Banking/Cost of Money

To determine the value of depositing money in a savings account, a person needs to know

• interest rates and inflation rates

• whether the account is FDIC protected

• the type of savings account
• the account holder's age

The total amount of money you pay back for a loan is called the

• principal

• finance charge

• interest rate
• monthly payment

The cost to use someone elses money for an extended amount of time is called

• principal
• loan fee
• collateral
• interest rate

What is compound interest?

• Compound interest is a fee charged for early loan repayment.
• Compound interest is the interest that does not change over time.
• Compound interest is the interest calculated only on the initial principal.
• Compound interest is interest on interest

What is the time value of money?

• Money now is worth more than the same amount in the future due to its potential earning capacity.

• Money loses value over time due to inflation.

• Future money is always worth more than present money.

• Money can only be invested in the future.

What is the Rule of 72?

• A strategy for minimizing tax liabilities.
• A guideline for stock market investments.
• A formula for calculating interest rates.
• A method for estimating the time it takes for an investment to double in value.

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

• Consumer Financial Protection Bureau (CFPB)
• Federal Deposit Insurance Corporation (FDIC)
• Internal Revenue Service (IRS)
• Financial Crimes Enforcement Network (FinCEN)

What should be stored in a safe-deposit box?

• Important documents, jewelry, and valuables.
• Used electronics and gadgets
• Expired food items
• Old clothes and shoes

Why does rising interest rates lower stock prices?

• Rising interest rates increase stock prices by boosting consumer spending.
• Rising interest rates lower stock prices by increasing borrowing costs.

• Higher interest rates have no effect on stock prices or investments.
• Rising interest rates make stocks more appealing than real estate investments.

What should you select as your PIN number for your ATM?

• Your birth year
• 1234
• The last four digits of your phone number
• A random 4-digit number that is not easily associated with you.