#1
Which of the following is a type of account offered by banks for short-term savings?
Money market account
ExplanationShort-term savings account offered by banks.
#2
What does APR stand for in the context of loans and credit cards?
Annual Percentage Rate
ExplanationRate representing the yearly cost of borrowing.
#3
What is a 401(k) plan?
A retirement savings plan sponsored by an employer
ExplanationEmployer-sponsored retirement savings plan.
#4
What is the purpose of FDIC insurance?
To protect depositors against bank failures
ExplanationInsure deposits against bank insolvency.
#5
What is the purpose of a savings account?
To earn interest on deposited funds and save money for future expenses
ExplanationEarn interest and save for future expenses.
#6
What is the term for the fee charged by a lender for the use of borrowed money, often expressed as a percentage of the principal?
Interest rate
ExplanationFee for borrowing money expressed as a percentage.
#7
What is the main purpose of a budget?
To plan and manage finances
ExplanationPlan for income and expenditure management.
#8
What is compound interest?
Interest calculated on the initial principal plus the accumulated interest from previous periods
ExplanationInterest on both initial amount and its earnings.
#9
What is the purpose of the Federal Reserve System in the United States?
To regulate and supervise banks
ExplanationOversee and regulate the nation's banks.
#10
What is the difference between a debit card and a credit card?
Debit cards withdraw funds directly from the linked bank account, while credit cards allow borrowing money up to a credit limit.
ExplanationDirect withdrawal vs. borrowing up to limit.
#11
What is the debt-to-income ratio used for?
To assess an individual's financial health and ability to repay debts
ExplanationMeasure of financial health and debt repayment capacity.
#12
What is the purpose of a mortgage?
To borrow money to purchase real estate
ExplanationLoan for purchasing real estate.
#13
Which of the following factors typically affects a person's credit score the most?
Payment history
ExplanationHistory of timely payments impacts credit score most.
#14
What is the purpose of diversification in investment?
To reduce risk by spreading investments across different assets
ExplanationSpreading investments to reduce risk.
#15
What is the primary function of the Securities and Exchange Commission (SEC) in the United States?
To regulate and oversee financial markets and securities transactions
ExplanationRegulate financial markets and securities transactions.