7SS S1 CFA Unit 1-Personal Finance Review

What is the MAIN purpose of investing ?

• to purchase a shirt

• to build credit

• to build wealth

• to create an emergency fund

What is an INCOME?

• Trading money in exchange for goods or services

  
  

• A plan for saving and spending income

• how you manage your money

  
  

• Money that you earn from working or gain from investments

Which statement about the relationship between income and spending is correct?

• income and spending should be balanced in creating budget

• Income should always be spent each month

• Spending more money each month will increase income

• Spending more money than income each month will not create problems

What is SAVING?

• A fee paid for the use of borrowing money. The cost of borrowing money

  
  

• Money set that is set aside for later use, often for a large purchase or an emergency

  
  

• a small plastic card issued by a bank, allowing a person to purchase goods or services on credit

  
  

• A plan for saving and spending income

  
  

Which of the following is an advantage of saving money each month?

• Savings allow an individual to pay for an unexpected expense without going into debt

• Savings are quick way to increase your monthly work income

• Savings ensure a better interest rate on credit card purchases

• Savings create the opportunity to build your credit score

True or False, is a Need something you do not need to survive?

• True

• False

True or False, is a Want something you do not need to survive?

• True

• False

Use the information to answer the following question.

Sasha is a bank manager. Every two weeks she receives a paycheck from the bank. What do the paychecks represent?

• her taxes

• her credit

• her income

• her interest

Why do people make personal budgets?

• to help them determine how to earn more resources

• to help them determine how to earn different resources

• to help them determine the best way to use a limited resource

• to help them determine the best way to use an unlimited resource

What is a DEBT?

• A plan for saving and spending income

• the money borrowed (but has not been repaid) from when you have spent more than you have; the state of owing money

  
  

• Trading money in exchange for goods or services

• Money that you earn from working or gain from investments