Question

___1. Features of a 401k plan include all the following except:

a. your contributions may get a company match.

b. contributions are tax deferred.

c. you often have a “menu” of funds to invest in.

d. the government guarantees your 401k against losses

___ 2. In personal finance or financial literacy, the term “estate” refers to

a. a mansion on a large tract of land

b. the assets you leave behind when you die

c. what you owe the state you live in for taxes due

d. the range of benefits provided by your employer

____3. Net worth is:

a. assets minus liabilities b. income minus expenses

c. the assets you own outright d. the amount of cash you can borrow

___ 4. “Risk averse” means

a. you tolerate risk b. you hate risk

c. you only invest long term d. you routinely invest in risky ventures

___ 5. The ability to pay your bills when due is known as:

a. net worth b. asset allocation

c. liquidity d. equity

___ 6. Earned income would include all the following except

a. salary b. bonus from employer c. commission d. interest

___ 7. Company A bought Company B using a “leveraged buyout (LBO). This means:


a. Company A used all borrowed money to buy B

b. Company A used taxpayer money to buy B

c. Company A used Company B’s money to buy B

d. Company A used their own money to buy B

____8. The three national credit bureaus include all the following except

a. TransUnion b. TransAtlantic

c. Equifax d. Experian

___ 9. XYZ Corporation had a successful year and has decided to pay its stockholders $1 for every share each stockholder owns. This type of payment is known as:

a. a dividend b. interest c. an investor bonus d. an investor payback

___10. Using the “Rule of 72”; if the interest was 8%, the amount in someone’s account would roughly double after

a. 2 years b. 7.2 years c. 8 years d. 9 years

___11. Which of the following is true? Insurance allows you to:

a. accept the risk b. mitigate the risk c. transfer the risk d. eliminate all risk

___12. The legal proceeding (i.e. court) to determine settlement of deceased person’s property is called

a. a guardianship hearing b. probate

c. estate planning d. a custodial hearing

___13. Which of the following is not true about a will:

a. you must leave some portion of your wealth to your children (if you have any).

b. you must at least 18 to have a will.

c. you must be of “sound mind”.

d. the document must state that it is your will.

____14. The feature of mutual funds that reduces risk is:

a. insurance b. governmental guarantees

c. diversification d. funds don’t invest in anything risky

____15. A secured loan means:

a. the loan is insured b. the loan is guaranteed by a government

c. there is collateral d. the loan is small

___16. Your credit score might be a factor in all the following except:

a. a loan decision b. a job offer c. an apartment lease d. buying stock

____17. A capital gain is the result of:

a. selling an asset for less than you bought it.

b. holding an asset that has appreciated.

c. diversification

d. selling an asset for more than what you bought it.

Answer 1

1. option D. the government guarantees your 401k against losses.

2. option C. what you owe the state you live in for taxes due.

3. option A. assets minus liabilities  

4. option B. you hate risk

5. option C. liquidity

6. option D. Interest

7. option A. Company A used all borrowed money to buy B

8. option B. TransAtlantic

9. option A. a dividend

10. option D. 9 years.  if the interest was 8%, the amount in someone’s account would roughly double after 9 yrs.

​​​​​​11. option C. transfer the risk

Insurance allow us to transfer the risk.

12. option B. probate

The legal proceeding (i.e. court) to determine settlement of deceased person’s property is called probate.

13. option D. the document must state that it is your will.

14. option C. diversification

15. option C. there is collateral

16. option B. a job offer

17. option D. selling an asset for more than what you bought it.