Unit 4: Savings Accounts Review

Front

What is a savings account?

Back

A savings account is a bank account that earns interest on the money deposited, allowing individuals to save money while earning a small return.

Front

What does interest mean in the context of savings accounts?

Back

Interest is the money paid by the bank to the account holder for using their deposited funds, usually expressed as a percentage of the account balance.

Front

What is the formula for calculating compound interest?

Back

A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount, r is the annual interest rate, n is the number of times that interest is compounded per year, and t is the number of years.

Front

What does 'compounded annually' mean?

Back

Compounded annually means that the interest is calculated and added to the principal once a year.

Front

If you deposit $440 at an interest rate of 5.8% compounded annually, how much will you have after 8 years?

Back

$690.78

Front

What does the 'r' represent in the interest formula?

Back

The 'r' represents the rate of interest.

Front

What is a deposit slip?

Back

A deposit slip is a form used to deposit money into a bank account, detailing the amount being deposited.

Front

How many times a year does interest compound if it is compounded quarterly?

Back

4 times a year.

Front

What is the principal in a savings account?

Back

The principal is the initial amount of money deposited into the savings account.

Front

What is the difference between a checking account and a savings account?

Back

A checking account is used for daily transactions and typically does not earn interest, while a savings account is used for saving money and earns interest.