Savings Exam

Question 1

Savings

Answer 1

The process of putting disposable income not spent on consumption of consumer goods in extremely safe securities or accounts

Question 2

Commercial Banks

Answer 2

Financial institutions that serve individuals and businesses and are the largest savings institutions in the US

Question 3

Savings and Loan Associations

Answer 3

Financial organizations that originally specialized in lending money to consumers to purchase homes

Question 4

Credit Unions

Answer 4

Financial institutions that offer membership to people who share a common bond, such as people in a particular profession, company, church or labor union

Question 5

Saving Accounts

Answer 5

Bank accounts that earn interest

Question 6

Certificate of Deposit

Answer 6

A deposit in a savings institution that earns a fixed interest rate for a set period of time

Question 7

Money Market Account

Answer 7

A deposit for which the interest rate changes over time

Question 8

Bond

Answer 8

A written promise to pat a debt by a specified date

Question 9

Government Bond

Answer 9

A bond issued by Federal Government

Question 10

Principle

Answer 10

The money in bank account

Question 11

Simple Interest

Answer 11

Interest paid once a year, at the end of the year and NOT on any interest earned during the year

Question 12

Compound Interest

Answer 12

Interest paid on the principle AND on previously earned interest, assuming that the interest is left in the account

Question 13

What are Five Tips for Saving Money

Answer 13

Needs vs Wants
Direct Deposit
Pay Bills On Time
Saving money from tips and Bonuses 
Make loans to yourself

Question 14

What are the characteristics for Commercial banks, credit unions and Savings and Loans

Answer 14

Commercial: Offer credit/debit card, FDIC insured, not risky
Credit Union: Restrictive, for certain people only, not trying to make money just to help these certain groups of people
Savings and Loans: Credit, FDIC insured, not risky, fixed interest

Question 15

Characteristics of Savings Account, Certificate of Deposit, Money Marketing Account, and Government Bonds

Answer 15

Savings Account: Earn Interest, Can withdraw whenever, FDIC insured
CD: Set Interest, More interest for more time, FDIC insured, Penalty for early removal
MMA: Interest Fixed, FDIC Insured
GB: Gov barrows money with GB pays back with interest, written promise to pay back by certain date, can be sold to another person at anytime

Question 16

Difference between Simple and Compound Interest

Answer 16

Simple interest is paid once a year at the end of the year based on principle, compound in paid more often based on new principle every time, makes more money from compound interest

Question 17

What are the different ways interest can be compounded?

Answer 17

Annually- Once a year
Semi Annually- Every 6 Months
Quarterly- Every 3 Months
Monthly- Every Month
Daily- Every Day

Question 18

What is the Formula for compound interest

Answer 18

(Percent/number of times compounded)(Principle)

Question 19

CB, S&L, CU Statements: Largest Savings Institution in US?

Answer 19

Commercial Banks

Question 20

CB, S&L, CU Statements: Became Pop during 1930’s

Answer 20

Savings and Loans

Question 21

CB, S&L, CU Statements: Provide Checking and Savings accounts

Answer 21

All

Question 22

CB, S&L, CU Statements: Operate for Profit

Answer 22

CB and S&L

Question 23

CB, S&L, CU Statements: Make loans to individuals

Answer 23

CB and S&L

Question 24

CB, S&L, CU Statements: Make Loans to Businesses

Answer 24

CB and CU

Question 25

CB, S&L, CU Statements: Insured by FDIC

Answer 25

Commercial Bank

Question 26

CB, S&L, CU Statements: Originally made to give loans to people who wanted to buy houses

Answer 26

S&L

Question 27

CB, S&L, CU Statements: Insured by SAIF

Answer 27

S&L

Question 28

CB, S&L, CU Statements: Members share a common Bond

Answer 28

CU

Question 29

CB, S&L, CU Statements: Offer Credit Cards

Answer 29

CB and CU

Question 30

CB, S&L, CU Statements: Deposit and become member

Answer 30

CU

Question 31

CB, S&L, CU Statements: Does not operate for profit

Answer 31

CU

Question 32

CB, S&L, CU Statements: Exists primarily for providing for its members

Answer 32

CU

Question 33

CB, S&L, CU Statements: Exclusive

Answer 33

CU

Question 34

CB, S&L, CU Statements: High interest rates for deposits

Answer 34

CU

Question 35

CB, S&L, CU Statements: Low rates for loans

Answer 35

CU

Question 36

CB, S&L, CU Statements: Insured by NCUSIF

Answer 36

CU