EverFi Module 1 - Savings - Final Quiz Answers

Key

* = correct answer

Joy is taking out a car loan which she will pay back with interest. Which option will require her to pay the lowest amount in interest?

A.) Annual Compounding* B.) Monthly Compounding C.) Daily Compounding D.) Semi-Annual Compounding

Which of the following is the most important consideration when planning your budget?

A.) Budget for fixed expenses before flexible expenses. B.) Budget for unexpected events in before expected expenses. C.) Budget for your needs before your wants.* D.) Budget for expected events before unexpected expenses.

Which of the following is a type of savings vehicle?

A.) Certificate of Deposit B.) Money Market Account C.) Checking Account D.) Both A & B*

Which type of account typically has very high liquidity, low or no interest, and low minimum balance?

A.) Certificate of Deposit (CD) B.) Checking Account* C.) Investment Retirement Account (IRA) D.) Money Market Account

Jorge has $300 for work he performed. He expects to spend the money in the next few weeks to buy a new bike. Which type of account will be best for Jorge?

A.) Certificate of Deposit (CD) B.) Savings Account C.) Money Market Account D.) Checking Account*

You are opening a savings account that earns compound interest. Which compounding frequency will earn you the MOST money?

A.) Compounding 1 time a year B.) Compounding 4 times a year C.) Compounding monthly D.) Compounding daily*

Which of the following is considered a "need"?

A.) Fruit B.) Gatorade C.) Food* D.) Pizza

Your friend is overspending and in need of a budget. What type of expense should they reduce next month?

A.) Going to the movies with friends.* B.) Purchasing medicine for their asthma. C.) Transportation to get to and from school. D.) Buy fewer school books.

When it comes to saving money, what is a good rule of thumb?

A.) Keep most of your savings in your checking account B.) Put aside money for savings each month* C.) Choose the savings account with the lowest interest rate D.) Put anything you can't afford on your credit card

Anthony is deciding between different savings accounts at his bank. He has four options, based on how frequently interest compounds. Which should he choose if he wants the best rate of return on his interest?

A.) Monthly Compounding B.) Daily Compounding* C.) Annual Compounding D.) Semi-Annual Compounding

Tamara has $500 she is looking to save for a class trip. She wants to earn the most possible interest and will not need access to her money for a full year. Which type of savings account will be best for Tamara?

A.) Savings Account B.) Certificate of Deposit (CD)* C.) Money Market Account D.) Checking Account

Which of the following is generally true about savings vehicles?

A.) Savings vehicles are only useful for long-term investments. B.) People should evaluate different forms of savings vehicles based on their needs.* C.) Savings vehicles are never insured. D.) All of the above

John just opened a savings account and wants to maximize the amount of interest he earns. Which of the following actions would enable him to earn MORE interest?

A.) Selecting an account with a high interest rate. B.) Leaving his money in the account for long period of time. C.) Transferring money into his checking account each month. D.) Both A & B*

What is the typical relationship between time and interest rate?

A.) Shorter time period usually equals higher interest rates. B.) Longer time periods usually have no affect on interest rates. C.) Longer time period usually equals higher interest rates.* D.) Shorter time periods usually have no affect on interest rates.

Which of the following savings vehicles usually requires a high minimum balance?

A.) Simple savings account B.) Certificate of Deposit (CD)* C.) Checking account D.) All of the above

Which of the following accounts will give you the LEAST access to your money?

A.) Simple savings account B.) Certificate of Deposit (CD)* C.) Checking account D.) Cash

Which of the following is considered a "want"?

A.) Socks B.) Shoes C.) Designer Sneakers* D.) A warm winter coat

Interest is:

A.) a charge for lending money to a bank B.) the amount owed for borrowing money* C.) the amount added into your savings when opening a bank account D.) a charge for the convenience of accessing money stored in your bank account

To earn as much interest as possible, you should open a savings account that earns _______ interest and has the ______ interest rate.

A.) compound; lowest B.) compound; highest* C.) simple; lowest D.) simple; highest

The purpose of a budget is to:

A.) help you plan how you will spend the money you earn or receive.* B.) stop you from spending too much money. C.) increase the balance of your savings account D.) tell you how much you owe the government in taxes