FIN 101 Quiz 1

Which of the following occupations is likely to have the highest median salary?

Personal financial advisor.

Which of the following is most likely to reduce your social capital among those who may be likely to hire you for a job?

Posting pictures of yourself drinking at a bar.

Someone who strongly agrees with (a) the thought of taking risk is exciting, (b) high returns are more important than safety, and (c) making money in stocks and bonds is based on knowledge is most likely:

willing to take more financial risk.

Financial risk tolerance refers to your:

willingness to engage in a risk in which an outcome is uncertain.

All of the following influence your human capital, except: -your health. -your income. -your educational level. -your skill(s).

your income.

The "A" in SMART stands for:

Attainable

A person's time orientation can shape life outcomes. Which of the following is most closely associated with lifetime wealth accumulation?

Future goal.

Lifetime earnings and education are positively related. Select the ranking that represents the median lifetime earnings based on education achievement from lowest to highest: -High School Diploma, Associates Degree, Some College, Master's Degree. -Professional Degree, Bachelor's Degree, Associate's Degree, High School Diploma. -High School Diploma, Bachelor's Degree, Doctoral Degree, Professional Degree. -Bachelor's Degree, Professional Degree, Master's Degree, Doctoral Degree.

High School Diploma, Bachelor's Degree, Doctoral Degree, Professional Degree.

Which of the following elements influence your view of the financial world? I.Your risk tolerance II.How much you believe you control your financial future. III.Knowledge about personal finance topics

I, II, and III

Loraine is thinking about her future retirement goals and needs. She has 25 years until retirement. She needs to save quite a bit of money to reach her retirement goal. Unfortunately, Loraine's risk tolerance is low. Given these facts, what the best recommendation for Loraine?

Invest more aggressively knowing that she has time on her side to withstand any temporary setbacks with these riskier investments.

It is possible to increase your financial risk tolerance over time. What is the process of risk tolerance change?

Knowledge leads to confidence, which leads to experience, understanding and an increase in risk tolerance.

Kaylee has been dreaming of a grand vacation for several years. Last year, she started to save for this once-in-a-lifetime event. So far, she has saved $2,000 toward a goal of $25,000. Her plan is to travel in 6 years. What is Kaylee's goal time horizon?

Long-intermediate term.

Nicki is meeting with her financial planner. She is new to investing and does not have much experience in the markets. She recently took a risk-tolerance quiz and scored below average in terms of risk tolerance. Her financial planner is now recommending that she purchase shares in an aggressive mutual fund that invests in very risky small companies. The financial planner's argument is that Nicki needs to take risk to achieve decent returns. Do you agree with the financial planner?

No, because Nicki's risk tolerance does not match the mutual fund's risk profile.

Which of the following time orientations is most closely associated with a lack of goal orientation, a general feeling of hopelessness, and general pessimism?

Past-negative.

Why might some people who are nearing retirement feel less confident about their financial future?

They have too much debt and they have not saved enough over their lifetime.

Which of the following goals is the most clearly stated?

To fund a $3,500 vacation in San Diego in 9 months.

As people age, their human capital can decline due to changes in the marketplace that demand different skills and abilities. One way to boost human capital is to:

both enroll in a continuing education program and go back to school and learn a new skill.

Someone who feels that investing is too difficult to understand likely:

has a lower level of financial literacy.

All the following are pathways to wealth, except: -saving money on a regular basis. -keeping good records. -spending less than income earned. -minimizing insurance expenditures.

minimizing insurance expenditures.

The fact that nearly everyone would like to be wealthier rather than poorer refers to his or her risk:

preference.