Money Basics
What are the three main functions of money?
Medium of exchange, unit of account, store of value
What is a numerical representation of your creditworthiness?
Credit score
What are ownership shares in a company?
Stocks
What is saving for unexpected expenses?
Emergency Fund
What is the term for the comparison of the benefits and costs of a financial decision?
Cost-benefit analysis
What type of money is backed by a commodity?
Representative money
What is the cost of borrowing?
Interest rate
What is a collection of investments managed by a professional?
Mutual fund
What is the process of ensuring your assets are distributed as desired after your death?
Estate planning
What is the process of evaluating different financial products to find the best option?
Comparison shopping
What is the central bank of the United States?
The Federal Reserve
What is a revolving credit limit?
Line of credit
What is the concept of spreading your investments across different asset classes?
Diversification
What is the term for the amount of money you need to save for retirement?
Retirement savings
What is the term for the interest rate charged on a credit card?
Annual percentage rate (APR)
What is the process of creating a plan for how you will spend your money?
Budgeting
What is the percentage of your income that goes toward debt payments?
Debt-to-income ratio
What type of retirement account allows for tax-free withdrawals?
Roth IRA
What is the strategy of setting aside a portion of your income for future goals?
Saving
What is the term for the annual percentage rate of a loan?
Annual percentage rate (APR)
What is the general increase in the price of goods and services over time?
Inflation
What is the strategy of paying off debt with the highest interest rate first?
Debt avalanche
What is the term for the potential for loss in an investment?
Risk
What is the process of assessing your financial situation and setting goals?
Financial planning
What is the term for the legal document that outlines the terms of a loan?
Loan contract