Personal Finance Quiz Answer – Get the Correct Answer

Put your knowledge of finance to the test with this quiz in multiple-choice format! Take the time to read each question thoroughly, and then get the correct answer below it.

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Personal Finance Quiz Answer:

When deciding which of the two items to purchase, one should always:

• Choose the item that costs less.
• Choose the item with the greatest benefits.
• Choose an item after comparing the costs and benefits of both items.
• Don’t know.

Answer: Choose an item after comparing the costs and benefits of both items.

Pat and Chris have identical interest-bearing bank accounts that pay them $15 interest per year. Pat leaves the $15 in the account each year, while Chris takes the $15 home to a jar and never spends any of it. After five years, who has more money?

• Pat
• Chris
• They both have the same amount.
• Don’t know.

Answer: Pat. (Because Pat’s interest compounds while Chris’s does not.)

Which of the following is the primary function of insurance?

• Making risk disappear.
• Pooling and sharing risk among the insured.
• Making someone else pay for an accident or loss.
• Don’t know.

Answer: Pooling and sharing risk among the insured.

Which of the following has historically had the highest rate of return over long periods of time?

• Bank savings accounts.
• Bonds
• Stocks
• Don’t know.

Answer: Stocks.

Which of the following would be expected to hold its value best during a time of inflation?

• A certificate of deposit.
• A corporate bond.
• A house.
• Don’t know.

Answer: A House

What is a budget?

• A spending plan showing sources and uses of income.
• A limit on spending that cannot be exceeded.
• The amount of money that a credit card will let you charge without penalties.
• Don’t know.

Answer: A spending plan showing sources and uses of income.

Which of the following would hurt your credit score?

• Closing a long-held credit card account.
• Paying off student loan debt.
• Getting married.
• Don’t know.

Answer: Closing a long-held credit card account.

Which of the following loans is most likely to be classified as “predatory”?

• A high interest rate on a store credit card.
• A cash-back home loan with a higher interest rate taken out after a high-pressure sales pitch.
• A variable interest rate home mortgage that could rise 5 percentage points with inflation.
• Don’t know.

Answer: A cash-back home loan with a higher interest rate taken out after a high-pressure sales pitch.

Which of the following strategies has shown the highest return over a period of years?

• Moving frequently in and out of the stock market to avoid downturns and exploit upturns.
• Avoiding stocks entirely by keeping money in federally insured bank accounts.
• Buying and holding onto a varied set of stocks, ignoring short-run fluctuations.
• Don’t know.

Answer: Buying and holding onto a varied set of stocks, ignoring short-run fluctuations.

According to car experts, which of the following ordinarily provides the best value in automobile ownership?

• Always buying a new car and driving it only a few years.
• Buying a relatively new used car and driving it for a long time.
• Buying the cheapest used car available.
• Don’t know.

Answer: Buying a relatively new used car and driving it for a long time.