Basics of Personal Finance and Financial Literacy Quiz

A financial account designed for individuals to deposit and accumulate money, typically earning interest.

A financial plan outlining expected income and planned expenses to achieve financial goals.

Funds set aside to handle unforeseen financial emergencies or unexpected expenses.

Reducing risk by investing in a variety of assets to avoid reliance on a single investment.

There is no commonly recognized type of insurance known as 'stock insurance' in personal finance.

A numerical representation of creditworthiness, assessing the likelihood of repaying borrowed funds.

A tax-advantaged savings plan designed to help individuals save for education expenses, particularly for college.

The annualized cost of borrowing, including interest and fees, expressed as a percentage of the loan amount.

Income generated with minimal effort or active involvement, such as interest earned on savings without direct participation.

A tax-advantaged investment account designed to help individuals save for retirement.

Investing in a diversified portfolio managed by professionals, offering the potential for higher returns.

Unlike traditional IRAs, Roth IRAs allow tax-free withdrawals of contributions and earnings in retirement.

The ease with which assets can be converted into cash without significant loss of value.

A measure of an individual's wealth, calculated by subtracting total liabilities from total assets.

Earning interest not only on the initial amount invested but also on the interest that has been previously earned.

While important for financial health, income level is not a direct factor influencing credit scores.

Distributing investments across different asset classes to manage risk and optimize returns.

A bear market is marked by a prolonged period of declining stock prices and negative investor sentiment.

A legal document specifying how an individual's assets should be distributed after their death.

While income is relevant to financial health, it is not a direct factor influencing an individual's credit score.