Topic Test Answers

The same amount of principal is invested in different accounts earning the same interest rate. Which of the following accounts would have the greatest accumulated value at the end of one year?

You will pay substantially less for life insurance if which of the following factors is true?

Consider the following incomplete deposit ticket. What was the subtotal of Rachel’s deposit?

In the formula I=P·r·t, what does P stand for?

Sharon wants to open a checking account from which to pay bills. She wants online services, and a debit card, which both banks provide for free. Based upon past experience, she expects to accidentally overdraft the account 1 time per year, due to unexpected charges and miscommunications. She expects no 2nd copies of statements, and to use network ATMs 4 times per month with either bank. She has $3300 in an emergency savings account at First State Bank, and thinks that the balance will be enough to cover overdrafts in the future if automatic transfers are made when needed. Based on the tables of fees, above, if Sharon chooses First State Bank, will it save her money over choosing Common Bank?

Which of these can be considered “online banking?”I. A brick-and-mortar bank that allows its customers to transfer money online.II. A bank that has only a few branches but has customers depositing money online.III. A bank that does not exist as a real building, but only has an internet presence.

What does “FDIC” stand for?

Rate the following bank accounts from most to least liquid: CD, savings account, checking account, money market account.

If you invest $3,900 at a 7.83% simple annual interest rate, approximately how long will it take for you to have a total of $10,000?

Gareth has $2,000 to invest. Putting the money in a savings account at his local bank will earn him 2.2% annual interest and gives him the ability to make ATM withdrawals from that bank’s ATMs. Putting the money in an online savings account will earn him 4.85% annual interest, but he will be charged $3 every time he makes an ATM withdrawal. Assuming that Gareth’s ATM withdrawals do not affect the amount of interest he earns, roughly how many ATM withdrawals must Gareth make every year for the local savings account to be a better deal than the online savings account?

What is a “balance brought forward?”

In 2007, the FDIC’s insurance limit was $100,000 per person per bank. If Sam had a $150,000 savings account and $80,000 checking account at Bank J, a $95,000 money market account at Bank K, and a $200,000 savings account at Bank L, how much of Sam’s money was FDIC insured?

If you wish to calculate the interest on an investment with a rate of 3.58%, what number will you plug into your equation?

How much more interest is earned on an investment of $12,585 at 3.5% interest over 5 years if the interest is compounded annually rather than earning simple interest?

Which of the following would be a good reason to place your money into a savings account?

Sam invests $9,400 in a fund yielding 5.2% simple interest annually. At the same time, Pat shops around for a better interest rate and invests $9,400 in a fund yielding 6.0% simple interest annually. After seven years, how much more interest has Pat’s fund earned than Sam’s fund?

Rachel just purchased a homeowners insurance policy for her new home that costs $0.43 per $100. Her home is worth $387,500. What is Rachel’s annual homeowners insurance premium?