Financial Decision-Making and Planning Quiz
Test your financial planning skills with our quiz covering mortgages, ratios, investment concepts, retirement plans, and more!
#1
Which of the following is a characteristic of a fixed-rate mortgage?
Interest rate changes periodically
Monthly payments may vary
Interest rate remains constant for the entire loan term
Requires balloon payment at the end
#2
What is the primary goal of financial planning?
To increase debt
To minimize savings
To achieve financial goals
To spend impulsively
#3
What does the term 'liquidity' refer to in finance?
Ability to convert an asset into cash quickly without significant loss
Long-term investment
Low-risk investment
Ability to borrow money
#4
What is the purpose of a budget in financial planning?
To overspend
To track income and expenses
To ignore financial goals
To increase debt
#5
What is the purpose of a 401(k) retirement plan?
To provide health insurance
To offer life insurance coverage
To facilitate retirement savings through tax advantages
To offer investment advice
#6
What is the purpose of financial ratios in financial analysis?
To increase profits
To measure a company's financial performance
To minimize expenses
To attract investors
#7
Which financial ratio measures a company's ability to pay its short-term obligations?
Debt-to-equity ratio
Current ratio
Return on investment
Earnings per share
#8
What is the concept of 'opportunity cost' in finance?
Cost of borrowing money
Cost of capital
Cost of an alternative that must be forgone in order to pursue another action
Cost of production
#9
What is the formula to calculate compound interest?
P = A / (1 + r/n)^(nt)
A = P(1 + r/n)^(nt)
A = P(1 + r/n)^nt
P = A(1 + r/n)^nt
#10
Which of the following is NOT a factor affecting the time value of money?
Inflation
Interest rate
Risk
Credit score
#11
Which of the following statements about bonds is true?
Bonds represent ownership in a company
Bondholders receive dividends
Bonds are typically considered higher risk than stocks
Bonds are a form of debt financing
#12
What is the role of the Securities and Exchange Commission (SEC) in financial markets?
Regulating and overseeing the stock market
Providing loans to businesses
Issuing currency
Determining interest rates
#13
Which of the following statements is true about diversification in investment?
It increases risk
It decreases risk
It has no effect on risk
It only applies to stocks
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