WGU D363
PREASSESMENT
QUESTIONS WITH 100%
COMPLETE ANSWERS,
ALREADY GRADED A+
1. Which statement best describes a personal budget?
A. A list of only monthly expenses
B. A plan that compares income and expenses to achieve financial goals
C. A record of past tax payments
D. A report showing credit history
Answer: B
Explanation: A budget is a financial plan that tracks income, expenses, savings, and
spending decisions to help achieve financial goals.
2. What is the primary purpose of an emergency fund?
A. Increase investment returns
B. Pay luxury expenses
C. Cover unexpected financial needs
D. Reduce income taxes
,Answer: C
Explanation: Emergency funds provide cash for unexpected events such as medical
bills, car repairs, or job loss.
3. Net worth is calculated as:
A. Income − Expenses
B. Assets − Liabilities
C. Assets + Liabilities
D. Expenses − Income
Answer: B
Explanation: Net worth measures financial position by subtracting what you owe
from what you own.
Formula:
Net Worth = Total Assets − Total Liabilities
4. Which of the following is considered a liability?
A. Savings account
B. Retirement account
C. Mortgage balance
D. Stock investment
Answer: C
Explanation: Liabilities are debts owed to others, such as mortgages, loans, and
credit card balances.
,5. A person earns $5,000 per month and has $1,500 in monthly debt payments.
What is the debt-to-income ratio?
A. 15%
B. 20%
C. 30%
D. 50%
Answer: C
Calculation:
Debt-to-Income Ratio = Debt Payments ÷ Gross Income
$1,500 ÷ $5,000 = 0.30 = 30%
6. Which type of insurance protects against damage to a person's home and
belongings?
A. Auto liability insurance
B. Homeowners insurance
C. Disability insurance
D. Life insurance
Answer: B
Explanation: Homeowners insurance covers property damage and personal
belongings.
7. HO-4 insurance is commonly known as:
, A. Homeowners insurance for landlords
B. Renters insurance
C. Condo insurance
D. Flood insurance
Answer: B
Explanation: HO-4 policies protect renters' personal property and liability.
8. The main purpose of life insurance is to:
A. Increase retirement income
B. Provide financial protection after death
C. Eliminate taxes
D. Guarantee investment profits
Answer: B
Explanation: Life insurance provides income replacement and financial support for
beneficiaries.
9. Which investment generally has the highest risk?
A. Savings account
B. Certificate of deposit
C. Government bond
D. Individual stock
Answer: D
Explanation: Individual stocks have higher volatility because their value depends on
company performance.
PREASSESMENT
QUESTIONS WITH 100%
COMPLETE ANSWERS,
ALREADY GRADED A+
1. Which statement best describes a personal budget?
A. A list of only monthly expenses
B. A plan that compares income and expenses to achieve financial goals
C. A record of past tax payments
D. A report showing credit history
Answer: B
Explanation: A budget is a financial plan that tracks income, expenses, savings, and
spending decisions to help achieve financial goals.
2. What is the primary purpose of an emergency fund?
A. Increase investment returns
B. Pay luxury expenses
C. Cover unexpected financial needs
D. Reduce income taxes
,Answer: C
Explanation: Emergency funds provide cash for unexpected events such as medical
bills, car repairs, or job loss.
3. Net worth is calculated as:
A. Income − Expenses
B. Assets − Liabilities
C. Assets + Liabilities
D. Expenses − Income
Answer: B
Explanation: Net worth measures financial position by subtracting what you owe
from what you own.
Formula:
Net Worth = Total Assets − Total Liabilities
4. Which of the following is considered a liability?
A. Savings account
B. Retirement account
C. Mortgage balance
D. Stock investment
Answer: C
Explanation: Liabilities are debts owed to others, such as mortgages, loans, and
credit card balances.
,5. A person earns $5,000 per month and has $1,500 in monthly debt payments.
What is the debt-to-income ratio?
A. 15%
B. 20%
C. 30%
D. 50%
Answer: C
Calculation:
Debt-to-Income Ratio = Debt Payments ÷ Gross Income
$1,500 ÷ $5,000 = 0.30 = 30%
6. Which type of insurance protects against damage to a person's home and
belongings?
A. Auto liability insurance
B. Homeowners insurance
C. Disability insurance
D. Life insurance
Answer: B
Explanation: Homeowners insurance covers property damage and personal
belongings.
7. HO-4 insurance is commonly known as:
, A. Homeowners insurance for landlords
B. Renters insurance
C. Condo insurance
D. Flood insurance
Answer: B
Explanation: HO-4 policies protect renters' personal property and liability.
8. The main purpose of life insurance is to:
A. Increase retirement income
B. Provide financial protection after death
C. Eliminate taxes
D. Guarantee investment profits
Answer: B
Explanation: Life insurance provides income replacement and financial support for
beneficiaries.
9. Which investment generally has the highest risk?
A. Savings account
B. Certificate of deposit
C. Government bond
D. Individual stock
Answer: D
Explanation: Individual stocks have higher volatility because their value depends on
company performance.
