Personal Finance Exam

1.

1 point

Using equity in a home as collateral when borrowing money

adjustable rate

fixed rate

balloon loan

home equity loan

2.

1 point

Buyer beware

Vive France

E pluribus unum

Caveat Emptor

Carpe Diem

3.

1 point

Diversification means to spread around.

True

False

4.

1 point

Never invest using ___ money.

borrowed

dirty

stolen

international

5.

1 point

A sinking fund approach means:

Saving and paying cash

90 days same as cash

Buying with credit by paying off before the interest comes due

Buying with credit, getting a low interest rate, and sinking further into debt

6.

1 point

For which of the following should you save?

wealth building

purchases

emergency fund

all of the above

7.

1 point

A drop in the value of property

cost

low lands

depreciation

appreciation

8.

1 point

A ___ is a debty instrument where a company owes you money.

bond

savings account

annuity

certificate of deposit

9.

1 point

Savings is about:

Contentment and earning more money

Making more money and discipline

pride and greed

Contentment and emotion

10.

1 point

Place your emergency fund in this type of account.

money market

real estate

annuity

certificate of deposit

11.

1 point

The availability of your money is called ____.

CD

mattress savings

liquidity

ATM

12.

1 point

Borrowing money and paying over time

financing

investing

rent

debit cards

13.

1 point

You need a credit card in order to rent cars and check into hotels.

True

False

14.

1 point

Which of the following is a risk to consider when investing?

You could lose all of your money

Inflation

Your money is not liquid

All of the above

15.

1 point

A share is a piece of ownership in an annuity.

True

False

16.

1 point

Never buy something you do not fully understand.

True

False

17.

1 point

How much money should you have in your emergency fund if you are working on Baby Step 2 (pay off all debt)?

3-6 months of expenses

$500 or $1,000, depending on your current income

15% of your household income

You should not have an emergency fund till all debt is paid

18.

1 point

With all investments, as the risk goes up, the return goes down.

True

False

19.

1 point

What is the best option if you befin losing money in your mutual fund?

Leave it alone, but stop investing money in the fund

Pull everything out and open a certificate of deposit at the bank

Call your broker and switch your funds.

Leave it alone and continue to invest money in the fund

20.

1 point

The typical millionaire drives a new car off the lot.

True

False

21.

1 point

___ is for less than five years.

Interest

A car payment

Childcare

Saving

22.

1 point

Most expensive way to finance a new car.

large down payment

low interest rate

lease

cash

23.

1 point

Which of the following is not a myth?

A credit card will teach teenagers how to handle money responsibly.

78% of Americans do not pay off their credit card balance every month

Playing the lottery will make you rich.

Debt, if properly used, is a tool for building wealth.

24.

1 point

A tax on the poor and people who can't do math.

income tax

lottery

sales tax

property tax

25.

1 point

How is a debit card like credit card?

They both can have the Visa or MasterCard logo.

A debit card can have a minimum monthly finance charge.

A debit card can be swiped and require your signature like a credit card.

Both a and c

All of the above

26.

1 point

Pay yourself ___.

first

when you have money left over.

before payday

after the weekend

27.

1 point

A fully funded emergency fund is ____ months of expenses.

36

2

12

3-6

28.

1 point

The amount of stuff a person has is directly related to contentment and happiness.

True

False

29.

1 point

Living without debt in today's society requires a paradigm shift.

True

False

30.

1 point

The first debt in your debt snowball is the one with the highest interest rate.

True

False

31.

1 point

___ are savings accounts with insurance companies.

Premiums

Annuities

CDs

Checking Accounts

32.

1 point

Pre-authorized checking helps to build discipline in saving.

True

False

33.

1 point

What is true about investing in single stocks?

There is a high degree of risk

The risk is the same whether you invest in mutual funds or stocks

If the stock is from your employer, the risk is lower

There is a low degree of risk

34.

1 point

Baby Step 2 is :

Pay off all debt using the debt snowball

Save 15% of income for retirement

Take a 15-year instead of a 30-year mortgage

A fully funded emergency fund.

35.

1 point

____ says that whatever can go wrong will go wrong.

Michael Scott

Maslow's Hierarchy of Needs

The Bible

Murphy's Law

36.

1 point

Buying an item without thinking about it first

impulse purchase

planned purchase

saving

investing

37.

1 point

In ___, investors pool their money.

mutual funds

CDs

annuities

savings accounts

38.

1 point

Saving must become a ____.

priority

report

bank's responsibility

chore

39.

1 point

The true cost of something in terms of what you give up

retail price

opportunity cost

wholesale

time lost

40.

1 point

The first thing you should save for is your emergency fund.

True

False