Test Your Personal Finance Knowledge!

15 Questions | Total Attempts: 70

SettingsSettingsSettings
Please wait...
Test Your Personal Finance Knowledge!

This quiz is designed to assess your applied understanding of introductory concepts.


Questions and Answers
  • 1. 
    Your parent(s) have decided to adopt a baby boy, and want to start saving for his college education now.  They asked you to clarify the difference among EE Bonds, I Bonds and 529 plans.  Be certain to explain the features of each type of education savings vehicle, and make a recommendation on which one(s) they should choose.
  • 2. 
    Conservative, risk-adverse investors are attracted to small-cap stocks.
    • A. 

      True

    • B. 

      False

  • 3. 
    A bear market occurs when investors are pessimistic about the economy.
    • A. 

      True

    • B. 

      False

  • 4. 
    A portfolio that includes stocks invested in one (1) sector of the market is considered to be diversified.
    • A. 

      True

    • B. 

      False

  • 5. 
    Stocks represent ownership in a company.
    • A. 

      True

    • B. 

      False

  • 6. 
      _________ are similar to mutual funds. They invest in a sector of the market or the stocks that make up an index, such as the Nasdaq100.
    • A. 

      Index funds

    • B. 

      Exchange Traded Funds (ETFs)

    • C. 

      Commodities

  • 7. 
    The par value of a bond represents its ____________.
    • A. 

      Comparative value to other bonds issued by the same entity

    • B. 

      Total value, calculated by adding principal and interest

    • C. 

      Face value

    • D. 

      Discount rate

  • 8. 
    The P/E ratio for a stock represents________________.
    • A. 

      The price an investor is willing to pay for $1 worth of earnings.

    • B. 

      The priceof a stock in relation to the earnings per share

    • C. 

      Both A and B

  • 9. 
    The average stock market return spanning the 86 years from 1926-2012 has approximated 9%.  According tp the Rule of 72, how often will an individual's investment double in that time?
    • A. 

      Approximately every 9.5 years

    • B. 

      Every 8 years

    • C. 

      1.2 years

    • D. 

      Every 72 years

  • 10. 
    Jacob has $5,000 that he has saved from doing odd jobs around the neighborhood.  When he graduates from college in four years, he would like to have $10,000 to use as a down payment on a new car. If Jacob is going to realize his dream, what interest rate will he have to invest his money at?
    • A. 

      18%

    • B. 

      50%

    • C. 

      .06%

    • D. 

      None of the above

  • 11. 
    A deferred compensation plan, such as a 401(k) _____
    • A. 

      Is an arrangement between an employer and employee under which a portion of employee's pay is withheld and paid out a future date with earnings.

    • B. 

      Allows an employee to make pre-tax contributions to an account that may be matched, in part, by the employer.

    • C. 

      Pushes the tax liability to a future date when the money is withdrawn.

    • D. 

      All of the above

  • 12. 
    This type of savings vehicle requires a minimum amount to open, has a short term, and restricts the number of withdrawals you can make. 
    • A. 

      Passbook Savings

    • B. 

      IRA

    • C. 

      MMA

    • D. 

      CD

  • 13. 
    Which of the following is most liquid?
    • A. 

      Certificate of deposit

    • B. 

      Money market account

    • C. 

      Savings account

    • D. 

      All the above

  • 14. 
    The strategy that maximizes your return with CD laddering involves the following:
    • A. 

      Spreading money across several CDs that have different term or maturity dates

    • B. 

      Placing all your money in the shortest-term CDs and when it matures, laddering up to longer-term ones.

    • C. 

      Shopping the market for the best rates or highest rung rate across various financial institutions.

    • D. 

      None of these strategies.

  • 15. 
    What is the relationship between the interest rate and liquidity of savings vehicles/
    • A. 

      The interest rate is a product of liquidity.

    • B. 

      Higher interest rates are offered in exchange for lower liquidity.

    • C. 

      There is no correlation between these factors.

    • D. 

      Higher interest rates are offered in exchange for higher liquidity.

Back to Top Back to top