Unit 2 Test - Saving
Quiz by Cressa Esch
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25 questions
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- Q1The highest yielding savings accounts are paying historically low interest rates, so Maria is only able to get a 1% annual interest rate for her savings account. Assuming interest rates do not change, use the Rule of 72 to approximate how many years it will take for her to DOUBLE her money in this account?10 years5 years1 year72 years30s
- Q2If you deposit $200 into a CD (Certificate of Deposit) with an interest rate of 1% for 3 years, how much simple interest will you earn after THREE years?$1$25$6$530s
- Q3Juan saved $1,000 from his summer job cleaning pools. Which of these savings vehicles would work best for him if he doesn't need access to the money for a number of years AND wanted to earn the highest interest rate?Checking accountRegular savings accountMoney Market accountCertificate of Deposit30s
- Q4You are comparing two savings accounts based on the interest you would earn and the fees they charge. Assuming you have a savings account with an average balance of $500, which combination of interest rates and fees are a better deal? (Hint: Using a one year period, determine the balance that you would have at Bank A and Bank B).Bank B offers you a savings account with 2% annual interest rate and no feesThe two banks deals are equivalentBank A offers you a savings account with a 10% annual interest rate and $5/month in feesTrick question -- it's a bad idea to open a savings account with just $50030s
- Q5Which of these statements about savings is incorrect?Billions of dollars is spent on marketing to persuade consumers to spend money instead of saving itWithout a vehicle to save (like a savings account), it's much easier to spend and harder to keep track of financesPeople often believe they are saving when they buy products at a listed discount, even if they didn't need the product in the first placeIt is extremely difficult to open a savings account, as you typically need at least $10,000 for your initial deposit30s
- Q6Jeremy is a 17-year-old junior in high school and just started his first job. He wants to open a savings account. Which of these will he need to bring to the local bank branch in order to start an account?An adult cosigner because he is under 18An adult cosigner because he is still a studentA letter from his schoolA letter from his parents30s
- Q7All three have fees competitive with other banks. Which bank is the best option?All 3 banks are equally good optionsBank CBank ABank B30s
- Q8When a bank says their savings account earns 1% interest, that typically means you will earn 1% interest over what period of time?MonthlyQuarterly (three months)DailyAnnually (a year)30s
- Q9Stanley deposits $1,000 into a savings account that pays 1% interest per year. At the end of the first year, he's earned $10 in interest and there is $1,010 in the account. If the account has simple interest, the 1% interest for year two would be based off ____________. If the account has compounding interest, the 1% interest for year two would be based off ________________.(NOTE: The first choice goes in the first blank, the second choice goes in the second blank).The original deposit ($1,000); The year one interest ($10)The year one account balance ($1,010); The year one interest ($10)The original deposit ($1,000); The year one account balance ($1,010)The year one account balance ($1,010); The original deposit ($1,000)30s
- Q10You open a new bank account at Eastside Savings. You see FDIC stickers around the bank, and the teller specifically mentions that Eastside Savings is "FDIC insured". A few months later, you hear on the radio that Eastside Savings is struggling to stay in business. Your savings balance is $500. What would happen to that money if Eastside Savings failed?You could lose $250 since FDIC insurance only covers 50% of the money you have deposited.You would lose all of your money.You would receive all the money you have deposited at Eastside Savings since FDIC insurance covers accounts up to $250,000.You would receive $250,000 since FDIC insurance provides each account at the bank with $250,000 regardless of how much they have deposited.30s
- Q11Which list includes the most important factors to consider when opening a savings account?The fees, the interest rates, and the minimum deposit to open the accountThe fees, the interest rates, and the bank’s brand recognitionThe fees, which bank your friend uses, and the bank’s brand recognitionThe fees, which bank your friend uses, and the minimum deposit to open the account30s
- Q12Which of the following is an effective strategy for personal saving?Take out a payday loan so you can save before you receive your paycheckCover all of your wants and needs and save whatever is left overSave a certain percentage of each paycheck and deposit it directly in a savings accountWait until the end of the month and save whatever is left in your checking account30s
- Q13What would be a good time to spend money from your Emergency Fund?Your favorite artist releases a new album and you just have to buy itYour friends are going on an expensive trip an you would like to go with themYou lose your job but still have bills to payYour friend tells you that you should buy as much Bitcoin as possible30s
- Q14Joelle wants to have an emergency fund to cover 6 months of her expenses. Her monthly gross pay is $4,000 and her monthly expenses are $2,000. If she plans to save 10% of her gross pay each month, how long will it take her to build her emergency fund?24 months9 months3 months30 months30s
- Q15Which of the following statements about banks is FALSE?If it is FDIC-insured, your money is safe even if the bank failsMany banks pay interest for the money you deposit with themMoney in a bank is usually easy to access via ATM, debit card or checkHistorically, savings accounts earn higher returns than investments in the stock market30s