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WorksheetsChp 5 Savings
Total questions: 20
Worksheet time: 10mins
A strategy for using money to reach important goals and to advance a person’s financial security
SMART goal
Savings plan
Financial institution
Banking
Account designed for accumulating money for future use.
Checking account
Certificate of deposit (CD)
Tax plan
Savings account
Ability for an individual to meet essential needs without taking on more debt that can be repaid.
fraud
savings account
financial security
SMART goal
A payroll savings plan (PSP) is another application of which strategy?
time value of money
rule of 72
compounding interest
pay yourself first
Measure of ease with which an asset can be converted into cash without losing value.
Liquidity
Assets
Future value
Financial security
The rate of yearly earnings from an account is called APY. What does APY stand for?
annual percentage rate
annual personal yield
annual percentage yield
account personal yield
A high-yield savings account
Account that pays a higher interest rate than passbook and statement savings accounts
Account that pays a lower interest rate than passbook and statement savings accounts
Account that pays no interest
Account that has no fees, restrictions or penalties
What does maximize mean?
make as small or little as possible.
make as large or great as possible.
spend money.
use your max credit card limit.
Which of the following is an effective strategy for personal saving?
Pay yourself only with discretionary money after all bills are paid.
Make savings a regular part of your budget.
Make frequent withdrawals.
Choose accounts with low interest rates.
Restrictions, fees and penalties can affect an account’s ________.
earnings
ownership
frequency of compounding interest
interest rates
The amount of money originally deposited is called the ______________________________.
interest
principal
checking account
deposit
Interest earned only on the principal.
Simple interest
Compound interest
certificate of deposit
savings account
Tax deffered means....
Taxes are delayed until funds are withdrawn.
No taxes are paid.
Taxes are paid quarterly.
1040 EZ
All of the following are good strategies to develop savings habits EXCEPT...
Start with a small goal and gradually get more ambitious
Take a percentage of your paycheck and deposit it directly into a savings account
Avoid spending money that you don't have and running up credit card debt
Request to be paid in cash so you can keep all of your
money in a shoebox in your room
Which three factors impact the amount of interest earned in a savings account?
time
principal
interest rate
credit score
When banks provide information about savings accounts, they typically quote the interest rates they offer (e.g. 1% APY) on a...
Per day basis
Per month basis
Per 6 month basis
Per year basis
Assume Jesse is earning 1.0% interest on her savings account, while inflation is running at 3% per year. Which statement below is TRUE?
Jesse's purchasing power is increasing by 0.5% per year
Jesse's purchasing power is increasing by 2.0% per year
Jesse's purchasing power is decreasing by 1.5% per year
Jesse's purchasing power is decreasing by 2.0% per year
Which of the following is a good reason to start saving for retirement as early as possible?
You might have student loans or other debts to pay off
You'll benefit substantially from earning compounding interest over all those years
Banks typically offer young people higher interest rates, so you'll earn more interest
Banks typically offer young people lower interest rates, so you'll pay less in interest
The time value of money is the idea that money loses value over time. This is due to...
interest
taxes
inflation
spending
Elizabeth is investing her money into an account that gives her an interest rate of 4%. How many years will it take her money to double? (Hint: Use Rule of 72)
10 years
12 years
15 years
18 years
