Simple interest is best defined as:

Interest earned on the principal investment

Assume u r earning 0.5% intrst on savings acct while inflation is 2% / year. Which is TRUE?

purchasing power is decreasing by 1.5% per year

$1k that you won't need for years & interest rates will rise sharply, what savings strategy?

keep in reg svngs and move to CD after rates move up

of the following are good strategies to develop savings habits EXCEPT...

Getting paid in cash & storing a % in boxin ur room montlhly

Which of the following is NOT a reason savings can be difficult?

Most Americans have no place in their budget they can save

Oh, no! Lost your job? What is the best thing to do?

Have 3-6 months' of savings to get through a crisis

Regarding time value of money, which is most likely to result in the largest return?

Invest as long as poss. at the highest interestrate poss.

How can you earn interest on your savings?

Depositing your money in a bank account

In relation to the other options, how liquid is a savings account?

More liquid than a Certificate of Deposit

How much should you keep in your savings account?

Enough to cover 6 months of your expenses

which combo of interest rates and fees are a better deal assuming your average balance is $500?

Bank B: 2% annual interest rate and no fees

Whichof the following is an effective strategy for personal saving?

Savea % of each paycheck and deposit it in a savingsacct

Which of the following statements about banks is FALSE?

Savings accts earn higher returns than investments in stocks

Which statement best reflects the philosophy of “pay yourself first”?

set aside a set amount of $ for saving before using any $

Okay, you're ready to build your budget. What information will you need to have?

All answers except the credit limit one

Which statement is the most correct description of liquidity?

Howquickly and easily an asset can be converted into cash

It's best to have the rate of return on an investment_______than the rate of inflation.

