Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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Liquidity refers to an investment that
a. | has no risk. | b. | is easily changed into
cash. | c. | is insured by a federal government agency. | d. | pays a high rate of
return. |
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2.
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A person’s savings would grow faster if the money was compounded
a. | annually. | c. | monthly. | b. | quarterly. | d. | daily. |
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3.
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A savings account statement presents
a. | the names of new depositors. | b. | a customer’s record of recnet
deposits. | c. | a summary of deposits, withdrawals, and interest earned. | d. | a list of current
interest rates paid on various savings accounts. |
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4.
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To open a savings account, a depositor must sign
a. | an account register. | c. | a withdrawal slip. | b. | an account statement. | d. | a signature
card. |
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5.
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Which of the following has the lowest liquidity?
a. | a savings account | c. | a checking account | b. | government savings bonds | d. | real estate |
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6.
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Boni intends to buy a certificate of deposit. Which of the following
restrictions is NOT likely to affect Boni when she starts this savings plan?
a. | There is a possible penalty for money withdrawn early. | b. | The deposit is not
insured by FDIC. | c. | Money must be left on deposit for a certain period of time. | d. | A minimum deposit
amount is likely to be required. |
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7.
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Investing commonly refers to
a. | opening a savings account. | b. | using your savings to earn more
money. | c. | putting money in a safe place in your home. | d. | storing important
documents in a safe-deposit box. |
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8.
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Putting money aside for future use is best achieved with the use of
a. | an insurance policy. | c. | a safe deposit box. | b. | real estate. | d. | a savings plan. |
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9.
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An individual retirement account (IRA) is designed to
a. | provide money for workrs who are on strike. | b. | earn higher interest
based on current government bonds. | c. | encourage workers to save for future financial
needs. | d. | increase tax revenues received by the federal
government. |
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10.
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To take money out of a savings account, a depositor must prepare a
a. | savings account register. | c. | signature card. | b. | savings account
statement. | d. | withdrawal
slip. |
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11.
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A savings plan that earns a variable rate based on current interest rates is
a. | a money market account. | c. | an EFT account. | b. | a certificate of
deposit. | d. | a regular savings
account. |
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12.
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A long-term deposit that pays a higher interest rate than other types of
accounts is
a. | a regular savings account. | b. | a money market account. | c. | a certificate of
deposit (CD). | d. | an interest-earning checking account. |
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13.
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A savings plan with a low or zero minimum balance is
a. | a regular savings account. | c. | a money market
account. | b. | an EFT account. | d. | a retirement account. |
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14.
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Which of the following commonly borrow to build highways and schools and to
provide other public services?
a. | consumers | c. | governments | b. | businesses | d. | foreign
companies |
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15.
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Roger wants to earn as much as possible on his savings. He should select a
savings plan with
a. | high liquidity. | c. | a high yield. | b. | high safety. | d. | low liquidity. |
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16.
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Savings grow over the years as a result of
a. | dividends received. | c. | interest earned. | b. | depreciation. | d. | higher tax
rates. |
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17.
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Lower yields on savings also usually mean the investment has
a. | a low risk. | c. | low liquidity. | b. | high risk. | d. | no liquidity. |
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