Let's Prepare For Finance Exam
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Questions and Answers
- 1.
Credit Cards allow you to ...
- A.
Spend only the amount in your account
- B.
Borrow money for a short term
- C.
Protect your checks form thieves
- D.
Transfer money between accounts online
Correct Answer
B. Borrow money for a short termExplanation
Credit cards allow you to borrow money for a short term. Unlike debit cards, which deduct money directly from your account, credit cards allow you to make purchases on credit and pay back the borrowed amount at a later date. This borrowing period is usually short term, typically within a billing cycle, after which you are required to repay the borrowed amount along with any applicable interest charges.Rate this question:
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- 2.
The most commonly used payment service is an....
- A.
Savings account
- B.
Certificate of Deposit
- C.
Checking Account
- D.
Mutual Fund
Correct Answer
C. Checking AccountExplanation
A checking account is the most commonly used payment service because it allows individuals to easily deposit and withdraw money for everyday transactions. It provides a convenient way to make payments through checks, debit cards, and online transfers. Unlike a savings account or certificate of deposit, a checking account offers frequent access to funds and is specifically designed for day-to-day financial transactions. While a mutual fund is an investment vehicle, it is not primarily used as a payment service like a checking account.Rate this question:
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- 3.
The rate of return on an investment is greatest when the interest is compounded....
- A.
Daily
- B.
Weekly
- C.
Monthly
- D.
Yearly
Correct Answer
A. DailyExplanation
The rate of return on an investment is greatest when the interest is compounded daily because compounding daily allows for the accumulation of interest on a more frequent basis. This means that the interest earned is added to the principal more frequently, leading to a higher overall return. In contrast, compounding on a weekly, monthly, or yearly basis would result in less frequent interest accumulation and therefore a lower rate of return.Rate this question:
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- 4.
When writing a check, include all of the following EXCEPT
- A.
The Current date
- B.
An endorsement on the back
- C.
Your signature on the front
- D.
The name of the payee
Correct Answer
B. An endorsement on the backExplanation
When writing a check, it is important to include the current date, your signature on the front, and the name of the payee. However, an endorsement on the back is not necessary when writing a check. Endorsement typically refers to the signature of the payee on the back of the check, which is only required when the payee wants to transfer the funds to someone else. Therefore, including an endorsement on the back is not required when writing a check.Rate this question:
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- 5.
You give up liquidity when you....
- A.
Buy a certificate of deposit
- B.
Use an ATM
- C.
Open a savings account
- D.
Recharge a stored value card
Correct Answer
A. Buy a certificate of depositExplanation
When you buy a certificate of deposit (CD), you give up liquidity because CDs have a fixed term and withdrawal before the maturity date usually results in a penalty. This means that your money is tied up for a specific period of time, and you cannot access it easily or without consequences.Rate this question:
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- 6.
If a check is stolen, you might ask the bank for....
- A.
Overdraft protection
- B.
Copies of cancelled checks
- C.
A stop-payment order
- D.
A bank reconciliation form
Correct Answer
C. A stop-payment orderExplanation
If a check is stolen, asking the bank for a stop-payment order would be the most appropriate action. A stop-payment order is a request made to the bank to cancel the payment of a specific check. This prevents the stolen check from being cashed or deposited by the thief. By placing a stop-payment order, the bank is alerted to the situation and takes necessary measures to ensure that the stolen check is not honored. This helps protect the account holder from financial loss and prevents unauthorized transactions.Rate this question:
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- 7.
Using a debit card to pay for a meal in a restaurant is called....
- A.
A point-of-sale transaction
- B.
A trade-off
- C.
A Direct Deposit
- D.
An online transaction
Correct Answer
A. A point-of-sale transactionExplanation
Using a debit card to pay for a meal in a restaurant is referred to as a point-of-sale transaction. This term is commonly used to describe the process of making a payment directly at the location where the goods or services are being purchased, such as a restaurant. It involves the transfer of funds from the customer's bank account to the merchant's account in real-time, typically using electronic payment systems.Rate this question:
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- 8.
