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Personal Finance Pre Assessment Flashcards | StudBud
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Personal Finance Pre Assessment
What is a credit score?
What is a retirement account?
Personal Finance Pre Assessment
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Life Management
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Questions
30
Answers
1
What is a retirement account?
An account for emergency funds
An account for daily expenses
An account for saving money for retirement
2
What is a credit score?
A measure of your spending habits
A measure of your financial health and creditworthiness
A measure of your annual income
3
What is the difference between short-term and long-term financial planning?
There is no difference
Short-term is for immediate needs; long-term is for future goals
Short-term is more important than long-term
4
What is a budget deficit?
When income exceeds expenses
When expenses and income are equal
When expenses exceed income
5
Name one type of investment.
Credit card
Stocks
Car loan
6
What is the difference between a need and a want?
Needs are optional; wants are essential
Needs and wants are the same
Needs are essential; wants are optional
7
What is an emergency fund?
Money set aside for holidays
Money set aside for investments
Money set aside for unexpected expenses
8
What is a mortgage?
An investment in stocks
A savings account for emergencies
A loan for purchasing property
9
What is an investment?
Saving money in a checking account
Allocating money with the expectation of a future benefit
Purchasing goods for immediate use
10
What is a bond?
A debt investment in which an investor loans money
A type of credit card
A bank account
11
How much of your income is it generally recommended to save?
20%
5%
10%
12
What does it mean to live within your means?
Spending exactly what you earn
Spending more than you earn
Spending less than you earn
13
What is interest, and how does it affect loans?
A type of insurance
A fee for borrowing money
A reward for saving money
14
Why is it important to track your expenses?
To have control over your finances and ensure you stay within budget
It's not important
To increase your debt
15
How can you improve your credit score?
By missing payments
By paying bills on time
By using credit cards excessively
16
How can having a budget help with debt management?
By providing a plan to allocate funds to pay off debts
By increasing spending
By ignoring debt payments
17
What is financial literacy?
The knowledge to make informed financial decisions
The skill to negotiate salaries
The ability to read financial documents
18
Name one benefit of creating a budget.
Helps save money
Increases stress
Makes spending unlimited
19
What is the purpose of a savings account?
To invest in the stock market
To write checks
To save money and earn interest
20
Give an example of a fixed expense.
Groceries
Rent
Entertainment
21
What is personal finance?
Managing your personal and professional life
Managing your money and financial decisions
nvesting in businesses
22
What is a financial goal?
A list of items to purchase
A plan for daily expenses
A specific monetary target or aim
23
What is discretionary spending?
Spending on fixed expenses
Spending on non-essential items
Spending on necessities
24
What is the purpose of a checking account?
To manage daily expenses and transactions
To save money for retiremen
To invest in stocks
25
What is compound interest?
Interest on the initial principal and accumulated interest
Interest that increases monthly
Interest on the initial principal only
26
What is a loan?
A payment received for work
Money borrowed that must be repaid
An investment strategy
27
How does inflation affect purchasing power?
Decreases purchasing powe
Has no effect on purchasing power
Increases purchasing power
28
How does a credit card differ from a debit card?
Credit cards are for cash withdrawals; debit cards are for online purchases
Credit cards use borrowed money; debit cards use your own money
Credit cards are free; debit cards have fees
29
What is a stock?
A type of savings account
A share in the ownership of a company
A loan from a bank
30
What is the difference between gross and net income?
Gross income is after taxes; net income is before taxes
There is no difference
Gross income is before taxes; net income is after taxes
