#1
Which of the following is an example of a fixed expense?
Rent or mortgage payment
ExplanationRegular, predictable expense that doesn't fluctuate.
#2
What does APR stand for in relation to loans?
Annual Percentage Rate
ExplanationThe annual cost of borrowing, including interest and fees.
#3
What is the purpose of a 'budget' in personal finance?
To plan and manage finances
ExplanationA financial plan allocating resources.
#4
What does 'ROI' stand for in finance?
Return on Investment
ExplanationPerformance measure for investment.
#5
What is the purpose of a 'savings account'?
To earn interest on deposited funds
ExplanationSafe place to store money while earning interest.
#6
What is the purpose of a credit score?
To determine a borrower's creditworthiness
ExplanationMeasure of a person's ability to repay debt.
#7
What is the 'debt-to-income ratio' (DTI) used for?
To determine eligibility for loans
ExplanationCompares total debt payments to income.
#8
What is the 'Rule of 72' used for in finance?
To estimate how long it takes for money to double
ExplanationQuick calculation for investment doubling time.
#9
What is the purpose of 'diversification' in investment?
To reduce risk
ExplanationSpreading investments to minimize risk.
#10
What is 'liquidity' in financial terms?
The ease of converting assets into cash
ExplanationHow quickly an asset can be turned into cash.
#11
Which of the following is NOT a factor affecting credit score?
Income level
ExplanationThough important, income doesn't directly affect credit score.