Personal Finance Basics Quiz
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Questions and Answers

What typically happens when a checking account is overdrawn?

  • The account is automatically closed.
  • No consequences occur if the account is in good standing.
  • All pending transactions are processed.
  • A fee is charged and transactions may be declined. (correct)

    • What is the main purpose of a cover letter?

  • To list all job experiences in detail.
  • To provide personal information not on the resume.
  • To summarize achievements only.
  • To introduce oneself and explain interest in the position. (correct)

    • How long does Chapter 7 bankruptcy typically remain on a credit report?

  • 7 years. (correct)
  • 5 years.
  • 10 years.
  • 2 years.

    • Which of the following best describes term life insurance?

    <p>It covers a specific period and pays out only if the insured dies during that time.</p> Signup and view all the answers

    What does diversification in investments aim to achieve?

    <p>To minimize potential losses.</p> Signup and view all the answers

    Which of the following describes a complex portfolio?

    <p>A portfolio with diverse asset classes and investment strategies.</p> Signup and view all the answers

    What is the role of beneficiaries in insurance?

    <p>They receive the death benefit or payout from the insurance policy.</p> Signup and view all the answers

    What factors primarily contribute to determining a credit score?

    <p>Length of credit history and payment behavior.</p> Signup and view all the answers

    What is the definition of interest?

    <p>Paid for the use of borrowed money</p> Signup and view all the answers

    What does a negative savings rate indicate?

    <p>Spending more than earning</p> Signup and view all the answers

    What is the purpose of an emergency fund?

    <p>Funds for unforeseen emergencies</p> Signup and view all the answers

    What does the term 'compound interest' refer to?

    <p>Interest paid on the principal plus accumulated interest</p> Signup and view all the answers

    What is meant by fixed expenses?

    <p>Recurring bills that do not change</p> Signup and view all the answers

    What is the first step in reconciling accounts?

    <p>Matching transactions</p> Signup and view all the answers

    What does financial security mean?

    <p>Meeting financial needs without stress</p> Signup and view all the answers

    How often can you receive a free credit report?

    <p>Annually</p> Signup and view all the answers

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