Final Exam 2023

If you deposit $200 into a CD (Certificate of Deposit) with an interest rate of 1% for 3 years, how much simple interest will you earn after THREE years?

• $1
• $5
• $6
• $25

Juan saved $1,000 from his summer job cleaning pools. Which of these savings vehicles would work best for him if he doesn't need access to the money for a number of years AND wanted to earn the highest interest rate?

• Regular savings account
• Money Market account
• Checking account
• Certificate of Deposit

A person-to-person payment would best be used in which of these situations?

• To give a donation to someone soliciting contributions outside the grocery store
• To repay your uncle who covered the cost of your first semester textbooks
• To buy some school supplies and baseball equipment while shopping online
• To give a tip to the waitress at a diner

Your friend Tammy just got a part-time job so she can afford to attend a school trip abroad later this school year. Tammy gets a paycheck on the 1st of every month, and a cash payment is due to the International Club advisor by the 3rd of every month with no exceptions. More than one late payment results in being removed from the trip. What recommendation do you have for Tammy?

• Sign up for direct deposit with her employer so that the money is already in her account the morning of the 1st
• Use her 15-minute break during work on the 1st of each month to run to the check cashing business; hopefully she doesn’t get delayed by long lines and return to work late, which will anger her boss
• Deposit the check through her mobile app on the 1st of the month and do a cash withdrawal from the ATM each month on the 2nd; hopefully the check clears in time to avoid fees
• Sign up for overdraft protection, withdraw the money from an ATM regardless of whether the funds are there in time, and just pay the $35 overdraft fee

Jocelyn gets a text alert from the bank that her account has dropped below $100 after a series of $20 ATM withdrawals. She has not used her ATM in over a week and wonders what she should do. What would you recommend?

• Wait until her monthly statement arrives so she can check to see if those withdrawals are still there
• Wait a week, as it is fairly common for the bank to catch mistakes like this
• Check her wallet to be sure her debit card has not been stolen. If she still has it, then she should not worry
• Contact her bank immediately as it appears that her account may have been hacked

Which of these is the most convenient feature of using online and mobile banking?

• Once you set up online banking, your bank will waive overdraft, ATM, and monthly fees
• By signing up for online banking, you will activate the FDIC insurance on your account
• Using online banking, you can request transfers, bill pay, automatic savings, and other features without visiting the bank branch
• You can shop online only if you've set up online banking

Which action below is considered a best-practice for check writing?

• Using a pencil so that you can quickly erase any errors without having to throw any checks away
• Recording all of your transactions in a check register
• Leaving the “to” field blank until the very last minute, so that no one else can steal the check
• Writing quite sloppily in each field so that no one else can forge your handwriting

The largest source of fees for banks when it comes to checking accounts is...

• Overdraft fees
• Wire transfer fees
• Check printing fees
• Interest expense

Which of these statements about savings is incorrect?

• People often believe they are saving when they buy products at a listed discount, even if they didn't need the product in the first place
• It is extremely difficult to open a savings account, as you typically need at least $10,000 for your initial deposit
• Without a vehicle to save (like a savings account), it's much easier to spend and harder to keep track of finances
• Billions of dollars is spent on marketing to persuade consumers to spend money instead of saving it

Jeremy is a 17-year-old junior in high school and just started his first job. He wants to open a savings account. Which of these will he need to bring to the local bank branch in order to start an account?

• A letter from his school
• A letter from his parents
• An adult cosigner because he is under 18
• An adult cosigner because he is still a student