Financial Literacy Program Quiz 6

Financial Literacy Quiz 6

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1. What is the primary purpose of financial risk management?

To avoid all types of investments

To minimize the potential for financial losses

To maximize profits regardless of risk

To predict the exact outcome of financial decisions

2. Which of the following is an example of market risk?

A change in government regulations

A personal injury that leads to high medical expenses

A sudden decrease in the stock market value

A fire that damages property

3. What type of financial risk involves the possibility of losing money due to changes in interest rates?

Interest rate risk

Credit risk

Operational risk

Liquidity risk

4. How can diversification help minimize financial risk?

By using a single type of investment to guarantee returns

By spreading investments across different asset types, reducing exposure to any single risk

By concentrating all investments in high-risk assets

By minimizing any exposure to international markets

5. What is the purpose of life insurance?

To provide financial support to dependents in the event of the policyholder's death

To pay for medical expenses

To cover the costs of property damage

To protect against loss in stock market investments

6. What does health insurance typically cover?

Investments in mutual funds

Property damage from accidents

Medical expenses, including doctor visits, hospital stays, and prescriptions

Lost wages from work

7. Which of the following is a key term to understand in property insurance?

Income tax rates

Mutual fund shares

Stock options

Deductible

8. What is the purpose of an insurance deductible?

To determine the maximum payout the insurance will cover

To specify the amount the insured must pay out-of-pocket before insurance coverage kicks in

To set the monthly premium amount

To decide the coverage limit for personal property

9. Which factor is most important when choosing the right insurance coverage?

The type of investment portfolio owned

Whether the insurance company is the most popular

The lowest possible premium available

Understanding the specific needs of the individual or business being insured

10. What type of insurance would be most beneficial for someone who owns a home and wants to protect it from risks like fire or theft?

Property insurance

Life insurance

Disability insurance

Health insurance

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Financial Literacy Program Quiz 6

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