Personal Finance Chapter 6
Tommy wants to buy a new bicycle, which costs $150. His parents have promised to contribute one-fourth of the cost of the bike. The rest will have to come out of Tommy's savings. What amount will Tommy need to come up with to get the new bike?
$112.50
John and Marissa purchase their first home for $120,000. They must put 15 percent down on the purchase price as a down payment. What will the amount of the down payment be?
$18,000
JaNoel took the following coins to her bank: three rolls of nickels; two rolls of dimes; five rolls of quarters. (Each roll of nickels is worth $2.00; each roll of dimes is worth $5.00; each roll of quarters is worth $10.00.) She deposited the sum into her savings account. What was the amount of her deposit?
$66.00
Suppose you deposit $50 into a savings account that pays 6% interest. Interest is compounded annually. After three years, how much will you have in the account (assume that you make no further deposits or withdrawals).
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You deposit $100 into a savings account that pays 6% interest. Interest is compounded quarterly. After six months, how much will you have in the account (assume that you make no further deposits or withdrawals).
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A(n) _____________________ firm is a company that buys and sells different types of stocks and bonds.
Brokerage
Loan ____________________ means that all of an individual's student loans are combined into one large loan, resulting in one monthly payment.
Consolidation
______________________ are not-for-profit organizations established by groups of people who pool their money.
Credit Unions
A large sum of cash you pay up front when you purchase a home is called a(n) ___________________.
Down Payment
A(n)__________________ is a form of financial aid for educational funding that does not have to be repaid.
Grant
__________________ is a measure of how quickly you can get your cash without loss of value.
Liquidity
The date on which an investment becomes due for payment is the _____________________ date.
Maturity
The amount of money you deposit into a savings account is called the _________________ .
Principal
_________________________ of principal means that you are guaranteed not to lose your savings deposit, even if the bank or other financial institution fails and goes out of business.
Safety
A cash allowance awarded to a student to help pay education costs is called a(n) _______________________.
Scholarship
A typical down payment for a house is about ___ percent of the purchase price.
a. 10 to 20
Bonds represent debt, or a loan; stocks represent equity, or ownership.
a. True
Earnings on principal is called interest.
a. True
Generally, the amount of work-study earnings will help offset the need for student loans.
a. True
Online savings accounts generally pay higher rates of interest than traditional savings accounts.
a. True
People often choose their financial institution because of convenience of location and the services offered.
a. True
The best reason to save money is to provide for future needs.
a. True
The biggest advantage of scholarships is that they do not have to be repaid if you complete your education.
a. True
The more liquid an investment, the less earning potential it is likely to have.
a. True
The more often interest is compounded, the greater your interest earnings will be.
a. True
Savings and checking accounts at a credit union are usually called
a. share accounts.
Credit unions are owned by the board of directors of the banks that established them.
b. False
Like certificates of deposit, there is a substantial penalty for taking money out of money market accounts.
b. False
One disadvantage of using direct deposit is that your paycheck can only be deposited into a savings account, not a checking account.
b. False
Scholarships almost always come with no strings attached.
b. False
Stocks and bonds issued by corporations or by the government are called share accounts.
b. False
When you buy a house, the smaller your down payment, the smaller your monthly mortgage payments will be.
b. False
Subsidized student loans
b. are guaranteed by the federal government.
Interest paid on the original principal plus accumulated interest is called
b. compound interest.
Which of the following would be considered a long-term need?
b. home ownership
Work-study programs allow students to earn money by working
b. on campus.
You can authorize your employer to make automatic deductions from your paycheck each period with a(n)
c. payroll savings plan.
Which of the following is organized primarily to lend money for home mortgages?
c. savings and loan association
Savings accounts protected by the FDIC are protected from loss for up to
d. $250,000.
The widest variety of banking services is provided at a
d. commercial bank.
