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PERSONAL FINANCE - Final Examination – 1st Term AY 2025-2026

Total questions: 60

Worksheet time: 30mins

Name
Class
Date
1.

What is the primary objective of risk management?

a)

To eliminate all risks

b)

To minimize financial losses

c)

To increase insurance costs

d)

To avoid all investments

2.

Which of the following best describes how insurance works?

a)

A. Insurance eliminates financial risks completely

b)

B. It transfers financial risks from an individual to an insurer

c)

C. Insurance is a form of investment

d)

D. It guarantees profit in any situation

3.

What is the key factor in determining life insurance premiums?

a)

Policyholder’s age and health condition

b)

Policyholder’s marital status

c)

Number of beneficiaries

d)

Government regulations

4.

Which type of life insurance provides coverage for a specified period?

a)

Whole life insurance

b)

Term life insurance

c)

Universal life insurance

d)

Variable life insurance

5.

What is NOT covered by a standard homeowner’s insurance policy?

a)

Fire damage

b)

Theft

c)

Normal wear and tear

d)

Vandalism

6.

What should be considered when investing in stocks?

a)

A. Market trends and company performance

b)

B. The investor's emotions

c)

C. Predictions from social media

d)

D. Daily fluctuations of the stock market

7.

Mutual funds pool money from investors to invest in which type of assets?

a)

Only real estate

b)

Stocks, bonds, and other securities

c)

Cryptocurrencies only

d)

Personal savings accounts

8.

What is the primary goal of an investment portfolio?

a)

To eliminate risk entirely

b)

To balance risk and return for financial growth

c)

To invest only in high-risk assets

d)

To avoid diversification

9.

What type of insurance is mandatory for car owners in the Philippines?

a)

Life insurance

b)

Comprehensive car insurance

c)

Compulsory Third Party Liability (CTPL) insurance

d)

Fire insurance

10.

The main purpose of a retirement plan is to:

a)

Invest in high-risk stocks

b)

Provide financial security in old age

c)

Rely solely on government pension plans

d)

Maximize tax deductions

11.

A well-diversified investment portfolio should include:

a)

Only real estate

b)

Only stocks

c)

A mix of stocks, bonds, and other assets

d)

High-risk cryptocurrencies only

12.

What is a key characteristic of an ethical stock market investor?

a)

Engaging in insider trading

b)

Making decisions based on factual analysis

c)

Manipulating stock prices

d)

Ignoring corporate governance issues

13.

What is the importance of an emergency fund?

a)

To cover unexpected expenses

b)

To invest in high-risk opportunities

c)

To avoid paying taxes

d)

To replace insurance policies

14.

When purchasing a property, what is a critical factor to consider?

a)

The property’s color

b)

Market demand and location

c)

The previous owner's name

d)

How much your friend likes it

15.

The main function of a stock market portfolio is to:

a)

Generate stable long-term returns

b)

Avoid all types of risk

c)

Rely on short-term speculation

d)

Invest only in government bonds

16.

Which financial product is best suited for long-term retirement savings?

a)

Savings account

b)

Mutual funds

c)

Payday loans

d)

High-interest credit cards

17.

What is a common financial scam related to investments?

a)

Ponzi schemes

b)

Government bonds

c)

Certificate of deposit

d)

Savings account

18.

Which factor greatly affects real estate pricing?

a)

Location and demand

b)

The age of the buyer

c)

The seller’s personality

d)

The color of the house

19.

Insurance planning is important because it:

a)

Eliminates the need for savings

b)

Provides financial protection against uncertainties

c)

Guarantees wealth accumulation

d)

Replaces retirement planning

20.

What is a key benefit of investing through mutual funds?

a)

Professional fund management

b)

Guaranteed high returns

c)

No market risks

d)

No need for diversification

21.

Indicate whether the statement is TRUE or FALSE. A diversified portfolio reduces investment risk.

a)

True

b)

False

22.

Indicate whether the statement is TRUE or FALSE. The stock market guarantees fixed returns over time.

a)

True

b)

False

23.

