FIN 100 EXAM 1 QUESTIONS WITH
100% CORRECT ANSWERS
Which of the following may result from spending beyond your income? - Answer- More
borrowing.
What should you do to accumulate wealth? - Answer- Accumulate a surplus, begin
saving the surplus as early as possible, and keep your money working for you as long
as possible.
Which of the following refers to your income before any taxes or other expenses are
deducted from your paycheck? - Answer- Gross income.
Which of the following describes all sources of money obtained by individuals and
households? - Answer- Income.
The law of scarcity means that - Answer- your individual resources are limited and finite
and you have to make choices to reach your financial goals.
Which of the following is most clearly a personal financial strength? - Answer- A
willingness to save money on a regular basis.
Someone who feels that investing is too difficult to understand likely - Answer- has a
lower level of financial literacy.
*Why might some people who are nearing retirement feel less confident about their
financial future? - Answer- They have too much debt and they have not saved enough
over their lifetime.
Your ability to earn money over your working life is called - Answer- human capital
_______ connects you with people with whom you would not usually socialize. -
Answer- A formal network
Which of the following relationships accurately describes the role of financial risk taking
and wealth accumulation? - Answer- The greater the return required, the greater the risk
that must be taken.
, Financial risk tolerance refers to your - Answer- willingness to engage in a risk in which
an outcome is uncertain.
The federal government uses tax revenue to - Answer- build infrastructure, provide
social welfare, and pay for national defense.
OASDI and HI are part of which of the following U.S. tax systems - Answer- Federal
Insurance Contributions Act.
Which of the following strategies is most likely to increase your confidence about your
financial future? - Answer- Applying your financial knowledge and organizing your
finances to achieve your personal goals.
*Nigel believes that most "rich people" obtain their wealth either through hard work or by
investing wisely. Assuming Nigel adopts this same perspective as a guide to his own
spending and saving behavior, he is most likely to become - Answer- more
knowledgeable about the financial marketplace overtime and to increase his personal
wealth
"I want to retire with $1,000,000 in the bank" represents what element of a SMART
goal? - Answer- Specific
Which of the following is an example of an external motivation factor? - Answer-
Receiving a bonus.
Which of the following time orientations is most closely associated with a lack of goal
orientation, a general feeling of hopelessness, and general pessimism? - Answer- Past-
negative.
*Mary sees no reason to change if what she is doing has worked in the past. Given her
perspective, Mary may be exhibiting a(n) - Answer- status quo bias.
Which behavior economics bias can result in someone forgoing possible long-term
growth of assets because they want their investments to be safe? - Answer- Loss
aversion.
*The power of compound interest refers to - Answer- interest being reinvested and
earning additional interest.
*When comparing loan offers, you should use the - Answer- annual percentage rate.
Approximately how long will it take to double your money if the APY is 7.30%? -
Answer- 10 years
What is used when comparing savings rate offers? - Answer- Annual Percentage Yield.
100% CORRECT ANSWERS
Which of the following may result from spending beyond your income? - Answer- More
borrowing.
What should you do to accumulate wealth? - Answer- Accumulate a surplus, begin
saving the surplus as early as possible, and keep your money working for you as long
as possible.
Which of the following refers to your income before any taxes or other expenses are
deducted from your paycheck? - Answer- Gross income.
Which of the following describes all sources of money obtained by individuals and
households? - Answer- Income.
The law of scarcity means that - Answer- your individual resources are limited and finite
and you have to make choices to reach your financial goals.
Which of the following is most clearly a personal financial strength? - Answer- A
willingness to save money on a regular basis.
Someone who feels that investing is too difficult to understand likely - Answer- has a
lower level of financial literacy.
*Why might some people who are nearing retirement feel less confident about their
financial future? - Answer- They have too much debt and they have not saved enough
over their lifetime.
Your ability to earn money over your working life is called - Answer- human capital
_______ connects you with people with whom you would not usually socialize. -
Answer- A formal network
Which of the following relationships accurately describes the role of financial risk taking
and wealth accumulation? - Answer- The greater the return required, the greater the risk
that must be taken.
, Financial risk tolerance refers to your - Answer- willingness to engage in a risk in which
an outcome is uncertain.
The federal government uses tax revenue to - Answer- build infrastructure, provide
social welfare, and pay for national defense.
OASDI and HI are part of which of the following U.S. tax systems - Answer- Federal
Insurance Contributions Act.
Which of the following strategies is most likely to increase your confidence about your
financial future? - Answer- Applying your financial knowledge and organizing your
finances to achieve your personal goals.
*Nigel believes that most "rich people" obtain their wealth either through hard work or by
investing wisely. Assuming Nigel adopts this same perspective as a guide to his own
spending and saving behavior, he is most likely to become - Answer- more
knowledgeable about the financial marketplace overtime and to increase his personal
wealth
"I want to retire with $1,000,000 in the bank" represents what element of a SMART
goal? - Answer- Specific
Which of the following is an example of an external motivation factor? - Answer-
Receiving a bonus.
Which of the following time orientations is most closely associated with a lack of goal
orientation, a general feeling of hopelessness, and general pessimism? - Answer- Past-
negative.
*Mary sees no reason to change if what she is doing has worked in the past. Given her
perspective, Mary may be exhibiting a(n) - Answer- status quo bias.
Which behavior economics bias can result in someone forgoing possible long-term
growth of assets because they want their investments to be safe? - Answer- Loss
aversion.
*The power of compound interest refers to - Answer- interest being reinvested and
earning additional interest.
*When comparing loan offers, you should use the - Answer- annual percentage rate.
Approximately how long will it take to double your money if the APY is 7.30%? -
Answer- 10 years
What is used when comparing savings rate offers? - Answer- Annual Percentage Yield.
