Savings/Interest Test

Interest is:

• A charge for lending money to a bank

• The amount owed for borrowing money

• The amount added into your savings when you open a bank account

• A charge for the convenience of accessing money stored in your bank account

Which should you choose if you want the best rate of return on your interest?

• Annual Compounding

• Semi-annual Compounding

• Monthly Compounding

• Daily Compounding

To earn as much interest as possible, you should open a savings account that earns ___ interest and has the ____ interest rate

• compound;lowest

• compound;highest

• simple;lowest

• simple;highest

What is the typical relationship between time and interest on savings products?

• Longer time period usually equals higher interest rates

• Shorter time period usually equals higher interest rates

• Longer time period usually has no effect on interest rates

• Shorter time period usually has no effect on interest rates

Susan has $500 she is looking to save for a trip. She wants to earn the most possible interest and will not need to access her money for a year. which type of savings account will be best

• Certificate of Deposit

• Money Market Account

• Savings Account

• Checking Account

You are opening a savings account that earns compound interest. Which compounding frequency will earn you the most money?

• Compounding 1 time a year

• Compounding 4 times a year

• Compounding monthly

• Compounding daily

Which of the following is a type of savings vehicle?

• Certificate of Deposit

• Money Market Account

• Checking Account

• Both CD & Money Market Accounts

Which type of account typically has very high liquidity, low or no interest, and low minimum balance

• Checking Account

• Money Market Account

• Certificate of deposit

• Investment Retirement Account

Which of the following is generally true about savings vehicles?

• Savings Vehicles are only useful for long-term investments

• People should evaluate different forms of savings vehicles based on their needs

• Savings vehicles are never insured

• All of the above

Which of the following savings vehicles usually requires a high minimum balance

• Simple savings account

• Certificate of deposit

• Checking account

• All of the above