0% 12 The Financial IQ Test Welcome to the Financial IQ Test! Assess your knowledge of personal finance, investments, and economic principles. Choose the best answer for each question. 1 / 30 Question 1: What is the primary purpose of a budget? To reduce taxes To eliminate debt To plan and manage income and expenses To invest in stocks 2 / 30 Question 2: Which of the following is considered a low-risk investment? Stocks Real estate Government bonds Cryptocurrency 3 / 30 Question 3: What is the Rule of 72 used for? Calculating mortgage payments Estimating how long it takes for an investment to double Determining credit scores Assessing annual expenses 4 / 30 Question 4: Which type of account is designed primarily for long-term retirement savings? Checking account Money market account 401(k) account Certificate of deposit (CD) 5 / 30 Question 5: What does a high credit score indicate? Higher likelihood of default Strong creditworthiness Low income level Limited financial knowledge 6 / 30 Question 6: Which of the following describes compound interest? Interest that increases at a fixed rate Interest charged on a loan only once Interest calculated on the principal and previously earned interest Interest exempt from taxes 7 / 30 Question 7: What does "diversification" mean in investing? Investing all your money in one stock Spreading investments across various assets to reduce risk Selling assets during market downturns Keeping investments in cash only 8 / 30 Question 8: What is the purpose of an emergency fund? To pay off student loans To invest in high-return assets To cover unexpected expenses To earn high interest 9 / 30 Question 9: What does "liquidity" refer to in finance? The amount of debt an individual owes How easily an asset can be converted into cash The profitability of an investment The stability of a stock price 10 / 30 Question 10: What is inflation? An increase in unemployment rates A decrease in the value of savings accounts A general increase in prices over time A rise in stock market indexes 11 / 30 Question 11: What is the purpose of a credit card grace period? To avoid late payment fees To reduce interest rates To allow time to pay off balances without accruing interest To improve credit scores 12 / 30 Question 12: Which financial metric is used to measure a company's profitability? Liquidity ratio Net income Current ratio Credit score 13 / 30 Question 13: What is dollar-cost averaging? A strategy to time the market Investing a fixed amount of money at regular intervals Buying stocks only when prices are low Selling assets during a bull market 14 / 30 Question 14: What does "net worth" refer to? Total income earned annually Value of investments only Total assets minus total liabilities Total cash on hand 15 / 30 Question 15: Which type of insurance is designed to replace lost income due to disability? Health insurance Life insurance Disability insurance Homeowner’s insurance 16 / 30 Question 16: What is a stock dividend? Profit earned from selling stocks A bonus stock offered by the company A portion of a company’s earnings distributed to shareholders The interest earned on stocks 17 / 30 Question 17: Which of the following is a tax-advantaged savings account? Savings account Checking account Roth IRA Credit card account 18 / 30 Question 18: What is an ETF (Exchange-Traded Fund)? A type of stock A fund that tracks an index, commodity, or sector A high-risk investment option A cryptocurrency fund 19 / 30 Question 19: What does "amortization" refer to? The process of paying off debt in regular installments The growth of an investment over time The depreciation of an asset Consolidating multiple debts 20 / 30 Question 20: What is the benefit of a Health Savings Account (HSA)? It provides high interest rates It offers tax advantages for medical expenses It guarantees coverage for all health issues It replaces employer health insurance 21 / 30 Question 21: What is the difference between a bull market and a bear market Bull markets have higher inflation than bear markets Bull markets indicate rising stock prices, while bear markets indicate falling stock prices Bull markets are riskier Bear markets lead to better returns 22 / 30 Question 22: What is the primary goal of diversification? To increase returns To reduce costs To minimize risk by spreading investments To maximize liquidity 23 / 30 Question 23: What does "APR" stand for? Annual Payment Rate Applied Payment Ratio Annual Percentage Rate Average Percentage Return 24 / 30 Question 24: What is a mutual fund? A loan offered by banks A pool of money collected from investors to invest in securities A government bond An individual retirement account 25 / 30 Question 25: Which is an example of a fixed expense? Dining out Groceries Rent or mortgage payment Clothing purchases 26 / 30 Question 26: What is "credit utilization"? The number of credit cards you own The ratio of your credit card balance to your credit limit The frequency of credit card use Your credit score increase rate 27 / 30 Question 27: Which of the following is a liability? Cash in hand Real estate owned Investment portfolio Outstanding loan balance 28 / 30 Question 28: What is the primary purpose of life insurance? To generate investment returns To cover medical expenses To provide financial security to beneficiaries To pay for retirement expenses 29 / 30 Question 29: What is the difference between gross income and net income? Gross income includes only bonuses Gross income is before taxes, and net income is after taxes Net income is before taxes They are the same 30 / 30 Question 30: What is the main benefit of refinancing a loan? Increasing monthly payments Shortening the loan term Securing a lower interest rate Avoiding all future interest payments Your score isThe average score is 75%Share your Score! LinkedIn Facebook VKontakte 0% Restart quiz