economy unit 6 review

How much would Keith have in his account after three years if he started with $200 and earns 2 percent interest, compounding annually?

$212.24 A=P（r+1）n

Annual compounding pays more money than daily compounding.

F

When you receive a savings bond worth $100, you can cash it for $100 right away.

F

The annual percentage yield (APY) is the _____.

amount of interest you'll earn in one year from a savings account

Select all of the reasons an individual would save his money in a CD.

high interest rates safe no fees

Use the Rule of 72 to solve. Manny has his money in a savings account earning 4.5% interest. How long it will take his money to double?

sixteen years (72÷4.5

When no taxes are due until the required time and the payments are held off, the action is called:

tax-deferred

Select all the reasons its important to save.

to reach long- and short-term goals to help manage your money to be prepared in case of emergency to be ready for an unforeseen expense to be a better steward of God's resources

1. 529 plan 2. CD 3. club account 4. IDA 5. savings bond 6. term 7. treasury bills 8. Treasury Inflation-Protected Securities 9. treasury notes 10. U.S. Department of Treasury

1.a saving plan for education designed to help set aside funds to pay for future college costs 2.certificate of deposit; an account where you leave your money for a set period of time and are unable to make deposits or withdrawals during this time unless you pay penalties 3.an account used to save money for a special reason, such as a holiday, a vacation, or college 4.an individual development account or a matched savings accounts into which an organization, such as a foundation, corporation, or government, agrees to add money which matches the money you deposit 5.a savings product or certificate issued by the U.S. government with values ranging from $50 to $10,000 6.a set period of time 7.T-bills; a savings product sold by the US Treasury department at a discount from their face value and range in terms from a few days to six months 8.TIPS; a savings product that pays interest twice per year and provides protection against inflation 9.T-notes; a savings product that pays interest every six months and is issued in terms of two, three, five, and ten years 10.an executive department of the United States government whose purpose is to manage the government's money

1. written orders that direct payment from a bank based upon the funds available from a depositor's account 2. a society where consumers rely solely on credit cards, debit cards, electronic accounts, and checks 3. the smallest amount allowed in an account without a financial penalty 4. tells the bank the length of time used in the processing of the check as well as the day of purchase 5. writing a check for more money than is available in your account 6. the person who will receive the check as payment

1.checking account 2.cashless society 3.minimum balance 4.check date 5.overdrawing 6.payee

1. compound interest 2. principal 3. return 4. Rule of 72

1.interest the bank gives on the interest that has been already earned 2.the original amount of money invested or deposited into a savings account 3.the profit or gain from saving or investing money 4.a formula that helps you calculate how long it will take for your savings to double in value

1. annual percentage yield 2. interest thresholds 3. money market account 4. variable interest rates

1.the amount of interest you will earn in one year from a savings account 2.the minimum balances before the bank begins paying interest 3.a savings account that offers a higher rate of interest when you make large deposits 4.different interest rates paid for different size balances, with higher balances earning higher rates

What is an incentive for a person to contribute to an IDA?

An organization matches the amount deposited.

There are several steps to opening a savings account. Select all of these steps.

Collect all the required information. Go to the bank and sign the necessary bank forms. Choose a director for the account. Fill out a deposit slip and deposit at least the minimum amount of money.

A check date is necessary so the bank will know the amount of money used in the processing of the check as well as the day of purchase.

F

Compound interest is the interest that is divided into different accounts.

F

IRAs are tax-free.

F

The great thing about IRAs is that you can withdraw money anytime you want with no financial penalty.

F

Identify tips that help you save.

If you receive cash as a gift, save at least part of it. Pay your bills on time to avoid late fees and finance charges. Use direct deposit or set up your account to automatically transfer money directly into savings. Save any extra money you get as a raise or bonus from your employer. When you get a tax refund, save it. If your employer offers a retirement plan, join it. Avoid debt.

Why does the money in a savings account grow?

It earns interest, plus it earns interest on the interest.

Select the TRUE statements.

NSF stands for "non-sufficient funds." Over 75 percent of the country's money in circulation is in checking accounts. Some banks offer interest on the money that is in the checking account. When you talk with a customer service representative, you can tell them of your particular needs in opening a checking account.

Taxes are paid when funds are invested, and there is not requirement for when withdrawal must begin.

Roth IRA4 check date

A "rollover" IRA is one that gets money from another qualified plan.

T

A formula that helps you calculate how long it will take for your savings to double is the Rule of 72.

T

Before you select a savings account, you want to think about how long you'll keep your money in the account.

T

On a check, what is the purpose of the memo line?

To serve as a personal reminder of purchases

Which has the best system for keeping track of your spending?

Using checks

Keeping a ____ balance means you keep a current total of what you have deposited into your account as well as what you have spent out of your account.

bank

IRA withdrawals must begin at age 70 ½. This refers to the:

basic IRA

Your IRA money can be meted out in periodic payments rather than one large sum.This is called

installment payments

If you received a $100 savings bond yesterday, can you use the money from the savings bond to buy an item that costs $85 today?

no

An online savings account _____.

offers higher interest rates because they don't have the overhead that standard banks have

Select each of the tools and services available with a savings account.

online statement ATMs online savings plan transfer money to other accounts direct deposit automatic transfer

"He that tilleth his land shall be satisfied with bread." This verse about a diligent worker comes from

proverbs 12:11

Manny has his money in a savings account earning 3% interest. How long will it take his money to double?

twenty-four years

There is also an education benefit with IRA's: you can take a penalty-free_____ for certain approved higher education-related expenses.

withdrawal

The formula for the Rule of 72 is _____.

years to double equals 72 divided by the interest rate