*select an answer for all questions
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