Diagnostic test

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You track spending for a month and find you consistently overspend by £120. The most effective fix is:

A. Set stricter limits next month and “try harder”

B. Add £120 to the overspent category limit without changing anything

C. Identify the specific spending category causing it and add a weekly cap plus automation

D. Stop tracking because it is discouraging

Which situation best describes a liquidity problem rather than a solvency problem?

A. A bank’s loans are worth less than its deposits

B. A bank has valuable long-term assets but cannot meet withdrawals today

C. A bank makes a profit but pays high staff salaries

D. A bank’s customers borrow too much on credit cards

A bank pays 2% on savings and charges 10% on loans. The simplest correct explanation is:

A. Banks charge more because they are greedy

B. The gap is mainly compensation for credit risk, operating costs, and capital constraints

C. Banks are legally required to charge at least 8% more than they pay

D. Savings interest is low because inflation is always low

Two portfolios have the same average annual return. Portfolio A has much higher volatility than Portfolio B. The most correct statement is:

A. Portfolio A is always better long-term

B. Portfolio B is always better short-term

C. Portfolio A has higher risk of large drawdowns, which can permanently damage compounding

D. Volatility does not matter if you believe in the assets

You own 10 different stocks, all in US tech. The most accurate description is:

A. Diversified, because there are 10 holdings

B. Concentrated, because the holdings share the same major risk drivers

C. Risk-free, because tech always grows

D. Balanced, because stocks are safer in groups

You choose a very low deductible on contents insurance to “make sure it pays out.” The most likely downside is:

A. Claims become illegal

B. Premiums rise because the insurer is pricing frequent small claims

C. The policy stops covering theft

D. Your bank account interest rate falls

You suffer a £350 loss and your policy has a £250 excess. You are deciding whether to claim. The most correct reasoning is:

A. Claim anyway because you paid premiums

B. Do not claim because insurers never pay small claims

C. Compare expected payout (£100) against likely premium increases and loss of discounts

D. Wait six months, then claim so it looks less suspicious

You get a text saying “Your bank account will be frozen today. Click this link to verify.” The best first action is:

A. Click quickly to prevent freezing

B. Reply asking if it is real

C. Log into your bank through the official app/website and contact the bank using a trusted number

D. Forward it to friends to ask what they think

Which statement about tax planning vs tax evasion is most correct?

A. Any action that reduces tax is illegal

B. Tax planning uses legal allowances and reliefs; evasion involves dishonest concealment or misreporting

C. Evasion is legal if the amount is small

D. Planning is only allowed for businesses, not individuals

Diagnostic test

Diagnostic test

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