Basic Financial Transactions Quiz

A common example of a basic financial transaction involving the exchange of cash for goods or services.

A financial budget helps individuals manage and plan their spending to achieve financial goals.

A 401(k) allows individuals to save for retirement by contributing pre-tax income to an investment account.

Liquidity measures how quickly an asset can be converted into cash without impacting its price.

The FDIC provides insurance on bank deposits, ensuring the safety of deposited funds up to a certain limit.

Debit involves the removal of money from an account, either through payment or withdrawal.

The balance sheet summarizes a company's assets, liabilities, and equity at a particular moment.

ROI measures the return or profitability of an investment relative to its cost.

Net profit is the difference between total revenue and total expenses, indicating a company's profitability.

Diversification involves reducing risk by investing in a variety of asset classes.

The compound interest formula calculates the total amount earned or paid on an investment over time.

Mutual funds collect funds from investors to create a diversified portfolio managed by professional fund managers.

Bank reconciliation ensures that the recorded cash and bank balances match the actual amounts.

Debit cards deduct funds directly from the linked bank account, while credit cards involve borrowing against a credit limit.

A stock split increases the number of shares outstanding, making the stock more affordable and attractive to a broader range of investors.

The Federal Reserve oversees and regulates commercial banks to maintain stability in the U.S. financial system.

A bull market is characterized by increasing asset prices and positive investor sentiment.

Financial advisors assist clients in managing investments and achieving their financial objectives.

A credit score evaluates an individual's creditworthiness based on their credit history and financial behavior.