Banks Most Missed

What does the term "Pay yourself first" mean in personal finance?

• Spending money on entertainment before paying bills

• Saving a portion of your income before spending on anything else

• Paying off all debts before saving

• Investing all your money in stocks

What is a Certificate of Deposit (CD) and what happens if you cash it before maturity?

• A type of savings account; you lose all interest earned

• A loan from a bank; you pay a penalty fee

• A fixed-term deposit; you may incur a penalty for early withdrawal

• A checking account; nothing happens

Which institution typically charges the highest interest rates on loans?

• Banks

• Credit unions

• Payday lenders

• Finance companies

What is a credit union and what is one advantage of using it?

• A for-profit bank; higher interest rates on loans

• A non-profit financial institution; lower fees and better interest rates

• A government agency; guaranteed loans

• An investment firm; higher returns on investments

What is overdraft protection and how does it work?

• A service that prevents you from spending more than you have; automatically declines transactions

• A loan that covers transactions exceeding your balance; may incur fees

• A savings account feature; earns interest on overdrafts

• A credit card feature; increases your credit limit

What is compound interest?

• Interest calculated only on the initial principal

• Interest calculated on both the initial principal and the accumulated interest

• Interest that decreases over time

• Interest that is paid annually

What does the time value of money imply?

• Money loses value over time due to inflation

• Money today is worth more than the same amount in the future

• Money has no value over time

• Money gains value over time without investment

Which of the following is a liquid financial product?

• Real estate

• Savings account

• Certificate of Deposit (CD)

• Bonds

What does the Rule of 72 estimate?

• The time it takes for an investment to double at a fixed annual interest rate

• The interest rate needed to double an investment in 72 years

• The number of years to pay off a loan

• The percentage of income to save annually

Which of the following is a form of endorsement for personal checks?

• Blank endorsement

• Verbal endorsement

• Digital endorsement

• Conditional endorsement