Personal Finance Final Exam Test
Questions with Guaranteed Pass
Solutions (2025) Updated.
Baby Steps - Answer 7 steps to a healthy financial plan
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
Questions with Guaranteed Pass
Solutions (2025) Updated.
Baby Steps - Answer 7 steps to a healthy financial plan
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
