WISE – MONEY MANAGEMENT QUIZ
Name _________________________
Practice Certification Test
1. One of the benefits of holding an investment for over a year rather than selling it in less than a year is that the
Answer A
Answer B
Answer C
Answer D
capital gains on the investment will be taxed at a lower rate.
fees will not be charged by brokers for selling the investment.
money earned on the investment will be considered tax-free.
profits on the investment can be averaged over the length of time the investment is held.
2. A person complains about how expensive it is to be a cigarette smoker. One of the reasons cigarettes are so
expensive is that
Answer A
Answer B
Answer C
Answer D
the tobacco supply is controlled by the Federal Trade Commission (FTC).
the tobacco industry imports most of the tobacco.
their cost is controlled by the Food and Drug Administration (FDA).
the government imposes an excise tax on them.
3. A person's debt ratio shows the relationship between debt and net worth. The lower the ratio the
Answer A
better off financially the person is.
Answer B
worse off financially the person is.
Answer C
more liquid assets the person has.
Answer D
less liquid assets the person has.
4. A man budgeted $200 a month for clothing. This month the man spent $150 on clothing therefore that budget item
is considered to have
Answer A
Answer B
Answer C
Answer D
an outflow deficit.
an income overage.
a budget variance.
a budget deficit.
5. The following is usually considered a variable expense:
Answer A
Answer B
Answer C
Answer D
mortgage payment
electric bill payment
rent payment
car payment
6. Which of the following will help you the least in managing your money?
Answer A
Answer B
Answer C
Answer D
pay your rent/mortgage payment and utility bills on time
plan ahead for large expenses, shop with a list, and resist impulse buying
set goals and keep a budget for your net income
get advice from your friends
7. A clear understanding of our personal values will:
Answer A
Answer B
Answer C
Answer D
encourage us to spend money on material goods
enable us to make choices that reflect what is important to us
enable us to save effectively
cause anxiety as we make consumer and financial decisions
WISE – MONEY MANAGEMENT QUIZ
Name _________________________
8. A stock broker or financial consultant:
Answer A
Answer B
Answer C
Answer D
Gives financial advice to clients
Sells money orders and certified checks
Guarantee a return on investment
Do not have to be licensed
9. Discretionary income is:
Answer A
Answer B
Answer C
Answer D
Wages plus investment income
A capital gain
The difference between your total income and your essential living expenses
Income that has been spent
10. I find myself using my credit card to cover the cost of food or rent because I'm regularly short on cash at the end of
each month. The best thing to do is:
Answer A
Answer B
Answer C
Answer D
Ignore it. Things are bound to get better
Make a budget and consider ways to reduce expenses or increase income.
borrow money from a relative
apply for additional credit cards
11. The term that best describes money left over after paying taxes, fixed and other essential living expenses, is:
Answer A
Answer B
Answer C
Answer D
Net pay
Play money
Net surplus
Disposable income
12. Which of the following careers would be possible choices for someone interested in money and finance?
Answer A
Answer B
Answer C
Answer D
Psychologist
Social worker
Insurance actuary
Musician
13. In creating her budget, Ann realizes that her expenses exceed her income. Ann should immediately try to:
Answer A
Answer B
Answer C
Answer D
apply for a loan
reduce or eliminate some expenses
ignore her budget until she has more income
open an IRA account
14. The financial planning process:
Answer A
Answer B
Answer C
Answer D
includes lifetime goals
needs to be adjusted for changing needs and goals in different stages of life
does not need to be revised for changing income and needs
guarantees that assets will increase
WISE – MONEY MANAGEMENT QUIZ
15. Financial planning is important because it helps you to:
Answer A
Answer B
Answer C
Answer D
Name _________________________
have higher expectations
eliminate risk on investments
reach financial goals and protect your assets
achieve all personal goals
16. A term that best describes your gross pay after taxes are deducted is:
Answer A
Answer B
Answer C
Answer D
take-home pay
net worth
assets
total revenues
17. Jane saw a breakfast cereal being advertised on TV and insisted that her mother purchase this cereal. This is an
example of advertising's:
Answer A
Answer B
Answer C
Answer D
power of persuasion in creating demand
influence on consumer discipline
failure to reach parents
focus on discouraging demand for products
18. Something you are working to achieve within a defined period of time is a(an):
Answer A
Answer B
Answer C
Answer D
Value
Goal
Ideal
Dream
19. Financial planning helps individuals to:
Answer A
Answer B
Answer C
Answer D
guarantee future income
achieve all goals by set target dates
have strategies for saving and investing
eliminate risk on investments
20. You want to gain control over your income and spending so that you will be able to save money. Which step will
help you the most?
