Amazing Quiz On Personal Finance!

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  • 1/25 Questions

    If you are going to increase your wealth, it is vitally important for you to set aside funds regularly into savings and investments.

    • True
    • False
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About This Quiz

This is your final for Personal Finance Class. This is a comprehensive test over all topics you have learned this semester.

Amazing Quiz On Personal Finance! - Quiz

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  • 2. 

    Financial success is primarily the result of setting long term goals and developing a plan to achieve them.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Financial success is primarily the result of setting long term goals and developing a plan to achieve them. This statement suggests that in order to achieve financial success, it is important to have a clear vision of what one wants to achieve in the long run and to create a strategic plan to reach those goals. By setting long term goals, individuals are able to prioritize their actions and make decisions that align with their objectives. Additionally, developing a plan gives structure and direction to one's financial journey, increasing the likelihood of achieving success. Therefore, the given answer, "True," is an accurate reflection of the statement.

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  • 3. 

     The purpose of a budget is to increase awareness of how funds are spent and to help the individual or household develop a plan to control spending more effectively and save for the future.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    A budget is a financial plan that helps individuals or households track their income and expenses. By creating a budget, one becomes aware of where their money is going and can identify areas where spending can be reduced or controlled. This awareness allows for better control over spending habits and the ability to save money for future goals. Therefore, the statement that the purpose of a budget is to increase awareness of how funds are spent and help develop a plan to control spending effectively and save for the future is true.

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  • 4. 

     It makes sense to set aside funds regularly into a special savings account so you will be better able to deal with future surprise expenses.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Setting aside funds regularly into a special savings account is a sensible practice because it allows individuals to be financially prepared for unexpected expenses in the future. By consistently saving money, individuals can build up a safety net that can be used to cover any surprise expenses that may arise, such as medical bills, car repairs, or home repairs. This proactive approach to saving can help individuals avoid financial stress and ensure that they are better equipped to handle unexpected financial situations.

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  • 5. 

      A history of late payments on credit cards, a defaulted car loan and an unstable employment history will negatively affect your credit score.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Late payments on credit cards, a defaulted car loan, and an unstable employment history are all factors that can negatively impact an individual's credit score. Late payments indicate a lack of responsibility in managing debt, while a defaulted car loan suggests an inability to meet financial obligations. An unstable employment history may indicate a lack of steady income, making it difficult to repay debts on time. These factors are taken into consideration by credit bureaus when calculating credit scores, resulting in a lower score for individuals with such negative financial history. Therefore, the statement is true.

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  • 6. 

     Saving and the power of compound interest can make it possible for you to consume more and achieve a higher living standard in the future.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Saving and the power of compound interest can indeed make it possible for individuals to consume more and achieve a higher living standard in the future. By consistently saving a portion of their income and allowing it to grow through compound interest, individuals can accumulate wealth over time. This accumulated wealth can then be used to invest in assets, purchase goods and services, or fund future goals and aspirations, ultimately leading to an improved standard of living. Therefore, the statement is true.

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  • 7. 

    A monthly budget is an effective tool that will help you

    • Spend a larger share of your earnings now

    • Manage your spending and save for the future in order to accumulate wealth

    • Keep your transportation costs low by purchasing a new car every tow or three years.

    • Select stocks that are more likely to increase in value over the long run.

    Correct Answer
    A. Manage your spending and save for the future in order to accumulate wealth
    Explanation
    A monthly budget is an effective tool that helps individuals manage their spending and save for the future. By creating a budget, one can track their expenses and allocate their earnings towards important goals such as saving and investing. This allows for the accumulation of wealth over time and provides financial security for the future.

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  • 8. 

    When should you begin saving your money?

    • Right away.

    • When you finish high school

    • When you reach retirement

    • When you are 30.

    Correct Answer
    A. Right away.
    Explanation
    Starting to save money right away is the best option because the earlier you start saving, the more time your money has to grow through compound interest. Saving money from a young age allows you to develop good financial habits and build a strong foundation for your future. Waiting until you finish high school, reach retirement, or turn 30 may result in missed opportunities for long-term growth and financial security. Therefore, it is advisable to begin saving money as early as possible.

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  • 9. 

    According to Dave Ramsey you should begin saving by setting aside $1000 in an emergency fund.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Dave Ramsey is a well-known financial expert who advocates for building an emergency fund as part of a solid financial plan. He suggests starting with a goal of saving $1000 in an emergency fund before focusing on other financial goals. This fund acts as a safety net to cover unexpected expenses and helps individuals avoid going into debt. By setting aside $1000, individuals can have peace of mind knowing they have a financial cushion to rely on in case of emergencies. Therefore, the given statement is true.

