Comprehensive Knowledge Check Comprehensive Knowledge Check 1. According to the Rule of 72, if an investor earned 12% per year, their money would double every ____ years?* A. 6 B. 7.2 C. Unable to determine without the tax rate D. Entrepreneurship 2. Which of the following would be considered a need rather than a want:* A. Body art B. Reliable transportation C. Dining out D. Cable TV package 3. A personal balance sheet does not include:* A. Liabilities B. Net worth C. Human capital D. Assets 4. ____________ occurs when the general level of prices for goods and services is rising and purchasing power of currency is falling.:* A. Creative destruction B. Deflation C. Disintermediation D. Inflation 5. All of the following can potentially raise your credit score except:* A. Open new credit accounts regularly B. Keep credit card balances low C. Pay your bills on time D. Dispute errors or questionable negative reporting 6. It would generally be unwise for younger retirement plan participants to invest entirely in:* A. Money market funds B. Target date funds C. Growth funds D. Age-based funds 7. The following are indications an investment may be a scam or, at the very least, requires heightened due diligence except:* A. Quoted returns are abnormally high and consistent B. The investment is complex or too difficult to explain to someone else C. The person recommending the investment is not willing to explain the investment strategy to your accountant or attorney D. The person recommending the investment cannot guarantee the returns 8. All of the following are reasons to go to college except:* A. The school advisor guarantees you’ll qualify for a student loan B. Increased pay and benefits from intended career C. Positive net present value of future career income D. Career satisfaction 9. All of the following are associated with Marxist ideology except:* A. No property ownership/property rights B. Central planning C. Totalitarian government D. Entrepreneurship 10. Doing good versus feeling good is an amalgam of all of the following concepts except:* A. The Rule of 72 B. Opportunity cost C. Pragmatism D. Division of labor 11. The acronym ARM stands for:* A. Adjustable regulating margin B. Adjustable rate mortgage C. Adaptive rate modification D. Abbreviated rate modification 12. Risk management techniques include all of the following except:* A. Risk transfer B. Risk intolerance C. Risk avoidance D. Risk retention/self-insurance 13. The most cost-effective way for young couples to mitigate the risk of premature death is typically accomplished via:* A. A universal life annuity B. Comprehensive life umbrella plan C. A flexible premium HAS D. Term life insurance 14. A government program intended to subsidize retirees, which requires both employees and employers to contribute equally is called:* A. Medicare B. Social Security C. Medicaid D. Medigap 15. A cash flow statement is measured:* A. As a snapshot in time B. Over a period of time C. Daily D. On the 15th of each month 16. The term business cycle is synonymous with the term _________________:* A. Growth cycle B. Contractionary cycle C. Economic cycle D. Bull market cycle 17. Which of the following is a common ARM reference rate:* A. London Interbank Offer Rate/LIBOR B. Federal funds rate C. Discount rate D. Federal Bank 1-year CD rate 18. Social Security benefits should never be deferred beyond the age of:* A. 62 B. 65 C. Full retirement age D. 70 19. Over the long run, investors would expect a higher rate of return from which asset class:* A. Long-term government bonds B. Stocks C. Money market funds D. Treasury bills 20. Which of the following types of investments tends to be the most complex:* A. Stocks B. Treasury bills C. Long term government bonds D. Variable annuities 21. Which of the following is a U.S. stock market exchange:* A. NYSE B. Pink sheets network C. Over the counter market D. The primary market 22. The most important metric that affects stock prices is:* A. Market share B. Number of shares outstanding C. Stock splits D. Earnings 23. The difference in yield between a Treasury note and a corporate bond is referred to as the:* A. Credit spread B. Yield curve C. Tax equivalent yield D. Credit risk 24. Which of the following is not a type of retirement plan:* A. 401(k) B. 529 plan C. 403(b) D. SIMPLE IRA 25. Engaging in one activity at the expense of another is known as:* A. Efficient allocation of resources B. Diminishing marginal return C. Diminishing marginal utility D. Opportunity cost 26. A personal balance sheet is the same as a:* A. Cash flow statement B. Budget C. Statement of shareholder equity D. Net worth statement 27. The most important driver of wealth creation is:* A. Government subsidies B. Innovation C. Price controls D. High minimum wages 28. A _______________ refers to a marketplace that is free from government intervention or price controls:* A. Command economy B. Monopolistic market C. Free market D. Regulated marketplace 29. Questions to ponder prior to enrolling in college include all of the following except:* A. What is my intended career? B. Social media recognition C. What education, credential, or skill is required for my desired career? D. What will the job market look like after graduation? 30. ________________ occurs when a disruptive innovation destroys/replaces existing technology and process if not entire industries:* A. Competitive devaluation B. Creative destruction C. Barriers to entry D. Diminishing marginal utility