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What's your financial quotient?

What's your financial quotient?

Every day, we conduct a financial transaction that requires an informed decision. Whether it is taking a loan, using a credit card or opening a fixed deposit, a little knowledge can get you a better deal. Check out how financially savvy you are with this short quiz.

Every day, we conduct a financial transaction that requires an informed decision. Whether it is taking a loan, using a credit card or opening a fixed deposit, a little knowledge can get you a better deal. Check out how financially savvy you are with this short quiz:

1. You are in the highest tax bracket and want to invest Rs 25,000 in a debt option for two years. The best option would be:
A. PPF
B. NSC
C. Fixed maturity plans
D. Bank fixed deposits

2. Tax planning funds have a lock-in period of:
A. Six months
B. One year
C. Three years
D. Five years

3. Which of the following corporate actions requires a payment by the shareholder?
A. Dividend
B. Bonus shares
C. Rights shares
D. Stock split

4. The value of shares you bought three years ago for Rs 10,000 has risen to Rs 40,000. What is your annualised return?
A. 100%
B. 300%
C. 58.75%
D. 40%

5. At the time of increment, you are offered four options. Which is the best deal:
A. A 10% hike on total income
B. Bonus equal to one month’s income at year-end
C. Two six-monthly increments of 6% each
D. Four quarterly increments of 4% each

6. The highest yield is from a fixed deposit that compounds:
A. Monthly
B. Quarterly
C. Half-yearly
D. Yearly

7. The term budgeting means:
A. Trying to spend less
B. Planning for income and expenditure
C. Recording how you have spent money
D. All of the above

8. Which of the following is the cheapest borrowing option?
A. Monthly reducing rate of 18% per annum
B. Flat rate of 12% per annum
C. Credit card rollover charge of 3%

9. Credit cards are useful because:
A. You can roll over the balance
B. You can save on bank fees
C. They give you a period of free credit
D. They are convenient

10. The balance transfer facility on a credit card allows a cardholder to:
A. Defer payment by one or two months
B. Split the outstanding into easy EMIs
C. Distribute the bill across several cards
D. Avoid penalty for not paying by due date

11. You get Rs 50,000 as bonus on Diwali. What should you do first?
A. Prepay a 8% fixed rate home loan
B. Foreclose a 12% auto loan
C. Repay all credit card outstandings
D. Put the money in a savings-cum-fixed deposit account

12. If the earnings per share of a company is Rs 6, and its share price is Rs 42, then the price to earnings ratio is:
A. 48
B. 7
C. 36

13. By opting for reverse mortgage, an investor can:
A. Get steady income against value of property
B. Mortgage his property
C. Take a home loan to repay other loans
D. Finance a second house by taking a loan

14. A cheque becomes ‘stale’ if it is deposited:
A. One year after the date of issue
B. Six months after the date of issue
C. Three months after the date of issue
D. One month after the date of issue

15. In which of the following debt options is the income tax free?
A. Term deposit with PSU bank
B. Infrastructure bonds
C. Public Provident Fund
D. Income or bond funds

Answers:

1. C. Fixed maturity plans
2. C.Three years
3. C. Rights shares
4. C. 58.75%
5. D. Four quarterly increments of 4% each
6. A. Monthly
7. B. Planning for income and expenditure
8. A. Monthly reducing interest rate of 18% per annum
9. A.You can roll over the balance
10. A. Defer payment by one or two months
11. C. Repay all credit card outstandings
12. B. 7
13. A. Get steady income against value of property
14. B. Six months after the date of issue
15. C. Public Provident Fund

Add up how many questions you got right. Your FQ score works to

0-4 Poor — Start reading up on financial matters
5-8 Fair — You are aware about a few things
9-11 Good — You know much of what is needed
12+ Excellent — Congratulations! You know quite a lot