Financial Literacy Midterm Concepts Review 1

Front

What does a credit score represent? Select the best answer for each question. Circle the letter of your choice.

Back

A number that indicates your ability to repay loans

Front

Which of the following is included in a pay stub? Select the best answer for each question. Circle the letter of your choice. Options: List of fixed expenses, Summary of net pay and payroll deductions, Details about mutual fund investments, Description of diversification strategies

Back

Summary of net pay and payroll deductions

Front

What is the difference between gross pay and net pay?

Back

Gross pay is before deductions; net pay is after deductions.

Front

Which of the following is an example of a fixed expense? Grocery bills, Rent or mortgage payments, Utility bills, Entertainment costs

Back

Rent or mortgage payments

Front

What is opportunity cost? Select the best answer for each question. Circle the letter of your choice.

Back

The cost of the next best alternative foregone

Front

Disposable income is:

Back

The money left after paying taxes and necessary expenses

Front

Why is compound interest beneficial for savings accounts?

Back

It allows interest to be earned on both the principal and previously earned interest.

Front

What does FDIC insurance cover?

Back

Up to $250,000 in deposits per bank account in the event of bank failure

Front

Which investment strategy involves spreading money across different types of assets to reduce risk?

Back

Diversification

Front

Which financial term refers to the original amount borrowed or invested?

Back

Principal