A possible drawback to using an ATM for your daily cash needs is....
- A.
Uncertaintly about how much you will need
- B.
The service fee for its use
- C.
Running up a large bill
- D.
Interest charges
Correct Answer
A. Uncertaintly about how much you will needExplanation
A possible drawback to using an ATM for your daily cash needs is uncertainty about how much you will need. Unlike withdrawing a specific amount from a bank teller, using an ATM may result in withdrawing more or less cash than required. This uncertainty can lead to either carrying excess cash or having to make multiple withdrawals, which may be inconvenient or risky.Rate this question:
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- 9.
An investor can trade a bond for shares of the corporate stock if the bonds is a
- A.
Mortgage bond
- B.
Debenture
- C.
Convertible bond
- D.
Subordinated Debenture
Correct Answer
C. Convertible bondExplanation
A convertible bond is a type of bond that can be converted into shares of the corporate stock at a predetermined conversion ratio. This means that the bondholder has the option to exchange their bond for a specified number of shares of the company's stock. Therefore, if an investor holds a convertible bond, they have the ability to trade that bond for shares of the corporate stock.Rate this question:
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- 10.
The investment that offers the highest rate of return is...
- A.
An agency bond
- B.
A treasury note
- C.
An EE savings bond
- D.
A treasury bond
Correct Answer
A. An agency bondExplanation
An agency bond is the correct answer because it typically offers a higher rate of return compared to other investment options listed. Agency bonds are issued by government-sponsored entities or agencies, such as Fannie Mae or Freddie Mac, and they are backed by the full faith and credit of the U.S. government. This backing provides a level of security for investors, allowing agencies to offer higher interest rates on their bonds. Treasury notes and bonds are also backed by the U.S. government but may offer slightly lower rates of return. EE savings bonds, on the other hand, are issued by the U.S. Treasury and have lower interest rates compared to agency bonds.Rate this question:
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- 11.
Which of these Standard & Poor ratings designates the riskiest investment?
- A.
A
- B.
B
- C.
AA
- D.
BBB
Correct Answer
B. BExplanation
The correct answer is B. The B rating from Standard & Poor's designates the riskiest investment. Standard & Poor's uses a letter grading system to assess the creditworthiness and risk of investments. The B rating indicates a higher level of risk compared to other ratings such as A or AA. This suggests that investments with a B rating have a higher likelihood of default or not being able to meet their financial obligations.Rate this question:
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- 12.
Only a fixed number of shares are issued for....
- A.
A no-load fund
- B.
A load fund
- C.
A closed-end fund
- D.
An open-end fund
Correct Answer
C. A closed-end fundExplanation
A closed-end fund is a type of investment fund where a fixed number of shares are issued. Unlike open-end funds, which continuously issue and redeem shares based on investor demand, closed-end funds have a fixed number of shares that are traded on the stock exchange. This means that the number of shares available for purchase or sale is limited, and investors can only buy or sell existing shares on the secondary market.Rate this question:
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- 13.
Diversification is a key reason for buying a
- A.
Corporate bond
- B.
Municipal bond
- C.
Treasury note
- D.
Mutual fund
Correct Answer
C. Treasury noteExplanation
Investors buy Treasury notes as a means of diversification. Treasury notes are considered safe investments because they are backed by the U.S. government. By investing in Treasury notes, investors can spread their risk across different asset classes and reduce the impact of any one investment performing poorly. This diversification helps to protect their overall investment portfolio and potentially generate more stable returns.Rate this question:
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- 14.
To reach maturity, treasury bills take between
- A.
13 to 52 weeks
- B.
1 to 10 years
- C.
6 months to 30 years
- D.
10 to 30 years
Correct Answer
A. 13 to 52 weeksExplanation
Treasury bills are short-term debt securities issued by the government to finance its short-term borrowing needs. They are typically issued with maturities ranging from 13 to 52 weeks, making them a popular choice for investors looking for short-term investments. This allows the government to raise funds quickly and efficiently, while investors can earn a fixed return over a shorter time period compared to other longer-term investments. Therefore, the correct answer is 13 to 52 weeks.Rate this question:
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- 15.
