Personal Finance Test 1: Unit 1 and 2

Front

Which of the following best describes loss aversion? Options: Preferring to spend money now rather than save it, Feeling a loss more strongly than an equivalent gain, Making decisions based on group behavior, Believing current information is always accurate

Back

Feeling a loss more strongly than an equivalent gain

Front

The endowment effect refers to

Back

Assigning more value to something you already own

Front

Which scenario best demonstrates present bias? Options: Choosing to spend money on a concert instead of saving for college, Selling stock that is losing value to avoid a loss, Shopping based on customer reviews, Changing careers for better long-term pay

Back

Choosing to spend money on a concert instead of saving for college

Front

When looking for a used car, Mia first sees one listed for $15,000. Later, she finds a similar car for $12,000 and feels like it's a bargain, even though the market value is $10,500. Which cognitive bias is influencing her decision?

Back

Anchoring

Front

Herd Mentality in financial decisions means:

Back

Making decisions based on what others are doing

Front

Which cognitive bias may cause someone to overlook negative reviews of a product they want?

Back

Confirmation Bias

Front

If a student decides to skip building an emergency fund because they "need" the newest phone, they are showing

Back

Present Bias

Front

Which of the following demonstrates how inner values influence financial decisions? Choosing a job based on location to stay near family, Buying a product due to an advertisement, Using a credit card for rewards points, Ignoring negative market trends

Back

Choosing a job based on location to stay near family

Front

Understanding cognitive biases is important because...

Back

it helps people make more informed financial decisions

Front

Non-income factors that often influence job choices include: job satisfaction, family needs, location

Back

job satisfaction, family needs, location