Introduction To Savings
- 1.
Which of the following financial services is best suited for saving money over a period of years?
- A.
Certificate of deposit
- B.
Checking account
- C.
Demand deposit
- D.
Mortgage loan
Correct Answer
A. Certificate of deposit -
- 2.
You will earn a higher interest rate when you _____________.
- A.
Buy a certificate of deposit
- B.
Use an ATM
- C.
Open a savings account
- D.
Open an interest-bearing checking account
Correct Answer
A. Buy a certificate of deposit -
- 3.
Compared to commercial banks, credit unions generally offer _______.
- A.
Higher interest rates on loans
- B.
Fewer financial services
- C.
Higher interest on savings
- D.
Lower fees and loan rates
- E.
Both c and d
Correct Answer
E. Both c and d -
- 4.
Which of the following is most liquid?
- A.
Certificate of deposit
- B.
Money market account
- C.
Savings account
- D.
All of the above have the same level of liquidity
Correct Answer
C. Savings account -
- 5.
What is the relationship between the interest rate and liquidity of savings vehicles?
- A.
The interest rate is a product of liquidity
- B.
Higher interest rates are offered in exchange for lower liquidity
- C.
There is no correlation between these factors
- D.
Higher interests rates are offer in exchange for higher liquidity
Correct Answer
B. Higher interest rates are offered in exchange for lower liquidity -
- 6.
Bonus: The strategy that maximizes your return with CD laddering involves the following: _________________
- A.
Spreading your money across several CDs that have different term or maturity dates
- B.
Placing all your money in the shortest-term CD and when they mature, ladder up to longer-terms ones when they
- C.
Shopping the market for the best rates or highest rung rate across various financial institutions
- D.
None of these strategies
Correct Answer
A. Spreading your money across several CDs that have different term or maturity dates -
- 7.
APY or annual percent yield accounts for _____________.
- A.
The fact that the actual rate you receive on a deposit may be higher than the quoted rate because of compounding.
- B.
Compound interest earned by a deposit
- C.
How much a deposit will earn over the course of one year
- D.
All of the above
Correct Answer
D. All of the above -
- 8.
This type of savings vehicle requires a minimum amount to open, has a short term, and restricts the number of withdrawals you can make.
- A.
MMA
- B.
CD
- C.
Passbook Savings
- D.
IRA
Correct Answer
A. MMA -
- 9.
If you deposit $100 at 6% interest compounded annually. At the end of two years, what will the total value in your account?
- A.
160
- B.
112
- C.
112.36
- D.
224
Correct Answer
C. 112.36 -
- 10.
Discuss the similarities and differences between savings and investment vehicles.
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Current Version
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Jan 31, 2013Quiz Edited by
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Nov 17, 2011Quiz Created by
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