PFIN 5.00
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22 QuestionsShow answers
  • Question 1
    30 seconds
    Q. Kylee’s Personal Finance class When has been discussing the importance of understanding liquidity and she is trying to explain the term to another student. Which statement is most correct description of liquidity?
    answer choices
    how quickly and easily an asset can be converted into cash
    the amount of savings available
    a measurement of how much a person or household owns once all debts have been paid
    the amount of money needed to pay for the necessities and comforts currently enjoyed
  • Question 2
    30 seconds
    Q. When taking advantage of the time value of money, which of the following is most likely to result in the largest return?
    answer choices
    Invest a large principal amount of money and then make no additional investments
    Invest as long as possible and at the highest interest rate possible.
    Invest a small amount of money for a short period of time at the highest interest rate possible.
    Invest at a high interest rate because interest is the only factor that affects return.
  • Question 3
    30 seconds
    Q. Compound interest is best defined as:
    answer choices
    Interest earned on the principal investment
    Any form of interest earned from saving or investing
    Earning interest on interest
    The effect interest has on the total return on investment
  • Question 4
    30 seconds
    Q. Dylan is preparing a presentation about saving and the presentation rubric says that he must include an explanation of compounding interest. Which of the following statements would be the best one to include in his presentation to show that he understands compounding interest?
    answer choices
    interest earned on the principal investment
    any form of interest earned from saving or investing
    earning interest on interest
    the effect interest has on the total return on investment
  • Question 5
    30 seconds
    Q. When a goal has been set to save $100.00 a month for an emergency fund of $2000.00, giving up food from the vending machine to achieve that goal is the:
    answer choices
    opportunity cost
    interest
    specific part of the SMART goal
    trade‐off
  • Question 6
    30 seconds
    Q. Which statement best reflects the philosophy of “pay yourself first”?
    answer choices
    An individual should save whatever money is left over after paying monthly bills
    An individual should pay all fixed expenses before paying flexible expenses
    An individual should set aside a predetermined amount of money for saving before using any of that money for spending.
    An individual should spend money on the items and activities enjoyed in life before paying any other expenses
  • Question 7
    30 seconds
    Q. In relation to the other options, how liquid is a savings account?
    answer choices
    More liquid than cash
    Less liquid than mutual funds
    More liquid than a Certificate of Deposit 
    More liquid than a checking account
  • Question 8
    30 seconds
    Q. Hannah needs a savings tool to help her manage her everyday purchases. The savings tool needs to be very liquid and accessible. Which of the following savings tools should Hannah choose?
    answer choices
    Certificate of deposit
    checking account
    Money market deposit account
    Any of the above savings tools would help Hannah
  • Question 9
    30 seconds
    Q. Which of the following statements correctly describes the security level of savings tools?
    answer choices
    Savings tools are not secure because they have a high risk of losing money.
    Savings tools are secure because they are protected by the U.S. government against loss.
    Savings tools are very secure because there are not risks involved with saving or investing.
    None of the above is true. It would be safer to keep the money at home in a shoe box.  
  • Question 10
    30 seconds
    Q. Brett plans to save money toward purchasing a car. His co‐worker is telling him about a Money Market Account he has that offers a tiered interest rate. What is Brett’s co‐worker talking about?
    answer choices
    The amount of money he earns depends on the balance, i.e. the higher the account balance the higher the interest rate he would earn.
    The amount of money he earns depends on the number of accounts he has at the depository institution, i.e. the more accounts he has, the higher interest rate he will earn.
    Brett’s co‐worker is talking about something that is illegal. A tiered account is promoted by scam artists who trick people into investing money in hopes of earning higher rates over time.
    The rate of interest earned increases over time, i.e. leaving money in the account for 3 months would earn a lower interest rate than leaving money in the account for 12 months.
  • Question 11
    30 seconds
    Q. Which of the following is a feature of a certificate of deposit (CD)?
    answer choices
    Funds deposited in a CD are held for a certain length of time. 
    Funds deposited in a CD have tiered interest rates.
    Funds deposited in a CD are very liquid.
    Funds deposited in a CD can be accessed via check or debit card.
  • Question 12
    30 seconds
    Q. Which of the following is a feature of a money market deposit account?
    answer choices
    No minimum balance requirements
    Unlimited transactions every month
    Tiered interest rates
    The money must remain in the account for a specific period of time.
  • Question 13
    30 seconds
    Q. Harris is concerned about the effects of inflation on his investment returns. Which statement best describes inflation?
    answer choices
    The rise in the general level of prices
    The uncertainty about the return on an investment
    The number of times something happens to money 
    The projected value of an investment at the end of a specified time frame  
  • Question 14
    30 seconds
    Q. The most common relationship between risk and return in investing can be stated as:
    answer choices
    higher risk indicates lower return
    higher risk indicates higher return
    lower risk indicates higher return
    No relationship exists between risk and return
  • Question 15
    30 seconds
    Q. Elliot’s stock broker is suggesting that he consider investing in a diversified portfolio. A diversified portfolio is desirable because it:
    answer choices
    increases the risk/return ratio 
    limits investors choices to only one or two investment tools   
    indicates an investor is a good predictor of the return an investment will have
    decreases risk by investing money in a variety of investment tools
  • Question 16
    30 seconds
    Q. Which of the following is not true in regards to investing in stock?
    answer choices
    A stockholder owns a part of a company.
    Depending upon the current market price, stockholders may pay different prices for the same stock.
    A stockholder may or may not receive a dividend.
    A stockholder will always receive a profit when the stock is sold.
  • Question 17
    30 seconds
    Q. Conner wants to purchase stocks with the money he received from his tax return. Who would he contact to make the transaction?
    answer choices
    A brokerage firm
    The New York Stock Exchange
    a real estate agent
    Conner should complete this transaction on his own
  • Question 18
    30 seconds
    Q. Which statement is TRUE of mutual funds?
    answer choices
    Mutual funds are speculative investments
    Mutual funds are diversified investments
    Mutual funds are a form of real estate investment
    Mutual funds are superior purchasing to a single stock
  • Question 19
    30 seconds
    Q. A bond is:
    answer choices
    A type of debt that a company issues to investors for a specified period of time
    A share of ownership in a company.
    A type of investment that is only offered by depository institutions.
    A type of investment that has the potential for significant fluctuations over a short period of time.
  • Question 20
    30 seconds
    Q. Alisa is looking for an investment that is structured to have tax benefits. She should look for information on:
    answer choices
    Tax rated bonds
    Speculative investments
    index funds
    Tax-advantaged investments
  • Question 21
    30 seconds
    Q. It is best to have the rate of return on an investment  than the rate of inflation.
    answer choices
    Lower, in order to minimize taxes
    Lower, in order to minimize risk
    Higher, to maintain purchasing power
    Higher, to minimize risk
  • Question 22
    30 seconds
    Q.

    Which of the following statements is true in regards to paying taxes on investments?

    answer choices

    Since investments are considered unearned income, taxes do not have to be paid on earnings.

    Taxes are often owed on profits generated from investments.

    Taxes only have to be paid on employer‐sponsored investment accounts.

    Taxes are always paid on investments either when the money is placed in the investment or removed from the investment.

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