#1
What is a common reason for building an emergency fund?
To invest in the stock market
To cover unexpected expenses
To buy luxury items
To pay off debt faster
#2
What does APR stand for in the context of loans and credit cards?
Annual Payment Rate
Average Principal Rate
Annual Percentage Rate
Average Payment Return
#3
What is the purpose of a budget in personal finance?
To limit spending on essential items only
To track income and expenses
To invest in high-risk ventures
To avoid paying taxes
#4
What is the 'snowball method' in debt repayment?
Paying off the debt with the highest interest rate first
Paying off the smallest debt first and then rolling the payments into larger debts
Ignoring debt payments altogether
Increasing debt payments randomly
#5
What is the concept of compound interest?
Interest calculated only on the initial principal
Interest calculated on the initial principal plus the accumulated interest
Interest calculated at a fixed rate
Interest calculated based on market performance
#6
Which of the following is NOT a component of a credit report?
Credit score
Credit utilization ratio
Social security number
Income history
#7
Which of the following factors can positively affect your credit score?
Carrying a high credit card balance
Making late payments on bills
Having a long history of timely payments
Opening multiple new credit accounts in a short period
#8
What does the debt-to-income ratio measure?
The amount of debt you have compared to your income
The amount of money you owe compared to your assets
The number of creditors you owe money to
The number of credit cards you have
#9
Which of the following is NOT a type of credit score used by lenders?
FICO Score
VantageScore
TransUnion Score
Equifax Score
#10
What is a 401(k) plan?
A health insurance plan
A retirement savings plan sponsored by an employer
A type of loan for homebuyers
A budgeting tool
#11
What is a collateralized loan?
A loan secured by an asset
A loan with no requirement for repayment
A loan with high interest rates
A loan for buying luxury items
#12
What is the grace period on a credit card?
The period during which you can pay your credit card bill without incurring interest
The period during which you cannot use your credit card
The period during which you can make purchases without a credit limit
The period during which you can withdraw cash from your credit card
#13
Which of the following is a characteristic of a fixed-rate mortgage?
The interest rate stays the same for the life of the loan
The interest rate changes periodically based on market conditions
The monthly payments decrease over time
The loan can be paid off early without penalty
#14
What is the purpose of diversification in investment?
To concentrate all investments in one asset
To reduce risk by spreading investments across different assets
To increase risk by investing in highly volatile assets
To limit investment options
#15
What is the difference between a traditional IRA and a Roth IRA?
Traditional IRA contributions are tax-deductible, while Roth IRA contributions are not
Roth IRA contributions are tax-deductible, while traditional IRA contributions are not
Traditional IRA withdrawals are tax-free, while Roth IRA withdrawals are taxed
There is no difference between them
#16
What is the purpose of an HSA (Health Savings Account)?
To pay for medical expenses not covered by insurance
To invest in the stock market
To fund retirement
To pay off credit card debt
#17
What is a credit utilization ratio?
The amount of credit available to you
The ratio of your credit card balance to your credit limit
The interest rate charged on your credit cards
The number of credit cards you have