Leah uses online spreadsheets and investment portfolio management tools to keep track of her different investments in various financial products.
Which skill does Leah use in the given scenario? a.)
The technology skill b.)
The agility skill c.)
The problem-solving skill d.)
The productivity skill
Which of the following loan options provides better protection to consumers and costs less in terms of interest? a.)
A payday loan b.)
A title loan
A loan from banks
A loan from pawn shops
Daniel urgently requires $500 because of a sudden leakage in the roof of his house.
Which of the following would be a productive financial decision for Daniel? a.)
Daniel should get a payday loan to pay the repair bill. b.)
Daniel should get a line of credit to pay the repair bill.
c.)
Daniel should declare his home as collateral and get a title loan to pay the repair bill. d.)
Daniel should get an installment loan to pay the repair bill
Which of the following is a feature of a direct unsubsidized loan? a.)
The interest accrued on the loan amount is added to the loan balance until the student can begin the repayment of the loan. b.)
Students need to show financial need to receive these loans. c.)
The interest accrued on the loan amount is paid by the federal government. d.)
It is a type of financial aid that is available only to undergraduate students.
Naveen opts to buy a car. After doing his research, he identifies a vehicle model suitable for him.
Keeping in mind the steps involved in purchasing a vehicle, what should Naveen's next step be? a.)
He should determine how much money he can spare every month to spend on the car. b.)
He should analyze his transport needs and cost to determine if he needs the car. c.)
He should contact his insurance company and figure out the cost to insure the vehicle.
d.)
He should identify a suitable auto loan.
Irfan commits to renting an apartment for one year, but he has to leave after just 6 months due to a family emergency.
Which of the following is true based on Irfan's situation? a.)
He will have to pay his landlord a reletting fee to rent the apartment to another tenant. b.)
He is entitled to receive his application deposit back from his landlord. c.)
He will have to pay city and state taxes on the house. d.)
He will have to pay his landlord the closing costs on the apartment.
Which of the following will reimburse buyers if their home and belongings are destroyed or stolen? a.)
Homeowner’s insurance b.) Title insurance c.) Mortgage insurance premium d.)
Renter's insurance
CHALLENGE 2
For which of the following people will opening a checking account be the most effective financial option? a.)
Xavi, who wants to obtain sufficient returns to help him pay off his mortgage over the next 10 years
b.) Jacob, who runs a small business and needs to have cash in hand at all times c.) Renata, who wants to steadily grow her money to achieve long-term goals d.) Rinaz, who wants to obtain high returns on her investments and has a high risk tolerance
Louis pays $1,000 a month on his mortgage, $500 for car loans, and $1,500 in rent. His living expenses amount to another $1,500. He has monetary assets of $9,000. The formula for emergency fund ratio is as follows: Emergency Fund Ratio = Monetary Assets / Monthly Living Expenses.
For how long will Louis's emergency fund last? a.) 3 months b.) 2 months c.) 6 months d.) 12 months
Which of the following decisions taken currently will help Grace be better prepared financially in the future? a.)
Grace decides to save $450 every month for an international trip that will cost her $4,500.
b.)
Grace decides to invest in an unconventional and risky financial investment that promises a high return. c.)
Grace decides to deposit $500 in her dedicated savings account for use in an emergency. d.)
Grace decides to withdraw money from her savings account to buy a gift for her friend.
Maya has contributed annually to a Roth IRA for the last 10 years and also has a traditional IRA.
Which of the following financial decisions will prove most beneficial for Maya if she needs money to make an emergency payment? a.)
Maya withdraws the interest earned from her traditional IRA. b.)
Maya withdraws from the principal amount of the traditional IRA. c.)
Maya withdraws the principal amount invested in the Roth IRA to make the emergency payment. d.)
Maya withdraws the interest earned on the principal invested in the Roth IRA to make the emergency payment
CHALLENGE 3
Nigel is self-employed. He seeks funding to expand his business operations.
What must Nigel do in order to sell shares in the business to raise funds? a.)