Higher, to maintain purchasing power

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Saving/Budgeting

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Questions 41

Answers

1
Something extra that isn't essential or that steps-up a basic need is called a _____ ?
Budget
Want
Disposable Income
Variable Expense
2
Simple interest is best defined as:
Anyform of interest earned from saving or investing
The effect interest has on the total return on investment
Earning interest on interest
Interest earned on the principal investment
3
A cost or obligation that occurs regularly but may vary in amount. ex: utilities/groceries
Month-to-Month Rental Agreement
Lease
Variable Expense
Fixed Expense
4
What would be the BALANCE of your savings account after 6 months w $300 deposit & APR 2%?
$6
$3
$303
$306
5
Assume u r earning 0.5% intrst on savings acct while inflation is 2% / year. Which is TRUE?
purchasing power is increasing by 2.0% per year
purchasing power is increasing by 0.5% per year
purchasing power is decreasing by 1.5% per year
purchasing power is decreasing by 2.0% per year
6
$1k that you won't need for years & interest rates will rise sharply, what savings strategy?
Putyour money into a 5-year Certificate of Deposit (CD)
keep in reg svngs and move to CD after rates move up
Spendthe $ since it'l be worth less if rates increase.
yourmoney into a 2-year Certificate of Deposit (CD)
7
of the following are good strategies to develop savings habits EXCEPT...
Avoid spnding $ that u don't have running up crdit card debt
Take % of your pay and deposit into a savings account
Start with a small goal and gradually get more ambitious
Getting paid in cash & storing a % in boxin ur room montlhly
8
Find the "Variable Expense"
Insurance Payments
Groceries
Rent
Car Payments
9
Which of the following is NOT a reason savings can be difficult?
it's easier to spend and harder to keep track of finances
Billionsof $ spent on mrktng to persuade consumers to spend
They believe they're saving when buying stuff at a discount
Most Americans have no place in their budget they can save
10
A plan for spending and saving money during a particular period.
Budget
Gross Income
Tenant
Utility
11
Which savings vehicle is best if $$ isn't needed for years to earn the highest interest rate?
Money Market account
Certificate of Deposit
Checking account
Regular savings account
12
Oh, no! Lost your job? What is the best thing to do?
Borrow money from friends & family
Pawn everything you can
Take out cash advances on credit cards
Have 3-6 months' of savings to get through a crisis
13
Regarding time value of money, which is most likely to result in the largest return?
Invst at high rate b/c intrst is only factor affctng return
Invest small amnt of $ for a short time at the highest rate
Invest a large principal amount of money
Invest as long as poss. at the highest interestrate poss.
14
How do you know you have developed healthy money habits?
When you know how much money you make and bring home
When you have enough money to cover needs and some wants
When you save money each paycheck
All other answers are correct
15
Which of the following is NOT a way to reduce your grocery bill?
Buy store-brand products
Make impulse purchases
Study grocery ads
Make a shopping list
16
Which savings tool should be used to manage every day purchases and is liquid and accessible:
Money market deposit account
Certificateof deposit
Any of the other three
Checking account
17
If you had $1000 on deposit in a bank that failed, what would happen to the money?
You would receive $250,000
You would receive half of it
You would receive all of it
You would lose all of it
18
Which of the following is NOT a true "need"?
Safe shelter
Basic groceries
Reliable transportation
A new car
19
How can you earn interest on your savings?
Putting money in your mattress at home
Depositing your money in a bank account
Allowing your account to drop below the minimum
Borrowing money from a bank
20
When opening savings acct, if u can only ask 1 question, what's the most important?
Is your bank FDIC insured?
What's the intrst I would earn w your reg. savings account?
Is it true that I get a toaster if I open a new account?
What are the fees on your regular savings account?
21
What would be the BALANCE in your acct after 2 yrs if $300 was deposited, compounded w 5% APR.
330.00
30.75
330.75
$30.00
22
A budget is.....
An ongoing project
All of the above
A tool to help you set priorities and accomplish goals
Clear and easy to use
23
How much or your earning should you save each month?
2%
8%
5%
10%
24
In relation to the other options, how liquid is a savings account?
More liquid than a Certificate of Deposit
More liquid than a checking account
More liquid than cash
Less liquid than mutual funds
25
Which of the following statements best describes compound interest
Interest earned on the principal investment
Earning interest on interest
Any form of interest earned from saving or investing
The effect interest has on the total return on investment
26
How much should you keep in your savings account?
Enough to cover 18 months of your expenses
Enough to cover 4 weeks of your expenses
Enough to cover 6 months of your expenses
Enough to cover 12 months of your expenses
27
Which of these is a "Fixed Expense"?
Telephone
Rent
Electricity
Gasoline
28
Which of these is a "Fixed Expense"?
Electricity
Gasoline
Rent
Telephone
29
which combo of interest rates and fees are a better deal assuming your average balance is $500?
Bank A: 10% annual interest rate and $5/month in fees
The 2 banks deals are equivalent
Bank B: 2% annual interest rate and no fees
30
Whichof the following is an effective strategy for personal saving?
Wait til the end of the month and save whatever is left
Savea % of each paycheck and deposit it in a savingsacct
Takeout a payday loan so u can save before u get ur paycheck
Coverall your wants/needs and save whatever is left over
31
Which of the following statements about banks is FALSE?
Ifit's FDIC-insured, ur money is safe even if the bank fails
$$ in a bank is easy to access via ATM, debit crd or chck
Savings accts earn higher returns than investments in stocks
Many banks pay interest for the money you deposit with them
32
How much simple interest will you earn after 2 years from a $200 CD w an APR of 1% for 2 years?
$4
$5
$1
$2
33
Which statement best reflects the philosophy of “pay yourself first”?
set aside a set amount of $ for saving before using any $
pay all fixed expenses before paying flexible expenses
spend $ on the items/actvties before paying otherexpenses
save whatever money is left over after paying monthly bills
34
Okay, you're ready to build your budget. What information will you need to have?
Know how much money you make
Know the credit limit on your credit card
Know how much money you spend
All answers except the credit limit one
35
Which statement is the most correct description of liquidity?
Howquickly and easily an asset can be converted into cash
Theamnt of $ needed to pay necessities/comforts curntlyenjyd
Ameasurement of how much a person owns once all debts are pd
The amount of savings available
36
When bank says a savngs acct earns 1% int., it means you'll earn 1% int. over what time frame?
Monthly
Annually(a year)
Daily
Quarterly(three months)
37
There are lots of ways to keep finances straight, but of them all, which is the most important?
Balancing your checkbook
Using a Credit Card
Planning a budget
Saving Money
38
Which is NOT a personal money management tool you should master?
Spend your paycheck each month
Develop smart money habits
Budget your money
Live within your means
39
To successfully open a savings account, which of the following is NOT required?
.If under 18, a guardian's signature
SocialSecurity number
Minimumdeposit (if applicable)
Evidence of a job
40
Giving up food from vending machine to achieve savings goal is the:
trade‐off
interest
specific part of the SMART goal
opportunity cost
41
It's best to have the rate of return on an investment_______than the rate of inflation.
Lower, in order to minimize risk
Higher, to maintain purchasing power
Lower, in order to minimize taxes
Higher, to minimize risk

Saving/Budgeting Flashcards | StudBud