Business Finance Mod 4
What is the primary purpose of creating a budget?
a) Tracking expenses
b) Increasing debt
c) Ignoring financial goals
A
How does compound interest affect savings over time?
a) Slows down growth
b) Accelerates growth
c) No impact
B
Which type of insurance provides coverage for unexpected medical expenses?
a) Life insurance
b) Home insurance
c) Health insurance
C
What is an emergency fund designed to cover?
a) Regular monthly expenses
b) Unplanned financial setbacks
c) Luxurious purchases
B
How does diversification reduce investment risk?
a) Increases risk
b) Spreads risk across assets
c) Has no impact on risk
B
What is the 50/30/20 rule used for in personal finance?
a) Budgeting income
b) Calculating taxes
c) Managing investment portfolios
A
Which of the following is a potential advantage of using credit responsibly?
a) Accumulating high-interest debt
b) Building a positive credit history
c) Ignoring financial responsibilities
B
What is the purpose of a retirement savings account, such as a 401(k) or IRA?
a) Funding short-term goals
b) Accumulating wealth for retirement
c) Avoiding taxes temporarily
B
How can one avoid identity theft and fraud in personal finance?
a) Sharing sensitive information online
b) Using weak passwords
c) Monitoring financial statements regularly
C
What is the significance of setting financial goals?
a) Having unrealistic expectations
b) Providing a roadmap for financial decisions
c) Ignoring the need for planning
B