30 Questions
What is the primary purpose of a budget?
To forecast future income and expenses
What is the term for the amount of income subject to taxes?
Taxable income
What is the significance of fair market value in a balance sheet?
It is the actual value of an asset in the open market
What are the three parts of a balance sheet?
Assets, liabilities, and net worth or equity
How do you determine if a business is solvent?
When its current assets exceed its current liabilities
What is the formula for calculating market value of a property?
The question is not applicable to property
What is the term for a check that has been written but not yet cashed or cleared by the bank?
Outstanding check
What is the formula for calculating compound interest?
P = C (1 + r/n)nt
What type of banks have grown in popularity due to their convenience?
Online banks
What is the primary function of the FDIC?
To insure funds for commercial banks
What is the primary goal of determining how much you can afford in the auto-buying process?
To ensure a successful purchase
What does a credit bureau primarily do?
Collect and store credit information about individual borrowers
What is another term for a checking account?
Demand deposit account
What is the purpose of property taxes?
To fund local government services and schools
What is the recommended step to take if you're expecting difficulties with your payments?
Notify your creditors
What is the primary purpose of a credit report?
To store credit information about individual borrowers
What is the loan-to-value ratio of a home calculated by?
Dividing the mortgage amount by the property value, then multiplying by 100
What are the 5 Cs of Credit?
Character, capacity, capital, collateral, condition
What percentage of your take-home pay should you not exceed with consumer credit?
10% to 15%
What is the primary purpose of a consolidation loan?
To convert many debts into one loan payment
What type of loan is repaid in a series of fixed, scheduled payments?
Installment loan
What is required to secure a single-payment loan?
Collateral
What is the primary purpose of life insurance?
To pay out a sum of money on death or after a set period
What should be the first question to ask before purchasing life insurance?
What is the purpose of purchasing life insurance?
What is the primary source of profit for investors in the stock market?
Capital gains
What is the benefit of investing in the long term?
Increased chance of profit
What is the purpose of an index fund?
To follow a benchmark index
What is the relationship between risk and return in investing?
Higher risk, higher return
How are cash dividends typically paid out to investors?
Quarterly, based on ownership at the time of declaration
What is the definition of a sector fund?
An investment fund that invests in one type of industry or sector
Test your knowledge of financial terms and concepts, including budget, inflation, balance sheet, and more. Learn how to understand and apply these concepts in real-world scenarios.
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