Financial Planning Semester Exam

Front

True or False: a Traditional CD has a maturity date?

Back

True

Front

A Health Savings Account is tax-deductible?

Back

True

Front

What does it mean when an account is tax-deductible?

Back

Contributions to the account reduce your taxable income for the year, potentially lowering the amount of taxes you owe.

Front

What is the interest rate of a high-yield Money Market Account? Mark only one oval.

Back

5%-10%

Front

Explain what an interest-bearing checking account is. What is a typical interest rate associated with this account?

Back

An account that pays interest on your balance while allowing regular transactions, with rates typically ranging from 0.01% to 0.50%.

Front

What is the highest interest rate a general savings account can earn? Mark only one oval.

Back

10%

Front

When opening any type of savings accounts, why is it important to take into account the interest rate, including a compound interest account?

Back

Because the interest rate determines how quickly your money grows over time, with compound interest offering the benefit of earning interest on both your initial deposit and previously earned interest.

Front

What is the process of distributing resources, such as capital or investment funds, among various assets or projects to optimize returns or minimize risk called?

Back

Allocation

Front

What is the process of spreading out a loan into a series of fixed payments over time, where each payment covers both interest and principal?

Back

Amortization

Front

What does APR stand for in financial terms?

Back

Annual Percentage Rate