Financial Literacy Test

Front

What is considered an asset in financial terms?

Back

An asset is anything of value or a resource owned by an individual or entity, such as savings, property, or investments.

Front

What are liabilities in financial terms?

Back

Liabilities are financial obligations or debts that an individual or entity owes to others, such as loans, bills, or mortgages.

Front

How do you calculate net worth?

Back

Net worth is calculated by subtracting total liabilities from total assets. It represents the value of an individual's or entity's financial position.

Front

What is simple interest?

Back

Simple interest is a method of calculating the interest charge on a loan or investment based on the original principal amount and the interest rate over a specified period.

Front

If Emilio borrows $1200 at 8.5% simple interest for 2 years, how do you calculate the total amount to be paid back?

Back

Total amount to be paid back = Principal + (Principal x Rate x Time) = $1200 + ($1200 x 0.085 x 2) = $1404.

Front

What is the difference between assets and liabilities?

Back

Assets are resources owned that have value, while liabilities are obligations owed to others. The difference between them is net worth.

Front

What are some examples of common assets?

Back

Common assets include cash, savings accounts, real estate, stocks, bonds, and personal property.

Front

What are some examples of common liabilities?

Back

Common liabilities include mortgages, car loans, credit card debt, student loans, and unpaid bills.

Front

What is the formula for calculating net worth?

Back

Net Worth = Total Assets - Total Liabilities.

Front

Why is understanding financial literacy important?

Back

Understanding financial literacy is important for making informed decisions about budgeting, saving, investing, and managing debt.