Personal Finance Midterm Exam

24 Questions | Total Attempts: 27

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Personal Finance Midterm Exam

Questions and Answers
  • 1. 
    These are common forms of investing.
    • A. 

      Life insurance, health insurance, estate planning

    • B. 

      Stocks, bonds, mutual funds

    • C. 

      Savings  bank account,  checking bank accounts, money market securities

  • 2. 
    This refers to all types of expenses an individual incurs related to buying goods and services or anything that is consumable.
    • A. 

      Income

    • B. 

      Spending

    • C. 

      Investing

  • 3. 
    This refers to excess cash that is retained for future investing or spending.
    • A. 

      Saving

    • B. 

      Spending

    • C. 

      Protection

  • 4. 
    This refers to the use of financial management principles with respect to individual or family finances to manage money, budget, save and spend while taking into account various future risks and life events.
    • A. 

      Finance management

    • B. 

      Personal finance

    • C. 

      Spending management

  • 5. 
    These are something that you must have in order to live. These represents the necessities.
    • A. 

      Love

    • B. 

      Wants

    • C. 

      Needs

  • 6. 
    [Blank] Finance is a subcategory of finance that seeks to explain the rationality or irrationality of financial decision-making.
  • 7. 
    Which is not an area of finance. (3 points)
    • A. 

      Income

    • B. 

      Spending

    • C. 

      Saving

    • D. 

      Planning

    • E. 

      Investing

    • F. 

      Protection

  • 8. 
    [Blank] is a well-established bias in which a person overestimates one’s aptitude to make good decisions.
  • 9. 
    Memory [Blank] is when one chooses to forget a past mistake, or try to rationalize that it wasn’t their fault or it wasn’t as bad as it really was.
  • 10. 
    Self-[Blank] occurs when we try to explain any possible future poor performance with a reason that may or may not be true.
  • 11. 
    An example of [Blank] accounting is people's willingness to pay more for goods when using credit cards than if they are paying with cash.
  • 12. 
    We are not [Blank] with money.
  • 13. 
    We all want to be wealthy and increase our well-being.
    • A. 

      True

    • B. 

      False

  • 14. 
    We understand that we shouldn’t spend money we don’t have.
    • A. 

      True

    • B. 

      False

  • 15. 
    Confirmation Bias occurs when people rely too much on pre-existing information or the first information they find when making decisions.
    • A. 

      True

    • B. 

      False

  • 16. 
    Herd instinct in finance is the phenomenon where investors follow what they perceive other investors are doing rather than their own analysis.
    • A. 

      True

    • B. 

      False

  • 17. 
    Sunk Costs makes people avoid losses, rather than acquiring gains.
    • A. 

      True

    • B. 

      False

  • 18. 
    Joining a Kapa Ministry Investment because of fear of missing out on a profitable investment idea is an example of:
    • A. 

      Loss aversion

    • B. 

      Herding

    • C. 

      Anchoring

    • D. 

      Overconfidence

  • 19. 
    You first see a Forehead Thermal Scanner that costs 4,000 then see a second one that costs 2,500, you're prone to see the second Forehead Thermal Scanner as cheap. This is an example of:
    • A. 

      Loss aversion

    • B. 

      Anchoring

    • C. 

      Memory bias

    • D. 

      Mental accounting

  • 20. 
    If we often see a lot of people eating in Jollibee wherever we go, then we’d most likely believe that it’s a profitable company and a good stock to buy.
    • A. 

      Confirmation bias

    • B. 

      Anchoring

    • C. 

      Mental accounting

    • D. 

      Herding

  • 21. 
    This influence our financial behaviors in unpredictable and irrational ways.
    • A. 

      Perception

    • B. 

      Emotion

    • C. 

      People

  • 22. 
    Personal finance is ________.
    • A. 

      Personal

    • B. 

      Money

    • C. 

      Important

  • 23. 
    Why do you think we are not rational with money? (5 points)
    • A. 

      We tend to decide based on emotions

    • B. 

      We don't know how to spend our money

    • C. 

      We spend without thinking

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