NEW
Font size
WorksheetsPF Midterm 1-49
Total questions: 49
Worksheet time: 25mins
The primary benefit of a Traditional IRA is that retirement withdrawals are tax-free.
True
False
Your collection of assets is called your investment strategy.
True
False
The odds of winning a large lottery jackpot like Powerball are:
1 in 100,000
1 in 292 million
1 in 10 million
1 in 100 million
Which of the following would be considered a discretionary expense?
Your mortgage payment
Your student loan payment
A new video game console
Your utility bills
What does diversification aim to reduce?
Risk
Taxes
Returns
A financial manager
Which is the safest retirement investment?
Stocks
Treasury bonds
Real estate
Cryptocurrency
Writing down your goals increases your likelihood of success.
True
False
What is a zero-based budget?
A budget with no savings
A traditional budget
A budget that ignores income
A budget where every dollar is allocated to a purpose
Investing in multiple sectors is an example of diversification.
True
False
Which of the following is NOT considered a Baby Step in Dave Ramsey's financial plan?
Saving for retirement
Optional emergency fund
Paying off debt
Compound interest benefits long-term investors.
True
False
Lottery winnings are tax-free.
True
False
A well-diversified investment portfolio includes:
One type of asset
Only international stocks
A mix of stocks, bonds, and real estate
Real estate and savings accounts
Spending more on lottery tickets significantly improves your odds of winning.
True
False
Which is NOT an example of a discretionary expense?
Gym membership
Netflix subscription
Eating out
Mortgage
Retirement savings should begin as early as possible to maximize growth.
True
False
What is the recommended percentage of your income you should invest?
10%
15%
20%
25%
Index funds are designed to match the performance of a market index.
True
False
Managing your finances is 70 percent behavior and 30 percent head knowledge.
True
False
What is the appropriate way to handle credit card debt?
Paying only the minimum balance each month
Using balance transfer offers to manage debt
Paying off the entire balance each month
Increasing the credit limit to accommodate debt
Employer matching for 401(k) plans is free money for employees.
True
False
Co-signing loans for a trusted friend is acceptable in emergencies.
True
False
Which is an example of a fixed expense?
Electricity bill
Dining out
Rent
Clothing expenses
A stock is a loan from the investor to a company or government.
True
False
High credit card debt impacts:
Your net worth
Investment opportunities
Your credit score
All of the above
Vision boards require daily updates to be effective.
True
False
The 'M' in SMART goals stands for 'Meaningful.'
True
False
A financial advisor is optional if you choose to invest in mutual funds.
True
False
Discretionary expenses remain constant each month.
True
False
What argument(s) would you use to dissuade someone from gambling?
Paying capital gains tax on winnings
Addictive nature of gambling
Very low odds of winning
All of the above
Mutual funds pool money from multiple investments.
True
False
Which is an achievable SMART goal?
Save $200 in 3 months by cutting dining out expenses
Become rich by the end of the year
Lose 25 pounds in a month
Travel to every country someday
What is a budget primarily used for?
To track money flow after it has been spent.
To plan and control how income is used.
To encourage impulsive spending habits.
To avoid any financial stressors.
What does "ROI" stand for in investing?
Rate of Interest
Retirement Option Investment
Risk of Investing
Return on Investment
Which of these is generally considered a higher-risk investment?
Bonds
Certificates of Deposit
Savings accounts
Stocks
What is a "diversified portfolio"?
Investing in international funds
Spreading your investments in different country's commodities
Spreading your investments across different types of assets
Investing in retirement accounts
Why is it generally not advisable to rely on winning the lottery as a retirement plan?
Lotteries are always profitable
Lottery winnings cannot be invested
Lotteries are government-funded
The odds of winning are extremely low
What does the "S" stand for in SMART goals?
Simple
Specific
Strategic
Significant
Which of the following is the best example of a variable expense?
Your monthly rent payment
Your car insurance premium
Your weekly grocery bill
Your monthly subscription to a streaming service
For a majority of millionaires, where did their money for retirement come from?
Social security
Inheritance
IRA/401(k)
Real estate investments
What is the potential downside of having too much debt?
It can make it harder to save money.
It can give you more opportunities to borrow money.
It makes it easier to buy what you want.
It improves your ability to pay for things.
The rule of thumb for buying stocks is sell low, buy high.
True
False
Your gross wages are your after-tax earnings.
True
False
What is the purpose of a vision board?
To create legal contracts
To visually represent your goals and aspirations
To help you save money
To track your lottery ticket purchases
Why is it important to re-evaluate your budget periodically?
Not necessary because budgets are unlikely to change
To adjust for changes in income and expenses
To avoid tracking expenses
To spend more money, but account for it monthly
What is the general relationship between risk and potential return in investing?
Higher risk, lower potential return
Lower risk, higher potential return
Higher risk, higher potential return
Risk and return are unrelated
What is the "house advantage" in most lottery games?
The mathematical advantage the players have over the lottery company
The mathematical advantage the lottery company has over the players
A fair distribution of winnings
A random allocation of winnings
First step in creating a budget
Find ways to increase your income
Decide which bills to pay first
Cut back on all spending
Figure out how much money you have coming in
What is compound interest
Interest earned only on the principal
Interest charged on debt
Interest earned on both the principal and accumulated interest
Interest that only applies to bonds
