2nd Quarter Assessment: Financial Math

1. All of the following are reasons to invest, EXCEPT…

• 1. To minimize the impact on inflation, which causes you to lose purchasing power

• 1. To earn a consistent rate of return with lower risk than typical savings accounts

• 1. To build wealth by reinvesting your returns and allowing them to compound

• To earn higher average rates of return than you would in a typical savings account

1. Which of the following statements BEST describes investing?

• 1. Putting $100 per month into an FDIC-insured bank account for short-term goals

• 1. Buying and selling stocks within the same day to take advantage of short-term price variation

• 1. Reducing the purchasing power of your money over time

• 1. Buying assets, like stocks, with the intention to hold them and grow your wealth over the long term.

An investor can best harness the power of compounding by doing all of the following, EXCEPT…

• 1. Making frequent trades

• 1. Starting to invest early

• 1. Reinvesting earnings

• 1. Minimizing risk

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1. Sarah is comparing two banks for their services.

2. OceanView Bank offers digital banking and loans, while GreenField Bank provides wire transfers and traveler's checks.

3. Sarah needs to send money to her family overseas every month.

4. Which bank should she choose?

• 1. OceanView because it offers digital banking

• 1. OceanView because it offers loans

• 1. GreenField because it offers wire transfers

• 1. GreenField because it offers traveler’s checks

1. All of the following are reasons to open a checking account EXCEPT… 

• 1. Making it easier to pay bills

• 2. The ability to make purchases with a debit card

• 2. Access to cash at an ATM

• 2. Earn interest on your deposits

1. Which of the following is usually a benefit of being a member at a credit union?

• 1. Higher interest rates and lower fees

• 1. Lower interest rates and higher fees

• 1. Higher interest rates and higher fees

• Lower interest rates and lower fees

1. Daisy reads her bank statement and finds an error. 

2. She should…

• 1. Do nothing. The bank will correct the error at the end of the month.

• 1. Call the FDIC. She is insured up to $250,000.

• 1. Call the bank. The bank will investigate the transaction to see if it was an error.

• 1. Assume that it’s a transaction that she made and forgot about.

1. Which of the following is TRUE when comparing savings accounts and certificates of deposit?

• 1. Savings accounts are FDIC insured while certificates of deposit are not

• 1. Savings accounts allow you to access your money at all times while certificates of deposit require your money to be left alone for a set period of time

• 1. Savings accounts typically have a higher interest rate than certificates of deposit

• Both savings accounts and certificates of deposit allow you to deposit money at any time

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?

• 1. Regular savings account

• Money Market account

• 1. Checking account

• 1. Certificate of Deposit

Your friend pays you back with a check, and you lose it before cashing it.

What should you do first?

• Write a new check for yourself

• There’s nothing you can do. The money is lost.

• 1. Contact your friend to issue a stop payment

• Contact your bank to issue a stop payment