24.25 Personal Finance Final Exam Review

What is the primary purpose of creating a budget?

• A. To spend more money
• B. To plan how to save and spend money
• C. To calculate your net worth
• D. To increase credit card debt

Which of the following is considered income?

• A. Money spent on groceries
• B. A paycheck from a job
• C. Monthly rent
• D. Credit card interest

Why is it important to track expenses?

• A. To avoid paying bills
• B. To stay within a budget
• C. To increase spending
• D. To eliminate taxes

Which account type is best for everyday transactions?

• A. Checking account
• B. Savings account
• C. Certificate of Deposit (CD)
• D. Brokerage account

What is a benefit of using a savings account?

• A. It allows unlimited withdrawals.
• B. It helps build interest on deposited money.
• C. It has no withdrawal limits.
• D. It earns higher interest than investments.

What does the stock market allow people to do?

• A. Store money safely
• B. Borrow money for a home
• C. Buy and sell shares of companies
• D. Deposit checks

What is a key benefit of investing in stocks?

• A. Guaranteed returns
• B. Potential for long-term growth
• C. Protection against losses
• D. Immediate access to funds

Which of the following is a characteristic of a credit card?

• A. It automatically deducts money from your bank account.
• B. It allows you to borrow money up to a limit.
• C. It always has a fixed interest rate.
• D. It is only used for online purchases.

What is compound interest?

• A. Interest paid only on the initial deposit
• B. Interest earned on both the principal and previous interest
• C. A penalty for early withdrawal
• D. A type of loan repayment

What is the main advantage of a Certificate of Deposit (CD)?

• A. High liquidity
• B. Higher interest rates than savings accounts
• C. No penalty for early withdrawal
• D. Unlimited transactions