Obtain a business loan for the amount of the shares
b.)
Sell bonds in the business for the same amount as the business's shares c.)
Convert the business from a public company to a private enterprise d.)
Convert the business into a corporation
The stock price of Greengold Corp. is $18 per share, and the formula for market capitalization is as follows:
Market capitalization = Stock price per share × Total number of shares in marketplace.
If Greengold's total number of shares in the stock market is 10 million, what is their market capitalization? a.)
$180 million b.) $18 million c.) $480 million d.) $10 million
Helga buys bonds in a company as an investment. Which of the following will be true in this scenario? a.)
Helga is entitled to dividends only if the firm's board of directors decides to make a payment. b.)
Helga will earn money through interest payments the company makes to her.
c.)
Helga will have to retain the bonds till the maturity date and cannot sell them before such time.
d.)
Helga now owns a percentage of the company
Why is investing in mutual funds a productive financial decision for its investors? a.)
Investors get premium returns on their investments as they are solely responsible for all the investment decisions.
b.)
It provides individuals with limited funding the opportunity to invest in different types of investments.
c.)
Individuals do not pay brokerage fees, which increases the earning potential from their investments.
d.)
It is a type of investment that has a slow growth rate but guarantees high returns with zero losses.
Dana is a young lawyer who has a moderate level of financial risk tolerance, but she wants to maximize the returns she receives.
Which of the following investment options will best suit Dana?
a.)
Dana should invest her money in corporate bonds.
b.)
Dana should invest her money in a short-term certificate of deposit.
c.)
Dana should invest her money in a savings account.
d.)
Dana should invest her money in speculative stocks
Which of the following is a feature of a margin account opened with a brokerage firm? a.)
Investors are guaranteed high returns on their investments. b.)
Investors with a low credit rating are given preference to open a margin account. c.)
Investors are not charged any brokerage fee on a stock trade. d.)
Investors can purchase stocks with borrowed money.
Janelle's financial advisor advises her to buy an apartment as a dual-purpose asset as this will be beneficial for her.
What does this statement mean?
a.)
Janelle should rent the apartment and use the rent money to pay her mortgage. b.)
Janelle should buy the apartment together with multiple properties through an REIT. c.)
Janelle should buy the apartment to live in and also as an investment. d.)
Janelle should buy a house currently under foreclosure for less than the market value.
MILESTONE
Tim is buying a house by taking out a mortgage.
Which of the following protects either the lender or Tim in case someone else says they have a claim on the property after purchase?
Homeowner’s insurance
Mortgage insurance premium
Appraisal fee
Title insurance
Buying a Home 2
Selena has a mortgage on her house, but fluctuating conditions in the housing market have resulted in her mortgage being "underwater." What does this term mean?
Selena's lender requires that she purchase flood insurance.
The lender or the bank is foreclosing on Selena's house.
Selena is prohibited from selling her house to another buyer.
Selena's mortgage amount is higher than the market value of the house Real Estate 3
Which of the following is a feature of a stop-loss order to sell a stock?
A stop-loss order does not require an investor to pay a commission on the sale of stock.
A stop-loss order automatically sells stock if the stock is incurring a loss.
A stop-loss order assures a minimum profit on the sale of the stock.
A stop-loss order specifies to sell the stock when its market value reaches a preset price.
Brokerage Accounts
4
Mark starts a new job in another state and decides to buy a house rather than renting one. Which of the following is true if Mark buys the house?
He will have limited ability to make improvements to the house.
He will have to pay a large security deposit on the house.
He will have to pay a fixed monthly cost to his landlord.
He will have to pay city and state taxes on the house.
Renting a Home
5
Using your problem-solving skills, identify the financial alternative among the following that provides loans with a reasonable rate of interest.
Personal loans from the bank
Pawn shops
Title loans
Payday lenders
Consumer Loans
Stella buys stock in a pharmaceutical company. Which of the following is true in this case?
Stella and other shareholders are responsible for paying for any losses the firm may generate.
