Investing MidTerm - 2nd Practice Test (Banking and Economic Prin

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

• Save a certain percentage of each paycheck and 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
• Wait until the end of the month and save whatever is left in your checking account

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

• If the bank is FDIC-insured, your money, up to the FDIC limit, is safe even if the bank fails
• Many banks pay interest on the money you deposit into your savings account
• Historically, savings accounts earn higher returns than investments in the stock market
• Money in a checking account is usually easy to access via ATM, debit card or check

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...

• Retirement, a house down payment, college tuition
• A new cell phone, college tuition, a house down payment
• A new cell phone, dinner with friends this weekend, a new bike
• Retirement, college tuition, a vacation

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
• Wants, needs, savings
• Savings, needs, wants
• Needs, savings, wants

Instead of living pay check to pay check, expert recommend that you accumulate enough to cover 3 to 6 _______________ of expenses in your emergency fund.

• Days
• Weeks
• Months
• Yearstion 1

Digital wallets and P2P payments have made the use of __________ less necessary.

• Checks
• Physical Cash
• Credit Cards
• All of the above

Three of these statements best describe a checking account. Which statement best describes a savings account?

• This account offers a convenient way to pay bills and access cash from an ATM
• This account pays you interest on money you have put away for later to help your money grow
• This account is automatically debited when you use a debit card
• This account typically allows an unlimited number of transactions per month

You are at the checkout counter at the local supermarket and use your debit card to pay for your groceries. Where does the money for this purchase come from?

• Your credit card company covers the cost
• It is deducted directly from your checking account
• Your credit card company provides you with a cash advance to cover the cost
• It is deducted directly from your savings account

Which of the following transactions will REDUCE your checking account balance immediately?

• Writing your monthly rent check which you will mail tomorrow
• Using your debit card to pay for groceries at the supermarket
• Using your credit card to pay for your school books
• Depositing a check at a local bank branch

FDIC Insurance is...

• Optional coverage consumers can purchase so that their bank deposits remain safe
• Insurance bank branches can buy to protect their business against fraud and scams
• Required if you want to do online or mobile banking
• Protection for bank customers’ deposits up to $250,000, guaranteeing their money is still available if the bank goes out of business