Financial Literacy for College Students Quiz

Budgeting involves monitoring income and expenses to maintain financial stability.

Compound interest allows investments to grow exponentially by earning interest on both the principal and accumulated interest.

401(k) accounts are retirement savings plans and not insurance products.

FAFSA forms assess an individual's financial need to determine eligibility for federal student aid programs.

Inflation refers to the rise in the prices of goods and services over time, resulting in a decrease in purchasing power.

Net worth represents the difference between an individual's assets and liabilities, indicating their overall financial position.

Grace periods offer students time after graduation before they need to start repaying their student loans.

Credit scores assess the risk of lending money to individuals.

Debit cards deduct funds directly from a bank account, while credit cards provide a line of credit.

APR represents the annual cost of borrowing, including interest and fees.

401(k) plans enable individuals to save for retirement with contributions deducted from their pre-tax income.

Diversification involves investing in various assets to minimize the impact of market fluctuations on overall portfolio performance.

Grants are funds provided without the requirement of repayment, while loans must be repaid with interest.

Roth IRAs allow individuals to contribute after-tax income, with tax-free withdrawals in retirement.

Stocks offer high potential returns but also come with high risk due to market volatility.

The Rule of 72 provides a quick way to estimate the time required for an investment to double based on its compound interest rate.

Liquidity measures an asset's ability to be sold or converted into cash quickly without substantial loss of value.

Opportunity cost refers to the potential benefits sacrificed when choosing one option over another.

Investment insurance is not a common type of insurance product.