Personal Finance Unit 2 Review

If a person makes a deposit of $10,000 or more into a bank account, the bank must notify who?

• Internal Revenue Service (IRS) – part of the US Treasury Department

• Federal Deposit Insurance Corporation (FDIC)

• State Banking Commission

• Federal Reserve Board

Doug wants to buy a car in two months, but does not have enough money. What is the best way for Doug to get the money he needs?

• Purchase a certificate of deposit (CD)

• Take out a loan

• Open a NOW account

• Apply for a thirty year mortgage

Money orders are:

• Distributed by the Treasury Department

• Available for no fee at banks and retail stores

• A guaranteed form of payment to pay a specified amount to a specific payee

• More trusted than certified/cashiers checks

Which financial product has the most predictable income?

• Stocks

• Real estate

• Lottery

• Certificate of deposit (CD)

What action should a person take who must make a tuition payment at the end of August each year?

• Divide the total amount of money that will be needed into 12 equal parts in a separate account each month

• Divide the total amount of money that will be needed into 12 equal parts and invest that amount in stocks

• Obtain a short-term collateralized loan for the needed amount of money

• Apply to open a new credit card account that will be used to charge the needed amount of money

The financial institution where Mrs. Lemmons has her checking account will continue to pay out money for the checks she writes as long as:

• She uses checks from her checkbook

• The financial institution has enough money

• There is enough money in Mrs. Lemmons' account to cover the amount of the checks

• She maintains a good checkbook register

Financial services and products that are typically offered by banks and credit unions include:

• Real estate listings (houses and properties)

• Savings and loans

• Legal services (lawyer)

• Business plans

Frankie’s savings account has earned a lot of interest. He wants to know if he must pay taxes on the interest earned. What would the IRS tell him?

• No, interest earned on a savings account is not taxable

• A sales tax will be charged on interest earned

• If the interest is under $50, it is not taxable

• Yes, savings account interest is taxable

The term used to describe the ease and speed with which you can convert savings or an investment to cash is:

• Convertibility

• Principal

• Liquidity

• Rate of return

A bank Certificate of Deposit (CD) is a:

• Savings instrument that requires a deposit for a period of time during which the saver can withdraw money from the plan at any time without a penalty

• Savings instrument that requires a deposit for a period of time during which there is a penalty for withdrawals

• Cash deposit in a savings account that earns interest

• Certificate for deposits that are issued for half the face value