#1
Which of the following is not a type of bank account?
Investment account
ExplanationInvestment accounts are not typically considered as traditional bank accounts.
#2
What is the purpose of a routing number?
To identify a specific bank branch
ExplanationRouting numbers help identify the specific bank branch for transactions.
#3
What is the purpose of a CD (Certificate of Deposit) account?
To earn higher interest rates on savings
ExplanationCD accounts offer higher interest rates for locking in funds for a specific period.
#4
Which of the following is not a factor affecting your credit score?
Marital status
ExplanationMarital status typically does not directly impact credit scores.
#5
What is the purpose of FDIC insurance for bank accounts?
To protect against losses due to bank failure
ExplanationFDIC insurance safeguards bank deposits in case of bank failures.
#6
What is the average annual percentage yield (APY) for a typical savings account?
Depends on the bank
ExplanationAPY for savings accounts varies depending on the financial institution.
#7
What does APR stand for in the context of loans and credit cards?
Annual Percentage Rate
ExplanationAPR stands for Annual Percentage Rate and represents the cost of borrowing.
#8
What is the main function of a financial budget?
To plan spending and saving
ExplanationBudgets help individuals plan and manage their spending and saving.
#9
Which of the following is a type of investment risk?
All of the above
ExplanationVarious risks, including market, credit, and liquidity risk, are types of investment risks.
#10
What is the meaning of 'compound interest'?
Interest added to the principal amount, resulting in interest on interest
ExplanationCompound interest is interest calculated on the initial principal and also on the accumulated interest.
#11
What does the term 'liquidity' refer to in finance?
How quickly an asset can be converted into cash without significant loss of value
ExplanationLiquidity refers to the ease of converting assets into cash without substantial loss.
#12
What does the term '401(k)' refer to in the context of personal finance?
A retirement savings plan sponsored by employers
ExplanationA 401(k) is an employer-sponsored retirement savings plan.
#13
What does the term 'amortization' refer to in finance?
The process of paying off debt over time through regular payments
ExplanationAmortization is the gradual repayment of a debt through scheduled installments.
#14
What does the term 'collateral' refer to in finance?
A type of security interest
ExplanationCollateral is an asset pledged as security for a loan.
#15
What is the purpose of an emergency fund?
To cover unexpected expenses
ExplanationEmergency funds are reserved for unexpected expenses or financial emergencies.