Business Finance Final Exam

1. All of the following statements about bank accounts are true EXCEPT…

• 1. If the bank is FDIC-insured, your money, up to the FDIC limit, is safe even if the bank fails

• 1. Many banks pay interest on the money you deposit into your savings account

• 1. Historically, savings accounts earn higher returns than investments in the stock market

• Money in a checking account is usually easy to access via ATM, debit card or check

1. All of the following are true about prepaid cards EXCEPT… 

• 1. Prepaid cards typically include a lot of fees

• 1. Prepaid cards are a useful option for someone who is unbanked to make online purchases

• 1. Prepaid cards are a great way to build credit

• 1. Prepaid cards are usually accepted anywhere that debit and credit cards are accepted

1. Fill in the blanks with the correct responses.  If you follow the 50-30-20 rule of budgeting, you'll be putting 50% of your monthly income toward _______________, 30% of your monthly income toward _____________, and 20% of your monthly income toward ______________. 

• 1. Needs, wants, savings

• 1. Savings, needs, wants

• 1. Needs, savings, wants

• 1. Wants, needs, savings

Which represents the BEST time to start saving for your retirement?

• 1. As soon as you have your first full-time job

• Right after you pay off your student loans

• Once you are debt-free, including paying off all credit cards, auto loans, and your mortgage

• 1. At age 45, so you have exactly 20 years until retirement

  
  

1. Experts recommend that you accumulate enough to cover 3 to 6 __________________ of expenses in your emergency fund. 

• Years

• Weeks

• Months

• Days

Which of these is a reason someone might choose to open an online savings account rather than a savings account at a traditional bank?

• 1. Online savings accounts are FDIC insured to a higher limit

• Online savings accounts typically pay higher interest rates

• 1. Online savings accounts are less likely to make you the victim of identity theft

• 1. Online savings accounts are created specifically for young adults

1.  Which statement best describes a savings account? 

• offers a convenient way to pay bills and access cash from an ATM

• 1.  pays you interest on money you have put away for later to help your money grow

• automatically debited when you use a debit card

• typically allows an unlimited number of transactions per month

Where does your money come from when you pay with a debit card?

• Savings account

• CD

• Mutual fund

• Checking account

Fill in the blanks:  If inflation is _____________ your savings account interest rate then you will be ______________ purchasing power.

• Higher than, gaining

• Equal to, gaining

• 1. Lower than, losing

• Higher than, losing

1. FDIC Insurance is...

• Required if you want to do online or mobile banking

• 1. Insurance bank branches can buy to protect their business against fraud and scams

• Optional coverage consumers can purchase so that their bank deposits remain safe

• 1. Protection for bank customers’ deposits up to $250,000, guaranteeing their money is still available if the bank goes out of business