Wise Financial Literacy Test Review Study Guide Graded A+

Using a brokerage firm, a qualified investor buys 1000 shares of a common stock at $50 a share on 50% margin. This means that the {Ans: brokerage firm is lending the investor 50% of the money}When a person brings an item to a pawnshop to obtain cash, the transaction is considered {Ans: a collateralized loan}savings account {Ans: allow deposits and withdrawals within limits, limit access to funds by check, help users earn interest on money kept in the account}Frankie's savings account has earned a lot of interest. He wants to know if he must pay taxes on the interest earned. What would the IRS tell him? {Ans: savings account interest is taxable}Which financial product typically pays the highest rate of interest? {Ans: certificate of deposit}Sally took out a $50,000 life insurance policy. The $50,000 amount of coverage is called the {Ans: death benefit or face value}