Personal Financial Security

What are the four types of services offered by financial institutions for saving?

• Credit cards, Auto loans, Mortgages, Personal loans

• Checking accounts, Money Markets, CDs, Personal Loans

• Savings accounts, Mutual Funds, Stocks, Treasury Bonds

• Checking accounts, Savings accounts, Money Markets, CDs

Answer explanation

The correct types of services offered by financial institutions for saving are checking accounts, savings accounts, money markets, and CDs.

What is the advantage of a Treasury Bond?

• High risk, high payout

• Low risk, fixed interest rates backed by the Fed

• Low liquidity, fixed interest rates

• High liquidity, variable interest rates

Answer explanation

The advantage of a Treasury Bond is low risk and fixed interest rates backed by the Fed.

What is the main reason to maintain good credit?

• Access to more loans with better terms and interest rates

• Access to more credit cards with higher limits

• Access to more personal loans with lower interest rates

• Access to more mortgage options with longer terms

Answer explanation

Maintaining good credit provides access to more loans with better terms and interest rates.

What is the role of life insurance companies?

• Provide financial protection for survivors of the insured

• Provide loans for purchasing real estate

• Provide investment opportunities in the stock market

• Provide credit cards for managing credit-based transactions

Answer explanation

Life insurance companies provide financial protection for survivors of the insured.

What is the disadvantage of a 401K compared to an IRA?

• No change in personal employment status

• No matching contributions from the employer

• Privately held and protected from loss

• Tied to your employment status

Answer explanation

The disadvantage of a 401K compared to an IRA is that it is tied to your employment status, unlike an IRA which is not.

What is the main disadvantage of borrowing money with bad credit?

• Lower credit limits

• Inability to access loans

• Higher interest rates

• Inability to access credit cards

Answer explanation

The main disadvantage of borrowing money with bad credit is the inability to access loans.

What is the purpose of the Federal Deposit Insurance Corporation (FDIC)?

• To provide loans for home ownership

• To manage pension funds for employees

• To regulate the stock market

• To provide deposit insurance to member banks

Answer explanation

The purpose of the FDIC is to provide deposit insurance to member banks, ensuring the safety of customers' deposits.

What is the main advantage of a mutual fund?

• High liquidity, variable interest rates

• Diversification in many businesses and industries

• High risk, high payout

• Low liquidity, fixed interest rates

Answer explanation

The main advantage of a mutual fund is diversification in many businesses and industries.

What is the role of the credit card company when you make a purchase?

• They immediately pay your bill in full

• They provide a grace period for repayment

• They charge you a fixed interest rate

• They require you to pay the total due every month

Answer explanation

The role of the credit card company is to provide a grace period for repayment.

What is the purpose of a REIT (Real Estate Investment Trust)?

• To invest in stocks and bonds

• To provide loans for purchasing real estate

• To specialize in businesses concerned with real estate and construction

• To provide financial protection for survivors of the insured

Answer explanation

A REIT is a type of investment trust that specializes in businesses related to real estate and construction.