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Money IQ Quiz: 10 Personal Finance Questions with Answers

Written by the Quizzeela team · Reviewed by Utsav Raj
Last checked · 10 questions · Easy

How good are your money basics? These 10 questions cover loans, interest, inflation and saving, the things everyone deals with but few are taught.

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1What does EMI stand for?

  1. Estimated Monthly Income
  2. Easy Money Investment
  3. Extra Monthly Interest
  4. Equated Monthly Instalment
Show answer
Answer: D. Equated Monthly Instalment. An EMI is the fixed amount you repay every month on a loan. It includes part of the loan and part of the interest.

2In a loan, what is the "principal"?

  1. The bank manager
  2. The late-payment fee
  3. The original amount you borrowed
  4. The interest rate
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Answer: C. The original amount you borrowed. The principal is the amount you borrowed. Interest is charged on the part of the principal you still owe.

3With compound interest, you earn interest on:

  1. Only the last month
  2. Your money plus the interest already added
  3. Only the money you first put in
  4. Nothing until the end
Show answer
Answer: B. Your money plus the interest already added. Compounding means interest is added to your balance, and the next interest is calculated on that bigger balance.

4Using the "Rule of 72", roughly how many years does money take to double at 8% a year?

  1. 9 years
  2. 6 years
  3. 12 years
  4. 18 years
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Answer: A. 9 years. 72 divided by the yearly rate gives the rough doubling time: 72 ÷ 8 = 9 years.

5For the same loan and rate, a longer tenure usually means:

  1. No change at all
  2. Higher EMI, less total interest
  3. The loan becomes interest-free
  4. Lower EMI, more total interest
Show answer
Answer: D. Lower EMI, more total interest. Spreading the loan over more months lowers each EMI, but you pay interest for longer, so the total cost goes up.

6What is inflation?

  1. Banks closing for holidays
  2. Prices of goods and services rising over time
  3. A type of loan
  4. Your salary going up
Show answer
Answer: B. Prices of goods and services rising over time. Inflation means the same money buys a little less each year because prices go up.

7An emergency fund is:

  1. Money you keep aside for unexpected costs
  2. An insurance policy
  3. A government scheme
  4. A loan for emergencies
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Answer: A. Money you keep aside for unexpected costs. It is savings kept ready for surprises like a job loss or a medical bill, so you do not need to borrow.

8If you pay only the "minimum due" on a credit card:

  1. Nothing happens
  2. Interest is charged on the remaining balance
  3. The rest is forgiven
  4. Your limit doubles
Show answer
Answer: B. Interest is charged on the remaining balance. The unpaid part keeps attracting interest, often at a high rate. Paying the full amount avoids that interest.

9What does "diversification" mean for investing?

  1. Keeping cash at home
  2. Spreading money across different investments
  3. Taking a loan to invest
  4. Putting all money in one share
Show answer
Answer: B. Spreading money across different investments. Spreading money across different types of investments lowers the damage if one of them falls.

10A budget is mainly a plan for:

  1. How to spend and save your income
  2. Which bank to choose
  3. Buying shares
  4. Your tax refund
Show answer
Answer: A. How to spend and save your income. A budget lists what comes in and what goes out, so you can decide how much to spend and how much to save.
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Sources: RBI financial education material and standard finance definitions. For learning only, not financial, tax or insurance advice. Found a mistake? Use "Report a mistake" in the timed quiz.