Chapter 3 Review- Banking Services

Aaron wants to know mow much he needs to save each month in his savings account to have a certain amount in the future. He should use the formula for present values of a periodic deposit investment.

• True

• False

Interest compounded semiannually is compounded four times a year.

• True

• False

Tags

CCSS.HSF.LE.A.1

CCSS.HSF.LE.A.2

CCSS.HSF.LE.B.5

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

Tags

CCSS.7.EE.B.3

CCSS.7.NS.A.1

CCSS.7.NS.A.3

Maxine deposited $1000 into an account that pays 4.5% interest, compounded daily. At the end of six months, she has earned $12 in interest,

• True

• False

Tags

CCSS.HSA.CED.A.1

CCSS.HSF.LE.A.1

CCSS.HSF.LE.A.2

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

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

• True

• False

Tags

CCSS.HSA.SSE.B.4

CCSS.HSF.LE.A.1

CCSS.HSF.LE.A.2

CCSS.HSF.LE.A.3

Annual percent yield is higher that the annual percentage ratebecause APY takes into account that additional interest earned by compounding.

• True

• False

• A

James and Terry open a saving account that has a 2.75% annual interest rate, compounded monthly. They deposit $200 into the account each month. How much will be in the account after 20 years?

• $48,407.45

• 159,744.59

• $330,600.15

• $580,894.18

Margarite wants to take a trip to Japan in 8 years. She knows she will need about $4,200. How much should she deposit into an account now that pays 3.55 interest compounded daily, in order to meet her goal? Round to the nearest dollar.

• $1026

• $1706

• $3174

• $3781

Tamika opened a money market account that has a 4.25% annual interest rate, compounded annually. She deposits $1750 into the account each year. How much interest will the account earn in 15 years?

• $9419.40

• $33,949.40

• $35,699.40

• $71,398.40