#1
Which of the following is NOT a type of investment?
Loans
ExplanationLoans are a form of lending money rather than investing it.
#2
What does APR stand for in financial terms?
Annual Percentage Rate
ExplanationAPR measures the annual cost of borrowing money, including fees and interest.
#3
What is the purpose of a budget?
To track income and expenses
ExplanationBudgets help manage finances by tracking money coming in and going out.
#4
What is the purpose of an emergency fund?
To cover unexpected expenses or income loss
ExplanationEmergency funds provide financial security for unforeseen events.
#5
What is the primary purpose of insurance?
To protect against financial loss
ExplanationInsurance provides financial protection against unexpected events.
#6
What is the term used to describe a sudden and significant decline in the value of a market?
Crash
ExplanationA crash refers to a rapid and substantial drop in market prices.
#7
What does ROI stand for in finance?
Return On Investment
ExplanationROI measures the profitability of an investment relative to its cost.
#8
What is compound interest?
Interest calculated on the principal plus any previously earned interest
ExplanationCompound interest is the interest earned on both the initial investment and previously earned interest.
#9
What is the purpose of diversification in investing?
To spread investment across different assets
ExplanationDiversification reduces risk by investing in a variety of assets.
#10
What is a bear market?
A market characterized by falling prices and investor pessimism
ExplanationIn a bear market, prices decline, and investor sentiment is negative.
#11
What is the primary function of a credit score?
To evaluate one's likelihood of defaulting on loans
ExplanationCredit scores assess the risk of lending money to an individual.
#12
What does P/E ratio indicate in stock analysis?
Price/Earnings ratio
ExplanationP/E ratio evaluates a company's stock price relative to its earnings per share.
#13
What does the term 'liquidity' refer to in finance?
The ease of converting an asset into cash without affecting its market price
ExplanationLiquidity measures how easily an asset can be converted to cash without loss of value.