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Personal Finance Chapter 11 Exam
Questions With Verified Answers
Which of the following is not a true statement? - answer✔Because investment goals deal with
the future, it is useless to make long-term goals
valid short-term investment goal is - answer✔Accumulating $3,000 in a savings account over the
next 12 months.
Which of the following steps should be completed before making your first investment? -
answer✔Work to balance your budget
Which of the following steps is NOT a factor to be considered before making your first
investment? - answer✔Save at least $10,000 to invest
All of the following statements are considered to be good advice for a potential investor in
performing a financial checkup except - answer✔Increase credit purchases and make installment
payments in order to increase cash available for investing.
A good rule of thumb is to limit installment payments to ____________ of your net (after-tax)
income. - answer✔20%
A _____________ is an employer-sponsored retirement account, and participating in one is one
of the easiest ways to begin an investment program. - answer✔401(k) account
If you invest $4,000 per year over the next 40 years for retirement, which of the following is
correct? - answer✔A high rate of return will give you the highest total dollar return.
Safe investments include all of the following except - answer✔Commodities
Which of the following would be considered speculative investments? - answer✔Precious metals
Speculative investments include all of the following except - answer✔Savings accounts
Which of the following would be considered a safe investment? - answer✔Savings accounts
Regarding older investors, which of the following holds true for most? - answer✔They choose
investments with less risk
, ©BRAINBARTER 2024/2025
Gwendolyn and Jack Francis are investors with no financial training or investment background.
Which approach will they likely take? - answer✔they will choose investments with less risk
The potential return on any investment should - answer✔be directly related to the risk the
investor assumes
Which of the following is not one of the four components of the risk factor to be considered
when evaluating investments? - answer✔Stock risk
When choosing an investment, you should consider risk. The four primary risk components are -
answer✔Inflation, interest rate, business failure, market.
Which of the following risks reduces your purchasing power? - answer✔Inflation risk
Which of the following risks associated with preferred stocks or government or corporate bonds
is a result of changes in rates in the economy? - answer✔Interest rate risk
Which of the following risks deals with the possibility that bad management, unsuccessful
products, or other factors will cause the business to be less profitable than originally anticipated?
- answer✔Business failure risk
Which of the following risks deals with fluctuations in the economy from a period of rapid
expansion followed by a period of recession? - answer✔Market risk
Inflation risk deals with - answer✔A reduction in purchasing power
Business failure can be due to - answer✔Bad management and/or unsuccessful products
Market risk is associated with fluctuations in the market due to - answer✔Economic conditions
such as rapid expansion and recession
All of the following can be factors that influence business failure risk except - answer✔All of the
above can affect business failure risk
business failure risk - answer✔causes the business to be less profitable than originally
anticipated
Timothy Calibe purchased common stock in XYZWidgets.com. To be a successful investor, he
should - answer✔Continue to evaluate his investment in XYZWidgets.com after the purchase.
If your primary investment objective is to receive investment income, which of the following
would NOT be an appropriate investment for you? - answer✔Agressive "Growth" funds
Which of the following describes a growth company? - answer✔Profits are reinvested in the
company for future growth.
Personal Finance Chapter 11 Exam
Questions With Verified Answers
Which of the following is not a true statement? - answer✔Because investment goals deal with
the future, it is useless to make long-term goals
valid short-term investment goal is - answer✔Accumulating $3,000 in a savings account over the
next 12 months.
Which of the following steps should be completed before making your first investment? -
answer✔Work to balance your budget
Which of the following steps is NOT a factor to be considered before making your first
investment? - answer✔Save at least $10,000 to invest
All of the following statements are considered to be good advice for a potential investor in
performing a financial checkup except - answer✔Increase credit purchases and make installment
payments in order to increase cash available for investing.
A good rule of thumb is to limit installment payments to ____________ of your net (after-tax)
income. - answer✔20%
A _____________ is an employer-sponsored retirement account, and participating in one is one
of the easiest ways to begin an investment program. - answer✔401(k) account
If you invest $4,000 per year over the next 40 years for retirement, which of the following is
correct? - answer✔A high rate of return will give you the highest total dollar return.
Safe investments include all of the following except - answer✔Commodities
Which of the following would be considered speculative investments? - answer✔Precious metals
Speculative investments include all of the following except - answer✔Savings accounts
Which of the following would be considered a safe investment? - answer✔Savings accounts
Regarding older investors, which of the following holds true for most? - answer✔They choose
investments with less risk
, ©BRAINBARTER 2024/2025
Gwendolyn and Jack Francis are investors with no financial training or investment background.
Which approach will they likely take? - answer✔they will choose investments with less risk
The potential return on any investment should - answer✔be directly related to the risk the
investor assumes
Which of the following is not one of the four components of the risk factor to be considered
when evaluating investments? - answer✔Stock risk
When choosing an investment, you should consider risk. The four primary risk components are -
answer✔Inflation, interest rate, business failure, market.
Which of the following risks reduces your purchasing power? - answer✔Inflation risk
Which of the following risks associated with preferred stocks or government or corporate bonds
is a result of changes in rates in the economy? - answer✔Interest rate risk
Which of the following risks deals with the possibility that bad management, unsuccessful
products, or other factors will cause the business to be less profitable than originally anticipated?
- answer✔Business failure risk
Which of the following risks deals with fluctuations in the economy from a period of rapid
expansion followed by a period of recession? - answer✔Market risk
Inflation risk deals with - answer✔A reduction in purchasing power
Business failure can be due to - answer✔Bad management and/or unsuccessful products
Market risk is associated with fluctuations in the market due to - answer✔Economic conditions
such as rapid expansion and recession
All of the following can be factors that influence business failure risk except - answer✔All of the
above can affect business failure risk
business failure risk - answer✔causes the business to be less profitable than originally
anticipated
Timothy Calibe purchased common stock in XYZWidgets.com. To be a successful investor, he
should - answer✔Continue to evaluate his investment in XYZWidgets.com after the purchase.
If your primary investment objective is to receive investment income, which of the following
would NOT be an appropriate investment for you? - answer✔Agressive "Growth" funds
Which of the following describes a growth company? - answer✔Profits are reinvested in the
company for future growth.