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  • 10. 

    You should invest using borrowed money.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Investing using borrowed money is generally not recommended because it carries a high level of risk. When you invest with borrowed money, you have to pay back the loan regardless of the performance of your investments. If your investments do not generate enough returns to cover the loan and interest, you could end up in financial trouble. Additionally, borrowing money to invest can amplify losses if your investments perform poorly. It is generally advised to invest with your own money or funds that you can afford to lose without causing financial hardship.

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  • 11. 

     Your take home pay will be less than your gross earnings because of taxes and benefits provided through payroll deductions

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Your take home pay will be less than your gross earnings because of taxes and benefits provided through payroll deductions. This means that a portion of your earnings will be deducted for taxes such as income tax, social security tax, and Medicare tax. Additionally, deductions may also be made for benefits such as health insurance, retirement contributions, and other employee benefits. Therefore, the amount you receive as take home pay will be lower than your gross earnings.

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  • 12. 

    What information do you provide on a check?

    • The time that you want your money to come out of the bank.

    • The amount of money to be withdrawn from the bank.

    • Promise to make monthly payments to your student loans.

    • How much money you want to save.

    Correct Answer
    A. The amount of money to be withdrawn from the bank.
    Explanation
    On a check, you provide the amount of money that you want to withdraw from the bank. This is the information that tells the bank how much money to deduct from your account and give to the recipient of the check.

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  • 13. 

    Which of the following will help you generate income and accumulate wealth?

    • Getting another credit card so you will have more borrowing power in the future.

    • Borrowing funds in order to increase your current consumption.

    • Setting aside funds regularly into savings and investments

    • Making only the minimum monthly payment on your outstanding credit card balances.

    Correct Answer
    A. Setting aside funds regularly into savings and investments
    Explanation
    Setting aside funds regularly into savings and investments is a prudent financial practice that can help generate income and accumulate wealth over time. By saving and investing, individuals can earn interest, dividends, and capital gains on their money, allowing it to grow and potentially generate additional income. This approach focuses on building wealth gradually and responsibly, rather than relying on credit or borrowing to fund current consumption. By consistently saving and investing, individuals can create a financial cushion, achieve long-term financial goals, and increase their overall net worth.

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  • 14. 

    A resume is used for

    • Providing a snapshot of your work history and skills

    • Providing proof of income.

    • Providing information about your credit worthiness.

    • Providing a government agency of your place of birth.

    Correct Answer
    A. Providing a snapshot of your work history and skills
    Explanation
    A resume is a document that summarizes an individual's work history, skills, education, and accomplishments. It is used to showcase one's qualifications and suitability for a job or position. Employers use resumes to evaluate candidates and determine if they possess the necessary skills and experience for a particular role. Therefore, providing a snapshot of your work history and skills is the correct answer as it accurately describes the purpose of a resume.

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  • 15. 

       Which of the following is the best place to set funds aside for “surprise” expenditures?

    • The stock market

    • Your regular checking account.

    • A savings account.

    • Ownership of real estate.

    Correct Answer
    A. A savings account.
    Explanation
    A savings account is the best place to set funds aside for "surprise" expenditures because it offers a safe and secure way to save money while also earning some interest. Unlike a regular checking account, which is meant for day-to-day expenses, a savings account allows individuals to set aside money specifically for unexpected expenses. The stock market and ownership of real estate are not ideal options for setting aside funds for surprise expenditures as they involve higher risks and may not provide immediate access to the funds when needed.

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  • 16. 

    Murphy's Law says that whatever can go wrong will go wrong.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Murphy's Law is a popular adage that suggests that if something has the potential to go wrong, it is likely to happen. This means that the occurrence of negative events or mishaps is inevitable. Therefore, the statement "whatever can go wrong will go wrong" aligns with the concept of Murphy's Law. Thus, the correct answer is True.

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  • 17. 

    Paying only the minimum balance on your credit card each month is a smart financial strategy.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Paying only the minimum balance on your credit card keeps your account in good standing but results in accruing significant interest on the remaining balance. Over time, this increases your debt, as interest compounds monthly. A better strategy is to pay off the full balance to avoid interest or as much as possible above the minimum to reduce overall costs.

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  • 18. 

      A monthly budget can help you achieve financial security by

    • Helping you choose stocks that are most likely to increase in price.

    • Reducing the likelihood that you will face unexpected expenditures for maintenance and repairs.

