Are You Street Smart?
- 1.What is interest?
- A.
Interest is money that is easy to understand
- B.
Interest is "rent on money"
- C.
It means you are interested in money
- 2.What is simple interest?
- A.
Interest that is simple to understand
- B.
An interest rate that is a % of the principal borrowed and does not compound
- C.
Compound interest that is simplified by a calculator
- D.
A zero percent interest rate
- 3.What is compound interest?
- A.
An interest rate that compounds and complicates your life
- B.
An interest rate mothod that pays interest upon interest
- C.
A compound rate that is paid back early
- D.
A complicated problem in finance
- 4.Which type of interest, over a period of time, will pay you more?
- A.
Compound
- B.
Simple
- 5.Who said "Compound interest is the greatest invention of the 20th century?"
- A.
Richard Nixon
- B.
John F. Kennedy
- C.
Albert Einstein
- D.
Alan Greenspan
- 6.What is the greatest influencer on interest rates?
- A.
Time value of money
- B.
Risk
- C.
Time preference for consumption
- D.
Greedy corporate lawyers
- 7.Most credit card companies charge which type of interest rate?
- A.
Simple
- B.
Compound
- C.
Mixed
- D.
No interest rate
- 8.The field of economics is the study of:
- A.
Money
- B.
Resources
- C.
Interest rates
- D.
The science of making choices with limited resources
- 9.Unlimited wants and limited resources is known as the:
- A.
Economizing problem
- B.
Dismal science
- C.
Personal issues with money
- D.
Whining people who want something for nothing
- 10.The "tool from the school" of economics used to make the best choices is called:
- A.
My best guess
- B.
Flip a coin
- C.
Marginal analysis
- D.
Wing it, ready aim fire
- 11.The underlying reasoning behind marginal analysis is:
- A.
Is the marginal benefit greated than the marginal cost?
- B.
Is the marginal input of labor greater than the marginal cost?
- C.
Is the marginal revenue from producing an extra unit greated than the marginal cost to produce that extra unit?
- D.
All the above
- 12.If an additonal salesperson cost $30,000 a year to hire, but will bring in an additional $50,000 in sales, what is the marginal cost of hiring the new salesperson?
- A.
$30,000
- B.
$50,000
- C.
$20,000
- D.
$80,000
- 13.From the above, what is the marginal revenue?
- A.
$30,000
- B.
$80,000
- C.
$50,000
- D.
$20,000
- 14.If the marginal cost of adding x unit is $1000, and the marginal PROFIT is $1200, should you add the marginal cost?
- A.
Yes
- B.
No
- C.
I don't know
- 15.Nothing in life is free - NOTHING. What is the definition of "opportunity cost?"
- A.
The cost of opportunities in life
- B.
The cost of the "next best alternative I would do with my time or money"
- C.
The high cost of opportunistic living
- 16.Which is more valuable: a dollar now or in the future, or in between?
- A.
A dollar now
- B.
A dollar in the future
- C.
A dollar right between the current date and the specific future date
- 17.If you borrow $1000 at a 10% simple interest rate, how much will you pay back if it is due in one year?
- A.
$1010
- B.
$1050
- C.
$1100
- D.
$1155
- 18.What does "the present value of future cash flows" mean?
- A.
Money in the future is worth more
- B.
Money expected in the future, discounted at a % interest rate that equates it to present value, or "in today's dollars"
- C.
A Christmas present that is valued at high interest
- D.
Money in the present with interest added to get a future value
- 19.What does it mean to own "stock" in a corporation?
- A.
It means to own part of a livestock stockyard
- B.
It means you are part owner of a company by purchasing stock of the company
- C.
It means you loan money to the company, but are not an "owner"
- D.
It's just like a bond - you lend money and expect it to be paid back
- 20.What is a "bond"
- A.
It's lending money to a company and expecting it to be paid back in full to you, plus the "coupon rate" (the stated interest rate)
- B.
It's a railroad term
- C.
It's a type of glue
- D.
It's a mix between ownership equity and a debt instrument
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