Personal Finance Final Eaxm

What is the primary purpose of a budget in personal finance?

• To track expenses only

• To plan and manage income and expenses

• To increase debt

• To avoid paying taxes

If you invest $1000 at an annual interest rate of 5% compounded annually, what will be the amount after 2 years?

• $1050

• $1100

• $1102.50

• $1150

Which of the following is a benefit of having a high credit score?

• Higher interest rates on loans

• Lower insurance premiums

• Difficulty in getting approved for credit

• Increased debt limits

What is the term for the amount of money you owe on a loan?

• Principal

• Interest

• Equity

• Dividend

Which of the following is a tax-advantaged retirement savings account?

• Savings Account

• Certificate of Deposit (CD)

• 401(k)

• Money Market Account

Which of the following is an example of a variable expense?

• Mortgage payment

• Utility bills

• Car insurance

• Student loan payment

What is the term for the profit made from selling an asset for more than its purchase price?

• Capital gain

• Dividend

• Interest

• Depreciation

If you have a credit card balance of $500 with an annual interest rate of 18%, what is the monthly interest rate?

• 1.5%

• 1.8%

• 2%

• 2.5%

Which of the following is a strategy to improve your credit score?

• Max out your credit cards

• Pay bills on time

• Close old credit accounts

• Apply for multiple credit cards at once

What is the term for the difference between your assets and liabilities?

• Net worth

• Cash flow

• Equity

• Revenue