Personal Finance and Economic Decision-Making Quiz

Regular, predictable costs that remain constant each month.

A measure used to evaluate the efficiency or profitability of an investment.

Income earned from rental property or other enterprises in which the individual is not materially involved.

Interest calculated on the initial principal and also on the accumulated interest from previous periods.

An obligation to repay a debt, in this case, a loan taken out to purchase a home.

The potential benefit that is given up when one alternative is chosen over another.

The annual rate charged for borrowing, representing the actual yearly cost of funds over the term of a loan.

A quick method for estimating the time it takes for an investment to double in value.

Mortgages are loans secured by real estate and not considered investments themselves.

To plan and allocate finances, track spending, and achieve financial goals effectively.

The process of dividing an investment portfolio among different asset categories to achieve diversification.

Insurance provides financial protection against unexpected events or losses.

The ease with which an asset can be converted into cash without affecting its market price.

Spreading investments across different assets to minimize risk and optimize returns.

To provide a financial safety net for unexpected expenses or financial emergencies.

The ownership interest or residual claim in assets after liabilities are paid.

The cost of funds used for financing a business.