NAB Personal Finance Planning 3

Question 1

What does 'compound interest' mean in the context of savings?

Accepted Answer

Interest earned on both the principal and previously accumulated interest

Answer

Interest earned only on the original principal

Answer

Interest charged on overdue payments

Answer

A fixed interest rate that never changes

Question 2

Using the Rule of 72, approximately how long will it take to double an investment earning 6% annually?

Accepted Answer

12 years

Answer

6 years

Answer

18 years

Answer

24 years

Question 3

Which credit score range is generally considered 'excellent' in the US?

Accepted Answer

800–850

Answer

300–579

Answer

580–669

Answer

670–739

Question 4

What factor has the LARGEST impact on a FICO credit score?

Accepted Answer

Payment history

Answer

Credit mix

Answer

Length of credit history

Answer

New credit inquiries

Question 5

What is 'pay yourself first' as a savings strategy?

Accepted Answer

Automatically transferring savings before spending disposable income

Answer

Paying off all debts before spending on anything else

Answer

Saving whatever remains after all monthly expenses are paid

Answer

Investing exclusively in employer-matched retirement accounts

Question 6

Which of the following DECREASES your credit utilization ratio?

Accepted Answer

Paying down existing credit card debt

Answer

Closing old credit card accounts

Answer

Increasing your credit card balances

Answer

Applying for multiple new loans simultaneously

Question 7

Inflation erodes purchasing power. If inflation is 3% and your savings account earns 1%, what is your real return?

Accepted Answer

-2%

Answer

+4%

Answer

+2%

Answer

-3%