Budget
What is the difference between a fixed expense and a variable expense?
A fixed expense generally stays the same each month, while a variable expense can change.
What is the difference between a debit card and a credit card?
A debit card uses money from your bank account, while a credit card allows you to borrow money that you must repay.
When you purchase a stock in a company, what are you actually buying?
A small portion of ownership in that company.
What is the main purpose of an emergency fund, and what is one expense it should cover?
To cover unexpected necessary expenses, such as car repairs, medical bills, or a loss of income.
A college student earns $1,500 monthly. Using the 50/30/20 budgeting rule, how much should be allocated toward wants?
$450
Which has the greatest impact on a typical FICO credit score: payment history, credit utilization, or credit mix?
Payment history.
Payment history accounts for approximately 35% of a typical FICO score.
What is the term for spreading your money across different investments to reduce the risk of relying on just one?
Diversification.
A student wants to save $1,800 for a study abroad trip in 12 months. If they already have $360 saved, how much must they save each month?
$120 per month.
You have $500 left in your monthly budget. You need $200 for groceries, $100 for gas, and $250 for textbooks. How much are you over budget?
$50
Your credit card has a $2,500 limit, and you currently owe $1,000. What is your credit utilization rate?
40%.
You purchase 10 shares of a stock for $20 each. The price increases to $28 per share. How much profit would you make if you sold all 10 shares?
$80.
Two savings accounts offer 4% APY and 4% APR, respectively. Assuming the APR account compounds monthly, which offers a higher effective annual yield?
The account offering 4% APR with monthly compounding.
A student earns $2,000 monthly and spends $1,650. What percentage of their income is left over?
17.5%
You have a $1,200 credit card balance with a 24% APR. Approximately how much interest would accrue in one month using a simplified monthly rate?
$24
Two students invest $1,000 each at the same hypothetical annual return. One starts at age 20, and the other starts at age 30. If both stop at age 60, who generally benefits more from compounding?
The student who starts at age 20.
You have $3,000 in a savings account earning 3% APY, but inflation is 5% annually. Is your money gaining or losing purchasing power?
Losing purchasing power.
You earn $2,400 monthly. Your expenses are $1,200 for rent and bills, $500 for food and transportation, and $300 for entertainment. If you want to save 25% of your income, how much must you reduce your expenses?
$200
Two students each have a $1,000 credit card balance at the same interest rate. Student A makes only minimum payments, while Student B pays $200 monthly. Who will generally pay more interest over time, and why?
Student A.
Making only minimum payments generally keeps the balance outstanding longer, allowing more interest to accumulate.
An investment gains 20% in its first year but loses 20% in its second year. If you originally invested $1,000, how much money would you have remaining?
$960.
A student deposits $2,000 into a savings account earning 5% APY. They make no additional deposits or withdrawals. Approximately how much will they have after three years?
$2,315.25.