Personal Finance

Smithville Community Bank pays depositors 2.5% interest for money put into savings accounts. When they make loans the bank charges 4% interest. Why is there a difference in these two rates?

• The bank is not as concerned with attracting depositors as it is with making loans

• The 2.5% rate is the minimum a bank is allowed to pay for deposits.

• People taking out loans demand higher interest rates than those making deposits

• It is a source of profit for the banks to have a higher interest charged than interest earned.

Which financial institution is MOST LIKELY to require membership and offer low loan rates to its members?

• savings and loan

• credit union

• retail store

• bank

Bailey makes $20,000 a year and pays 5% in taxes. Felicia makes $85,000 a year and pays 2.6% in taxes. This type of tax system is

• proportional

• progressive

• regressive

• possessive

Which type of tax structure taxes people with higher incomes at higher percentages?

• proportional

• progressive

• flat

• regressive

Which shows the correct order of investments going from MOST risky to LEAST risky?

• savings accounts, bonds, mutual funds, stocks

• stocks, savings accounts, mutual funds, bonds

• savings accounts, mutual funds, stocks, bonds

• stocks, mutual funds, bonds, savings accounts

Which factor will have the LEAST impact on whether a person gets credit or not?

• compatibility, how much the loan officer likes the person

• capacity, how able the person is to pay back the loan

• character, how willing the person is to pay back the loan

• collateral, how much the person's assets are worth

Sally is not feeling well so her mother takes her to the doctor. The doctor tells her she has strep throat, gives her medication and sends her home. What type of insurance was used

• property and liability

• health

• life

• disability

Joey's father is in a car accident and cannot work. What type of insurance replaces his father's earnings?

• Property and liability

• Health

• disability

• unemployment

David's mother is killed in an automobile accident. What type of insurance would provide his family financial support to cover the paid and unpaid work his mother performed?

• Property and liability

• life

• health

• worker's compensation

When dealing with investments, as risk of losing money increases

• it is more likely the investment is short term.

• more insurance is needed to protect the investment

• more people take that risk.

• the rate of return is usually higher