Interest

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

• their total income

• the rate of inflation

• whether the account is FDIC protected

• whether there is overdraft protection

If a person has $1,000 in a savings account and earns $20/year in interest. That means the rate of return is _____.

• 5%

• 2%

• 10%

• 20%

What should a person do when he believes he is being charged too high a rate of interest for a loan by a lending institution?

• Take the loan and pay it off early.

• Ask them to lower the rates.

• Notify them about state usury laws.

• Notify the Better Business Bureau.

The time value of money refers to which concept of money?

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

• Money changes in value along with interest rates.

• Money will double in value over seven year.

• Money is the foundation for developing a financial plan.

The information that a lender must disclose to consumers applying for a cash loan is:

• The formula for compounded interest

• The annual percentage rate (APR) and/or the finance charge

• Full dollar amount being paid back on the loan over its life

• The tax obligations

If you think that interest rates are going to fall in the near future and remain low for a considerable period of time. What should you invest in?

• Nothing, just put your money under your mattress

• A variable rate certificate of deposit

• A long-term, fixed rate certificate of deposit

• A short-term, fixed rate certificate of deposit

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 idea that "money received today is worth more than the same amount of money received sometime in the future" is known as:

• The Rule of 72

• The time value of money

• A false statement

• The concept of 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

Why might rising interest rates depress stock prices?

• Stock investors are lured away from interest-paying investments to stocks.

• Rising interest rates can result in higher business profits

• Rising interest rates usually means the economy has less.

• Rising interest rates can result in lower business profits.