#1
Which of the following is considered a short-term debt instrument?
Corporate bond
Treasury bill
Mortgage-backed security
Preferred stock
#2
What does APR stand for in the context of consumer loans?
Annual Percentage Rate
Average Payment Requirement
Asset Protection Ratio
Accumulated Principal Return
#3
Which type of investment typically offers a fixed interest rate and a specified term?
Stocks
Mutual funds
Certificates of deposit (CDs)
Real estate
#4
What is the purpose of a budget in personal finance?
To limit spending on unnecessary items
To maximize credit card usage
To invest in high-risk assets
To increase debt
#5
What is the concept of 'compound interest' in the context of savings or investments?
Interest calculated on the initial amount only
Interest earned on the principal amount and previously earned interest
Interest paid on loans
Interest calculated annually
#6
What does the term 'credit score utilization' refer to in the context of credit scores?
Total available credit
Percentage of available credit used
Number of credit cards owned
Total outstanding debt
#7
Which financial metric indicates how well a company can cover its short-term liabilities with its short-term assets?
Return on Investment (ROI)
Current Ratio
Debt-to-Equity Ratio
Earnings Per Share (EPS)
#8
What is the primary purpose of a FICO credit score?
Assessing income levels
Predicting future stock prices
Evaluating creditworthiness
Calculating tax liabilities
#9
What does the term 'liquidity' refer to in the context of personal finance?
Ability to buy luxury goods
Ease of converting assets into cash
Total net worth
Investment portfolio diversity
#10
In the context of credit cards, what is a 'grace period'?
The time allowed to return a purchased item
A period when no interest is charged on purchases
The maximum credit limit
A fee for exceeding the credit limit
#11
What is the concept of 'opportunity cost' in financial decision-making?
The total amount of money invested
The potential benefit of the next best alternative forgone
The current market value of assets
The total income after taxes
#12
Which financial document provides a summary of income, expenses, and savings over a specific period?
Balance sheet
Income statement
Cash flow statement
Profit and loss statement
#13
Which behavioral economics concept refers to the tendency of individuals to prefer immediate rewards over larger but delayed rewards?
Hyperbolic discounting
Arbitrage
Risk aversion
Market efficiency
#14
What is the purpose of a 401(k) retirement account?
Short-term savings for emergencies
Tax-free savings for education
Long-term retirement savings
High-yield investment opportunities
#15
What is the debt-to-income ratio used for in assessing financial health?
Evaluating credit card debt
Measuring the ability to cover debts with income
Calculating mortgage interest rates
Determining credit card limits
#16
What is the main purpose of emergency savings in personal finance?
To fund luxurious vacations
To cover unexpected expenses or job loss
To invest in high-risk assets
To pay off long-term debts
#17
In the context of credit scores, what does a higher credit utilization ratio indicate?
Better creditworthiness
Lower risk of default
Higher risk of financial distress
Greater potential for high returns
#18
What is the purpose of a Roth IRA in retirement planning?
Tax-free withdrawals in retirement
Immediate tax deductions
Access to funds without penalties
Guaranteed fixed returns