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| 1 | |
Who is most negatively affected by inflation? |
| | A) | Borrowers |
| | B) | People on fixed incomes |
| | C) | Businesses |
| | D) | The government |
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| 2 | |
Using the rule of 72, how long would it take for your money to double at an interest rate of 2.5%? |
| | A) | 28.8 years |
| | B) | 2880 years |
| | C) | 180 years |
| | D) | 36 years |
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| 3 | |
Hidden inflation is a problem because… |
| | A) | People are not truthful in how much they spend so it skews inflation rates. |
| | B) | People do not realize how much they spend and end up declaring bankruptcy. |
| | C) | The actual amount of inflation experienced by people may be different that the reported inflation rate based on the CPI. |
| | D) | The CPI does not measure all goods and services, so does not accurately measure inflation. |
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| 4 | |
Which of the following is the basis for successful achievement of long-term financial goals? |
| | A) | Using the rule of 72 to figure out how long it takes your money to double. |
| | B) | Avoiding inflation by only buying goods and services that do not have price increases. |
| | C) | Buying more consumable products than durable products. |
| | D) | Setting and achieving short-term goals. |
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| 5 | |
Which of the following would be an effective financial goal? |
| | A) | Winning $1,000,000 on a game show and investing it in junk bonds. |
| | B) | Saving money for retirement by clipping coupons. |
| | C) | Saving $25 a week by eating out less for a year to put $1300 in an IRA. |
| | D) | Forgoing your daily latte to buy a lottery ticket instead. |
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| 6 | |
An example of a financial opportunity cost is… |
| | A) | The interest lost by using savings to purchase a car. |
| | B) | Having high cholesterol from eating fast-food 5 times a week. |
| | C) | Decreased study time because you went to a movie. |
| | D) | Putting money in savings from increased use of coupons. |
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| 7 | |
How much money would you have at the end of a year if you had $1,000 in savings and earned 3.26% interest? |
| | A) | $1,003.26 |
| | B) | $312.50 |
| | C) | $1,326.00 |
| | D) | $1,032.60 |
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| 8 | |
If you want to know how much you need to save now to have $1,000,000 for retirement, you would use… |
| | A) | Future value computation |
| | B) | The rule of 72 computation |
| | C) | Present value computation |
| | D) | Interest calculations |
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| 9 | |
What is the first step in developing a financial plan? |
| | A) | Set realistic goals |
| | B) | Determine your current financial situation. |
| | C) | Develop your financial goals. |
| | D) | Evaluate your risk. |
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| 10 | |
In evaluating your risk, which of the following should you consider? |
| | A) | Probability of loss of income |
| | B) | The opportunity costs of the investment |
| | C) | How easy it is to declare bankruptcy. |
| | D) | What your short-term goals are. |
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