Understanding Net Worth

What is the basic formula for calculating net worth?

• Assets plus liabilities

• Liabilities minus assets

• Liabilities divided by assets

• Assets minus liabilities

Which of the following is considered a personal liability?

• Property value

• Mortgage

• Investment portfolio

• Bank balance

What is an example of a personal asset?

• Student loan

• Credit card debt

• Car value

• Personal loan

How does a change in the value of assets affect net worth?

• It has no effect

• It changes the net worth

• It only affects liabilities

• It only affects income

Why might individuals aim for a higher net worth?

• To increase their liabilities

• To achieve financial goals

• To avoid paying taxes

• To decrease their assets