Financial Literacy Mod. 3 Assessment Review

Question 1

A bank loan must be paid back with interest

Accepted Answer

True

Question 2

Banks make money by charging more interest on loans than they pay on deposits

Accepted Answer

True

Question 3

What does the term "compoun interest" mean?

Accepted Answer

Earning interest on your deposit and on previously earned interest

Question 4

Stocks represent ownership in a company

Accepted Answer

True

Question 5

What is the primary function of a banK?

Accepted Answer

Provide loans and accept deposits

Question 6

A high-interest savings account is always better than a regular one.

Accepted Answer

False

Question 7

Which type of account typically offers the highest interest rate?

Accepted Answer

Certificate of Deposit (CD)

Question 8

What is a mutual fund?

Accepted Answer

A group of people investing together informally

Question 9

A debit card withdraws money from:

Accepted Answer

A checking account

Question 10

What is one risk of investing in the stock market?

Accepted Answer

You could lose all your moeny

Question 11

Which investment option typically carries the highest risk?

Accepted Answer

Stock marrket

Question 12

What is one difference between savings and investment accounts?

Accepted Answer

Investment accounts have a higher risk

Question 13

Interest on a Certificate of Deposit is typically fixed.

Accepted Answer

True

Question 14

Which of the following is not considered an investment?

Accepted Answer

Lottery ticket

Question 15

Why is diversification in investments important?

Accepted Answer

It spreads out your risks

Question 16

What is one advantage of keeping your money in a bank instead of at home?

Accepted Answer

FDIC insured

Question 17

You need good credit to open a checking account

Accepted Answer

False

Question 18

What is the purpose of the FDIC?

Accepted Answer

Guarantee (insure) your money in a bank up to a certain limit

Question 19

You can usually write checks from a savings account

Accepted Answer

False

Question 20

You can lose money when investin gin the stock market.

Accepted Answer

True

Questions 20