WorksheetsPERSONAL FINANCIAL LITERACY EXAM
Total questions: 49
Worksheet time: 25mins
If a publicly traded corporation has a positive cash flow, it may
become less liquid.
go into debt.
pay dividends.
increase net income.
If you are investing for a goal that you hope to reach within three years, you are investing for a(n)
short-term time horizon.
intermediate-term time horizon.
long-term time horizon.
risk-tolerant time horizon.
Alex wants to conduct a fundamental analysis of a company's stock. What information does he need to examine?
All internal and external business factors
The stock's past performance
Economic factors that may impact its value
The company's financial reports
Which of the following is essential for making wise investment decisions:
Knowledge
Intelligence
Age
Wealth
What is the main purpose of diversifying investments?
To avoid penalty fees
To reduce risk
To increase liquidity
To eliminate income tax
What is an example of an internal stock information resource?
Brokerage firm research
The Value Line Investment Survey®
A company's annual report
A financial website portal
A potential investor can assess a stock's volatility by comparing the highest paid price in the past 52 weeks with the
estimated dividends.
rate of return.
price-earnings ratio.
lowest paid price in the past 52 weeks.
Jessica wants to evaluate the rate of return for a particular stock. What component of the stock table should she review?
Ticker
Volume
Yield percentage
Net change
The purpose of the risk pyramid is to show a comparison of
one investment to another.
one stock to another.
corporate bonds to municipal bonds.
stocks to stock mutual funds.
Why is it important for individuals to establish investment goals?
To achieve plans for the future
To buy common stock
To reduce overall debt
To borrow capital
What type of retirement plan gives employees little control but guarantees a specific amount for employees?
Defined contribution
Defined benefit
401(k)
Social Security
An important advantage of using a stock screener is the ability to
speak with a live person.
place a quick bid.
refine your search.
participate in online investing.
When John was injured in an auto accident on his way to work, what kind of insurance paid his hospital bill?
Life
Disability
Term
Health
Collin's old car has very little value, and he is not concerned with replacement costs. What type of car insurance coverage should he purchase?
Gap insurance
Collision
Liability
Comprehensive
What should you do first if you think there is an error in one of your bills?
Pay the bill and hope the error is resolved on the next bill.
Refuse to pay the bill.
Call the company and ask them to review the charges.
File a lawsuit against the company.
Rhea is 20 years old, and she wants to buy a house by the time she is 40 years old. Ideally, she'd like to invest a lump sum now and watch it grow over time, at an interest rate of 5% annually, until she has enough to make a down payment of $40,000 on the home. What is the minimum amount (rounded up to the nearest dollar) she should invest now to reach her goal in 20 years?
$15,095
$4,193
$20,000
$8,000
What is good advice to follow to avoid excessive debt?
Use cosigners on loans so that they can be held responsible for excessive debt.
Engage in impulse buying to avoid unmanageable debt.
Notify creditors immediately when you know your payments will be late.
Think long term and be realistic about income and expenses.
Which of the following is a question you should ask yourself when determining how your assets will be managed after your death:
When will I be able to buy a house?
How much can I contribute to my 401(k)?
How much can I spend each month on groceries?
Who will oversee the terms of my will?
Robert and Martha are an elderly couple with three children and nine grandchildren. When they pass away, their three children will each inherit one third of Robert and Martha's assets. In other words, the couple's children are (a) of their parents' will.
arbitrators
executors
directors
beneficiaries
Mia's loan application was rejected. Which of the following is the most likely reason why her application was rejected?
She does not have any debt.
Her credit score is too low.
Her income level is too high.
The loan officer disliked her.
Arial is a high school student working 10 hours a week at a part-time job. She wants to buy her first car. She has $1,000 saved for a down payment and plans to obtain a car loan for the remaining purchase price. What should she do first?
Test drive several used car models
Research a new car model that she likes
Get preapproved for a car loan
Determine how much debt she can afford
Blue Diamond Co. attracts the best salespeople because it offers a generous commission structure, a well-rounded benefits package, flexible work hours, and opportunities for professional development. Blue Diamond Co. has
unethical hiring practices.
problems with its finances.
an unsustainable business model.
a total rewards system.
