Investment and Interest Quiz

For each option, write an equation to represent the relationship between the amount of money and the number of years of investment.

• Simple interest: A = P(1 + rt); Compound interest: A = P(1 + r/n)^(nt)

• Simple interest: A = P + rt; Compound interest: A = P(1 + r)^t

• Simple interest: A = P(1 + rt); Compound interest: A = P(1 + r)^t

• Simple interest: A = P + rt; Compound interest: A = P(1 + r/n)^(nt)

Which investment option should the family choose? Use your equations or calculations to support your answer.

• Bonds, because they have no fees

• Savings account, because it compounds interest

• Bonds, because they grow faster

• Savings account, because it has a higher initial amount

What is an emergency fund based on?

• Regular income

• Unexpected expenses

• Daily needs

• Luxury items

What is essential spending?

• Spending on non-essentials

• Spending on basic needs

• Spending on entertainment

• Spending on luxury goods

How could you divide your main savings account?

• Into different currencies

• Into different categories for specific goals

• Into stocks and bonds

• Into cash and credit

How long must the CD be held until the date of maturity?

• 3 years

• 4 years

• 5 years

• 6 years

What is the initial amount Amanda is considering to invest?

• $400

• $500

• $600

• $700

Which type of account allows withdrawal of the original deposit at any time?

• Certificate of deposit

• Savings account

• Both A and B

• Neither A nor B

What type of interest calculation is used in Amanda's CD?

• Compounded monthly

• Compounded annually

• Simple interest

• Compounded daily

What is the purpose of the spreadsheet Amanda uses?

• To calculate taxes

• To evaluate investments over five years

• To track expenses

• To plan a budget