CDs, IRAs & Other Savings Plans - Check for Understanding

What is a key difference between CDs and savings accounts?

• Savings accounts provide periodic income

• Savings accounts have fixed terms

• CDs have fixed terms

• CDs have fluctuating interest rates

What can affect CD rates?

• The type of currency

• The account holder's credit score

• The size of the bank

• The age of the account holder

What is a characteristic of a 401K plan?

• It is a personal savings plan

• It requires taxes to be paid on interest

• It is employer-sponsored

• It can be started by individuals

Which type of IRA allows for tax-deductible contributions?

• Neither Roth nor Traditional IRA

• Roth IRA

• Both Roth and Traditional IRA

• Traditional IRA

What is a feature of Roth IRAs?

• They can be withdrawn at any time

• They require mandatory withdrawals at age 70.5

• They provide a tax shelter on contributions

• They require taxes to be paid on interest

What do mutual funds consist of?

• A portfolio of securities

• Only bonds

• Only common stock

• Only money-market accounts

What is a characteristic of preferred stocks?

• They have no voting rights in a company

• They are not publicly traded

• They are the last to receive dividends

• They provide voting rights in a company

What is the purpose of emergency funds?

• To pay off loans

• To provide a cushion for unforeseen financial conditions

• To increase tax liability

• To invest in stocks

How does a low unemployment rate affect personal financial planning?

• It increases the monetary supply

• It has no effect on savings

• It leads to a decrease in savings

• It decreases the monetary supply

Savings accounts are like money market accounts because __________.

• Check writing is authorized

• They have a high minimum balance required

• They have a low rate of return

• They have a limited number of withdrawals