Question 1

Some retirement planning experts suggest that you start retirement planning while you are:

Accepted Answer

A)   in school.
B)   married.
C)   divorced.
D)   middle-aged.
E)   still employed.F) C) and E)
G) C) and D)

Question 2

The quality rating given by Standard & Poor's to highly speculative bonds is:

Accepted Answer

A)   high-grade.
B)   default.
C)   investment-grade.
D)   medium-grade.
E)   unrated.F) A) and D)
G) A) and E)

Question 3

A government security issued with a maturity that is LESS than one year is called a:

Accepted Answer

A)   Federal Reserve note.
B)   Treasury bill.
C)   Treasury note.
D)   Treasury bond.
E)   savings bond.F) C) and E)
G) C) and D)

Question 4

Which of the following would increase the risk of a loan?

Accepted Answer

A)   rising consumer prices
B)   a short time to maturity
C)   lower consumer prices
D)   constant interest rates
E)   a good credit ratingF) B) and E)
G) B) and C)

Question 5

People seeking high (and risky) returns would likely invest in any of the following EXCEPT:

Accepted Answer

A)   growth stocks.
B)   junk bonds.
C)   commodity futures, such as oil.
D)   precious metals.
E)   T-bonds.F) None of the above
G) B) and D)

Question 6

The value of the bond at maturity,or the payment due at repayment,is known as the ________ value.

Accepted Answer

A)   par
B)   maturity
C)   real
D)   ending
E)   nominalF) C) and D)
G) All of the above

Question 7

Your aunt gives you some money for your birthday and you decide to put it into your savings account instead of spending it.The trade-off of not being able to spend the money now is this decision's ________ cost.

Accepted Answer

A)   fixed
B)   opportunity
C)   variable
D)   transaction
E)   totalF) B) and D)
G) B) and C)

Question 8

Which one of the following is a disadvantage of using credit?

Accepted Answer

A)   receiving advance notice of sales
B)   ease of overspending
C)   avoiding the necessity of carrying cash
D)   ease of returning merchandise
E)   having a record of all purchasesF) None of the above
G) A) and E)

Question 9

A loan to purchase real estate in which the real estate itself serves as collateral is a(n) ________ loan.

Accepted Answer

A)   mortgage
B)   property
C)   real estate
D)   homeowner's
E)   escrowF) C) and D)
G) C) and E)

Question 10

Which one of the following investments is likely to have the highest return (and highest risk) between now and the year 2025?

Accepted Answer

A)   U.S.Treasury bills
B)   corporate bonds
C)   stocks
D)   municipal bonds
E)   zero-coupon bondsF) A) and D)
G) All of the above

Question 11

A government security issued with maturities of more than 10 years is called a:

Accepted Answer

A)   Federal Reserve note.
B)   Treasury bill.
C)   Treasury note.
D)   Treasury bond.
E)   savings bond.F) D) and E)
G) None of the above

Question 12

Treasury securities are:

Accepted Answer

A)   securities backed by mortgages and student loans.
B)   riskier assets than most other investment options.
C)   sold directly to individual investors in the open market.
D)   only available to foreign investors.
E)   bonds sold by the U.S.government to pay for the national debt.F) A) and B)
G) C) and D)

Question 13

An individual retirement account (IRA) is an example of a(n) ________ asset.

Accepted Answer

A)   personal
B)   common
C)   investment
D)   household
E)   budgetedF) D) and E)
G) A) and B)

Question 14

All of the items listed are factors in the development of credit scores EXCEPT:

Accepted Answer

A)   amounts owed.
B)   types of credit you use.
C)   payment history.
D)   how many accounts you open.
E)   your level of education.F) C) and E)
G) D) and E)

Question 15

The changing cost of using money is referred to as ________ risk.

Accepted Answer

A)   interest rate
B)   inflation
C)   economic
D)   trade-off
E)   personalF) A) and B)
G) None of the above

Question 16

When you pay cash to buy something,you:

Accepted Answer

A)   give up the opportunity to keep the cash in an interest-bearing account.
B)   always get a cash discount.
C)   can build a better credit rating.
D)   get better personal service from store employees.
E)   have a better selection of goods than if you use credit.F) C) and D)
G) B) and E)

Question 17

Which of the following investments has the lowest risk?

Accepted Answer

A)   T-bills
B)   municipal bonds
C)   income stocks
D)   real estate
E)   corporate bondsF) C) and D)
G) None of the above

Question 18

Which of the following goal statements would be the easiest to implement and measure?

Accepted Answer

A)   "Reduce our debt payments."
B)   "Save funds for an annual vacation."
C)   "Save $100 a month to create a $4,000 emergency fund."
D)   "Invest $2,000 a year for retirement."
E)   "Increase our emergency fund."F) A) and E)
G) A) and C)

Question 19

Stocks are:

Accepted Answer

A)   ownership shares in a firm.
B)   securities that represent a debt to be paid.
C)   markets in which securities are bought and sold.
D)   contracts that represent a guaranteed payment.
E)   not available for individual investors.F) All of the above
G) A) and D)

Question 20

What is the highest rating a bond can receive from the rating firm Standard & Poor's?

Accepted Answer

A)   A+
B)   A++
C)   AA
D)   AAA
E)   AF) B) and C)
G) C) and E)

Exam 19: Personal Finance

Which one of the following investments is likely to have the highest return (and highest risk) between now and the year 2025?

Correct AnswerverifiedShow Answer

The changing cost of using money is referred to as ________ risk.

Correct AnswerverifiedShow Answer

When you pay cash to buy something,you:

Correct AnswerverifiedShow Answer

An individual retirement account (IRA) is an example of a(n) ________ asset.

Correct AnswerverifiedShow Answer

What is the highest rating a bond can receive from the rating firm Standard & Poor's?

Correct AnswerverifiedShow Answer

Stocks are:

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Which one of the following is a disadvantage of using credit?

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Some retirement planning experts suggest that you start retirement planning while you are:

Correct AnswerverifiedShow Answer

A government security issued with maturities of more than 10 years is called a:

Correct AnswerverifiedShow Answer

Treasury securities are:

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Which of the following investments has the lowest risk?

Correct AnswerverifiedShow Answer

The quality rating given by Standard & Poor's to highly speculative bonds is:

Correct AnswerverifiedShow Answer

Which of the following would increase the risk of a loan?

Correct AnswerverifiedShow Answer

People seeking high (and risky) returns would likely invest in any of the following EXCEPT:

Correct AnswerverifiedShow Answer

All of the items listed are factors in the development of credit scores EXCEPT:

Correct AnswerverifiedShow Answer

A government security issued with a maturity that is LESS than one year is called a:

Correct AnswerverifiedShow Answer

A loan to purchase real estate in which the real estate itself serves as collateral is a(n) ________ loan.

Correct AnswerverifiedShow Answer

Your aunt gives you some money for your birthday and you decide to put it into your savings account instead of spending it.The trade-off of not being able to spend the money now is this decision's ________ cost.

Correct AnswerverifiedShow Answer

Which of the following goal statements would be the easiest to implement and measure?

Correct AnswerverifiedShow Answer

The value of the bond at maturity,or the payment due at repayment,is known as the ________ value.

Correct AnswerverifiedShow Answer

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