#1
Which of the following is a type of retirement account?
401(k)
ExplanationTax-advantaged savings plan for retirement.
#2
What does APR stand for in the context of loans and credit cards?
Annual Percentage Rate
ExplanationAnnual cost of borrowing money, including fees and interest.
#3
What is the primary purpose of a budget?
To track income and expenses
ExplanationHelps manage finances by tracking spending.
#4
What is the purpose of diversification in investment?
To spread risk across different assets
ExplanationReduces risk by investing in various assets.
#5
What does ROI stand for in finance?
Return on Investment
ExplanationMeasure of profitability from an investment.
#6
What is the rule of 72 used for in personal finance?
Estimating investment growth
ExplanationQuickly estimate how long an investment will double.
#7
What is the term used for the process of spreading investments across different asset classes?
Diversification
ExplanationStrategy to reduce risk by investing in varied assets.
#8
What does the term 'liquidity' refer to in personal finance?
The ability to convert assets into cash quickly
ExplanationEase of turning assets into cash without significant loss.
#9
What is the FICO score used for in personal finance?
To measure creditworthiness
ExplanationNumerical assessment of credit risk.
#10
What is the purpose of an emergency fund?
To cover unexpected expenses
ExplanationFinancial cushion for unforeseen costs.
#11
What is the time value of money principle?
Money loses value over time due to inflation
ExplanationConcept that money today is worth more than in the future.
#12
What is the difference between a traditional IRA and a Roth IRA?
Traditional IRA contributions are tax-deductible, while Roth IRA contributions are not
ExplanationTax treatment differs for contributions and withdrawals.