Financial Fundamentals Mastery

What is a 401(k) plan primarily used for?

• Retirement savings

• Emergency funds

What does APR stand for and what does it represent?

• Annual Payroll Rate; the total amount of payroll a company has in a year

• Annual Percentage Rate; the real cost of borrowing money

How does APY differ from APR?

• APY includes transaction fees, while APR does not

• APY takes into account compound interest, while APR does not

In financial terms, what are assets?

• The difference between total assets and total liabilities

• Items of ownership convertible into cash

What is the primary function of an ATM?

• To facilitate stock trades

• To allow for cash withdrawals and deposits

What is the purpose of audits in the financial context?

• To determine the company's credit score

• To evaluate the accuracy of a company's financial statements

What does the balance of an account show?

• The difference between the total debits and total credits

• The amount of money that has been deposited over a set period

What is the maximum amount that an individual under 50 can contribute to a 401(k) in 2023?

• $25,000

• $22,500

Which of the following best describes the difference between a traditional and a Roth 401(k)?

• Roth 401(k) allows tax-free withdrawals in retirement, while traditional 401(k) does not

• Traditional 401(k) has higher contribution limits than Roth 401(k)

What is the typical consequence for withdrawing funds from a 401(k) before reaching the age of 59½?

• There is no consequence; funds can be withdrawn freely

• A penalty fee is charged along with income taxes on the amount withdrawn