#1
What does APR stand for in the context of loans?
Annual Percentage Rate
ExplanationThe annualized cost of borrowing, including interest and fees.
#2
Which of the following is a type of investment where an individual lends money to a government or corporation in exchange for regular interest payments?
Bonds
ExplanationDebt securities that pay periodic interest and return the principal at maturity.
#3
What is the recommended percentage of your income that financial experts suggest you should save for emergencies?
15%-20%
ExplanationThe advised portion of income to set aside for unexpected expenses.
#4
Which of the following factors typically affects your credit score the most?
Payment history
ExplanationThe record of timely or untimely payments on credit accounts.
#5
Which of the following types of accounts typically offers the highest interest rates?
Certificate of deposit (CD) accounts
ExplanationTime deposits with fixed interest rates and maturity dates.
#6
What is the FICO credit scoring range in the United States?
300 to 850
ExplanationThe numerical range used to assess an individual's creditworthiness.
#7
What does IRA stand for in personal finance?
Individual Retirement Account
ExplanationA tax-advantaged account for retirement savings.
#8
What is the 'debt-to-income ratio' used for in personal finance?
All of the above
ExplanationAssessing the proportion of income allocated to debt payments.
#9
Which of the following is NOT a factor in determining your credit score?
Income level
ExplanationAn individual's income is not directly used in calculating their credit score.
#10
What is the term for a sudden and significant decline in the value of a financial market?
Bear market
ExplanationA period of falling stock prices and negative investor sentiment.
#11
What is the concept of 'compound interest'?
Interest calculated on both the initial principal and the interest accumulated
ExplanationEarning interest on both the original amount and previous interest.
#12
What does the term 'asset allocation' refer to in investing?
Spreading investments across different asset classes
ExplanationDiversifying investments to manage risk and return.
#13
What does the term 'liquidity' mean in personal finance?
The ability to access funds easily
ExplanationThe ease with which assets can be converted into cash without significant loss of value.
#14
What is the 'credit utilization ratio' in personal finance?
The percentage of your available credit that you're using
ExplanationThe ratio of current credit card balances to credit limits.
#15
What is the concept of 'net worth'?
The total value of your assets minus your liabilities
ExplanationA measure of an individual's financial position by subtracting liabilities from assets.