Money Power Interest, Cost of Money I

To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and

• her total income

• the rate of inflation

• whether the account is FDIC protected

• whether the bank offers overdraft protection

Lavinia believes that interest rates are going to fall in the near future and remain low for a considerable period of time. She should invest in:

• Nothing, she should put her money under her mattress

• A variable rate certificate of deposit

• A long-term, fixed rate certificate of deposit

• A short-term, fixed rate certificate of deposit

If a person has $1,000 in a savings account and earns $20 a year in interest on that account, the rate of return on the money is close to

• 5%

• 2%

• 10%

• 20%

Which type of financial institution usually pays the highest rate of interest on savings account balances?

• Savings and Loans

• Commercial Banks

• Credit Unions

• Investment firms money market accounts

Which of the following is the federal law that requires the cost of credit be disclosed to consumers in bold print on loan agreement?

• Fair Credit Reporting Act

• Equal Credit Opportunity Act

• Truth in Lending Act

• Fair Debt Collection Practices Act

The cost to use someone else's money for a period of time is called the:

• Interest rate expressed as a percentage

• Opportunity Cost

• Minimum Payment

• Inflation rate

The time value of money refers to the concept that money:

• Received today is worth more than the same amount of money received in the future

• Changes in value along with interest rates

• Money will double in value over seven years

• Is the foundation for developing a financial plan

Money received today is worth more than the same amount of money received sometime in the future is:

• Rule of 72

• Time Value of Money

• Not true

• Investing

The annual percentage rate (APR) is:

• The true cost of credit that must be disclosed on a loan agreement

• Always expressed in dollars

• Required by the Securities Exchange Commission

• Required by the Comptroller of the Currency

The amount a lender charges to borrow money is called the:

• Principal

• Annual Percentage Rate (APR)

• Loan Balance

• Finance Charge