    • Expanding the borrowing limits on your existing credit cards and increasing the number of credit cards you hold.

    • Increasing your financial awareness and helping you allocate your funds more effectively.

    Correct Answer
    A. Increasing your financial awareness and helping you allocate your funds more effectively.
    Explanation
    A monthly budget can help you achieve financial security by increasing your financial awareness and helping you allocate your funds more effectively. By creating a budget, you can track your income and expenses, identify areas where you may be overspending, and make necessary adjustments to save money or pay off debt. This can lead to better financial decision-making and ultimately help you achieve your financial goals.

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  • 19. 

    Personal financial success is primarily the result of

    • Generous welfare and unemployment programs.

    • Spending more than you earn.

    • Doing what you are passionate about regardless of whether others value it.

    • Providing services others value while working hard to achieve financial goals.

    Correct Answer
    A. Providing services others value while working hard to achieve financial goals.
    Explanation
    Personal financial success is primarily the result of providing services others value while working hard to achieve financial goals. This means that in order to achieve financial success, it is important to offer services or products that are valuable to others and work hard towards achieving financial goals. This involves understanding the needs and preferences of others and providing solutions that meet those needs. Additionally, it requires dedication, perseverance, and a strong work ethic to work hard towards achieving financial goals.

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  • 20. 

    You are getting ready for your first interview. You should bring all of the following with you EXCEPT

    • ID or Drivers Lisence

    • Birth Cerificate

    • Social Security Card

    • Report Card

    Correct Answer
    A. Report Card
    Explanation
    When preparing for a first interview, it is important to bring certain documents that may be required for verification purposes. These documents typically include an ID or driver's license, birth certificate, and social security card. However, a report card is not typically necessary or relevant for an interview, as it primarily pertains to academic performance and is not directly related to employment or identification. Therefore, a report card is not something that you need to bring with you for a job interview.

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  • 21. 

      A credit card is an emergency fund.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    A credit card is not an emergency fund. While a credit card can be used in emergencies to cover expenses temporarily, it is not a reliable or sustainable source of funds for emergencies. It is important to have a separate emergency fund that consists of savings or investments that can be accessed quickly and without incurring debt. Relying solely on a credit card for emergencies can lead to high interest charges and potential financial difficulties in the long run.

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  • 22. 

       If you want to avoid financial anxiety, it would be wise to gradually increase the outstanding balance on your credit cards to the credit limit.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Gradually increasing the outstanding balance on credit cards to the credit limit would not be a wise strategy to avoid financial anxiety. Increasing the outstanding balance on credit cards can lead to higher interest charges and potential difficulty in repaying the debt. It is generally recommended to keep credit card balances low and pay them off in full each month to avoid accumulating excessive debt and financial stress.

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  • 23. 

     If career objectives may cause you to move from an area during the next two or three years, you should purchase a home if your mortgage payments are less than your rental costs.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    If career objectives may cause you to move from an area during the next two or three years, it would not be advisable to purchase a home even if your mortgage payments are less than your rental costs. This is because buying a home involves additional costs such as closing costs, property taxes, and maintenance expenses, which may not make it financially feasible to buy a home if you plan to move in a few years. Renting would provide more flexibility and less financial burden in such a situation.

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  • 24. 

     The interest rates charged on outstanding credit card balances are usually quite low because these loans are highly secure.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because credit card balances are usually secured by collateral or assets. This means that if the borrower fails to repay the debt, the lender can seize the collateral to recover the amount owed. This security lowers the risk for the lender, allowing them to offer lower interest rates on credit card balances.

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  • 25. 

    A couple that is currently renting but is thinking about a move to another city in the near future should.

    • Buy if they can arrange a monthly mortgage payment less than their current rent.

    • Continue renting because the real estate is not easily convertible into cash and costly to buy and sell.

    • Buy because real estate will always increase in value.

    • Continue renting because rental payments are tax deductible but mortgage interest payments are not.

    Correct Answer
    A. Continue renting because the real estate is not easily convertible into cash and costly to buy and sell.
    Explanation
    The correct answer suggests that the couple should continue renting because real estate is not easily convertible into cash and it can be costly to buy and sell. This implies that if the couple plans to move to another city in the near future, it would be more convenient and cost-effective for them to continue renting rather than buying a property, which would involve the hassle and expenses of selling the property when they decide to move.

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Quiz Review Timeline (Updated): Jan 15, 2025 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Jan 15, 2025
    Quiz Edited by
    ProProfs Editorial Team
  • Dec 10, 2009
    Quiz Created by
    Ccunningham123
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