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