#1
Which of the following is considered a fixed expense?
Rent or Mortgage
ExplanationRegular, predetermined payment.
#2
What does APR stand for in the context of loans?
Annual Percentage Rate
ExplanationAnnual cost of borrowing.
#3
What is the 50/30/20 rule in budgeting?
Saving 50% of income, spending 30% on needs, and 20% on wants
ExplanationA guideline for allocating income.
#4
What is the purpose of an emergency fund?
Covering unexpected expenses and financial emergencies
ExplanationFinancial safety net.
#5
What is the purpose of a credit score?
Evaluating your creditworthiness
ExplanationAssessment of borrowing risk.
#6
Which investment option typically carries the highest risk?
Stocks
ExplanationEquity ownership in companies.
#7
What is the purpose of a 401(k) retirement account?
Retirement savings
ExplanationTax-advantaged retirement plan.
#8
What is the concept of compound interest?
Interest calculated on both the initial principal and the accumulated interest
ExplanationEarning interest on interest.
#9
What does the term 'net worth' represent in personal finance?
Total assets minus total liabilities
ExplanationOverall financial position.
#10
In the context of budgeting, what is a zero-based budget?
Allocating every dollar of income to a specific expense or savings category
ExplanationAssigning all income to expenses or savings.
#11
What is the purpose of a Roth IRA?
Tax-free withdrawals in retirement
ExplanationRetirement account with tax benefits.
#12
What does the term 'FICO score' refer to in personal finance?
Fair Isaac Corporation score
ExplanationCredit scoring system.