Stella receives the interest on her investment in the company in a series of predefined payments.
Stella is entitled to a proportional amount of the profits of the company
Stella will receive guaranteed income in the form of dividends. Introduction to Stocks
Tina needs a loan of $18,000 to buy a new car. She has a good credit score and earns $60,000 annually. Which type of personal loan allows Tina to repay the money through regular monthly payments over a fixed period?
Aleesha wants to ensure that she has emergency funds to last her for 6 months. She has monetary assets of $12,000 and monthly living expenses of $3,000. The formula for emergency fund ratio is as follows: Emergency Fund Ratio = Monetary Assets / Monthly Living Expenses
How much more will Aleesha need to save to cover her emergencies for 6 months?
$8,000
Aleesha already has sufficient funds to last her for 6 months. Emergency Funds
The market price of Golden Inc. stock is $15 per share. The formula for P/E ratio is as follows:
P/E ratio = Stock price per share / Earnings per share
If the stock earns $3 per share, then its P/E ratio is __________.
Kelvin has $12,000 in outstanding student loans. Which of the following criteria should Kelvin fulfill to be eligible for the Public Service Loan Forgiveness (PSLF) program?
He should have made 50 qualifying payments toward his loan repayment.
He should be married and have at least three children.
He should be employed full-time in a not-for-profit organization
He should be a volunteer in a nonprofit organization. Student Loans
11
Rohan decides to invest in bonds instead of stocks because he has heard that bonds are a lower risk investment. He uses the bond's credit rating to make his investment decisions. Which of the following is true about the risk Rohan faces with his decision?
The credit ratings of the bond-issuing companies will not change from one year to the next.
The bond issuer may not pay him back because it may go bankrupt or become insolvent.
The bonds' value is not affected by inflation because most bonds pay a fixed coupon rate over time.
If Rohan chooses bonds from a company with low credit ratings, he's almost certain to have a low default risk.
Introduction to Bonds
12
Alex wants to purchase a car. He begins to shop for an auto loan. What information does he need to have before he selects an auto loan?
He needs to determine the total amount he can afford to spend on the car
He needs to obtain an estimate of the insurance amount he will have to pay toward the car.
He needs to identify the car dealership he wants to buy the car from.
He needs to determine the make and model of the vehicle he is interested in buying.
Auto Loans
13
Which of the following statements is true of a money market savings account?
It offers lower returns than a savings account.
It allows withdrawals only in person at the bank.
It limits the number of withdrawals account holders can make each month.
It is generally purchased with one lump-sum dollar amount.
Savings Accounts
14
Which of the following statements is true of a value-oriented investor?
A value-oriented investor monitors the pattern of stocks in the market index and mirrors the investment.
A value-oriented investor relies on the investment decisions of other investors in the same mutual fund.
A value-oriented investor looks to invest in highly priced stocks.
A value-oriented investor looks to invest in undervalued stocks.
Miles needs to withdraw $4,500 from his Roth IRA to pay his medical bills. In which of the following scenarios is the money withdrawn from the Roth IRA considered a qualifying distribution for Miles?
Miles is 65 years old and has been investing in the Roth IRA for the last 10 years
Miles is disabled and withdraws his Roth IRA balance within 3 years of opening it.
Miles is 58 years old and withdraws only the principal portion from his Roth IRA.
Miles withdraws money from his Roth IRA to make a down payment for his second home.
Roth
In which of the following cases would prioritizing liquidity over returns be the most productive choice?
Anton, who is 33 years old, wants to begin investing for retirement.
Hanna needs to start an emergency fund for her household
Julio wants to double his initial investment to pay off his mortgage quickly.
Chloe wants to buy a large piece of land as an investment. Risk and Return
Dan is looking to invest his savings to obtain high returns. He has moderate to high risk tolerance and wants to invest his savings in an investment that has low marketability risk. Which of the following investment options is best suited for Dan?
He should invest in a house.
He should invest in stocks and bonds.
He should invest in a money market savings account.
He should invest in antiques and collectibles.