Trivia On Personal Finance: MCQ Quiz

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Trivia On Personal Finance: MCQ Quiz - Quiz

Do you know anything about personal finance? Would you like to put your knowledge to the test? Personal finance is the financial management in which an individual or family unit operates to budget, save, and spend monetary resources over time, consider various financial risks and future life endeavors. The critical component of personal finance is financial planning. If you would like to comprehend more regarding personal finance, this is the quiz for you.


Questions and Answers
  • 1. 

    What is a credit card?

    • A.

      A loan that has to be paid off every month.

    • B.

      An arrangement by which you can buy something now, with the promise that you will pay for it in the future.

    • C.

      A money substitute for items you cannot afford.

    • D.

      All of the above.

    Correct Answer
    D. All of the above.
    Explanation
    The correct answer is "All of the above." This is because a credit card can be used as a loan that needs to be paid off every month, it allows you to buy something now and pay for it in the future, and it can also be used as a money substitute for items you cannot afford.

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  • 2. 

    What are the advantages of having a credit card?

    • A.

      It takes all the worry out of buying things, because you know the money will be there when you need it.

    • B.

      You don't have to carry cash or wonder whether someone will accept your check.

    • C.

      It doesn't cost anything to use it.

    • D.

      All of the above.

    Correct Answer
    B. You don't have to carry cash or wonder whether someone will accept your check.
    Explanation
    Credit cards provide the convenience of making purchases without carrying cash, ensuring transactions are smooth and universally accepted. This eliminates concerns about merchant check acceptance, streamlining the buying process. However, the perception of credit cards being worry-free or costless is misleading; responsible use is crucial to avoid debts and manage potential fees. Their primary advantage lies in their universal acceptance and the financial flexibility they offer for immediate needs.

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  • 3. 

    Why is it important to have good credit? 

    • A.

      To be eligible for a job.

    • B.

      To buy a car and get auto insurance.

    • C.

      To rent an apartment or buy a house.

    • D.

      All of the above.

    Correct Answer
    D. All of the above.
    Explanation
    Having good credit is important because it affects various aspects of our lives. It can determine our eligibility for job opportunities, as some employers may consider a candidate's credit history as an indicator of their responsibility and trustworthiness. Good credit is also crucial when purchasing a car, as it can affect the interest rates and loan options available. Additionally, landlords and mortgage lenders often review credit scores to assess the reliability of potential tenants or borrowers. Therefore, having good credit is essential for securing housing options, whether it's renting an apartment or buying a house.

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  • 4. 

    What do lenders look for before they lend you money?

    • A.

      What kind of grades you earn.

    • B.

      Whether or not you pay your bills on time (your credit history).

    • C.

      Your intended date of graduation.

    • D.

      All of the above.

    Correct Answer
    B. Whether or not you pay your bills on time (your credit history).
    Explanation
    Lenders look for whether or not you pay your bills on time, which is reflected in your credit history. This is an important factor for lenders as it demonstrates your ability to manage your financial obligations and repay borrowed money. Your credit history provides insight into your past financial behavior and helps lenders assess the level of risk associated with lending you money. Grades earned and intended date of graduation are not typically considered by lenders when determining whether to lend money.

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  • 5. 

    How can you build a good credit history?

    • A.

      Only use your credit card when you know you can afford to use it.

    • B.

      Be reliable, stay within your affordable budget.

    • C.

      Establish other forms of credit—like a checking account, debit card and car payments—that can help demonstrate that you are responsible.

    • D.

      All of the above.

    Correct Answer
    D. All of the above.
    Explanation
    To build a good credit history, it is important to only use a credit card when you can afford to use it, as this demonstrates responsible financial behavior. Additionally, being reliable and staying within your affordable budget is crucial in establishing a positive credit history. Finally, establishing other forms of credit, such as a checking account, debit card, and car payments, can also help showcase responsibility and contribute to building a good credit history. Therefore, the correct answer is "All of the above."

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  • 6. 

