Personal Finance Challenge Practice Test

Common stock provides the shareholder with:

• ownership in a company.

• a set interest rate per year.

• guaranteed annual dividends.

• insured protection on investment.

Suzy backs her car into a metal fence, causing $500 of damage to her car. Suzy has an auto insurance policy with a $200 deductible. To get her car fixed, how much will her auto insurance company pay?

• $0

• $200

• $300

• $500

Tags

CCSS.7.EE.B.3

Liquidity risk is highest for which type of investment?

• real estate

• mutual fund

• savings account

• individual stocks

Which strategy is most likely to improve most people’s financial situation over a lifetime?

• using credit to spend more than a person earns

• making financial decisions quickly based on intuition

• saving early in life when a person begins earning an income

• gaining work experience early instead of continuing in school

Beginning to save while you are young is recommended by financial experts because it:

• is easier to save when you first begin earning income.

• is hard to save later in life when you have more income to spend.

• allows you to lock in higher interest rates when you buy on credit.

• lets compound interest work in your favor by earning interest on interest.

Tags

CCSS.7.RP.A.3

When making an investment, “market price risk” refers to which possibility?

• the difficulty of converting one’s in-vestment into cash

• the value of the investment could decrease over time

• the inability to get any money back from the investment

• the interest earned might be greater than the rate of inflation

Which three things do creditors consider to be most important when judging a person’s creditworthiness to buy a house or car?

• marital status, gender, location

• character, collateral, and capacity

• length of loan, credibility, commissions

• occupation, connections, income sources

A typical characteristic of entrepreneurs is that they:

• like to work part-time.

• are willing to take risks.

• would rather save than invest.

• enjoy working under supervision.

Tags

CCSS.RI.7.2

CCSS.RI.8.2

CCSS.RL.11-12.2

CCSS.RL.8.1

CCSS.RL.9-10.2

A whole life insurance policy offers protection:

• for income when the policyholder is unable to work.

• during the lifetime of the insured and builds cash value.

• for a specified period of time and does not build cash value.

• that is based on the policy holder following a healthy lifestyle.

A company calls you and offers an investment opportunity with very high returns. All you have to do is recruit some of your friends who will also invest and soon your checks will start rolling in. This is a description of which type of investment fraud?

• identity theft

• a local scam

• credit repair scam

• a pyramid scheme

Tags

CCSS.RL.5.6