Municipal bonds are offered by all the following levels of government EXCEPT
- A.
Federal
- B.
State
- C.
County
- D.
City
Correct Answer
A. FederalExplanation
Municipal bonds are offered by all levels of government except for the federal government. Municipal bonds are debt securities issued by state and local governments, including counties and cities, to finance public projects such as infrastructure development, schools, and hospitals. The federal government, on the other hand, issues Treasury bonds and other types of federal debt securities to finance its own operations and projects. Therefore, federal government is not included in the list of levels of government that offer municipal bonds.Rate this question:
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- 16.
Standard and Poor's rating for an investment-grade bond is
- A.
B
- B.
BB
- C.
BBB
- D.
C
Correct Answer
C. BBBExplanation
The correct answer is BBB, which is a rating given by Standard and Poor's for an investment-grade bond. This rating indicates that the bond has a moderate level of risk and is considered to have a good credit quality. It suggests that the issuer of the bond has a relatively low risk of defaulting on their payments. This rating is one step above BB, indicating a higher level of creditworthiness.Rate this question:
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- 17.
Only the bond owner can collect interest from a
- A.
Registered bond
- B.
Registered coupon bond
- C.
Bearer bond
- D.
Zero-coupon bond
Correct Answer
B. Registered coupon bondExplanation
A registered coupon bond is a type of bond where the bondholder's information is recorded with the issuer. This means that only the registered bond owner, whose details are on record, can collect the interest payments from the bond. This provides security and ensures that the rightful owner receives the interest income. In contrast, bearer bonds can be transferred from one person to another, allowing anyone who holds the physical bond to collect the interest. Zero-coupon bonds do not pay periodic interest, while registered bonds without coupons may not pay any interest at all.Rate this question:
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- 18.
Investors pay penalty fees if they fail to make regular purchases of shares when ivesting in a mutual fund under a
- A.
Regular account transaction
- B.
Voluntary savings plan
- C.
Contactual savings plan
- D.
Reinvestment plan
Correct Answer
C. Contactual savings planExplanation
In a contractual savings plan, investors agree to make regular purchases of shares over a specified period of time. If they fail to make these regular purchases, they may be subject to penalty fees. This type of plan is typically used for long-term savings goals and encourages investors to consistently contribute to their mutual fund investment.Rate this question:
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- 19.
A lender may ask a buyer to deposit money in an escrow account for paying
- A.
Property taxes
- B.
Closing costs
- C.
Loan interest
- D.
The principal
Correct Answer
A. Property taxesExplanation
When a lender asks a buyer to deposit money in an escrow account for paying property taxes, it means that the lender wants to ensure that the property taxes are paid on time. By requiring the buyer to deposit money into an escrow account, the lender can use those funds to pay the property taxes when they become due. This helps protect the lender's interest in the property and ensures that the property taxes are paid in a timely manner.Rate this question:
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- 20.
The most popular type of housing in the United States is
- A.
Single family homes
- B.
Multiunit homes
- C.
Condominiums
- D.
Mobile homes
Correct Answer
A. Single family homesExplanation
Single family homes are the most popular type of housing in the United States because they offer privacy, space, and a sense of ownership. They are typically preferred by families who desire a yard, more rooms, and the ability to customize their living space. Single family homes also provide a greater level of independence compared to multiunit homes or condominiums, where residents may have to share walls or common spaces. Mobile homes are less popular due to their transient nature and limited appreciation value.Rate this question:
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- 21.
In the first years of a mortgage, most of the monthly payment goes toward paying off the
- A.
Points
- B.
Property taxes
- C.
Principal
- D.
Interest
Correct Answer
D. InterestExplanation
In the first years of a mortgage, most of the monthly payment goes toward paying off the interest. This is because the interest is calculated based on the outstanding loan balance, which is highest at the beginning of the mortgage term. As the borrower makes monthly payments, a larger portion of the payment is allocated towards interest payments, gradually reducing the outstanding balance. Over time, as the principal balance decreases, a larger portion of the monthly payment will go towards paying off the principal.Rate this question:
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- 22.