The purpose of filing an insurance claim is to obtain
profit from the premium.
discounts on the deductible.
dividends on the investment.
compensation for the loss.
An overall purpose of establishing goals is to increase your chances of
enlarging your income.
achieving immediate success.
satisfying your wants.
avoiding making mistakes.
A step in choosing a goal is selecting a (a) for the goal.
daily schedule
substitution
vague reason
time limit
Which of the following should you do when you fail to reach a goal:
Give up goal setting.
Find someone to blame.
Congratulate yourself.
Find out what went wrong.
Which of the following is an example of an extensive decision:
How you'll pack your lunch
What shoes you'll wear today
Which job you'll take
Where you'll hang out after school
Which of the following best describes a decision-making model:
The best way to solve a problem
An easy way to select an alternative
An organized way to make a decision
A good way to reach an objective
Jacob is interested in pursuing a specific business career and sets up a time to talk with a person who works in his field of interest. Jacob is obtaining career information by initiating a(n)
exploratory interview.
internship.
discussion forum.
job evaluation.
What do people usually take into consideration when identifying occupations that they want to pursue in life?
Social attitude
Personal conduct
Mental health
Natural talent
Why do individuals often take aptitude tests and fill out self-assessment questionnaires?
To determine intelligence levels
To complete industry surveys
To identify occupational interests
To monitor performance reviews
Which of the following is a career area in business:
Entertainment
Health care
Marketing
Mathematics
Young people often locate their first jobs in the community by responding to businesses that have
advertised in trade journals.
hired employment agencies.
posted help-wanted signs.
conducted professional searches.
When completing job applications, the applicants should sign their
last names first.
favorite nicknames.
initials only.
proper names.
What is one of the main reasons for writing a cover letter?
To organize thoughts
To attract attention
To give detailed data
To describe activities
Why are most resumes set up with a job or career objective as the first item on the resume?
To show the employer the applicant's level of creativity
To call the job applicant's goals to the employer's attention
To give the job applicant a chance to make a statement
To demonstrate the job applicant's ability to express themselves
Which of the following is a banking service that allows customers to pay their bills without any paper money exchanging hands:
Certificates of deposit
Debt consolidation
Lines of credit
Electronic funds transfer
When considering loan products for higher education, most finance professionals encourage students to pursue federal loans first because
they generally have the lowest interest rates.
private loans are almost nonexistent.
federal loans are the most challenging to be approved for.
they usually do not need to be repaid.
If you are covered under your parents' health insurance, you
won't receive full benefits.
are breaking the law.
must have financial need.
are considered a dependent.
It is a good idea to purchase life insurance as a young adult because
it takes time for the policy to become active.
younger people pay lower premiums.
policies have limited time periods.
young people often have dependents.
Which of the following is likely to be covered under long-term care insurance:
Expenses associated with funeral services
Bills for emergency surgery
Home modifications such as ramps
Costs of home repairs after a fire
To avoid accumulating unmanageable debt, you should
avoid buying anything except necessities.
pay your credit card balance in full.
purchase expensive items using credit.
spend your monthly paycheck immediately.
Maggie wants to buy stock in PepsiCo, but only when the price drops to a certain amount. She is interested in placing a (a) order.
market
limit
stop
trade
All the efforts to safeguard consumers from any kind of injury they might suffer in the process of purchasing and/or using consumer products is known as consumer
spending.
protection.
marketing.
confidence.
Which of the following factors is most likely to increase a policyholder's car insurance premium?
Owning an inexpensive used car
Receiving one or more driving violations
Living in a rural community
Driving a short distance to work
What component of homeowners insurance covers structural damage caused by fire?
Personal property
Dwelling
Liability
Living expenses
A primary characteristic of a whole life insurance policy is that it
covers the insured for a time period of 25 years.
accumulates cash value over time.
covers only the insured's burial expenses.
requires policyholders to pay low premiums annually.
Everett is purchasing his first car. What can he do to negotiate a good deal?
Be combative
Research ahead of time
Leave terms open
Agree with the salesperson
Which of the following statements is true regarding business plans:
Lending institutions do not usually require loan applicants to submit a business plan.
The operating plan details information regarding the business's services.
Owners often use business plans as a tool to help them achieve their objectives.
A corporation is the only legal form of business ownership that should develop a business plan.
