Interest

Banks offer interest as an incentive to customers who open accounts. What does "incentive" mean?

• Encouragement

• Punishment

• Trick

• Gift

Which of these is an opinion about interest?

• Most American banks offer interest rates below 10 percent.

• Interest can be compounded yearly, monthly, or even daily

• An interest rate of 20 percent, compounded monthly, is far too high

• Interest is accrued on savings accounts, but rarely checking accounts

How can you compare simple and compound interest?

• Simple interest is paid on the principal plus accrued interest; compound interest is paid only on the principle

• Compound interest is paid on the principal plus accrued interest; simple interest is paid only on the principal

• Compound interest is paid out once a month; simple interest is paid out once a year

• Simple interest is more difficult to calculate than compound interest

Which of the following statements is true?

• The less money you borrow from a bank, the more interest you pay

• The more money you have in the bak, the less interest you accumulate

• The more money you borrow from a bank, the less interest you pay

• The more money you have in the bank, the more interest you accumulate

How does charging interest encourage banks to make loans?

• It allows them to make profits by lending money

• It ensures that borrowers will pay them back

• It discourages people from borrowing money from their friends

• It allows banks to pay interest to people with savings accounts

Which of the following is true?

• You pay interest when you borrow money and earn interest when you loan money

• You earn interest when you borrow money and pay interest when you loan money

• You pay interest both when you borrow and loan money

• You earn interest both when you borrow and loan money

If your bank offers 6 percent annual simple interest, and you start with $60 in your account, how much will you have after one year?

• $70.00

• $66.30

• $63.60

• $66.00

You bank offers 6 percent annual interest, compounded month. If you start with $500 in your account, how much will you have after 3 months?

• $501.50

• $507.54

• $590.00

• $595.51

What can you infer about compound interest from the information resented in the movie?

• It's not worth calculating unless you make a large initial deposit

• It's easier to calculate than simple interest

• Very few banks offer it

• It allows people with savings accounts to accumulate more money than they would with simple interest

How might life be different if banks didn't offer interest on savings accounts, or charge interest on loans?

• People would open fewer bank accounts, and banks would offer fewer loans

• People would open more bank accounts, and banks would offer more loans.

• People would open fewer bank accounts, but banks would offer more loans

• Banks would offer more loans, but people would open few bank accounts