Financial Algebra Banking Review

Compound interest earns more than simple interest at the same interest rate because compounding pays interest on the interest earned.

• True

• False

The Federal Deposit Insurance Corporation insures bank accounts up to a particular amount. This means that if the bank fails, the money is guaranteed by the government.

• True

• False

Interest compounded semiannually is compounded 4 times a year

• True

• False

Interest compounded quarterly is compounded how many times?

• 2

• 4

• 12

• 1

Interest compounded daily is compounded how many times?

• 365

• 12

• 4

• 2

Maxine deposited $1,000 into an account that pays 4.5% interest, compounded daily. At the end of six months, she has earned $12 in interest.

• True

• False

Annual percent yield is higher than the annual percentage rate because APY takes into account the additional interest earned by compounding.

• True

• False

To reconcile a check register means to match all the entries in the register with the statement received from the bank and correct any discrepancies.

• True

• False

Loretta deposits $1,200 into a savings account that earns 4.5% interest compounded quarterly. What is the balance after 7 years?

• $1,312.63

• $1,344.18

• $1,444.27

• $1,641.42

Tamika opened a money market account that has a 4.25% annual interest rate, compounded annually. She deposits

$1,750 into the account. How much interest will the account earn after 15 years?

• $3,267.20

• $3,267.22

• $3,276.22

• $3,667.22