Financial Literacy Exam Review PART I

An increase of an amount in money due to earned interest or dividends is called:

• opportunity cost

• time value of money

• Rule of 72

• pay yourself first

You should set aside money from each paycheck and treat it as an expense. This rule of thumb is called:

• opportunity cost

• time value of money

• rule of 72

• pay yourself first

A plan for your money is called a(n):

• expense

• depreciation

• opportunity cost

• budget

Which of the following type of compounding will yield the best results?

• annually

• monthly

• weekly

• daily

Which account has less liquidity?

• checking

• savings

• money market account

• both savings and checking

Which account holds your money for a period of time and earns a higher interest rate due to this?

• savings

• checking

• money market account

• certificate of deposit

A savings account is less liquid than a checking account.

• TRUE

• FALSE

Which is TRUE of an FDIC insured bank?

• it insures the borrower for up to $250,000 per account

• all banks are FDIC insured

• FDIC insured banks insure both checking and savings accounts

• none of these are true

Which of the following financial institutions requires membership and is often run by its members?

• retail bank

• online bank

• credit union

• credit collection agency

The ability to convert assets to cash is called:

• depreciation

• appreciation

• liquidity

• credit