A disadvantage of renting is
- A.
More responsibilities
- B.
High initial costs
- C.
Restricted lifestyle
- D.
Eligibility for tax deductions
Correct Answer
A. More responsibilitiesExplanation
Renting typically comes with more responsibilities compared to other housing options such as owning a home. As a renter, you may have to take care of maintenance and repairs, which can be time-consuming and costly. Additionally, you may have to follow certain rules and regulations set by the landlord or property management, limiting your freedom to make changes or personalize the living space. These added responsibilities can be considered a disadvantage of renting.Rate this question:
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- 23.
Your biggest monthly expense as a tenant is the
- A.
Rent
- B.
Security deposit
- C.
Utilities
- D.
Renter's insurance
Correct Answer
C. UtilitiesExplanation
The correct answer is utilities. As a tenant, your biggest monthly expense is likely to be the cost of utilities such as electricity, water, and gas. These expenses can vary based on your usage and the rates charged by the utility providers. Rent is typically a fixed monthly expense, while the security deposit is a one-time payment made at the beginning of the lease. Renter's insurance is also an important expense but is usually lower in cost compared to utilities. Therefore, utilities are likely to be the largest recurring expense for a tenant.Rate this question:
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- 24.
Generally mortgage insurance is required when the buyers' down payment is
- A.
100%
- B.
20%
- C.
10%
- D.
25%
Correct Answer
C. 10%Explanation
Mortgage insurance is typically required when the buyers' down payment is less than 20% of the purchase price. This is because a down payment of less than 20% represents a higher risk for the lender, as the buyer has less equity in the property. Therefore, the lender requires mortgage insurance to protect themselves in case the buyer defaults on the loan. In this case, the correct answer is 10%, indicating that mortgage insurance would be required if the down payment is less than 10%.Rate this question:
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- 25.
The portion of the purchase price that a buyer pays the seller when signing a purcahse agreement is called the
- A.
Earnest money
- B.
Escrow
- C.
Application fee
- D.
Down payment
Correct Answer
D. Down paymentExplanation
A down payment is the portion of the purchase price that a buyer pays the seller when signing a purchase agreement. It is a form of upfront payment made by the buyer to show their commitment and seriousness in purchasing the property. The down payment is typically a percentage of the total purchase price and is deducted from the overall amount that the buyer will need to finance through a mortgage or other means. It helps reduce the loan amount and demonstrates the buyer's financial capability to lenders.Rate this question:
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- 26.
What might a buyer do to get a low interest rate?
- A.
Buy mortgage insurance
- B.
Pay points
- C.
Pay an application fee
- D.
Amortize
Correct Answer
B. Pay pointsExplanation
To get a low interest rate, a buyer can choose to pay points. Points are upfront fees paid to the lender at closing in exchange for a lower interest rate. Each point typically costs 1% of the total loan amount and can reduce the interest rate by a certain percentage. By paying points, the buyer effectively reduces their interest rate, resulting in lower monthly mortgage payments over the life of the loan.Rate this question:
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- 27.
A bank pays the full amount of the mortgage to
- A.
The buyer
- B.
A savings and loan
- C.
The seller
- D.
An escrow account
Correct Answer
C. The sellerExplanation
The correct answer is "the seller". In a mortgage transaction, the bank pays the full amount of the mortgage directly to the seller of the property. This is because the seller is the one who owns the property and is selling it to the buyer. The bank acts as the intermediary, providing the funds to facilitate the purchase. The buyer then becomes responsible for repaying the mortgage to the bank over a period of time.Rate this question:
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- 28.
The listing price is the amount that the
- A.
Owner asks for the house
- B.
Buyer offers for the house
- C.
Buyer accepts for the house
- D.
Buyer borrows to finance the house
Correct Answer
A. Owner asks for the houseExplanation
The correct answer is "owner asks for the house". The listing price refers to the initial amount set by the owner of the house as the asking price. This is the price at which the owner is willing to sell the house, and potential buyers can negotiate from this starting point.Rate this question:
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- 29.