Indicate whether the statement is TRUE or FALSE. Whole life insurance has an investment component.

a)

True

b)

False

24.

Indicate whether the statement is TRUE or FALSE. Property insurance covers losses due to gambling.

a)

True

b)

False

25.

Indicate whether the statement is TRUE or FALSE. A real estate investment should consider location as a major factor.

a)

True

b)

False

26.

Indicate whether the statement is TRUE or FALSE. Stocks are low-risk investments.

a)

True

b)

False

27.

Indicate whether the statement is TRUE or FALSE. The risk-return trade-off means higher risks can lead to higher potential returns.

a)

True

b)

False

28.

Indicate whether the statement is TRUE or FALSE. Retirement planning should start as early as possible.

a)

True

b)

False

29.

Indicate whether the statement is TRUE or FALSE. Ponzi schemes are legal forms of investment.

a)

True

b)

False

30.

Indicate whether the statement is TRUE or FALSE. Term life insurance accumulates cash value over time.

a)

True

b)

False

31.

Indicate whether the statement is TRUE or FALSE. Mutual funds allow investors to pool their money for diversification.

a)

True

b)

False

32.

Indicate whether the statement is TRUE or FALSE. High returns are always guaranteed in the stock market.

a)

True

b)

False

33.

Indicate whether the statement is TRUE or FALSE. Real estate investments are immune to market fluctuations.

a)

True

b)

False

34.

Indicate whether the statement is TRUE or FALSE. An emergency fund should cover at least 3-6 months of expenses.

a)

True

b)

False

35.

Indicate whether the statement is TRUE or FALSE. The primary goal of risk management is financial protection.

a)

True

b)

False

36.

The process of evaluating and managing financial risks.

a)

Risk management

b)

Financial reporting

c)

Asset allocation

d)

Tax planning

37.

A legal contract between an insurer and a policyholder.

a)

Insurance policy

b)

Premium receipt

c)

Claim form

d)

Underwriting agreement

38.

The type of insurance that provides financial security for a family in case of a policyholder’s death.

a)

Life insurance

b)

Health insurance

c)

Auto insurance

d)

Travel insurance

39.

The practice of spreading investments to reduce risk.

a)

Diversification

b)

Inflation

c)

Depreciation

d)

Speculation

40.

A long-term financial strategy for post-employment years.

a)

Retirement plan

b)

Credit card debt

c)

Short-term loan

d)

Monthly grocery budget

41.

The financial product that pools funds from multiple investors to invest in a diversified portfolio of securities.

a)

Mutual fund

b)

Savings account

c)

Fixed deposit

d)

Credit card

42.

The mandatory insurance required for all vehicle owners in the Philippines.

a)

Compulsory Third Party Liability (CTPL) insurance

b)

Comprehensive insurance

c)

Personal Accident insurance

d)

Fire and Theft insurance

43.

The financial concept that states the higher the risk, the higher the potential return.

a)

Risk-return tradeoff

b)

Liquidity preference

c)

Time value of money

d)

Diversification benefit

44.

A fraudulent investment scheme that pays existing investors with funds from new investors rather than actual profits.

a)

Ponzi scheme

b)

Pyramid scheme

c)

Insider trading

d)

Stock split

45.

The strategy of regularly investing a fixed amount regardless of market conditions to reduce the impact of volatility.

a)

Dollar-cost averaging

b)

Value investing

c)

Market timing

d)

Growth investing

46.

The financial safety net that covers unexpected expenses such as medical emergencies or sudden job loss.

a)

Emergency fund

b)

Retirement plan

c)

Credit card

d)

Investment portfolio

47.

A tangible asset investment that involves purchasing properties for rental income or future appreciation.

a)

Real estate investment

b)

Stock trading

c)

Cryptocurrency mining

d)

Collectible art purchasing

48.

The document that outlines the terms and conditions of an insurance policy.

a)

Policy contract

b)

Premium receipt

c)

Claim form

d)

Endorsement letter

49.

