Module 06 Quiz

1. Which of the following are reasons why people generally don't give their money to someone else without expecting a positive rate of return? Choose all that apply.
   • they are giving up options for using their money for something else for themselves
   • they don't like other people and want them to to have a hard time financially
   • they are taking on risk of non-repayment
   • they are giving up the option to have their money available to them just in case
2. If you invest $200 at a 6.5% annual rate of return, what will be the value of your investment in one year?
3. If you invest $200 at a 6.5% annual rate of return, and leave it be, what will be the value of your investment in 5 years?
4. True or False: When you use a credit card, you are borrowing money from the card issuer.
5. True or False: It is impossible to use a credit card without paying any fees or interest.
6. True or False: Using a credit card provides better fraud protection than using cash or debit cards.
7. Which of the following are differences between debt and equity investments? Choose all that apply.
   • debt holders has a higher priority in receiving cash from the business than equity holders
   • equity represents part ownership of the business, while debt has no ownership claim
   • debt requires an investment of money, while equity generally does not
   • debt payments are generally limited in scope, while equity has an unlimited upside
8. Which of the following are disadvantages of the private market? Choose all that apply.
   • higher prices for investments of comparable value
   • lower liquidity
   • requires higher minimum investment amounts
   • harder to achieve diversification
9. Examine the investment growth spreadsheet. Tweak the inputs. How much in assets will you have after 20 years of investing $4,000 at 6%? (Include the $4,000 you put in at the end of year 20.)
10. True or False: Financial independence is defined as having enough return from assets to cover spending needs.
11. The rule of "pay yourself first" means which of the following? Choose all that apply.
    • When you have a business, give yourself a salary.
    • When splitting a cake with friends, take a piece first.
    • Allocate a portion of income to savings before spending, to pay your future self.
    • Spend your income before paying taxes on it.