#1
What is a credit score used for?
To assess your creditworthiness
ExplanationAssessing creditworthiness
#2
In the context of loans, what is collateral?
An asset pledged to secure a loan
ExplanationAsset securing a loan
#3
What is the concept of 'debt consolidation' in financial management?
Combining multiple debts into a single loan
ExplanationConsolidating multiple debts
#4
What is the concept of 'opportunity cost' in financial decision-making?
The cost of choosing one alternative over another
ExplanationCost of alternative choices
#5
In the context of credit scores, what does 'derogatory mark' mean?
A negative entry that can harm your credit
ExplanationNegative entry affecting credit
#6
Which of the following is considered a good credit score?
#7
What is the purpose of a debt-to-income ratio in financial management?
To assess the relationship between debt and income
ExplanationEvaluating debt-income relationship
#8
What does the term 'compound interest' refer to in finance?
Interest calculated on the initial principal and the accumulated interest
ExplanationInterest on principal and accumulated interest
#9
In the context of credit cards, what is a 'grace period'?
A period during which no interest is charged on purchases
ExplanationInterest-free purchase period
#10
What is the role of a co-signer in a loan agreement?
To repay the loan on behalf of the borrower
ExplanationLoan repayment responsibility
#11
Which of the following is an example of a secured loan?
#12
What does APR stand for in the context of loans and credit cards?
Annual Percentage Rate
ExplanationAnnual Percentage Rate
#13
What is the significance of a budget in financial planning?
To limit spending
ExplanationLimiting spending
#14
What is the primary purpose of an emergency fund in personal finance?
To cover unexpected expenses and emergencies
ExplanationCovering unexpected expenses
#15
What does the term 'net worth' represent in financial terms?
Total assets minus total liabilities
ExplanationAssets minus liabilities
#16
What is the significance of a FICO score in the credit industry?
It measures credit risk based on credit history
ExplanationCredit risk assessment
#17
What is the purpose of a 401(k) plan in retirement savings?
To save for retirement with pre-tax dollars
ExplanationPre-tax retirement savings