Personal Finance 4

What is an advantage of a savings account with compound interest over a checking account with simple interest?

• Savings accounts pay a higher rate of interest.
• Savings accounts are easier to acquire.
• Savings accounts can be used to guarantee loans.
• Savings accounts provide more protection for your money.

Which of the following is a reason to save?

• Your bank charges a penalty if you withdraw money from your account.
• The government collects high rates of taxes on interest received through saving.
• Having to go to the bank to make a purchase.
• Your parents place a dollar into your savings account for every dollar you save.

If you have $50 in a savings account with simple interest at a rate of 6%, how much interest will you earn at the end of 3 years? (Principle x Rate x Time = Interest)

• $3
• $6
• $9
• $12

Which of the following is NOT a use for credit?

• an emergency situation
• buying expensive outfits to impress your clients to make a commission
• acquiring something of great value that you may not be able to attain later
• making an investment for your future

Which statement BEST explains what stocks, bonds, and mutual funds have in common?

• They are things that wealthy people purchase.
• Banks sell them as a way to improve their profits.
• They are bought by people as a way to save money.
• They are ways to invest extra money.

Which type of investment provides more flexibility and greater liquidity?

• certificates of deposit
• money market
• savings accounts
• stocks and mutual funds

How has technology NOT changed banking?

• It has made debit cards a choice over credit cards.
• It has provided personal bankers.
• It has made direct deposits through an ATM possible.
• It has permitted easy transfer of funds from one account to another.

When should people buy less on credit?

• when they have other debts
• when interest rates are low
• when they have no savings account
• when they have no collateral

Which is a method of saving money?

• purchasing bonds 
• purchasing stocks
• purchasing certificates of deposit
• purchasing mutual funds

Why do periods of low interest rates create jobs?

• People borrow money to buy more goods.
• People save move money.
• People are willing to work for less money.
• Savings accounts pay a lower rate of interest.