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Personal Finance
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practice questions for personal finance
Flashcards
20 cards
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Questions
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Answers
1
Which of the following would be the safest financial asset to own?
Certificate of deposit
stock
bond
Mutual fund
2
The term referring to the rate of yearly interest for your credit card is commonly known as:
grace period
APR
COD
default rate
3
A plan that allows people to keep up with what they spend is known as...
asset allocation
discretionary spending
dollar cost averaging
budget
4
An investment (could be a company) that sells shares of itself then uses the money to buy stocks in many companies
Finance Company
Life Insurance
Pension Fund
Mutual Fund
5
What is the relationship between risk and reward?
risk is the reward for taking a chance
the safer the investment the greater the reward
they are both the same
the riskier the investment the higher the reward
6
Which would be an example of collateral?
delicious chocolate chip cookies
auto insurance
a house, a car, or a business
children
7
The amount you pay for your insurance policy is known as...
real rate of return
dividend
premium
nominal rate of return
8
Which of the following ways to save for retirement is typically offered through an employer?
401k
403b
IRA
Roth IRA
9
Which type of bank account typically offers no interest?
Checking
CD
Money Market
Savings
10
Which types of insurance would you buy to protect you in case you are unable to work?
health insurance
premium coverage
life insurance
disability insurance
11
Who will get a low interest rate loan? Betty who has a history of making late payments or Alice who always pays on time.
Alice
Betty
12
Which group of people would be hurt the most by a sales tax increase?
neither group would be affected by an increase
it would hurt each group the same
lower income earners
higher incomes earners
13
Lisa borrows $3000 at 5%. If she pays $12.50 in interest each month, then why type of interest?
simple
compound
none
14
Why is there a difference between interest charged and earned?
banks need to make money
consumers demand high interest to put money in banks
banks want consumers to have competitive interest rates
the FED regulates all things dealing with interest rates
15
Which of the following differentiates a credit union from a bank?
A credit union is owned by its members
A credit union in all cases refuses to work with non-members
A bank is owned by its members
A credit union gives unusually high interest rates on loans
16
Where would a mortgage payment be placed in a budget?
fixed expense
net income
discretionary spending
variable expense
17
What is a deductible?
it is your co-pay when visiting a doctor
the cost you pay each month for your insurance policy
the amount of risk you agree to retain before your insurance kicks in
it assess your liability when you are in a car accident
18
A financial asset which has a stated time period, interest rate, and a penalty for early withdrawal.
CD
Premium
Stock
Bond
19
Who will keep their job? Aaron who is constantly late or Bill who is always early?
Bill
Aaron
20
Which of the following is not a mandatory deduction from a persons paycheck?
health insurance
Social Security
Federal Income Tax
State Income Tax
