Financial Lit Midterms

Front

What is the formula for 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 (decimal), n is the number of times that interest is compounded per year, and t is the number of years the money is invested or borrowed.

Front

What does 'compounded semiannually' mean?

Back

It means that the interest is calculated and added to the principal twice a year.

Front

What is the Child Tax Credit?

Back

A tax benefit for families with children, which reduces the amount of tax owed.

Front

What is the income threshold for a married couple filing jointly to qualify for the Child Tax Credit?

Back

$150,000.

Front

How do you calculate net income?

Back

Net Income = Gross Income - Total Deductions.

Front

If your gross income is $550 and your deductions are $110 for payroll taxes and $22.50 for health insurance, what is your net income?

Back

$417.50.

Front

What is a withdrawal in banking terms?

Back

A withdrawal is the act of taking money out of a bank account.

Front

What is a deposit in banking terms?

Back

A deposit is the act of putting money into a bank account.

Front

Define 'principal' in the context of loans and investments.

Back

The principal is the amount of money borrowed or deposited.

Front

What is the difference between gross income and net income?

Back

Gross income is the total income before deductions, while net income is the income after deductions.