Personal Finance Semester Exam Review Part 1

Overdraft protection...

• Allows you to withdraw more money than you have in your account

• Protects your account from unauthorized transactions

• Helps you save money for emergencies

• Provides insurance for your deposits

Which of the following is TRUE about banks and credit unions?

• Banks are for-profit institutions, while credit unions are non-profit

• Banks offer higher interest rates on savings accounts than credit unions

• Credit unions are insured by the FDIC, while banks are not

• Banks are owned by their customers, while credit unions are owned by shareholders

What is a 529 account?

• A retirement savings account

• A health savings account

• A college savings account

• A tax-free savings account

About how much should you save in an emergency fund?

• 1 month of expenses

• 3 months of expenses

• 6 months of expenses

• 1 year of expenses

Tags

CCSS.6.RP.A.3B

How does the 50-20-30 rule distribute your income?

• 50% for needs, 20% for savings, 30% for wants

• 50% for savings, 20% for needs, 30% for wants

• 50% for wants, 20% for savings, 30% for needs

• 50% for needs, 20% for wants, 30% for savings

Tags

CCSS.6.RP.A.3C

How is compound interest different than simple interest?

• Compound interest is calculated on the initial amount only

• Compound interest is calculated more frequently

• Simple interest is calculated more frequently

• Simple interest is calculated on the initial amount only

Tags

CCSS.7.RP.A.3

How does inflation impact the money in your savings account?

• It increases the value of your money

• It decreases the value of your money

• It has no impact on the value of your money

• It depends on the interest rate

Tags

CCSS.6.RP.A.3D

Saving accounts differ from checking accounts in that...

• Saving accounts have higher interest rates

• Saving accounts have more fees

• Saving accounts have unlimited transactions

• Saving accounts have overdraft protection

A key difference between saving and investing is

• Saving is for everyone, investing is for the wealthy

• Your money is insured when investing, it is not in savings

• Investing has a guaranteed return, savings does not

• Saving is for emergencies & goals, investing is for long-term wealth

Why is compound interest more beneficial than simple interest? (hint: choose 2 correct answers)

• Your money grows faster when it is compounded

• Your taxed on simple interest, but not compound interest

• Fees for compound interest are greater than simple interest

• Compound interest is hard to calculate, so fewer use it