FLASHCARDS - CTE Review (Financial Literacy)

Front

An account in which money is kept at a bank or credit union for safekeeping. Money can be easily withdrawn by writing checks or using an ATM or debit card.

Back

Checking Account

Front

What is a commercial bank?

Back

Offers a broad range of deposit accounts and provides loans to individuals and businesses.

Front

Credit Union

Back

A non-profit institution owned by its members that provides financial services to them.

Front

What is the advantage of Casey having a credit card in her own name?

Back

If she pays her bills promptly, she will establish a good credit history.

Front

If the demand for software engineers increases more rapidly than for office clerks, what would you expect to happen to the average pay for the two occupations?

Back

The pay for software engineers will go up relative to the pay for office clerks.

Front

How risky is an investment with a return averaging 25% per year?

Back

Much riskier than most stocks.

Front

Rachel has found a great apartment that costs $800 per month. To move in, her new landlord requires the first month's rent in advance, plus a damage deposit equal to one month's rent. If she signs a year's lease and does no damage to the apartment, what must she pay before moving in, and what will she get back when she moves out?

Back

She must pay $1,600 before moving in and will get back $800 when she moves out.

Front

Caleb has decided to invest $1,000 in a bond that has a return rate of 6%. Using the Rule of 72, determine how many years it will take for his original investment to double.

Back

12 years

Answer explanation

Answer Explanation: The Rule of 72 is a simple way to estimate the number of years required to double the invested money at a given annual rate of return. By dividing 72 by the annual rate of return (6% in this case), you get the approximate number of years it will take for the investment to double. So, 72 divided by 6 equals 12 years.

Front

When you buy a consumer durable good, such as a new refrigerator, and the person making the sale keeps trying to sell you an extended warranty on the product, what does that tell you?

Back

The store is probably making a big profit on the extended warranty because it costs much more than the estimated cost of repairs.

Answer explanation

Explanation: Stores often make significant profits on extended warranties because the cost of the warranty is usually much higher than the average cost of repairs, which is why salespeople push them.

Front

Lauren has a $200 annual deductible on her health insurance. By the end of 2023, she had paid $175 in medical expenses. On January 4, 2024, she went to the doctor for the first time that year and was charged $60 for an office visit. How much of that must she pay herself?

Back

$60

Answer explanation

Answer Explanation: Lauren has a $200 deductible, and she has already paid $175. This means she needs to pay $25 more to meet her deductible. Therefore, she must pay $25 of the $60 office visit charge herself. The remaining $35 will be covered by her insurance.