Answer A
Answer B
Answer C
Answer D
developing a retirement plan
developing a budget
getting advice from a friend
applying for a loan
21. Spreading one's assets across several types of saving and investment products to manage risk is called:
Answer A
Answer B
Answer C
Answer D
Allocation
Pooling
Diversification
Budgeting
22. In addition to monthly mortgage payments, each year a homeowner can expect to pay
WISE – MONEY MANAGEMENT QUIZ
Answer A
Answer B
Answer C
Answer D
Name _________________________
an assessment fee.
title insurance.
property taxes.
a broker’s fee.
23. Can Cathy withdraw money from her IRA savings account?
Answer A
Answer B
Answer C
Answer D
Money cannot be withdrawn from an IRA before age 59
There is a 10% penalty on any money she takes out before age 59
She can take out the money at any time since she made the deposits
There is a 50% penalty if she does not start withdrawing money at age 59
24. Goals:
Answer A
Answer B
Answer C
Answer D
Need to be realistic, have a target date, and, if possible, an associated cost
Remain the same year after year, throughout life
Need to reflect current income
Are generally the same for middle class families
25. An important consideration when saving money for emergencies is:
Answer A
Answer B
Answer C
Answer D
high growth potential
high degree of safety and liquidity
diversification
return on investment
26. Julian is a single and recent college graduate who just got his first full-time job. Which of the following should be his
first financial goal?
Answer A
Answer B
Answer C
Answer D
buying a house
buying a life insurance policy
establishing a fund for emergencies
creating a stock portfolio
27. An example of a fixed expense is:
Answer A
Answer B
Answer C
Answer D
Entertainment
Apartment rent
Restaurants
Vacations
28. John's company will match his pre-tax contributions to the company's retirement plan, known as:
Answer A
A 401(k)
Answer B
A Roth IRA
Answer C
A defined benefit plan
Answer D
A traditional IRA
29. Ben's annual income is $30,000, and he contributed $3,000 to a traditional IRA in his local bank. What is his taxable
income?
Answer A
$33,000
WISE – MONEY MANAGEMENT QUIZ
Answer B
$30,000
Answer C
$27,000
Answer D
$0 because he contributed to an IRA
Name _________________________
30. Expenditures that remain constant from one time period to another are:
Answer A
Answer B
Answer C
Answer D
Variable expenses
Current expenses
Fixed expenses
Steady assets
31. When deciding between two job offers with a similar salary offer, a person should first consider:
Answer A
Travel time to the work location and the size of the organization
Answer B
Retirement and health plans
Answer C
Tuition reimbursement and bonus potential
Answer D
Reputation of the organization
32. In terms of their finances, when a couple has a baby, they will
Answer A
Answer B
Answer C
Answer D
receive an additional tax exemption because of the baby.
need to obtain a W-2 form for the baby.
have to file a separate income tax form for the baby.
automatically start paying Social Security payments for the baby.
33. A well stated financial goal is:
Answer A
Answer B
Answer C
Answer D
Realistic with a target date
Related to one's age group
A map of steps to be taken in the future
Logical and specific
34. Rossi has a part time job delivering pizzas to raise money for college in two years. Going to college is one of Rossi's:
Answer A
Answer B
Answer C
Answer D
Goals
Hopes
Values
Dreams
35. Which of the following is necessary for successful budgeting?
Answer A
Answer B
Answer C
Answer D
A copy of credit card report
The location of your banks
The ability to adjust spending to money available
A list of unexpected income
36. Money set aside to grow is typically called:
Answer A
Answer B
Answer C
Answer D
a budget
discretionary income
net income
savings or investments
WISE – MONEY MANAGEMENT QUIZ
Name _________________________
37. Financial plans need to:
Answer A
Answer B
Answer C
Answer D
include income but not expenses
be changed during different stages in life
include income and eliminate risk
to be approved by an accountant
38. Electricity and food expenditures are:
Answer A
Answer B
Answer C
Answer D
variable expenses that change from one period to another
discreet expenses that do not have to be paid monthly
fixed expenses that remain the same from one period to another
personal expenses for an individual or family
39. A good example of a well-stated financial goal is:
Answer A
Answer B
Answer C
Answer D
Buy a $25,000 car
Pay off $5,000 in credit card debt in two years
Buy a house
Become financially independent
40. An important consideration when saving money for emergencies is:
Answer A
Answer B
Answer C
Answer D
high growth potential
high degree of safety and liquidity
diversification
return on investment
41. Our values are:
Answer A
Answer B
Answer C
Answer D
what we want to achieve
the basic principles that guide our actions and beliefs
our expectations of other people
the same as our goals
42. Another term for the dollar amount of your paycheck after taxes and other withholdings is:
Answer A
Answer B
Answer C
Answer D
Discretionary income
Adjusted gross income
Net income
Gross income