Financial Literacy 4-7

What is a budget?

• A plan to spend as much money as possible

• A detailed plan for all financial resources and expenses

• A record of past spending

• A loan from a bank

If you have a savings account with an annual interest rate of 5%, how much interest will you earn in a year on a deposit of $200?

• $5

• $10

• $15

• $20

What does a credit score represent?

• Your income level

• The amount of money in your bank account

• A measure of your financial responsibility and risk to lenders

• The interest rate on your mortgage

Which of the following is a benefit of investing in the stock market?

• Guaranteed returns on investment

• Potential for high returns

• Fixed interest rates

• Immediate access to funds

What is the purpose of setting financial goals?

• To spend money without limits

• To ensure you have enough debt

• To guide your financial planning and track progress

• To impress others with your wealth

What is compound interest?

• Interest on the principal amount only

• Interest on the principal amount for the first year only

• Interest on both the principal and the accumulated interest

• A fixed interest rate for the life of the loan

How can having a good credit score benefit you?

• You can borrow any amount of money you want

• You are exempt from paying taxes

• You qualify for lower interest rates on loans

• You receive cash back on all purchases

What is the first step in creating a budget?

• Spending all your money to see what you need

• Borrowing money from friends and family

• Tracking your income and expenses

• Investing in the stock market

Why is diversification important in investing?

• It guarantees profits

• It reduces risk by spreading investments across various assets

• It allows you to focus on one high-return investment

• It ensures immediate liquidity

What is a fixed interest rate?

• An interest rate that changes daily

• An interest rate that increases over time

• An interest rate that decreases over time

• An interest rate that remains the same through the term of the loan