The central banking organization of the United States is called the
- A.
Bank of America
- B.
United States Reserve Bank
- C.
Federal Bank Reserve
- D.
Federal Reserve System
Correct Answer
D. Federal Reserve SystemExplanation
The correct answer is the Federal Reserve System. The Federal Reserve System is the central banking organization of the United States. It was established in 1913 and is responsible for conducting monetary policy, supervising and regulating banks, and providing financial services to depository institutions. The Federal Reserve System plays a crucial role in maintaining the stability and integrity of the U.S. financial system.Rate this question:
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- 30.
A series of equal regular deposits is called
- A.
Serial deposits
- B.
An annuity
- C.
A personal financial plan
- D.
A paycheck
Correct Answer
B. An annuityExplanation
An annuity refers to a series of equal regular deposits made over a specific period of time. This financial arrangement allows individuals to save or invest money on a consistent basis, typically for retirement purposes. An annuity provides a steady stream of income in the future, often in the form of regular payments, which can help individuals achieve their long-term financial goals.Rate this question:
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- 31.
The way in which people make, distribute, and use their goods and services is called
- A.
Opportunity cost
- B.
Short term goals
- C.
Economics
- D.
Wealth watch
Correct Answer
C. EconomicsExplanation
Economics refers to the study of how individuals, businesses, and societies make choices regarding the allocation of limited resources to fulfill their unlimited wants and needs. It encompasses the production, distribution, and consumption of goods and services, as well as the factors influencing these decisions. Therefore, economics is the appropriate term to describe the way in which people make, distribute, and use their goods and services.Rate this question:
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- 32.
The amount of goods and services available for sale is called
- A.
Demand
- B.
Reserve
- C.
Supply
- D.
Economy
Correct Answer
C. SupplyExplanation
The correct answer is supply. Supply refers to the quantity of goods and services that producers are willing to offer for sale at a given price and time. It represents the availability of products in the market. The concept of supply is crucial in understanding the dynamics of the economy and how it impacts prices and consumer demand.Rate this question:
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- 33.
Inflation refers to
- A.
A balloon payment
- B.
A general rise in prices of goods and services
- C.
The rise in the price of stock
- D.
The cost of intangible goods
Correct Answer
B. A general rise in prices of goods and servicesExplanation
Inflation refers to a general rise in prices of goods and services. This means that over time, the overall cost of goods and services increases, leading to a decrease in the purchasing power of money. Inflation can be caused by various factors such as increased demand, higher production costs, or changes in government policies. It is an important economic indicator that affects individuals, businesses, and the overall economy.Rate this question:
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- 34.
An example of a long term liability
- A.
A car loan
- B.
Taxes
- C.
Insurance
- D.
Medical bills
Correct Answer
A. A car loanExplanation
A car loan is an example of a long-term liability because it represents a financial obligation that extends beyond the current accounting period. Unlike taxes, insurance, and medical bills which are typically short-term liabilities, a car loan involves a contractual agreement to make regular payments over an extended period of time, usually several years. Therefore, it qualifies as a long-term liability on the balance sheet of an individual or a company.Rate this question:
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- 35.
A disadvantage of using a safe deposit box for keeping financial documents is that it
- A.
Fails to protect documents from fire
- B.
Takes too much space in your home
- C.
Can cost $100 a year to rent
- D.
Cannot store canceled checks
Correct Answer
C. Can cost $100 a year to rentExplanation
A disadvantage of using a safe deposit box for keeping financial documents is that it can cost $100 a year to rent. This means that there is an ongoing expense associated with using a safe deposit box, which may not be feasible for everyone. It is important to consider the cost factor when deciding whether to use a safe deposit box for storing financial documents.Rate this question:
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- 36.
One use of discretionary funds is spending on
- A.
Groceries
- B.
Transportation
- C.
Videos
- D.
Medication
Correct Answer
C. VideosExplanation
Discretionary funds refer to money that is available to be spent at one's own discretion. In this context, the correct answer is "videos" because it is an optional expense that can be chosen to be purchased with discretionary funds. Groceries, transportation, and medication are essential needs that usually come under necessary expenses rather than discretionary ones.Rate this question:
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- 37.
