Finance Quiz

1.What is the primary purpose of a budget in personal finance?

 a) To track historical spending

 b) To predict the future value of investments

 c) To plan and manage income and expenses

 d) To pay off all debts immediately

2.What is the term for the interest rate at which banks lend money to each other overnight?

 a) Prime rate

 b) Federal funds rate

 c) LIBOR rate

 d) Mortgage rate

3.Which of the following is a type of investment that represents ownership in a corporation? 

a) Bond

b) Mutual fund

 c) Stock

 d) Certificate of deposit (CD)

4.What does ROI stand for in finance?

 a) Return on Investment

 b) Rate of Interest

 c) Risk of Inflation

 d) Revenue of Income

5.What is diversification in the context of investment? 

a) Putting all your money into a single investment

 b) Investing only in real estate

 c) Spreading investments across various assets to reduce risk

 d) Investing in high-risk, high-reward assets