True/False
Indicate whether the
sentence or statement is true or false.
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1.
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Short-term needs include things such as home ownership, education of children,
and retirement.
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2.
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Discretionary income is income you have left to spend after the bills have been
paid.
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3.
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A regular savings account pays less interest than a certificate of
deposit.
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4.
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Certificates of deposit are less liquid than regular savings accounts.
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5.
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Interest computed on the principal plus accumulated interest is compound
interest.
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6.
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Liquidity is a major advantage to regular savings accounts.
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7.
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A money market fund is insured by the FDIC for a maximum of $100,000.
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8.
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Money compounded quarterly earns more total interest than money compounded
annually.
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9.
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Early withdrawal penalties are charged against certificates of deposit for
withdrawals prior to maturity.
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10.
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The money you can save will depend on discretionary income, the importance of
savings, needs and wants, and your willpower to forego present spending.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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11.
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Money deposited to earn interest is called
a. | investment | c. | earnings | b. | principal | d. | diversification |
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12.
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You will receive the greatest gain on your principal if interest is
compounded
a. | quarterly | c. | daily | b. | annually | d. | semiannually |
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13.
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Money left over after you have paid bills is
a. | discretionary income | c. | interest | b. | principal | d. | compound
interest |
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14.
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A savings account at a credit union is called a
a. | certificate of deposit | c. | money market account | b. | share account | d. | savings club |
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15.
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Which of the following is not a short-term need?
a. | unemployment | c. | child’s education | b. | weekend
trip | d. | automobile
repair |
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16.
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The date on which a certificate is due is called the
a. | redemption date | c. | beginning date | b. | maturity date | d. | ending date |
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17.
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Which of the following items is the most liquid?
a. | home | c. | certificate of deposit | b. | regular savings | d. | automobile |
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18.
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A type of savings plan whereby you set aside money at a financial institution
for a set period is a
a. | regular account | c. | certificate of deposit | b. | share draft
account | d. | money market
account |
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19.
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Which type of preauthorized payments may be made from a checking account?
a. | car payment | c. | house payment | b. | insurance payment | d. | all of the
above |
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Matching
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a. | discretionary income | g. | FDIC | b. | short-term needs | h. | annual percentage yield | c. | liquidity | i. | compound interest | d. | principal | j. | savings club | e. | long-term
needs | k. | maturity | f. | interest | l. | share account |
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20.
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The amount of money deposited by a saver.
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21.
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Interest paid on the principal plus interest already earned.
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22.
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A rate that include compounding.
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23.
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Arrangement for making regular payments to a special account to be withdrawn on
a specified date.
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24.
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Emergencies, weekend trips, and social events.
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25.
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Income left over after the bills have been paid.
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26.
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The quality of being easily converted to cash.
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27.
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Money paid for the use of money.
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28.
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The date on which a time certificate must be renewed or canceled and a new one
purchased.
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29.
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Insurance that covers deposits in commercial banks.
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