    How can you maintain good credit? 

    • A.

      Pay at least the minimum payments of all your bills on time.

    • B.

      Ask your parents to pay your bills for you.

    • C.

      Use all your available credit on all accounts.

    • D.

      All of the above.

    Correct Answer
    A. Pay at least the minimum payments of all your bills on time.
    Explanation
    To maintain good credit, it is important to pay at least the minimum payments of all your bills on time. This shows responsible financial behavior and helps to establish a positive credit history. By consistently making timely payments, you demonstrate your ability to manage your debts effectively and lenders are more likely to view you as a reliable borrower. Asking your parents to pay your bills for you may not help you build credit in your own name, and using all your available credit on all accounts can actually harm your credit score by increasing your credit utilization ratio.

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  • 7. 

    Which of the following may request your credit score from a credit bureau?

    • A.

      Insurance companies.

    • B.

      Your employer.

    • C.

      Your renter or mortgage company

    • D.

      All of the above.

    Correct Answer
    D. All of the above.
    Explanation
    Insurance companies, employers, and renter or mortgage companies may request your credit score from a credit bureau. Insurance companies may use your credit score to determine your risk level and set premiums. Employers may request your credit score as part of a background check for certain job positions. Renter or mortgage companies may use your credit score to assess your creditworthiness and determine if you qualify for a rental or mortgage agreement. Therefore, all of the options mentioned can request your credit score from a credit bureau.

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  • 8. 

    What should you do if you're having trouble paying your credit card bills?

    • A.

      Borrow money from friends or your parents.

    • B.

      Use another credit card to pay them off.

    • C.

      Speak with a family member, friend, or other advisor, and work with your creditors to determine how you can best repay your obligations.

    • D.

      All of the above.

    Correct Answer
    C. Speak with a family member, friend, or other advisor, and work with your creditors to determine how you can best repay your obligations.
    Explanation
    If you're having trouble paying your credit card bills, the best course of action is to speak with a family member, friend, or other advisor, and work with your creditors to determine how you can best repay your obligations. This option suggests seeking support and guidance from trusted individuals who can provide advice on managing your financial situation. It also emphasizes the importance of communicating with your creditors to find a solution that works for both parties involved. Borrowing money from friends or parents or using another credit card to pay off the bills may not be sustainable or effective long-term strategies.

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  • 9. 

    What is interest?

    • A.

      The money the credit card company pays to the people who have the credit cards.

    • B.

      The amount of people who want to get the credit card.

    • C.

      The money a person pays to the credit card company on top of the money that is already owed.

    • D.

      The amount of money a lender will allow you to have

    • E.

      None of the Above

    Correct Answer
    C. The money a person pays to the credit card company on top of the money that is already owed.
    Explanation
    Interest is the additional amount of money that a person pays to the credit card company on top of the money that is already owed. It is a fee charged by the lender for borrowing money or using credit. This fee is calculated as a percentage of the outstanding balance and is added to the total amount owed. Interest is a way for lenders to earn money on the loans they provide, and it is an important factor to consider when using credit cards or taking out loans.

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  • 10. 

    What is the difference between an Express store credit card and a general credit card?

    • A.

      The general credit card has lower interest rates than the express store credit card.

    • B.

      The express store credit card has lower interest rates than a general credit card.

    • C.

      The express store credit card can be used anywhere while the general credit card can only be used at specific stores

    • D.

      The express store credit card can only be used at express while a general credit card can be used anywhere.

    • E.

      There is no difference.

    Correct Answer
    D. The express store credit card can only be used at express while a general credit card can be used anywhere.
    Explanation
    The correct answer states that the express store credit card can only be used at express while a general credit card can be used anywhere. This implies that the two types of credit cards have different acceptance and usage capabilities. The express store credit card is limited to a specific store, while a general credit card is accepted at various locations. Therefore, the difference lies in the scope of usability for each card.

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  • Current Version
  • Apr 10, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • Feb 18, 2009
    Quiz Created by
    Areese07
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