International Baccalaureate (IB) Practice Exam

What situation would NOT be considered a huge financial risk if you had a full emergency fund of $500 or more?

1. Your identity gets stolen

2. A medical emergency

3. You lose your cell phone

4. A car accident

The correct answer is: You lose your cell phone

Having a full emergency fund of $500 or more allows you to manage unexpected expenses or financial setbacks without significant strain. In the context of the options presented, losing a cell phone is generally a scenario that would not pose a huge financial risk if an emergency fund is available. The costs associated with replacing or repairing a lost cell phone can often fall within the $500 range, making it manageable. Unlike the other situations, such as a medical emergency or a car accident, which can quickly lead to expenses that far exceed that amount or can result in long-term financial implications, replacing a cell phone is usually straightforward and does not typically threaten overall financial stability. Situations like identity theft may involve complex processes and potential financial liabilities, while medical emergencies and car accidents can incur high costs for treatment, repairs, or legal fees, which can strain finances more significantly. Thus, with an emergency fund, losing a cell phone stands out as the least financially risky scenario.