Understanding Savings and Interest

What does saving mean?

• Setting aside part of your income

• Investing in stocks

• Spending all of your income

• Borrowing money from a bank

What is interest in the context of savings?

• A fee for opening an account

• A penalty for withdrawing money

• A reward for saving money

• A tax on savings

What is the balance in a savings account?

• The amount of money in the account at a given time

• The interest rate applied

• The amount of money borrowed

• The total interest earned

What do deposit accounts allow customers to do?

• Save money and earn interest

• Invest in stocks

• Borrow money

• Pay taxes

How is simple interest calculated?

• As a fixed amount

• As a percentage of the original amount

• As a percentage of the interest earned

• As a percentage of the total amount in the account

How is compound interest calculated?

• As a percentage of the total amount at the end of each year

• As a fixed amount

• As a percentage of the interest earned

• As a percentage of the original amount

What does CAR stand for?

• Current Account Rate

• Compound Annual Rate

• Credit Annual Rate

• Cash Accumulation Rate

What does AER stand for?

• Annual Equivalent Rate

• Annual Earnings Rate

• Accumulated Earnings Rate

• Annual Expense Rate

What is the difference between fixed and variable interest rates?

• Fixed rates change over time, variable rates do not

• Fixed rates remain the same, variable rates can change

• Both rates change over time

• Both rates remain the same

What does D.I.R.T. stand for?

• Deposit Interest Retention Tax

• Direct Interest Rate Tax

• Direct Income Revenue Tax

• Deposit Income Rate Tax