WorksheetsFINANCIAL LITERACY PREPARATORY TEST
Total questions: 50
Worksheet time: 25mins
Bank account for business transactions?
Fixed deposit account
Recurring deposit account
Current account
Savings account
First fire insurance company was due to:
Indian Independence
Global Financial Crisis
Earthquake in Japan
Great Fire of London
Money in a piggy bank is:
Earning interest
Not earning interest
Both B and C
Available for immediate withdrawal
FV = PV(1+iN) calculates:
Present Value
Risk Factor
Rate of Interest
Future Value
Main purpose of social insurance?
Cover property damage
None of the above
Protect against unemployment and disability
Provide life coverage
Which carries the highest risk?
Fixed deposits
Stocks
Savings account
Bonds
Main purpose of savings?
Immediate consumption
Payment of loans
Future use and emergencies
Investment in stocks
What is collateral in loans?
An asset pledged to secure the loan
The amount borrowed
The monthly repayment amount
The interest rate
Implication of education loan?
Affects credit score
Provides tax benefits
All of the above
Must be repaid with interest
Type of life insurance?
All of the above
Endowment plan
Term insurance
Whole life insurance
The cost of borrowing money is known as:
Loan term
Principal
Interest
EMI
Net Asset Value (NAV) is used in the context of:
Mutual funds
Loans
Savings accounts
Fixed deposits
Which of the following is a type of inflation?
Cost-push inflation
All of the above
Demand-pull inflation
Built-in inflation
If you invest $100 at 5% interest compounded annually, future value after 5 years?
$105
$127.63
$552.60
$1000
Which type of loan is typically secured by collateral?
Credit card loan
Home loan
Student loan
Personal loan
Which type of bank account is used for daily transactions?
Checking account
Recurring deposit account
Fixed deposit account
Savings account
The concept of ‘compounding’ refers to:
None of the above
Losing interest over time
Earning interest on both principal and accumulated interest
Earning interest on the principal only
IMPS allows fund transfers:
Only during bank working hours
24/7
None of the above
Only on weekdays
Which of the following is a type of loan?
All of the above
Personal loan
Education loan
Home loan
What does the ‘time value of money’ mean?
None of the above
Money loses value over time due to inflation
Money gains value due to interest
Value of money remains constant
A fixed deposit account typically offers:
No interest
Higher interest rates than savings accounts
None of the above
Lower interest rates
Which of the following is a type of mutual fund?
Close-ended fund
Exchange-traded fund
Open-ended fund
All of the above
What is a secondary market?
Market where new securities are issued
Market where existing securities are traded
Market for commodities
None of the above
Primary benefit of investing in mutual funds?
Diversification
Guaranteed returns
None of the above
High returns with low risk
Which of the following is a benefit of GST?
Increases compliance
Eliminates cascading effect of taxes
Promotes ease of doing business
All of the above
What does a debit card do?
Enables borrowing money
Issues a loan automatically
None of the above
Allows spending money from own account
What happens to investor’s money during an NFO?
Used to buy individual stocks
Pooled with others’ money & invested as per scheme
Kept in high-interest savings account
Directly invested in real estate
Why prefer mutual funds over shares?
Requires less time and research
Guarantees higher returns
Eliminates all risks
Provides personal financial advice
Who manages mutual fund investments?
The investor
The fund manager
The bank
The government
When did GST come into effect in India?
1st July 2016
1st July 2017
1st January 2017
29th March 2017
Which type of insurance includes accident and health insurance?
Life Insurance
Marine Insurance
General Insurance
Social Insurance
What happens if you fail to repay a secured loan?
The bank increases the interest rate
The bank forgives the loan
The bank may seize the collateral
Nothing happens
What security is required for an Education Loan above 7.5 lakhs?
No security needed
Only Parent/Guardian as co-borrower
Tangible collateral security + Parent/Guardian as co-borrower
Third-party guarantee
Which of the following is considered wasteful expenditure?
Spending money allocated for stationery on chocolates
Saving money in a bank
Paying off debt
Buying necessary groceries
Which type of loan is often used to buy a house?
Payday loan
Home loan
Auto loan
Personal loan
Components of GST system in India?
SGST, CGST, UGST
LGST, CGST, IGST
SGST, CGST, IGST
SGST, CGST, FGST
A premium in insurance refers to:
Amount paid periodically to keep policy active
None of the above
Claim amount
Total coverage amount
Role of a mutual fund manager?
Select securities to invest in
Monitor performance of the fund
Manage pool of funds
All of the above
What is a New Fund Offer (NFO)?
A special tax on mutual funds
Launch of a new mutual fund scheme
A discount on mutual fund units
A type of mutual fund withdrawal
Primary function of SEBI?
Promote corporate finance
Regulate & protect investors in securities
Manage government securities
Provide financial education
Which term refers to short-term investments?
Savings
Real estate
Speculation
Insurance policies
Who are the participants in the stock market using price fluctuations?
Speculators
Investors
Savers
Bankers
Which bank account is used for long-term savings?
Savings account
Checking account
Fixed deposit account
Current account
What is inflation?
None of the above
Stability in prices
Increase in general price level of goods and services
Decrease in prices
Which insurance covers health expenses?
Property insurance
Health insurance
Life insurance
Auto insurance
Money lying in a piggy bank is:
Earning interest
Available for withdrawal
Not earning interest
Both B and C
What is a demand draft?
A prepaid negotiable instrument issued by a bank
An electronic fund transfer
A type of loan
A cheque issued by an individual
Which inflation is caused by increase in production costs?
Stagflation
None of the above
Cost-push inflation
Demand-pull inflation
What does a debit card do?
Enables borrowing from a bank
Allows spending money from own account
None of the above
Issues a loan automatically
What is the main function of a bank?
Store and protect customers’ money
Provide legal advice
Store customers’ gold
All of the above
