WorksheetsUnderstanding Credit and Investments
Total questions: 20
Worksheet time: 10mins
What is the main purpose of overdraft protection on a checking account?
To increase the account's interest rate
To prevent transactions from being declined when funds are insufficient
To provide a fixed monthly income
To improve your credit score
Which of the following is considered a type of fixed income investment?
Common stocks
Government bonds
Real estate
Cryptocurrency
Which type of loan is typically used to purchase a house?
Payday loan
Mortgage loan
Student loan
Auto loan
What does a higher credit score generally indicate?
Higher risk for lenders
Lower risk for lenders
No impact on borrowing
Higher interest rates
Which of the following is an example of a variable income investment?
Certificate of deposit (CD)
Savings account
Corporate stock
Treasury bill
If the annual interest rate on a loan is 5%, what is the interest on a $1,000 loan after one year (simple interest)?
$25
$50
$100
$500
Which of the following best describes a personal loan?
A loan used only for buying a car
A loan that can be used for various personal expenses
A loan that must be used for education
A loan that is only available to businesses
What is the main risk associated with variable income investments?
Fixed returns
Loss of principal due to market fluctuations
Guaranteed income
No risk at all
Which of the following actions can help improve your credit score?
Missing payments
Paying bills on time
Maxing out credit cards
Applying for multiple loans at once
If the interest rate on a savings account increases, what happens to the amount of interest earned?
It decreases
It stays the same
It increases
It becomes negative
Which of the following is NOT a type of credit?
Installment loan
Revolving credit
Fixed deposit
Mortgage
What is the formula for calculating simple interest?
I=P+r+t
I=P×r×t
I=P÷r÷t
I=P−r−t
Which investment typically offers the highest potential return but also the highest risk?
Savings account
Government bond
Stock market
Certificate of deposit
What happens if you exceed your overdraft limit?
The bank pays all your transactions without penalty
Transactions may be declined and additional fees may apply
Your credit score automatically increases
You receive a bonus from the bank
Which of the following is a benefit of having a good credit score?
Higher interest rates on loans
Easier approval for credit cards and loans
More bank fees
Lower chances of getting a loan
Which type of investment is most likely to provide a predictable stream of income?
Stocks
Bonds
Real estate
Commodities
If you borrow $2,000 at an annual interest rate of 6% for 2 years (simple interest), how much total interest will you pay?
$120
$240
$360
$600
Which of the following is an example of revolving credit?
Car loan
Mortgage
Credit card
Student loan
What is the main difference between fixed income and variable income investments?
Fixed income investments have unpredictable returns
Variable income investments guarantee returns
Fixed income investments provide regular, predictable payments; variable income investments do not
There is no difference
How does a higher interest rate affect the total amount paid on a loan?
It decreases the total amount paid
It has no effect
It increases the total amount paid
It makes the loan free
