Nuthrive Financial Literacy Quiz

You’ll have more than $102 because your interest compounds over time, meaning that you earn interest on the money you save and on the interest your savings earned in prior years.

Borrowing money to buy or lease a car in order to secure a better paying job can be considered a smart financial decision. In this situation, the borrowed money is being used as an investment in one's career growth and potential future earnings. By acquiring a reliable means of transportation, individuals can increase their job prospects and potentially improve their financial situation in the long run.

Being on a budget means planning your expenses to be less than or equal to your income. This implies that you are consciously managing your finances by carefully considering your expenses and ensuring that they do not exceed what you earn. By doing so, you can effectively allocate your income towards necessary expenses and savings, allowing you to live within your means and avoid financial stress.

When investing in a higher risk stock compared to a lower risk stock, it is expected to yield a higher return for your investment. This is because higher risk stocks have the potential for greater gains, but also come with a higher chance of losses. Investors are compensated for taking on this additional risk by the possibility of higher returns. On the other hand, lower risk stocks offer more stability and lower potential returns.

When you buy a company's stock, you become a shareholder and therefore own a portion of the company. This means that you have a claim on the company's assets and earnings, as well as the right to vote on certain matters related to the company's operations. Owning a part of the company does not necessarily mean that the company will return your original investment with interest or that you are liable for the company's debts.

Rent, insurance, and loan payments are examples of fixed expenses because they are recurring costs that do not typically fluctuate in amount from month to month. These expenses are typically set at a fixed amount and are necessary for maintaining a certain standard of living or fulfilling financial obligations.

When you make a decision to give up something, you are incurring an opportunity cost. This means that by choosing one option, you are forgoing the benefits or opportunities that could have been gained from choosing an alternative option. In other words, the opportunity cost is the value of the next best alternative that is forgone when making a decision.

Your credit score is important because it can affect your interest rates when borrowing money for a car or home. Lenders use your credit score to determine the level of risk you pose as a borrower, so a higher credit score can result in lower interest rates. Additionally, your credit score can impact your ability to finance major purchases, as lenders may be hesitant to provide loans or financing to individuals with lower credit scores. Finally, your credit score can determine whether you can be approved for credit cards, as credit card companies often consider your creditworthiness before issuing a card.

A bank is most likely to reduce potential risk when giving a credit card to someone with no credit history by starting the customer off with a smaller line of credit to see how they handle the account. This approach allows the bank to assess the customer's creditworthiness and financial responsibility before granting them a larger line of credit. By starting with a smaller credit limit, the bank can minimize the potential risk of extending a large credit line to someone with no credit history.

Direct Stafford student loans have a grace period of 6 months after you leave college or drop below half-time enrollment before you are required to begin repaying your debt. This grace period allows borrowers to have some time to find employment or adjust to their new financial situation before they start making payments on their loans. Once the grace period ends, borrowers are expected to start making regular monthly payments towards their loan.