FBLA Personal Finance Test

What does APR stand for in the context of loans and credit cards?

• Annual Payment Rate

• Annual Percentage Rate

• Average Payment Ratio

• Average Percentage Return

What is the purpose of a budget?

• To restrict spending

• To plan and track income and expenses

• To increase debt

• To limit investments

Which of the following is considered a fixed expense?

• Groceries

• Entertainment

• Rent

• Dining Out

What is the term for a loan that is backed by collateral?

• Unsecured loan

• Secured loan

• Payday loan

• Cash advance

Which type of investment typically offers the highest potential return?

• Stocks

• Bonds

• Savings accounts

• Certificates of deposit (CDs)

What is the purpose of insurance?

• To guarantee investment returns

• To protect against financial loss

• To increase debt

• To provide investment advice

Which of the following is a benefit of a Roth IRA?

• Tax-deductible contributions

• Tax-free withdrawals in retirement

• Employer matching contributions

• Penalty-free withdrawals at any time

What is the recommended percentage of income to save for emergencies?

• 5-10%

• 10-15%

• 20-25%

• 30-35%

Which of the following is a disadvantage of using a debit card?

• Interest charges

• Risk of overspending

• No purchase protection

• Lower acceptance than credit cards

What is the primary function of a credit score?

• To track income and expenses

• To provide investment advice

• To calculate net worth

• To determine eligibility for loans and credit cards