"Next Gen Personal Finance (NGPF)" is an organization that provides free personal finance curriculum and professional development for educators. The following financial quiz is inspired by the NGPF.org diagnostic exam to test your knowledge of personal finance concepts.
What is the purpose of a budget? a) To track income and expenses b) To maximize credit card rewards c) To minimize taxes d) To determine retirement age
Which of the following is an example of a fixed expense? a) Groceries b) Dining out c) Rent d) Clothing
What does the term "APR" stand for in relation to credit cards? a) Annual Percentage Rate b) Application Processing Rate c) Average Payment Ratio d) Applicable Payment Rate
What is the purpose of an emergency fund? a) To pay off credit card debt b) To save for a vacation c) To cover unexpected expenses d) To invest in the stock market
Which of the following best describes a 401(k) plan? a) A college savings plan b) A retirement savings plan c) A life insurance policy d) A high-interest savings account
What is the primary difference between a traditional IRA and a Roth IRA? a) The age at which you can withdraw funds b) The types of investments you can make c) The tax treatment of contributions and withdrawals d) The maximum contribution limits
What is the relationship between risk and return in investing? a) Higher risk guarantees higher returns b) Higher risk is associated with higher potential returns c) Lower risk guarantees higher returns d) There is no relationship between risk and return
What is the purpose of diversification in an investment portfolio? a) To minimize risk b) To guarantee returns c) To increase the likelihood of picking winning stocks d) To reduce taxes
Which of the following is an example of a liability? a) A car loan b) A checking account c) A savings account d) A stock portfolio
What is the purpose of insurance? a) To generate profit b) To eliminate risk c) To transfer risk d) To reduce investment fees
Answers: 1(a), 2(c), 3(a), 4(c), 5(b), 6(c), 7(b), 8(a), 9(a), 10(c)
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