PERSONAL FINANCE FINAL PAPER
TESTED QUESTIONS WITH VERIFIED
ANSWERS COMPLETE STUDY SHEET
●● Compound Interest
Answer: Interest paid on interest previously earned; credited daily,
monthly, quarterly, semi-annually or annually on both principal and
previously credited interest
●● Emergency Fund
Answer: 3-6 months of expenses in readily available cash to be used
only in an emergency
●● Interest Rate
Answer: The percent paid to a lender for the use of borrowed money
●● Money Market
Answer: A mutual fund that seeks to maintain a stable share price and to
earn current income by investing in interest-bearing instruments with
short-term (usually 90 days or less) maturities
●● Sinking Fund
, Answer: Saving money for purchases and letting interest work for, not
against you
●● Diversification
Answer: To spread around one's investment dollars among several
different classes of financial assets among the securities and many
issuers results in lower risks
●● Liquidity
Answer: Quality of an asset that permits it to be converted quickly into
cash; availability of money
●● Risk
Answer: Degree of uncertainty of an asset; in business, the likelihood of
loss or reduced profit
●● Risk Return Ratio
Answer: Relationship of substantial reward in comparison to the amount
of risk taken
●● Share
Answer: A piece of ownership in acompany or mutual fund
●● Annual Fee
TESTED QUESTIONS WITH VERIFIED
ANSWERS COMPLETE STUDY SHEET
●● Compound Interest
Answer: Interest paid on interest previously earned; credited daily,
monthly, quarterly, semi-annually or annually on both principal and
previously credited interest
●● Emergency Fund
Answer: 3-6 months of expenses in readily available cash to be used
only in an emergency
●● Interest Rate
Answer: The percent paid to a lender for the use of borrowed money
●● Money Market
Answer: A mutual fund that seeks to maintain a stable share price and to
earn current income by investing in interest-bearing instruments with
short-term (usually 90 days or less) maturities
●● Sinking Fund
, Answer: Saving money for purchases and letting interest work for, not
against you
●● Diversification
Answer: To spread around one's investment dollars among several
different classes of financial assets among the securities and many
issuers results in lower risks
●● Liquidity
Answer: Quality of an asset that permits it to be converted quickly into
cash; availability of money
●● Risk
Answer: Degree of uncertainty of an asset; in business, the likelihood of
loss or reduced profit
●● Risk Return Ratio
Answer: Relationship of substantial reward in comparison to the amount
of risk taken
●● Share
Answer: A piece of ownership in acompany or mutual fund
●● Annual Fee
