A
B
C
D
E
100
When a goal has been set to save $100.00 a month for an emergency fund of $2000.00, giving up food from the vending machine to achieve that goal is the: A- opportunity cost B- interest C- specific part of the SMART goal D- trade‐off
D- trade‐off
100
A bond is: A- A type of debt that a company issues to investors for a specified period of time. B- A share of ownership in a company. C- A type of investment that is only offered by depository institutions. D- A type of investment that has the potential for significant fluctuations over a short period of time.
A- A type of debt that a company issues to investors for a specified period of time.
100
Which statement best reflects the philosophy of “pay yourself first”? A- An individual should save whatever money is left over after paying monthly bills. B- An individual should pay all fixed expenses before paying flexible expenses. C- An individual should set aside a predetermined amount of money for saving before using any of that money for spending. D- An individual should spend money on the items and activities enjoyed in life before paying any other expenses.
C- An individual should set aside a predetermined amount of money for saving before using any of that money for spending.
100
Elliot’s stock broker is suggesting that he consider investing in a diversified portfolio. A diversified portfolio is desirable because it: A- increases the risk/return ratio B- limits investors choices to only one or two investment tools C- indicates an investor is a good predictor of the return an investment will have D- decreases risk by investing money in a variety of investment tools
D- decreases risk by investing money in a variety of investment tools
100
Alisa is looking for an investment that is structured to have tax benefits. She should look for information on: A- Tax rated bonds B- Speculative investments C- Index funds D- Tax‐advantaged investements
D- Tax‐advantaged investements
200
Hannah needs a savings tool to help her manage her everyday purchases. The savings tool needs to be very liquid and accessible. Which of the following savings tools should Hannah choose? A- Certificate of deposit B- Checking account C- Money market deposit account D- Any of the above savings tools would help Hannah
B- Checking account
200
The most common relationship between risk and return in investing can be stated as: A- higher risk indicates lower return B- higher risk indicates higher return C- lower risk indicates higher return D- No relationship exists between risk and return
B- higher risk indicates higher return
200
When Bryce attempted to borrow money at the bank, he learned that his credit score is low. Which statement best describes what this is likely to mean for Bryce? A- The interest rates on his loan will be lower, since his credit score is low. B- The purchase price of the item he needs the loan for will be higher due to his low credit score. C- The monthly loan payments will be lower due to his lower credit score. D- The interest rates on his loan will be higher, since his credit score is low.
D- The interest rates on his loan will be higher, since his credit score is low.
200
Jenny is 18‐years‐old and has applied for credit for the first time. Her credit application was declined because she has no credit history. What would you recommend Jenny do to being to build a positive credit history? A- Jenny should acquire several credit cards to establish that she can manage them responsibly. B- Jenny should obtain a secured credit card. C- Jenny should re‐apply for the same credit but include a letter of recommendation from someone who knows her well and can vouch for her character. D- Jenny should apply for a different type of credit. Since she was applying for a bank loan, she should apply for a credit card.
B- Jenny should obtain a secured credit card.
200
In relation to the other options, how liquid is a savings account? A- More liquid than cash B- Less liquid than mutual funds C- More liquid than a Certificate of Deposit D- More liquid than a checking account
C- More liquid than a Certificate of Deposit
300
Which of the following statements correctly describes the security level of savings tools? A- Savings tools are not secure because they have a high risk of losing money. B- Savings tools are secure because they are protected by the U.S. government against loss. C- Savings tools are very secure because there are not risks involved with saving or investing. D- None of the above is true. It would be safer to keep the money at home in a shoe box.
B- Savings tools are secure because they are protected by the U.S. government against loss.
300
Becky no longer wants to use her Clothes‐R‐Us store credit card. What is the best thing she could do with the credit card? A- File the credit card away for use at a later time. B- Let a family member take over the credit account so her credit score will not be affected. C- Keep the credit card in her wallet in case she needs proof of identification. D- Close the account by phone and in writing, then destroy the card.
D- Close the account by phone and in writing, then destroy the card.
