Banking Unit Exam

1. Juan saved $1,000 from his summer job cleaning pools. Which of these account types would work best for him if he doesn't need access to the money for a number of years AND wants to earn the highest interest rate?

• Regulary savings account

• Money Market account

• Checking Account

• Certificate of Deposit

2. Which of the following is an effective strategy for personal saving?

• Wait until the end of the month and save whatever is left in your checking account

• Save a certain percentage of each paycheck ad deposit it directly into a savings account

• Cover all of your wants and needs and save whatever is left over

• Take out a payday loan so you can save before you receive your paycheck

3. Joelle wants to have an emergency fund to cover 6 months of her expenses. Her monthly gross pay is $4,000 and her monthly expenses are $2,000. If she plans to save 10% of her gross pay each month, how long will it take her to build her emergency fund?

• 3 months

• 9 months

• 24 months

• 30 months

4. All of the following statements about bank accounts are true EXCEPT…

• 1. If the bank is FDIC-insured, your money, up to the FDIC limit, is safe even if the bank fails

• 1. Many banks pay interest on the money you deposit into your savings account

• 1. Historically, savings accounts earn higher returns than investments in the stock market

• 1. Money in a checking account is usually easy to access via ATM, debit card or check

5. All of the following are true about prepaid cards EXCEPT…

• 1. Prepaid cards typically include a lot of fees

• 1. Prepaid cards are a useful option for someone who is unbanked to make online purchases

• 1. Prepaid cards are a great way to build credit

• 1. Prepaid cards are usually accepted anywhere that debit and credit cards are accepted

6. You are developing a savings plan and using short-, medium-, and long-term goals to motivate you. Which represents possible goals from short-term to long-term? Save for…

• 1. Retirement, a house down payment, college tuition

• 1. A new cell phone, college tuition, a house down payment

• 1. A new cell phone, dinner with friends this weekend, a new bike

• 1. Retirement, college tuition, a vacation

7. Fill in the blanks with the correct responses.  If you follow the 50-30-20 rule of budgeting, you'll be putting 50% of your monthly income toward _______________, 30% of your monthly income toward _____________, and 20% of your monthly income toward ______________.

• Needs, wants, savings

• Savings, needs, wants

• Needs, savings, wants

• Wants, needs, savings

8. Which represents the BEST time to start saving for your retirement?

• As soon as you have your first full-time job

• Right after you are debt-free, including paying off all credit cards, auto loans, and your mortgage

• 1. Once you are debt-free, including paying off all credit cards, auto loans, and your mortgage

• 1. At age 45, so you have exactly 20 years until retirement

9. Which of the following statements is TRUE?

• 1. The majority of Americans have an adequate emergency fund

• 1. The majority of Americans have sufficient amounts of money saved for retirement

• 1. The majority of Americans have an adequate emergency fund, but do NOT have sufficient amounts of money saved for retirement

• 1. The majority of Americans do NOT have an adequate emergency fund or sufficient amounts of money saved for retirement

10. Experts recommend that you accumulate enough to cover 3 to 6 __________________ of expenses in your emergency fund.

• Days

• Weeks

• Months

• Years