Chapter 10: Saving for the Future
certificate of deposit
A deposit that is set aside for a specified length of time at a specified rate is called a(n) _____.
Grant
A form of educational funding that does not have to be repaid, is often funded by the government, and is in addition to scholarships and loans, is called a(n) _____.
safety of principal
A guarantee that you will not lose your savings deposit
liquidity
A measure of how quickly you can get your cash without loss of value.
payroll savings plan
A plan in which you authorize your employer to make automatic deductions from your paycheck each pay period.
work study
A program where students work on campus to earn money.
Share
A regular account at a credit union is called a(n) _____ account.
False
A subsidized student loan has higher interest rates, and interest begins the day you receive the loan.
certificate of deposit
A time deposit where a fixed rate of interest is earned for a specified length of time.
Money Market account
A type of saving plan that offers a more competitive interest rate than a regular saving account is called a(n) _____.
money market account
A type of savings account that offers a more competitive interest rate than a regular savings account.
certificate of deposit
A type of savings plan whereby you set aside money at a financial institution for a set period is a...
True
Cash allowances awarded to students to go to college, called scholarships, are based on need or may be based on high test scores.
scholarships
Cash allowances awarded to students to pay education costs
loan consolidation
Combining many loans into one large loan with one monthly payment.
True
Compound interest refers to interest paid on principal and interest.
True
Deposits in savings and loan associations and commercial banks are insured by the FDIC.
NCUA
Deposits kept in credit unions are insured by the _____.
interest
Earnings on principal.
True
Emergencies, vacations, social events, and major purchases are examples of short-term needs.
short-term needs
Expenses beyond your regular monthly items
long-term needs
Expenses that are costly and require years of planning and saving.
FDIC
Federal insurance for depositors in commercial banks and saving and loans is provided by the _____.
True
Financial Institutions can offer interest compounded daily because of computers that make rapid computations possible.
grants
Forms of education funding that do not have to be repaid.
True
If a depositor withdraws part or all of a certificate of deposit before its maturity date, there will be an early withdrawal penalty.
Compound
Interest drawn on the sum of the original principal plus interest is called _____ interest.
student loans
Money borrowed for education, called _____, can be subsidized or subsidized.
student loans
Money borrowed to pay for education
Interest
Money that is paid for the use of money is called _____.
compounded daily
Of the following items, which pays the highest total interest when deposits are withdrawn at irregular times? a.) compounded quarterly b.) compounded daily c.) compounded yearly d.) compounded monthly
Automatic deduction
Represent money you have authorized your bank or other organization to move from one account to another at regular intervals.
$100,000
The FDIC insures a depositor's money up to
annual percentage yield
The actual interest rate an account earns stated on a yearly basis.
principal
The amount of money you place in savings is called _____.
liquidity
The capability of financial institutions being readily converted to cash is called _____.
Maturity Date
The date on which an investment becomes due for payment.
maturity day
The day on which a certificate must be renewed or cashed in is called the _____.
risk
The greater the _____ you are willing to take, the higher the rate of interest you will receive.
principal
The total amount borrowed; amount deposited on which interest will be paid.
withdrawl
When a CD is cashed before its maturity date, the depositor much pay a(n) _____ penalty.
True
When choosing a financial institution in which to place your savings, you should consider safety, liquidity, convenience, and purpose.
all of these
Which of the following do banks usually offer? a.) ATMs b.) numerous locations c.)drive-up windows d.) all of these.
You can have part or all of your deposit put into your savings account.
Which of the following is not a benefit of direct deposit? a.) Your money is available in your account faster. b.) You do not have to make a special trip to the bank. c.) You can have part or all of your deposit put into your savings account. d.) Your money earns more interest than in any other type of savings plan.
Automobile Purchase
Which of the following is not an example of a long-term savings goal? a.) home ownership b.) college education c.) retirement d.) automobile purchase
Regular savings
Which of the following items is the most liquid? a.) home b.) regular savings c.) certificate of deposit d.) automobile
False
Work-study programs will replace your need for other sources of money for college funding.
direct deposit
Your net pay is deposited electronically into your bank account.
Direct Deposit
_____ involves an employer or financial institution electronically depositing your paycheck into a bank account.
Loan Consolidation
_____ occurs when student loans are combined into one large loan.
True
some ways to make savings easier include direct deposit and automatic deductions.
