Savings

A loan can be defined as

• a thing that is borrowed, especially a sum of money that is expected to be paid back with interest.

• a savings account that a bank holds

Who pays a higher interest?

• The bank who offers a saving account

• The customer that has taken out a loan

• Both pay the same interest

True or false: Simple interest is calculated using the current balance of the account

• True

• False

Which of the following guarantees the safety of money in a bank by insuring each depositor for up to a specified amount

• Deposit Insurance Government

• Federal Insurance Corporation

• Federal Deposit Insurance Corporation

True or False: All banks require a minimum balance.

• True

• False

A Certificate of Deposit (CD) is a certificate that

• has a specific sum minimum to open

• guarantees the payment of a fixed interest rate until maturity

• does not give you access to your account until maturity

• all of the above

True or False: Compound interest is money earned on the money deposited plus previous interest

• True

• False

True or False: Compound interest is calculated using only original principal.

• True

• False

Annual compounding is

• interest compounded twice per year

• interest compounded once each year

• interest compounded four times per year or every three months

Semiannual compounding is

• interest compounded twice per year

• interest compounded everyday

• interest compounded four times per year