Busines Finance Mod 3
What is the primary goal of the "Debt Snowball" money management philosophy?
- A) Minimizing expenses
- B) Paying off the smallest debts first
- C) Investing in high-risk assets
B
In the context of money management, what does the acronym "IRA" stand for?
- A) International Revenue Account
- B) Individual Retirement Account
- C) Investment Risk Assessment
B
Which money management philosophy emphasizes the importance of setting aside a fixed percentage of income for different financial goals?
- A) Zero-Based Budgeting
- B) 50/30/20 Rule
- C) Pay Yourself First
B
What is the primary principle of the "Envelope System" in money management?
- A) Investing in real estate
- B) Allocating cash into labeled envelopes for specific expenses
- C) Using credit cards for all transactions
B
According to the "Emergency Fund" philosophy, what is the recommended amount to have set aside for unforeseen expenses?
- A) One month's living expenses
- B) Three to six months' living expenses
- C) Ten percent of annual income
B
What is the core principle of the "Frugality" money management philosophy?
- A) Maximizing spending on luxury items
- B) Minimizing expenses and embracing a simple lifestyle
- C) Aggressively investing in the stock market
B
Which investment strategy aligns with the "Buy and Hold" money management philosophy?
- A) Frequent buying and selling of stocks
- B) Holding onto investments for the long term
- C) Day trading in the stock market
B
According to the "Diversification" philosophy, why is it important to spread investments across different asset classes?
- A) To increase investment risk
- B) To reduce the impact of poor-performing assets
- C) To concentrate wealth in a single investment
B
What does the "Rule of 72" help individuals calculate in the context of money management?
- A) Monthly budgeting
- B) The number of years for an investment to double at a fixed annual rate of return
- C) Credit card interest rates
B
In the context of money management, what does the term "Net Worth" represent?
- A) Total income earned in a year
- B) Total assets minus total liabilities
- C) Monthly savings contribution
B