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Quiz Answers

That wasn't so bad, was it?  Well... check your answers below and see how you scored!


1.  A good financial plan is... (pick one)  Correct answer is b.
     a.)  one that makes me rich before I retire.  You'll only become "rich" through slow careful planning.  
     b.)  a process, not an event.  It is an ongoing process in which you gather and organize information, set
           goals, and then figure out how to monitor regular progress toward those goals.  
     c.)  a document that comes from robust planning software and can present all sorts of charts, graphs, 
           and different hypothetical scenarios. The plan itself is more important than snazzy planning software.
     d.)  not for me because I am beyond hope.  Have faith!  No matter what, some planning will help!

2.  Variable interest rates are... (pick one)  Correct answer is c.
     a.)  calculated based on a different base number each time.  When the base varies, the 
            interest rate varies.  Huh?  This answer makes no sense.
     b.)  indexed for inflation.  No.  That would be an indexed rate, as in a TIP bond or something.
     c.)  rates that fluctuate according to market forces.  Low rates will eventually rise; high rates will 
           eventually fall; neither is permanent.
     d.)  compounded on a non-regular basis, according to annuity tables, not according to monthly 
            schedules.  Huh?

3.  The most expensive thing about debit cards are the hidden fees.  True or false?
      False.  Yes, the hidden fees and expenses with debit cards are a big deal.  But the biggest issue with 
      debit cards is that when people use them, they typically spend a lot more money than when they just
      pay for everything with cash or check.


4.  Overdraft protection is a free tool offered by my bank to help you manage your finances and to keep you 
      from bouncing checks.  True or false?
      False.  Well, yes, this is a tool to help keep you from bouncing checks.  But you know, don't you, that
      banks rarely provide anything at all to you that is free.  Overdraft protection is quite simply an
       unsecured loan from your bank to you.  And the cost for that loan?  Try 18% interest.  

5.  Student loans are unaffected if a person declares personal bankruptcy.  True or false?
      True.  If you have student loans (from, for example, going to art school), and you get in deep financial 
      doo doo and you have to declare personal bankruptcy, you still have to pay off your student loans.  
      They are unaffected by personal bankruptcy proceedings.  

6.  Copyright permission is... (pick one)  Correct answer is d.
     a.)  not usually necessary for artists to deal with because so much is in the public domain.  Dream on.
     b.)  a form of legal monopoly power granted to individuals and/or corporations in order to squash 
            creativity and entrepreneurship.  True-ish, but more of an outcome than intent of these laws...
     c.)   the last refuge of artists, writers, musicians, and other creatives who have no new ideas coming to 
            them so they have to rely on royalties from work they did back when they were young.  See b above.
     d.)  a strong and robust presence in the US, so you'd better understand how it might impact your work. 

7.  You should never, ever, do anything that might hurt your credit rating.  True or false?
      False.  You obviously would rather not do anything that could hurt your credit score.  But, too often, 
      damage to your score is used like a threat by creditors and other financial (and nonfinancial) 
      institutions in order to influence your behavior.  Truth is, there are times when you may need to do 
      something that may have a short term negative impact on your score, in order that you can improve 
      your overall financial position.  For example, is it better to keep eight credit cards, many of which have 
      crappy terms and conditions, or should you close down six of them and consolidate?  Common sense 
      says you should have fewer, better cards.  Credit card companies might argue the opposite.  But... who 
      you gonna trust?  Your common sense?  Or the credit card issuer?


8.  A short sale on a house is... (pick one)  Correct answer is b.
     a.)  when the deal goes through quickly, because you followed the short-form mortgage application.  No
     b.)  when a house is sold for an amount that is less than the mortgage owed.  
     c.)  a sale in which no cash changes hands: one house is swapped for another similar one.  Fake.
     d.)  one that is executed primarily for tax purposes, but the owner is able to continue living in the house.           
            Fake (but didn't our fake answers on this one sound really believable?).

9.  You'll have enough money when you retire if you... (pick one)  Correct answer is d... No, not e. 
     a.)  win the lottery.  And the likelihood of you winning the lottery is how infinitesimal?
     b.)  are an early investor in a successful internet startup.  Don't believe the hype, this is really rare.
     c.)  are finally discovered as a genius whose creative work is worth millions.  You want to count on it?
     d.)  put a little money aside each month, every month, for many many years.
     e.)  all of the above.  Strictly speaking, this answer is correct.  But, you're kind of missing the point if you
           believe the methods of acquiring money listed above are all valid means of acquiring wealth. 
           Choose anything other than d and you risk an insolvent dotage.

10.  You have to file paperwork with the state you reside in if you decide to register your business as a sole 
        proprietorship.  True or False?
        False.  You don't have to register, per se, to be a sole proprietor.  You will recognize your sole
        proprietorship business on your personal tax returns when you file your taxes.  


Calculate your score, and then... 

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