Personal Finance
What’s the “50/30/20 rule” in budgeting?
50% needs, 30% wants, 20% savings/investments.
What’s the difference between a stock and a bond?
A stock = ownership; a bond = a loan to a company/government.
What is the main goal of a central bank?
Price stability and controlling inflation.
What is a stablecoin?
A cryptocurrency pegged to a stable asset like USD.
You invest $100 at 10% per year. After 2 years, how much will you have (compound)?
$121
Why is an emergency fund important?
It protects you from unexpected expenses without taking loans.
What is the P/E ratio used for?
To measure how expensive a company’s stock is compared to its earnings.
How does raising interest rates affect inflation?
It reduces spending and borrowing, slowing inflation.
What’s the main difference between Bitcoin and Ethereum?
Bitcoin = digital money; Ethereum = blockchain for smart contracts.
A product’s price increased from $100 to $110. What’s the inflation rate?
10%
How does compound interest work?
Interest is added to the initial sum and future interest grows on both.
Why might an investor choose index funds over individual stocks?
Lower risk, diversification, and lower management fees.
What is fractional reserve banking?
Banks keep only a portion of deposits as reserves and lend the rest.
What is a “smart contract”?
A self-executing contract with rules coded on the blockchain.
Why can high GDP growth still mean poor living standards?
Because wealth may concentrate in few hands.
What’s the difference between gross and net income?
Gross = before taxes; Net = after taxes and deductions.
What does it mean to “buy the dip”?
To purchase an asset after its price drops, expecting recovery.
What happens during a bank run?
Many clients withdraw money at once, risking bank insolvency.
What risks exist in DeFi platforms?
Hacks, smart contract bugs, and no regulation or insurance.
If your loan has 12% annual interest, what’s the approximate monthly rate?
About 1% per month.
How can inflation affect your savings if you keep them in cash?
The real value decreases — you lose purchasing power over time.
What is dollar-cost averaging?
Investing equal amounts regularly regardless of price to reduce risk.
What is quantitative easing (QE)?
Central banks buying assets to inject money into the economy.
What is a blockchain “fork”?
A split in the blockchain network creating a new version (e.g., Bitcoin Cash).
Why might printing more money not make a country richer?
More money → inflation → prices rise faster than income.