Your net worth goes up when you
- A.
Spend more than you earn
- B.
Pay off previous debts
- C.
Borrow money to pay a deficit
- D.
Withdraw money from savings
Correct Answer
B. Pay off previous debtsExplanation
Paying off previous debts increases your net worth because it reduces your liabilities. When you have fewer debts, you have more assets relative to your liabilities, resulting in a higher net worth. This is because your net worth is calculated by subtracting your liabilities from your assets. Therefore, paying off previous debts is a positive financial action that can improve your overall financial health and increase your net worth.Rate this question:
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- 38.
The first step in planning a budget is
- A.
Estimating income
- B.
Setting financial goals
- C.
Listing fixed expenses
- D.
Budgeting for savings
Correct Answer
B. Setting financial goalsExplanation
Setting financial goals is the first step in planning a budget because it helps individuals determine their priorities and what they want to achieve financially. By setting clear goals, such as saving for a down payment on a house or paying off debt, individuals can then work backwards to determine how much income they need, what fixed expenses they have, and how much they can allocate towards savings. Setting financial goals provides a roadmap for budgeting and ensures that individuals are aligning their spending and saving habits with their long-term objectives.Rate this question:
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- 39.
An example of a fixed expense is
- A.
Cable tv bills
- B.
Electric bills
- C.
Gas bills
- D.
Water bills
Correct Answer
A. Cable tv billsExplanation
A fixed expense is a recurring cost that remains constant and does not fluctuate. Cable TV bills are an example of a fixed expense because they are typically billed at a fixed rate each month. Unlike variable expenses such as electric bills, gas bills, and water bills, which can vary depending on usage, cable TV bills remain the same regardless of how much cable is watched. Therefore, cable TV bills can be considered a fixed expense.Rate this question:
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- 40.
After a corporation fails, who has first rights to its remaining assets?
- A.
Corporate bond holders
- B.
Mutual fund investors
- C.
Common stockholders
- D.
Preferred stockholders
Correct Answer
D. Preferred stockholdersExplanation
Preferred stockholders have first rights to a corporation's remaining assets after it fails. Preferred stock represents ownership in a company and gives shareholders a higher claim on assets and earnings compared to common stockholders. In the event of bankruptcy or liquidation, preferred stockholders are entitled to receive their investment back before common stockholders. This is because preferred stock is considered a hybrid security, combining features of both debt and equity, and is typically issued with a fixed dividend rate.Rate this question:
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- 41.
In an investment program "pyramid", investing in baseball cards would be a possible investment for,
- A.
Level 1
- B.
Level 2
- C.
Level 3
- D.
Level 4
Correct Answer
D. Level 4Explanation
In a pyramid investment program, the higher levels typically involve higher risk and potential returns. Level 4 is the highest level in this program, indicating that it is the riskiest and potentially most profitable level. Therefore, investing in baseball cards, which can have high value and returns, would be a possible investment for Level 4.Rate this question:
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- 42.
Which investment is the safest source of income?
- A.
U.S treasury bills
- B.
Corporate bonds
- C.
Precious metals
- D.
Collectibles
Correct Answer
A. U.S treasury billsExplanation
U.S treasury bills are considered the safest source of income among the given options. This is because they are backed by the U.S government, which is considered to have a very low risk of defaulting on its debt. Treasury bills are short-term debt instruments that are issued by the U.S Department of the Treasury to finance the government's operations and pay off its debts. They are highly liquid and have a fixed maturity date, making them a reliable and secure investment option for individuals seeking a safe source of income.Rate this question:
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- 43.
A major goal when investing a real estate is to
- A.
Earn interest
- B.
Recieve dividends
- C.
Have liquid assets
- D.
Sell at a profit
Correct Answer
D. Sell at a profitExplanation
When investing in real estate, the ultimate goal is typically to sell the property at a profit. This means that the investor aims to purchase the property at a lower price and sell it at a higher price in the future, making a profit from the appreciation in value. This is a common objective for real estate investors as it allows them to maximize their return on investment and generate substantial profits.Rate this question:
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- 44.