The financial principle that emphasizes investing in different asset classes to manage risk.

a)

Asset allocation

b)

Market timing

c)

Short selling

d)

Insider trading

50.

The professional who provides advice and services in managing financial risks and insurance policies.

a)

Financial advisor

b)

Software engineer

c)

Civil engineer

d)

Graphic designer

51.

Define: Mutual Fund.

a)

A mutual fund is an investment vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, and other assets.

b)

A mutual fund is a type of insurance policy that provides coverage for health-related expenses.

c)

A mutual fund is a government-issued document that certifies ownership of land.

d)

A mutual fund is a savings account offered by banks with a fixed interest rate.

52.

Define: Compulsory Third Party Liability (CTPL) Insurance.

a)

CTPL Insurance is a mandatory insurance policy for vehicle owners that covers liability for third-party injuries or death caused by the insured vehicle.

b)

CTPL Insurance is an optional insurance policy that covers damages to the insured vehicle only.

c)

CTPL Insurance is a policy that covers theft of the insured vehicle.

d)

CTPL Insurance is a health insurance policy for the vehicle owner.

53.

Define: Risk-Return Trade-off.

a)

Risk-return trade-off is the principle that potential return rises with an increase in risk.

b)

Risk-return trade-off is the principle that higher risk always leads to lower returns.

c)

Risk-return trade-off is the idea that risk and return are unrelated.

d)

Risk-return trade-off means avoiding all risks to maximize returns.

54.

Define: Ponzi Scheme.

a)

A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors, where returns are paid to earlier investors using the capital of new investors.

b)

A Ponzi scheme is a government-backed investment plan that guarantees returns to all participants.

c)

A Ponzi scheme is a legal method of pooling money for mutual benefit in a cooperative society.

d)

A Ponzi scheme is a type of insurance policy that covers investment losses.

55.

Define: Peso Cost Averaging.

a)

Peso cost averaging is an investment strategy where an investor divides up the total amount to be invested across periodic purchases of a target asset to reduce the impact of volatility.

b)

Peso cost averaging is a method of investing where an investor puts all their money into a single asset at one time to maximize returns.

c)

Peso cost averaging is a strategy where investments are made only when the market is at its highest point.

d)

Peso cost averaging is a technique where an investor buys assets only when prices are falling to avoid losses.

56.

Define: Emergency Fund.

a)

An emergency fund is a savings account set aside to cover unexpected expenses or financial emergencies.

b)

An emergency fund is a loan taken to buy a new car.

c)

An emergency fund is money invested in the stock market for long-term growth.

d)

An emergency fund is a fund used only for planned vacations.

57.

Define: Real Estate Investment.

a)

Real estate investment involves purchasing property as an investment to generate income rather than using it as a primary residence.

b)

Real estate investment is the process of decorating your home for personal satisfaction.

c)

Real estate investment means renting a property for a short vacation stay.

d)

Real estate investment is the act of selling furniture for profit.

58.

Define: Policy Document.

a)

A policy document is a written contract of insurance that outlines the terms, conditions, coverage, and exclusions of an insurance policy.

b)

A policy document is a government-issued identification card.

c)

A policy document is a receipt for payment of insurance premium only.

d)

A policy document is a marketing brochure for insurance products.

59.

Define: Asset Allocation.

a)

Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance, and investment horizon.

b)

Asset allocation refers to the process of selecting individual stocks for maximum short-term gains.

c)

Asset allocation is a method of determining the best time to buy and sell real estate properties.

d)

Asset allocation is a strategy focused solely on investing in government bonds to minimize risk.

60.

Define: Insurance Advisor / Financial Advisor.

a)

An insurance advisor or financial advisor is a professional who provides advice on insurance and financial planning to help clients achieve their financial goals.

b)

An insurance advisor or financial advisor is a person who only sells insurance policies without any financial planning.

c)

An insurance advisor or financial advisor is a professional who manages only real estate investments.

d)

An insurance advisor or financial advisor is someone who provides legal advice to clients.