Financial Literacy Exam (Chapter 10)
Questions and Answers.
Short term needs you might encounter include: - Answer Emergencies, Vacations, Social
Events, and Major Purchases.
What is key for long-term needs? - Answer Proper investing
What are some long term needs? - Answer Home ownership, education, retirement (can't
count on S.S., have another plan for financial security), and Investing
Saving money will allow you to do what things - Answer Make large purchases in the future,
invest, and accumulate money for a secure retirement.
The larger the downpayment you can make, the (smaller/larger) your monthly payment will be.
- Answer The larger the downpayment the smaller the monthly payments.
Social Security was never made to ____ - Answer To provide a comfy retirement. It's meant to
be a supplement to an individual's own savings
Two reasons why someone would want to invest their money - Answer Financial security (to
protect against inflation), to make money for future use.
Where can you invest your money? - Answer Stocks, Bonds, Mutual funds, Real estate,
Insurance, In a business
Investments are - Answer Risky, should be made in addition to savings NOT in replace of.
Invest ONLY what you can risk to lose.
Discretionary income - Answer What you have left over after you have paid your bills.
The best reasons to save are as follow: - Answer Peace of mind, no pressure it's there when
you need it, and adequate money for future
The factors that affect amount of savings - Answer Discretionary income
Importance of savings
Anticipated needs/wants
, Will power
Principle - Answer Amount of money deposited by a saver
Interest rate - Answer An increase of money accumulated
Compound interest - Answer Interest computed on the original principal plus accumulated
interest.
Interest earned... - Answer Interest earned increases each year because the saver is earning
interest on the previous year's interest as well as on the initial deposit.
The more often interest is compounded, - Answer the greater your earnings
You earn more interest with (quarterly compounding/annual compounding) - Answer
Quarterly compounding.
Annual Percentage Yield (APY) - Answer Actual interest rate the account pays per year, with
compounding included.
Earnings on savings can be measured by the - Answer Rate of return or yield
Yield is - Answer the percentage of increase in the value of your savings due to earned interest
Where can you save? - Answer Commercial banks (amount of locations is only difference)
Savings Banks(smaller building, not common)
Savings+Loans association
Credit unions(size/name is only way to differentiate, not many anymore)
Brokerage firm(People who buy stocks/bonds)
Interest rates (are the same/vary) among all savings institutions - Answer Vary
Which bank provides the widest variety of banking services of any financial institutions? -
Answer Commercial banks
Why do people prefer to keep their checking savings accounts in the same bank? - Answer For
ease in transferring funds and making deposits and withdrawals.
Questions and Answers.
Short term needs you might encounter include: - Answer Emergencies, Vacations, Social
Events, and Major Purchases.
What is key for long-term needs? - Answer Proper investing
What are some long term needs? - Answer Home ownership, education, retirement (can't
count on S.S., have another plan for financial security), and Investing
Saving money will allow you to do what things - Answer Make large purchases in the future,
invest, and accumulate money for a secure retirement.
The larger the downpayment you can make, the (smaller/larger) your monthly payment will be.
- Answer The larger the downpayment the smaller the monthly payments.
Social Security was never made to ____ - Answer To provide a comfy retirement. It's meant to
be a supplement to an individual's own savings
Two reasons why someone would want to invest their money - Answer Financial security (to
protect against inflation), to make money for future use.
Where can you invest your money? - Answer Stocks, Bonds, Mutual funds, Real estate,
Insurance, In a business
Investments are - Answer Risky, should be made in addition to savings NOT in replace of.
Invest ONLY what you can risk to lose.
Discretionary income - Answer What you have left over after you have paid your bills.
The best reasons to save are as follow: - Answer Peace of mind, no pressure it's there when
you need it, and adequate money for future
The factors that affect amount of savings - Answer Discretionary income
Importance of savings
Anticipated needs/wants
, Will power
Principle - Answer Amount of money deposited by a saver
Interest rate - Answer An increase of money accumulated
Compound interest - Answer Interest computed on the original principal plus accumulated
interest.
Interest earned... - Answer Interest earned increases each year because the saver is earning
interest on the previous year's interest as well as on the initial deposit.
The more often interest is compounded, - Answer the greater your earnings
You earn more interest with (quarterly compounding/annual compounding) - Answer
Quarterly compounding.
Annual Percentage Yield (APY) - Answer Actual interest rate the account pays per year, with
compounding included.
Earnings on savings can be measured by the - Answer Rate of return or yield
Yield is - Answer the percentage of increase in the value of your savings due to earned interest
Where can you save? - Answer Commercial banks (amount of locations is only difference)
Savings Banks(smaller building, not common)
Savings+Loans association
Credit unions(size/name is only way to differentiate, not many anymore)
Brokerage firm(People who buy stocks/bonds)
Interest rates (are the same/vary) among all savings institutions - Answer Vary
Which bank provides the widest variety of banking services of any financial institutions? -
Answer Commercial banks
Why do people prefer to keep their checking savings accounts in the same bank? - Answer For
ease in transferring funds and making deposits and withdrawals.