A person risks losing most or all of his or her money in
- A.
A savings account
- B.
An elective savings program
- C.
A speculative investment
- D.
A conservative investment
Correct Answer
C. A speculative investmentExplanation
A speculative investment carries a high level of risk and uncertainty. It involves investing in assets or ventures that have the potential for significant gains but also a high chance of loss. Unlike a savings account or a conservative investment, which typically offer lower returns but are considered safer, a speculative investment involves taking a gamble with one's money. Therefore, there is a greater likelihood of losing most or all of the invested funds in a speculative investment compared to the other options provided.Rate this question:
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- 45.
Of the following investments, the one with the most predictable income is
- A.
Gold
- B.
Commodities
- C.
Real estate
- D.
U.S savings bonds
Correct Answer
D. U.S savings bondsExplanation
U.S savings bonds are considered the investment with the most predictable income. This is because they are backed by the U.S government, making them low risk. The interest rate on savings bonds is fixed and guaranteed, providing a stable and consistent income. In contrast, gold and commodities can be highly volatile, with their prices fluctuating based on market conditions. Real estate income can vary depending on factors such as rental demand and property value appreciation. Therefore, U.S savings bonds offer a more reliable and predictable income compared to the other investment options.Rate this question:
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- 46.
"Growth" companies typically reinvest their profits rather than
- A.
Pay dividends
- B.
Expand operations
- C.
Conduct research
- D.
Pay Mr. Rojeski
Correct Answer
A. Pay dividendsExplanation
"Growth" companies focus on expanding their operations and investing in research and development to fuel their growth. Instead of distributing their profits to shareholders as dividends, they reinvest the earnings back into the company to fund future growth opportunities. This strategy allows the company to allocate more resources towards innovation, acquisitions, and other initiatives that can help drive long-term growth and increase shareholder value.Rate this question:
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- 47.
Short term capital gains are
- A.
Not taxed
- B.
Taxed as regular income
- C.
Tax-exempt
- D.
Tax-deffered
Correct Answer
B. Taxed as regular incomeExplanation
Short term capital gains are taxed as regular income because they are profits made from the sale of an asset that has been held for less than a year. These gains are treated as ordinary income and are subject to the individual's applicable income tax rate. Unlike long term capital gains, which may qualify for lower tax rates, short term gains do not receive any special tax treatment and are taxed at the same rate as other forms of income.Rate this question:
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- 48.
Durable gooods are purchases that made and used up quickly
- A.
T
- B.
F
Correct Answer
B. FExplanation
Durable goods are not purchases that are made and used up quickly. Instead, they are goods that are intended to last for a significant period of time, such as appliances, furniture, or vehicles. These items are typically more expensive and are expected to provide long-term value and use to the consumer.Rate this question:
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- 49.
Your financial goals should be realistic and specific
- A.
T
- B.
F
Correct Answer
A. TExplanation
Setting realistic and specific financial goals is important because it allows you to have a clear vision of what you want to achieve and helps you create a plan to reach those goals. Realistic goals are attainable and can be accomplished within a reasonable timeframe, while specific goals provide clarity and direction. By setting realistic and specific financial goals, you are more likely to stay motivated, make better financial decisions, and track your progress effectively.Rate this question:
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- 50.
The easiest way to accomplish goals is to plan for them ahead of time
- A.
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- B.
F
Correct Answer
A. TExplanation
Planning ahead of time allows individuals to set clear objectives, break them down into smaller tasks, and allocate resources effectively. By doing so, they can identify potential obstacles and develop strategies to overcome them, increasing their chances of achieving their goals. Planning also helps individuals stay organized, focused, and motivated, as they have a clear roadmap to follow. Therefore, the statement that the easiest way to accomplish goals is to plan for them ahead of time is true.Rate this question:
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Jan 22, 2024Quiz Edited by
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Jun 07, 2009Quiz Created by
Sarizvi
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