Financial Planning and Insurance Terms Quiz

Measure of financial performance, indicating the percentage increase in value relative to the initial investment.

Numerical representation of a person's creditworthiness, influencing the ability to borrow and the interest rates offered.

Individual retirement account allowing tax-free withdrawals in retirement, funded with after-tax contributions.

Risk management strategy involving the allocation of investments across diverse assets to minimize the impact of a poor-performing investment.

Simple formula for approximating the time required for an investment to double, calculated by dividing 72 by the annual rate of return.

The upfront amount paid by the insured before the insurance coverage begins, limiting the insurer's liability.

Tax-advantaged retirement savings plan allowing individuals to contribute a portion of their salary.

Strategy of distributing investments across various asset categories to achieve a balance between risk and return.

Life insurance providing coverage for a predetermined term, with no payout if the insured survives beyond that period.

Gradual reduction of a loan's principal through scheduled payments, covering both interest and principal.

The evaluation process by which an insurer determines the risks it will cover and the premiums to charge.

Market value of a company's outstanding shares, calculated by multiplying the current stock price by the total number of shares.

The ability to quickly convert assets into cash without causing a significant impact on their value.

Interest calculated on the initial principal and accumulated interest, leading to exponential growth of savings.

Financial gain resulting from the sale of an investment or asset, calculated as the selling price minus the purchase price.