#1
Which of the following is a key component of a personal budget?
Investment portfolio
Emergency fund
Credit card balance
Shopping spree
#2
What does the term 'FICO score' represent in the context of personal finance?
Credit score
Investment index
Savings account balance
Loan interest rate
#3
What is the concept of 'compounding' in the context of investing?
Adding interest to the principal amount
Withdrawing funds from an investment
Timing the market for maximum returns
Reducing the risk of investments
#4
What is the purpose of a 'sinking fund' in personal finance?
Emergency fund for unexpected expenses
Setting money aside for a specific future expense
Daily living expenses
High-risk investments
#5
What does the term 'inflation' mean in the context of personal finance?
Increase in the purchasing power of money
Decrease in the overall price level of goods and services
Increase in the overall price level of goods and services
Stagnation in economic growth
#6
What does APR stand for in the context of loans and credit cards?
Annual Payment Rate
Annual Percentage Rate
Average Payment Ratio
Adjusted Profit Return
#7
What is the primary purpose of a 401(k) retirement account?
Tax-free savings
Emergency fund
Long-term retirement savings
Short-term investments
#8
Which of the following is considered a 'liquid asset'?
Real estate
Stocks
Retirement account
Savings account
#9
What is the purpose of a 'credit report' in personal finance?
To track daily expenses
To monitor investment performance
To assess creditworthiness
To calculate net worth
#10
What does the term 'net worth' represent in personal finance?
Total assets minus liabilities
Total income
Total expenses
Total savings
#11
In the context of budgeting, what does the term 'discretionary expenses' refer to?
Essential living expenses
Non-essential, optional expenses
Savings contributions
Debt repayments
#12
What is the concept of 'opportunity cost' in personal finance?
The actual cost of an opportunity
The benefits of an opportunity
The potential benefits given up when one alternative is chosen over another
The interest rate associated with an opportunity
#13
In the context of investments, what does the term 'diversification' refer to?
Concentrating investments in a single asset
Spreading investments across different assets to reduce risk
Investing only in high-risk assets
Timing the market for maximum returns
#14
What is the significance of the 'Rule of 72' in financial planning?
Determining credit card interest
Estimating the time it takes for an investment to double at a fixed annual rate of return
Calculating mortgage payments
Budgeting for retirement
#15
What is the purpose of a '529 plan' in the context of personal finance?
Retirement savings
Emergency fund
College savings for education expenses
Short-term investments
#16
What is the purpose of an 'emergency fund' in personal finance?
Long-term investments
Cover unexpected expenses or financial emergencies
Monthly bills and utilities
Entertainment and leisure activities
#17
What is the significance of the 'time value of money' in financial decision-making?
Calculating interest rates
Evaluating the impact of inflation on purchasing power
Determining stock prices
Assessing market volatility