MIDTERMS

Question 1

What term describes the process of monitoring and adjusting your budget to ensure financial goals are met?

Answer 1

c. Financial Tracking

Question 2

Which type of investment carries the highest risk but also the potential for the highest returns?

Answer 2

Answer: c. Stocks

Question 3

What financial concept involves spreading investments across different asset classes to reduce risk?

Answer 3

Answer: b. Asset Allocation

Question 4

What is the term for the process of estimating the value of a property or asset?

Answer 4

a. Appraisal

Question 5

Which of the following is NOT a component of a typical credit score?

Answer 5

c. Marital Status

Question 6

What is an asset acquired or money committed to earning income in the future called?

Answer 6

b. Investment

Question 7

What are the first forms of money in the barter system?

Answer 7

d. Agricultural commodities

Question 8

What characteristic of an investment makes it easily saleable or marketable?

Answer 8

b. Liquidity

Question 9

Which investors are driven by the prospect of earning maximum returns and high profits?

Answer 9

b. Risk-takers

Question 10

What is an arrangement to receive cash, goods, or services now and pay for them in the future?

Answer 10

a. Credit

Question 11

Which is NOT an advantage of consumer credit?

Answer 11

Answer: c. Gives consumers a temptation to overspend

Question 12

What type of money is not backed by a physical commodity and is declared as legal tender by a government?

Answer 12

b. Fiat Money

Question 13

Which type of insurance provides coverage for damage to your own vehicle in case of an accident?

Answer 13

d. Auto Insurance

Question 14

What is the maximum amount of money that an individual can invest in a tax-advantaged retirement account (e.g., 401(k)) in 2023?

Answer 14

c. $19,500

Question 15

What type of tax is levied on the income you earn from investments, such as interest, dividends, and capital gains?

Answer 15

d. Investment Tax

Question 16

Which of the following best describes a bear market?

Answer 16

b. A market with falling stock prices

Question 17

In financial planning, what does the term “ROI” stand for?

Answer 17

a. Return on Investment

Question 18

What is the primary function of a financial advisor?

Answer 18

c. Helping clients achieve their financial goals

Question 19

Which of the following is considered a short-term financial goal?

Answer 19

c. Paying off credit card debt

Question 20

What is the term for an investment strategy that involves buying a diversified portfolio of stocks and holding them for the long term?

Answer 20

c. Buy and Hold

Question 21

What type of tax is typically used to fund local government services like schools and roads?

Answer 21

c. Property Tax

Question 22

Which of the following is a key component of a comprehensive estate plan?

Answer 22

a. Creating a will

Question 23

What term describes a sudden and significant increase in the overall price level of goods and services?

Answer 23

a. Inflation

Question 24

What is the primary purpose of a 529 college savings plan?

Answer 24

c. Saving for a child’s education

Question 25

Which of the following is an example of a fixed expense?

Answer 25

b. Rent or mortgage

Question 26

What is the term for the interest rate that central banks charge commercial banks for borrowing money?

Answer 26

b. Prime Rate

Question 27

Which of the following investments is considered the most liquid?

Answer 27

d. Cash

Question 28

In the context of insurance, what is a “deductible”?

Answer 28

a. The amount you pay out of pocket before insurance coverage kicks in

Question 29

What type of tax is imposed on the transfer of assets from one person to another upon the death of the asset owner?

Answer 29

c. Estate Tax

Question 30

What is the term for the process of regularly setting aside a portion of your income for future use?

Answer 30

a. Saving

Question 31

Which of the following is a characteristic of a good financial plan?

Answer 31

a. Flexibility to adapt to changing circumstances