Personal Finance Quiz: Test Your Financial Knowledge

1. Who Wants To Be A Millionaire? Instructor Name Personal Finance

2. #1 What is the “PYF” principle? Provide For Yourself Peanuts, Yogurt & Fruit A: B: Pay Yourself First Principal, Years, Funds C: D:

3. Pay Yourself First

4. #2 Which of the following is a stock exchange? NASDAQ DJIA A: B: IPO AAA C: D:

5. NASDAQ

6. #3 What is the suggested percent of income that one should save when following the “PYF” principle? 2% 10% A: B: 20% 50% C: D:

7. 10%

8. #4 If you have $50 in savings for one year at an interest rate of 7 percent, how much interest will you earn at the end of the year? $3.50 A: B: $.35 $35.00 $7 C: D:

9. $3.50

10. #5 If you have an 8-percent compound interest rate on your savings of $1,000, how many years will it take for these savings to reach $2,000? 7.2 years 8 years A: B: 9 years 10 years C: D:

11. 9 years

12. #6 Which of the following is an example of investing? Buying a pop and candy bar Saving your allowance to buy a DVD. A: B: Putting money in a box under your bed. Buying a U.S. Savings Bond C: D:

13. Buying a U.S. Savings Bond

14. #7 What are the three rules of building wealth over the long term? Start early, buy and hold, and diversify Seek liquidity, buy on margin, and sell short A: B: Trade early, trade often, and trade comfortably Buy aggressively, short cover, and borrow C: D:

15. Start early, buy and hold, and diversify

16. #8 Which of the following is an incentive that encourages people to save money? Earning interest on money saved. The marginal cost of saving A: B: Giving up things that could be purchased now. The opportunity cost of saving C: D:

17. Earning Interest on Money Saved

18. #9 If you have $100 in savings for one year at an interest rate of 5 percent, how much Interest will you earn at the end of the year? $5 $4 A: B: $3 $2 C: D:

19. $5

20. #10 The formula for calculating simple interest is: Interest = Loan X Rate X Dividend Principal X Rate X Yield A: B: Rate X Time X Yield Principal X Rate X Time C: D:

21. Interest = Principal X Rate X Time

22. #11 Which of the following is NOT an investment? Buying a bond from Coca-cola, which promises to pay back the money plus interest Buying 100 shares of Disney A: B: Buying a bond issued by the government of Mexico. Buying a hot dog at the baseball game. C: D:

23. Buying a hot dog at the baseball game.

24. #12 One way people can earn money from stocks is by Selling the stock for a lower price than the price they paid for the stock. Buying stock from an investment banker. A: B: Selling the stock for the same price as the price they paid for the stock. Selling the stock for a higher price than the price they paid for the stock. C: D:

25. Selling the stock for a higher price than the price they paid for the stock.

26. #13 Which of the following statements about mutual funds is true? Mutual funds allow investors to spread risk among several stocks and bonds. All mutual funds are the same. A: B: Load funds do not charge a sales commission but invest in lower-quality stocks. Many mutual funds do not charge management fees. C: D:

27. Mutual funds allow investors to spread risk among several stocks and bonds.

28. #14 What are the five steps used in the decision-making process? Plan, alternatives, choices, evaluation, decision Plan, alternatives criteria, evaluation, decision A: B: Problem, action, conditions, execution, decision Problem, alternatives, criteria, evaluation, decision C: D:

29. Problem, alternatives, criteria, evaluation, decision

30. #15 Josh is stressing out about making an investment that involves high risks. Which one of the following is his safest investment option? Savings Account Putting his money in a box under his bed A: B: Mutual Fund Stocks C: D:

31. Savings Account

32. Great Job!!!! Thank you for playing!