Personal Finance Review Quiz One

Which of the following best describes loss aversion?

• Focusing only on gains from an investment

• Avoiding any financial decision that involves risk

• Weighing potential losses more heavily than gains

• Ignoring past financial mistakes

Why might someone influenced by herd mentality make a poor financial decision?

• They ignore all available information

• They value their own possessions more than others

• They follow the crowd rather than making informed choices

• They only act on the first information they see

Which cognitive bias leads someone to rely heavily on the first piece of financial information they receive?

• Anchoring

• Present bias

• Confirmation bias

• Herd mentality

What is present bias?

• Preferring long-term rewards

• Focusing only on past decisions

• Ignoring present needs

• Choosing short-term rewards over long-term benefits

Which behavior is an example of confirmation bias?

• Seeking reviews that match your beliefs

• Ignoring online reviews

• Trusting only friends

• Accepting all feedback equally

Which of the following is a non-income factor when choosing a career?

• Salary

• Job security

• Tax bracket

• Capital gains

Why might someone choose a technical school over a 4-year college?

• Longer training

• Less expensive and faster to enter workforce

• Higher student loan debt

• No future benefits

Which is an example of unearned income?

• Hourly wages

• Salary

• Dividends

• Freelance payments

Entrepreneurs often accept more financial risk in exchange for what?

• Guaranteed income

• Government benefits

• Independence and profit potential

• Free education

What is a major benefit of gig economy work?

• Guaranteed hours

• Job security

• Flexibility and independence

• Salary raises