WorksheetsPersonal Financial Planning MCQs
Total questions: 20
Worksheet time: 10mins
Personal financial planning primarily aims to
Maximize tax payable
Minimize expenditure only
Achieve stated life-cycle goals with optimal use of resources
Time the share market perfectly
Which of the following is not a step in the financial-planning process?
Establishing goals
Implementing a plan
Evaluating advertising campaigns
Monitoring and revising the plan
The term resource planning in personal finance refers to
Allocating financial and non-financial resources toward goals
Forecasting national GDP growth
Only budgeting household income
Purchasing real assets exclusively
A positive ‘surplus’ in a cash-flow statement indicates
Liquidity crisis
Excess liabilities over assets
Disposable funds available for investment or debt reduction
Mandatory dividend distribution
For a young professional in the accumulation life-cycle stage, the typical investment horizon is
Very short-term (< 1 year)
Medium-term (3-5 years)
Long-term (10+ years)
Undefined because horizons don’t apply
Which demographic factor most directly increases risk tolerance in portfolio construction?
Higher age
Dependents increasing
Stable high income and long time horizon
Approaching retirement
During the recession phase of a trade cycle, investors generally prefer
High-beta growth stocks
Speculative derivatives
Defensive assets such as high-quality bonds or gold
Leveraged real-estate deals
An Exchange-Traded Fund (ETF) backed by physical gold gives the retail investor all of the following benefits except
Ease of liquidity on stock exchanges
Elimination of storage and security costs
Guaranteed above-inflation real return each year
Transparent pricing close to international spot rates
Which one of these is not a real asset?
Residential apartment
Corporate bond
Agricultural land
Platinum bullion
A primary merit of real estate as an investment is
Perfect divisibility
High liquidity at any time
Potential for rental income and capital appreciation
Zero transaction costs
A common demerit of investing in precious metals is
Low marketability
Absence of periodic cash flow
Exposure to credit-default risk
100 % government control on pricing
Over the past decade, which asset class in India has most consistently beaten inflation on a post-tax basis?
Savings bank deposits
Physical gold
Equity mutual funds (diversified)
Cash held at home
Investing through an IPO rather than the secondary market can be preferable when
The IPO is priced below intrinsic value and oversubscription is low
Liquidity is the top priority
One seeks instant exit opportunities on listing day despite large premiums
The company has no prospectus available
The grey market premium (GMP) discussed around IPOs indicates
Likely listing gain expectation under informal trading
RBI-mandated interest on application money
Exchange-approved brokerage commission
Dividend yield promised by the issuer
Which pair correctly matches the avenue with its typical risk–return profile?
Equity shares — Low risk / Low return
Gold ETF — Moderate risk / Inflation-hedge return
Government T-Bill — High risk / High return
Venture capital fund — Low risk / Guaranteed return
Liquidity risk is generally highest in
Listed blue-chip equities
Sovereign gold bonds traded on exchange
Open-ended debt mutual funds
Direct investment in commercial property
Over the last five calendar years, Indian large-cap equity indices have delivered an average annualised return closest to
2–3 %
7–9 %
12–14 %
20–25 %
If an investor buys shares after listing on the stock exchange, the transaction occurs in
The primary market only
The secondary market only
Both primary and secondary markets simultaneously
The grey market
A key advantage of systematic investment plans (SIPs) in mutual funds is
Timing the market for highest single-day gains
Averaging purchase cost over market cycles (rupee-cost averaging)
Lock-in of capital at fixed returns
Elimination of all market risks
Which statement best explains the diversification benefit?
Combining assets whose returns do not move perfectly together reduces portfolio risk without proportionally reducing expected return.
Spreading money across many stocks always guarantees higher returns than bank deposits.
Holding only fixed-income assets eliminates inflation risk.
Diversification has no effect on unsystematic risk.
