#1
Which of the following is a factor influencing consumer decision-making?
Personal income
ExplanationPersonal income plays a significant role in shaping consumer choices.
#2
What does APR stand for in the context of loans and credit cards?
Annual Percentage Rate
ExplanationAPR represents the annualized cost of borrowing, including interest and fees.
#3
In the context of investing, what does 'ROI' stand for?
Return on Investment
ExplanationROI measures the profitability of an investment relative to its cost.
#4
Which of the following is a type of risk associated with investing?
Market risk
ExplanationMarket risk pertains to the possibility of losses due to market fluctuations.
#5
What is the primary purpose of a credit score?
To evaluate a person's creditworthiness
ExplanationA credit score assesses an individual's creditworthiness based on their credit history.
#6
Which of the following is NOT typically considered a fixed expense in a budget?
Grocery bills
ExplanationGrocery bills are usually categorized as variable expenses due to their fluctuating nature.
#7
Which of the following is NOT a stage in the consumer decision-making process?
Ignition
ExplanationIgnition is not a recognized stage in consumer decision-making models.
#8
What concept suggests that consumers make purchases to maximize their overall satisfaction?
Utility theory
ExplanationUtility theory posits that consumers seek to optimize their satisfaction or utility from purchases.
#9
What does the 'Rule of 72' estimate?
The time it takes for an investment to double at a fixed annual rate of return
ExplanationThe Rule of 72 provides a quick estimate of how long it takes for an investment to double.
#10
What is the primary goal of portfolio diversification?
To decrease risk
ExplanationPortfolio diversification aims to mitigate risk by spreading investments across various assets.
#11
What is the term used for a sudden, unexpected event that requires significant financial resources?
Emergency
ExplanationAn emergency refers to an unforeseen event necessitating substantial financial resources.
#12
Which of the following is a key principle of budgeting?
Saving consistently
ExplanationConsistent saving is fundamental to budgeting for achieving financial goals.
#13
Which financial term refers to the measure of how quickly an asset can be converted into cash without affecting its market price?
Liquidity
ExplanationLiquidity indicates the ease with which an asset can be converted into cash.
#14
What is the term used for the process of examining an investment's potential return compared to its risk?
Risk assessment
ExplanationRisk assessment evaluates the potential return of an investment relative to its associated risks.
#15
What term describes the action of borrowing money to invest with the expectation of earning a greater return than the interest payable on the loan?
Leveraging
ExplanationLeveraging involves borrowing funds to amplify potential investment returns.
#16
What does the acronym 'IRA' stand for in personal finance?
Individual Retirement Account
ExplanationIRA is a tax-advantaged retirement savings account for individuals.
#17
What is the term for a situation where a person spends more money than they earn?
Debt
ExplanationDebt arises when expenditures exceed income, resulting in a negative financial balance.