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

Compound interest is calculated on the initial principal plus all previously earned interest, accelerating wealth growth over time.

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

The Rule of 72 divides 72 by the interest rate: 72 ÷ 6 = 12 years to double the investment.

Question 3

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

Accepted Answer

800–850

Answer

A FICO score of 800–850 is classified as exceptional/excellent and qualifies borrowers for the best loan rates.

Question 4

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

Accepted Answer

Payment history

Answer

Payment history accounts for 35% of a FICO score, making it the single most influential factor.

Question 5

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

Accepted Answer

Automatically transferring savings before spending disposable income

Answer

Paying yourself first means automatically directing a portion of income to savings immediately upon receiving a paycheck, before discretionary spending.

(NAB) National Australia Bank Practice Test

(NAB) National Australia Bank Practice Test

NAB Personal Finance Planning 3