Financial Terminology Quiz

Question 1

Maybe income

Answer 1

Income not contractually guaranteed

Question 2

Social security

Answer 2

US Federal Government program that provides retirement income

Question 3

Social security benefits

Answer 3

Monthly income payments to retired workers

Question 4

Pension

Answer 4

Compensation received by an employee from a company they retired from

Question 5

Explain the difference between income vs asset

Answer 5

Income is money received from working/investing

Asset is a pool of money that has been saved/invested

Question 6

Qualified plan

Answer 6

Qualifies for tax advantages

Question 7

Non qualified plan/asset

Answer 7

Not qualified for tax advantages

Question 8

Stock

Answer 8

Ownership interest in a company

Question 9

Bonds

Answer 9

Loan between investor and institution

Question 10

CD (2 points, know abbreviation and meaning)

Answer 10

Certificate of deposit

Gives fixed rate for a fixed term

Question 11

Mutual fund

Answer 11

Pool of money from many investors invested into securities

Question 12

Annuity

Answer 12

Insurance contract designed to provide payments to individuals

Question 13

Annuitization

Answer 13

Turning on the income payments from an annuity

Question 14

Dollar cost averaging

Answer 14

Systematic savings into an investment

Question 15

Reverse dollar cost averaging

Answer 15

Systematic withdrawals from an investment

Question 16

RMD (2 points, know abbreviation and definition)

Answer 16

Required minimum distribution

Money that must be taken from qualified plans at age 70.5

Question 17

What’s the difference between simple and compound interest?

Answer 17

Simple is only interest on the principal

Compound is interest on interest on the principal

Question 18

Guaranteed income

Answer 18

Income contractually guaranteed