Financial Literacy Trivia Exam Quiz! MCQ

1.

What percent of your pay check should go towards your savings?
- A.
  
  10%
- B.
  
  5%
- C.
  
  25%
- D.
  
  50%
Correct Answer
A. 10%

Explanation
A general rule of thumb is to save at least 10% of your paycheck. This allows you to build up your savings over time and have a financial cushion for emergencies or future goals. Saving 10% of your income can also help you develop good financial habits and ensure that you are consistently setting aside money for your future financial security.

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1
2.

Treasury bills are a high-risk investment.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Treasury bills are actually considered to be a low-risk investment. They are issued by the government and are backed by the full faith and credit of the government, making them one of the safest investments available. They have a short-term maturity, usually less than one year, which further reduces the risk. Investors are willing to accept lower returns on treasury bills in exchange for the safety and security they offer. Therefore, the statement that treasury bills are a high-risk investment is false.

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3.

Saving is the same as investing.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Saving and investing are not the same thing. Saving refers to setting aside money for future use, typically in a low-risk account, such as a savings account. On the other hand, investing involves putting money into assets or ventures with the expectation of generating a return or profit over time. While both saving and investing involve setting money aside, they differ in terms of risk and potential for growth. Therefore, the statement "Saving is the same as investing" is false.

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4.

If I have just started working, the first thing I should do is...
- A.
  
  Build an emergency fund account
- B.
  
  Start a savings account
- C.
  
  Shop for office clothes
- D.
  
  Set aside money for a dream vacation
Correct Answer
A. Build an emergency fund account

Explanation
Starting an emergency fund account is the first thing one should do when they have just started working. This is because emergencies can occur at any time, such as unexpected medical expenses or car repairs. Having an emergency fund provides a financial safety net and helps to cover these unforeseen expenses without relying on credit cards or loans. It is a responsible financial decision to prioritize building an emergency fund before considering other financial goals like saving for a vacation or shopping for office clothes.

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5.

You will benefit from investing in only one type of investment vehicle.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Investing in only one type of investment vehicle is not beneficial because it does not provide diversification. Diversification is the strategy of spreading investments across different assets to reduce risk. By investing in a variety of investment vehicles such as stocks, bonds, real estate, and mutual funds, an investor can minimize the impact of any single investment's poor performance. This approach allows for potential gains from different sectors and asset classes, while also mitigating the potential losses. Therefore, investing in only one type of investment vehicle may expose the investor to unnecessary risk and limit their potential returns.

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6.

To take up a financial plan and be committed to it, it is...
- A.
  
  A burden to my financial success
- B.
  
  Not really important
- C.
  
  A necessity to me and my family
- D.
  
  A compulsory because the government says to do so
Correct Answer
C. A necessity to me and my family

Explanation
Taking up a financial plan and being committed to it is a necessity to me and my family. This suggests that having a financial plan is crucial for the financial success and well-being of both myself and my family. It implies that without a financial plan, achieving financial success and security may be difficult.

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7.

Mutual funds are...
- A.
  
  Very troublesome and should be avoided
- B.
  
  A good asset to have in your portfolio
- C.
  
  Very hard to understand since there are few people that can help
- D.
  
  Hands down, a bad investment
Correct Answer
B. A good asset to have in your portfolio

Explanation
Mutual funds are considered a good asset to have in one's investment portfolio. They offer diversification by pooling money from multiple investors to invest in a variety of securities such as stocks, bonds, and other assets. This diversification helps to spread the risk and potentially increase returns. Additionally, mutual funds are managed by professionals who have expertise in selecting and managing the investments, making it a convenient option for individuals who may not have the time or knowledge to manage their investments on their own. Therefore, having mutual funds in one's portfolio can be beneficial in terms of potential returns and risk management.

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8.

When should you start investing?
- A.
  
  Today
- B.
  
  Wait until you are 18 years of age
- C.
  
  At the age of 40
- D.
  
  When I start working
Correct Answer
A. Today

Explanation
The correct answer is "Today" because starting to invest as early as possible allows for more time for your investments to grow and compound. The earlier you start, the more time you have to take advantage of the power of compounding and potentially earn higher returns. Waiting until you are 18 years old, at the age of 40, or when you start working may result in missed opportunities for growth and potentially lower returns on your investments.

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9.

It’s a bad idea to start investing when you’re young.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Starting investing when you're young is actually a good idea. By starting early, you have more time to take advantage of compounding interest and the potential for long-term growth. Investing at a younger age also allows you to develop good financial habits and learn from any mistakes along the way. Additionally, starting young gives you the opportunity to build a larger investment portfolio over time, which can help secure your financial future.

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10.

Investing involves...
- A.
  
  Stocks and only stocks
- B.
  
  Bonds
- C.
  
  T-Bills
- D.
  
  GIC’s
- E.
  
  All of the above
Correct Answer
E. All of the above

Explanation
Investing involves various options such as stocks, bonds, T-Bills, and GIC's. Stocks represent ownership in a company and offer potential for capital appreciation. Bonds are debt securities issued by governments or corporations, providing fixed income over a specific period. T-Bills are short-term government bonds with maturities of less than a year. GIC's (Guaranteed Investment Certificates) are low-risk investments offered by banks or trust companies. Therefore, the correct answer is "All of the above" as investing encompasses these different asset classes.

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11.

Interest is...
- A.
  
  Good
- B.
  
  Bad
- C.
  
  All of the above
Correct Answer
C. All of the above

Explanation
Interest can be good because it motivates individuals to learn and explore new things. It can also be bad if it leads to obsession or unhealthy behaviors. Additionally, interest can encompass both positive and negative aspects, depending on the context and the individual's perspective. Therefore, the answer "All of the above" is appropriate as it acknowledges that interest can have various effects, both positive and negative.

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12.

The best bank to open an account with is...
- A.
  
  BMO
- B.
  
  Royal
- C.
  
  Scotia
- D.
  
  TD
- E.
  
  The one that suits your needs
Correct Answer
E. The one that suits your needs

Explanation
The answer "The one that suits your needs" is the best choice because the best bank to open an account with will vary depending on individual needs and preferences. Each bank offers different services, benefits, and fees, so it is important to choose the one that aligns with your specific requirements, such as low fees, convenient branch locations, online banking features, or specific account types. Therefore, the best bank for someone might not be the best for another person, making it essential to consider personal needs when selecting a bank.

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Financial Literacy Trivia Exam Quiz! MCQ

What percent of your pay check should go towards your savings?

Treasury bills are a high-risk investment.

Saving is the same as investing.

If I have just started working, the first thing I should do is...

You will benefit from investing in only one type of investment vehicle.

To take up a financial plan and be committed to it, it is...

Mutual funds are...

When should you start investing?

It’s a bad idea to start investing when you’re young.

Investing involves...

Interest is...

The best bank to open an account with is...