Unit 3 Test - Savings - Matthew Goldstein | Biblioteka

Instrukcije

Here are the links for the calculators:

Simple interest: https://www.calculatorsoup.com/calculators/financial/simple-interest-plus-principal-calculator.php

Compound interest: https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator

Or Compound interest: https://www.nerdwallet.com/banking/calculator/compound-interest-calculator

Desmos calculator: https://www.desmos.com/scientific

1

When a bank says their savings account earns 1% interest, that typically means you will earn 1% interest over what period of time?

Annually (each year)

Monthly

Daily

Quarterly (every three months)

1

Stanley 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 account balance ($1,010)

The original deposit ($1,000); The year one interest ($10)

The year one account balance ($1,010); The year one interest ($10)

The year one account balance ($1,010); The original deposit ($1,000 )

1

If 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?

$6

$1

$5

$25

1

If you deposit $2000 into a savings account with interest compounded monthly at a rate of 2.5% for 3 years, how much interest will be in your account at the end of 3 years?

$2140

$2156

$155.60

$2500

1

Juan 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?

Certificate of deposit

Money market account

Traditional savings account

Checking account

1

You 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 fees

The two banks deals are equivalent

Trick question -- To open a savings account, you must have at least $3,000

Bank A offers you a savings account with a 3% annual interest rate and $5/month in fees

1

Which of these statements about savings is INCORRECT?

Without a vehicle to save (like a savings account), it's much easier to spend and harder to keep track of finances

It is extremely difficult to open a savings account, as you typically need at least $10,000 for your initial deposit

People often believe they are saving when they buy products at a listed discount, even if they didn't need the product in the first place

Billions of dollars is spent on marketing to persuade consumers to spend money instead of saving it

1

Hector is 17 years old 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 still a student

An adult cosigner because he is under 18

A letter from his school

A letter from his parents

1

Comparing banks, what makes Bank B a better option than Bank A?

Both banks are equally good options.

Bank A has a higher interest rate.

Bank B has a lower interest rate.

Bank B is FDIC insured.

1

Comparing banks, what makes Bank B a better option than Bank C?

Bank B has a minimum deposit of $50, as opposed to a minimum deposit of $10,000.

Bank B has a lower interest rate.

Bank B is FDIC insured.

Both banks are equally good options.

1

Kevin opens a new bank account at Northstone Savings. You see FDIC stickers around the bank, and the teller specifically mentions that Northstone Savings is "FDIC insured". A few months later, you hear on the radio that Northstone Savings is struggling to stay in business. Your savings balance is $500. What would happen to that money if Northstone 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 Northstone 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.

1

Which list includes the most important factors to consider when opening a savings account?

The fees, which bank your friend uses, and the bank’s brand recognition

The fees, the interest rates, and the bank’s brand recognition

The fees, which bank your friend uses, and the minimum deposit to open the account

The fees, the interest rates, and the minimum deposit to open the account

1

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

Take out a payday loan so you can save before you receive your paycheck

Save a certain percentage of each paycheck and deposit it directly in a savings account

Cover all of your wants and needs and save whatever is left over

Wait until the end of the month and save whatever is left in your checking account

1

What would be a good time to spend money from your Emergency Fund?

Your friend tells you that you should buy as much Bitcoin as possible

Your favorite artist releases a new album and you just have to buy it

Your friends are going on an expensive trip an you would like to go with them

You lose your job but still have bills to pay

1

Which of the following statements about banks is FALSE?

Money in a bank is usually easy to access via ATM, debit card or check

Historically, savings accounts earn higher returns than investments in the stock market

Many banks pay interest for the money you deposit with them

If it is FDIC-insured, your money is safe even if the bank fails

1

You are developing a savings plan and using short-, medium- and long-term goals to motivate you. Which of the following might you pick as the most long-term goal?

Saving to buy a car

Saving to go on vacation

Saving for retirement

Saving for a down payment on a home

1

You want to take earnings from your part-time job to pay for a new laptop. Your monthly take-home pay is $500 and the laptop costs $1,200. What percentage of your pay do you need to save in order to buy the laptop in 12 months?

5%

20%

10%

15%

1

Assume Sid the Saver is earning 0.5% interest on his savings account while inflation is running 2% per year. Which statement below is TRUE?

Sid's purchasing power is decreasing by 1.5% per year

Sid's purchasing power is decreasing by 2.0% per year

Sid's purchasing power is increasing by 0.5% per year

Sid's purchasing power is increasing by 2.0% per year

1

Which of the following statements is TRUE?

The interest rate on your savings account will vary over time and be set by the government.

You can choose the interest rate on your savings account, but only once per year.

The interest rate on your savings account will remain the same as long as you open a checking account also.

The interest rate on your savings account will vary over time and be set by the bank.

1

All of the following are good strategies to develop savings habits EXCEPT...

Request to be paid in cash so you can save a certain percentage of your money in a shoebox in your room every month

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

1

Which of the following individuals is the wealthiest?

Elyse owns a $500,000 home and has a $460,000 mortgage.

Keith owns a $15,000 car and owes $45,000 in student loan debt.

Karina owns a $20,000 car that is entirely paid off but has $10,000 in credit card debt.

Norman owns a $40,000 car and has $5000 remaining on his car loan.

1

If you used the 50-20-30 rule of budgeting, how much of your income should you be saving?

20%

30%

50%

100%

1

Which of the following is an example of delayed gratification as it pertains to saving?

Not buying a muffin or breakfast sandwich every morning during the workweek so you can buy a really nice breakfast for your family once every few weeks

Using your credit card so that you can get points on your purchases

Postponing your mall shopping trip to Sunday, rather than Saturday, so there are fewer crowds

Using your credit card to afford a fancy vacation now, but not feeling happy about it until you pay off the entire debt in 5 years

1

Misty just secured her first job after college, and she's heard that it's important to start investing for her retirement. She can afford to put 5% of her monthly salary toward retirement. What type of account should she choose for this goal?

HSA

IRA

CD

MMA

1

Kevin is working full-time and wants to make sure he's saving strategically for four specific goals: an emergency fund ($5000), a flight home to see his parents for the holidays ($450), a downpayment on a new car ($3000), and his retirement (2% of his monthly take-home pay). What's his best strategy?

Set up 4 separate savings accounts

Keep all the money in his checking account so that he can spend it in the different categories as needed

Put as much as he can every month into an investment, like shares of a company, so his money grows quickly

Set up 3 separate savings accounts for the first 3 goals and a retirement investment for the 4th