300
Which statement is TRUE of mutual funds? A- Mutual Funds are speculative investments B-Mutual Funds are diversified investments C- Mutual Funds are a form of real estate investment D- Mutual funds are superior purhcasing to a single stock
B-Mutual Funds are diversified investments
300
Harris is concerned about the effects of inflation on his investment returns. Which statement best describes inflation? A- The rise in the general level of prices B- The uncertainty about the return on an investment C- The number of times something happens to money D- The projected value of an investment at the end of a specified time frame
A- The rise in the general level of prices
300
Conner wants to purchase stocks with the money he received from his tax return. Who would he contact to make the transaction? A- A brokerage firm B- The New York Stock Exchange C- A real estate agent D- Conner should complete this transaction on his own
A- A brokerage firm
400
It is best to have the rate of return on an investment___________ than the rate of inflation. A- Lower, in order to minimize taxes B- Lower, in order to minimize risk C- Higher, to maintain purchasing power D- Higher, to minimize risk
C- Higher, to maintain purchasing power
400
When may a person view his/her credit report for free? A- At any time and an unlimited number of times B- Once a year, from each of the three main credit reporting agencies C- A person may not review his/her credit report D- If a person has sufficient financial resources
B- Once a year, from each of the three main credit reporting agencies
400
Brett plans to save money toward purchasing a car. His co‐worker is telling him about a Money Market Account he has that offers a tiered interest rate. What is Brett’s co‐worker talking about? A- The amount of money he earns depends on the balance, i.e. the higher the account balance the higher the interest rate he would earn. B- The amount of money he earns depends on the number of accounts he has at the depository institution, i.e. the more accounts he has, the higher interest rate he will earn. C- Brett’s co‐worker is talking about something that is illegal. A tiered account is promoted by scam artists who trick people into investing money in hopes of earning higher rates over time. D- The rate of interest earned increases over time, i.e. leaving money in the account for 3 months would earn a lower interest rate than leaving money in the account for 12 months.
A- The amount of money he earns depends on the balance, i.e. the higher the account balance the higher the interest rate he would earn.
400
Jake’s credit application has been declined because of his negative credit history. Which statement is most likely to be true? A- Jake pays his bills consistently and on time. B- Jake has applied for 4 credit cards and a car loan in the past 6‐weeks. C- Jake has received 3 traffic tickets in the past 2 months. D- Jake holds 2 store credit cards, a bank credit card, a car loan, and a mortgage
B- Jake has applied for 4 credit cards and a car loan in the past 6‐weeks.
400
Which of the following is a feature of a certificate of deposit (CD)? A- Funds deposited in a CD are held for a certain length of time. B- Funds deposited in a CD have tiered interest rates. C- Funds deposited in a CD are very liquid. D- Funds deposited in a CD can be accessed via check or debit card.
A- Funds deposited in a CD are held for a certain length of time.
500
Which of the following statements is true in regards to paying taxes on investments? A- Since investments are considered unearned income, taxes do not have to be paid on earnings. B- Taxes are often owed on profits generated from investments. C- Taxes only have to be paid on employer‐sponsored investment accounts. D- Taxes are always paid on investments either when the money is placed in the investment or removed from the investment.
B- Taxes are often owed on profits generated from investments.
500
Which of the following is a feature of a money market deposit account? A- No minimum balance requirements B- Unlimited transactions every month C- Tiered interest rates D- The money must remain in the account for a specific period of time
C- Tiered interest rates
500
Which is NOT an example of a data furnisher? A- Landlord B- Credit card company C- Utility company D- Medical provider
B- Credit card company
500
Which of the following is not true in regards to investing in stock? A- A stockholder owns a part of a company. B- Depending upon the current market price, stockholders may pay different prices for the same stock. C- A stockholder may or may not receive a dividend. D- A stockholder will always receive a profit when the stock is sold.
D- A stockholder will always receive a profit when the stock is sold.
500
Which of the following is NOT included in an individual’s credit report? A- Current and past addresses B- Account balances C- Bankruptcies and foreclosures D- Medical information
D- Medical information
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