D363 FINC 2000
Personal Finance
OA REVIEW 1
© 2024/2025
,1. Which of the following investment strategies focuses on
minimizing risk while achieving a satisfactory return?
A) Aggressive Growth
B) Conservative Allocation
C) Sector Rotation
D) Day Trading
Answer: B) Conservative Allocation
Rationale: Conservative allocation focuses on balancing the
portfolio to reduce risk, typically including more fixed-income
investments.
2. What is the primary goal of tax diversification in retirement
planning?
A) To minimize investment costs
B) To maximize Social Security benefits
C) To have a mix of taxable, tax-deferred, and tax-free accounts
D) To ensure wealth transfer to heirs
Answer: C) To have a mix of taxable, tax-deferred, and tax-
free accounts
Rationale: Tax diversification allows individuals to manage tax
liabilities effectively in retirement.
© 2024/2025
, 3. Which of the following ratios is used to evaluate the
sustainability of a company's dividend payments?
A) Price-to-Earnings (P/E) Ratio
B) Current Ratio
C) Dividend Payout Ratio
D) Debt-to-Equity Ratio
Answer: C) Dividend Payout Ratio
Rationale: The dividend payout ratio indicates the percentage
of earnings distributed as dividends, helping assess sustainability.
4. What is the adjusted gross income (AGI) in the context of
personal finance?
A) Total income before any deductions
B) Total income after standard or itemized deductions
C) Total income minus specific deductions like retirement
contributions and student loan interest
D) Total income minus tax credits
Answer: C) Total income minus specific deductions like
retirement contributions and student loan interest
Rationale: AGI is calculated by taking total income and
subtracting certain deductions.
© 2024/2025
Personal Finance
OA REVIEW 1
© 2024/2025
,1. Which of the following investment strategies focuses on
minimizing risk while achieving a satisfactory return?
A) Aggressive Growth
B) Conservative Allocation
C) Sector Rotation
D) Day Trading
Answer: B) Conservative Allocation
Rationale: Conservative allocation focuses on balancing the
portfolio to reduce risk, typically including more fixed-income
investments.
2. What is the primary goal of tax diversification in retirement
planning?
A) To minimize investment costs
B) To maximize Social Security benefits
C) To have a mix of taxable, tax-deferred, and tax-free accounts
D) To ensure wealth transfer to heirs
Answer: C) To have a mix of taxable, tax-deferred, and tax-
free accounts
Rationale: Tax diversification allows individuals to manage tax
liabilities effectively in retirement.
© 2024/2025
, 3. Which of the following ratios is used to evaluate the
sustainability of a company's dividend payments?
A) Price-to-Earnings (P/E) Ratio
B) Current Ratio
C) Dividend Payout Ratio
D) Debt-to-Equity Ratio
Answer: C) Dividend Payout Ratio
Rationale: The dividend payout ratio indicates the percentage
of earnings distributed as dividends, helping assess sustainability.
4. What is the adjusted gross income (AGI) in the context of
personal finance?
A) Total income before any deductions
B) Total income after standard or itemized deductions
C) Total income minus specific deductions like retirement
contributions and student loan interest
D) Total income minus tax credits
Answer: C) Total income minus specific deductions like
retirement contributions and student loan interest
Rationale: AGI is calculated by taking total income and
subtracting certain deductions.
© 2024/2025
