WorksheetsPersonal Finance - Unit Test 2
Total questions: 55
Worksheet time: 40mins
Chapter 1-1: Introduction to Personal Finance 1. Money management is primarily about:
How much money you earn
Spending every dollar you earn
Planning, saving, and investing your money wisely
Avoiding all debt
A financial goal should be:
Vague and flexible
Specific, measurable, and time-bound
Impossible to reach
Focused only on luxury items
A budget is a tool that helps track income and expenses.
True
False
Financial literacy means:
Only understanding how to spend money
Understanding how to manage money effectively
Knowing how to get rich quickly
Avoiding all financial planning
Emergencies should be accounted for in your financial plan.
True
False
Which money personality tends to avoid thinking about finances?
Spender
Saver
Avoider
Investor
Being a "spender" personality always results in financial irresponsibility.
True
False
A "saver" personality is best described as:
Impulsive with money
Avoids making any financial decisions
Careful and cautious with spending and saving
Always invests in risky ventures
Which personality might struggle with budgeting due to emotional spending?
Saver
Spender
Avoider
Planner
Understanding your money personality can help improve financial decision-making.
True
False
Needs are:
Items that are necessary for survival or basic living
Luxury items or entertainment
Anything that is on sale
Things you want but can live without
Wants are:
A. Necessities
B. Optional items that improve quality of life
C. Items required by law
D. Investments
A new car is always a need.
True
False
Prioritizing needs over wants helps:
Reduce financial stress
Increase debt
Avoid saving
Guarantee instant wealth
Wants can be included in a budget after needs are covered.
True
False
Chapter 6-1: Saving and Investing Basics 16. Saving money is:
Setting money aside for future use
Spending on daily needs
Buying stocks only
Avoiding all financial planning
Investing typically involves more risk than saving.
True
False
Emergency funds should ideally cover:
One month of expenses
3-6 months of expenses
A year of discretionary spending
Only luxury purchases
Chapter 6-1: Saving and Investing Basics 19. True or False: Compound interest helps your money grow over time.
True
False
High-risk investments are suitable for:
Short-term savings
Long-term goals with tolerance for risk
Emergency funds
Daily expenses
A stock represents:
Ownership in a company
A loan to the government
A type of insurance
A guaranteed payment
Stocks can increase or decrease in value over time.
True
False
A company’s performance can affect:
Stock value
Insurance premiums
Stocks are risk-free investments.
True
False
Index funds are designed to:
Track a market index like the S&P 500
Guarantee higher returns than stocks
Replace insurance policies
Focus only on one company
Mutual funds pool money from:
One investor only
Many investors
Banks only
Governments
Mutual funds provide diversification with a single investment.
True
False
Large-cap funds invest in:
Companies with under $2 billion market cap
Companies with $2-10 billion market cap
Companies with over $10 billion market cap
Only government entities
Index funds are typically passively managed.
True
False
Sector focus funds invest in:
A mix of all industries
One specific industry like healthcare or technology
Only bonds
Only real estate
Higher potential returns generally come with higher risk.
True
False
Diversification helps:
Increase all risk
Spread risk across multiple assets
Reduce savings
Avoid retirement planning
A conservative investment approach typically focuses on:
High-risk growth stocks
Stability and lower-risk assets
Cryptocurrency only
Speculation
Past performance guarantees future investment results.
True
False
Investment goals should be:
Random
Aligned with your risk tolerance and timeline
Focused solely on short-term gains
Ignored
Mutual funds are:
Individually managed by investors
Professionally managed investment pools
Only available to banks
Low-risk insurance policies
Mutual funds require investors to have large amounts of money.
True
False
Open-ended mutual funds:
Trade only once
Continuously issue and redeem shares
ETFs can be bought and sold throughout the trading day like a stock.
True
False
Net Asset Value (NAV) is:
The total insurance payout
The value per share of a mutual fund
Your monthly paycheck
The cost of bonds
Starting retirement savings early allows more time for compounding to grow wealth.
True
False
A 401(k) plan is:
A. A government grant
B. An employer-sponsored retirement account
C. Only for retirees
D. A type of health insurance
Employer matching contributions are considered "free money."
True
False
Roth IRAs differ from Traditional IRAs because:
Contributions are pre-tax
Contributions are post-tax, withdrawals are tax-free
They are only for employers
They are guaranteed by Social Security
Social Security:
Requires voluntary contributions
Provides financial support in retirement or for disabled individuals
Is optional for all workers
Only applies to government employees
Insurance is a way to transfer financial risk to a company in exchange for premiums.
True
False
A deductible is:
The maximum the insurance company pays
The amount the policyholder pays before insurance coverage begins
A type of stock
Optional for life insurance
Liability insurance protects you from claims resulting from injuries or damage you are responsible for.
True
False
Homeowners insurance is typically required by:
The federal government
Your mortgage lender
Your employer
Social Security
Without insurance, one accident or disaster could result in significant financial loss.
True
False
Explain how understanding your money personality can affect your financial decisions and planning.
Compare and contrast Traditional IRA and Roth IRA, focusing on tax benefits and withdrawal rules.
Describe the purpose of diversification in investing.
Explain how a 401(k) works and the advantage of employer matching.
Describe how insurance protects individuals financially and give an example using auto insurance.
