#1
Which of the following is a basic principle of personal finance?
Save regularly and invest wisely
ExplanationRegular saving and wise investing are fundamental in personal finance.
#2
What is the term used to describe the process of converting assets into cash?
Liquidity
ExplanationLiquidity refers to the ease of converting assets into cash.
#3
Which of the following is a potential benefit of creating and sticking to a budget?
Decreased financial stress
ExplanationSticking to a budget can lead to reduced financial stress.
#4
What is the primary function of a stockbroker in personal finance?
Executing trades on behalf of clients
ExplanationStockbrokers primarily execute trades for their clients.
#5
What is the term used to describe the process of comparing prices from different vendors before making a purchase?
Comparison shopping
ExplanationComparison shopping involves comparing prices from various vendors.
#6
Which of the following is NOT a factor to consider when setting financial goals?
Irrelevance
ExplanationIrrelevance is not a factor when setting financial goals.
#7
Which of the following is NOT a factor influencing consumer behavior?
Fiscal factors
ExplanationConsumer behavior is not typically influenced by fiscal factors.
#8
What is the term used to describe the tendency for individuals to spend more when using credit cards than when using cash?
Credit bias
ExplanationCredit bias refers to the tendency to spend more with credit cards than cash.
#9
What is the rule of 72 used for in personal finance?
Estimating the time for an investment to double
ExplanationThe rule of 72 estimates how long it takes for an investment to double.
#10
What is the term used to describe the emotional bias that can lead individuals to make irrational financial decisions?
Behavioral finance
ExplanationBehavioral finance deals with emotional biases affecting financial decisions.
#11
Which of the following factors is important to consider when evaluating the risk of an investment?
Time horizon
ExplanationThe time horizon is crucial when assessing investment risk.
#12
Which of the following is a characteristic of a fixed-rate mortgage?
Interest rate that remains constant
ExplanationFixed-rate mortgages have a constant interest rate.
#13
Which of the following is a characteristic of a good credit score?
Low credit utilization ratio
ExplanationA good credit score typically features a low credit utilization ratio.