Financial Literacy Quiz by Code Elites

What is the primary purpose of insurance?

• To provide an investment return

• To protect against financial loss

• To guarantee financial security

• To generate profit

Which process assesses risk and determines premium terms in insurance?

• Claims process

• Underwriting

• Risk pooling

• Policyholder verification

What makes cryptocurrency different from traditional money?

• It is backed by gold reserves

• It is centralized and issued by governments

• It operates on decentralized networks using blockchain technology

• It is physical money

What is the primary function of cryptography in cryptocurrency?

• To track stock market trends

• To secure transactions and control new unit creation

• To store user data securely

• To generate transaction fees

Which is a key difference between mutual funds and ETFs?

• Mutual funds trade like stocks, while ETFs are not tradable

• ETFs have higher fees than mutual funds

• Mutual funds are professionally managed, while ETFs often have lower fees

• ETFs are typically intended for short-term investments

Why is learning money skills through investing important for young people?

• It helps build immediate wealth

• It teaches financial discipline and patience

• It avoids the need for a budget

• It eliminates the need for loans

Which of the following is an example of a short-term financial goal?

• Saving for college tuition

• Saving for a new phone or trendy outfit

• Saving for retirement

• Saving for a used car

Why is it important to set long-term financial goals?

• To enjoy immediate rewards

• To help build financial independence and security

• To avoid paying taxes on savings

• To avoid creating a budget

Which of the following is a benefit of budgeting?

• It helps prevent overspending and impulse buying

• It reduces the need for savings

• It eliminates all debts

• It ensures that money is automatically managed without effort

What skill does budgeting help develop?

• Responsibility and smart spending

• Spontaneous purchases

• Long-term financial instability

• Ignoring financial goals