1. Practice, Practice, Practice Makes…

2. TRUE or FALSE? You would find monthly expenses on a person’s Income Statement.

3. TRUE or FALSE? A budget variance is the actual amounts you spent throughout the month.

4. TRUE or FALSE? Monthly compounding would benefit a saver more than quarterly compounding.

5. TRUE or FALSE? You would be jumping for joy if your liquidity ratio was 2.2 months.

6. TRUE or FALSE? Online-only banks have less overhead expenses, so they typically offer better interest rates.

7. TRUE or FALSE? A Balance Sheet is also called a “Statement of Cash Flow”

8. TRUE or FALSE? The interest rate on a 4-year CD would typically be lower than the rate on a 1-year CD.

9. TRUE or FALSE? Assets and Liabilities would be found on the Statement of Net Worth.

10. TRUE or FALSE? Funds in a savings account are considered “demand deposits”

11. TRUE or FALSE? The FDIC protects funds in bank accounts: up to $250,000 per account per institution.

12. TRUE or FALSE? You should subtract total liabilities from your monthly income to find your net worth.

13. TRUE or FALSE? Uh-Oh! Mr. Jackson is insolvent! This means that his liabilities exceed his assets.

14. TRUE or FALSE? The value of your home is included in your liquid assets.

15. A savings bond with a face value of $500 can be purchased for None of the above. $1000 $500 It depends on the current rates in the market $250

16. You want to know how much to invest today in an account earning 7% so that you’ll have $10,000 in 5 years. This is an example of Insufficient information to determine. Future Value (Series) Future Value (Single Amount) Present Value (Series) Present Value (Single Amount)

17. Interest earned on top of previously earned interest is called Liquid Interest Tiered Interest APR Simple Interest Compound Interest

18. Yeah! You have just calculated your liquidity ratio. What do experts recommend? It should be at least 1 year. The lower, the better. Less than 3 months is ideal. The higher, the better. Between 3 and 6 months.

19. You need to know 3 important figures in order to calculate the time value of money. These are None of the above. Principle, Series, and Value. Time, Safety, and Rate. Liquidity, Principle, and Rate. Principle, Rate, and Time.

20. How long will a U.S. Savings Bond continue to accrue interest? Forever. Savings Bonds do not accrue interest. It depends on current rates in the market. 20 years from date it is issued. 30 years from date it is issued.

21. APR would be equal to APY when APR can never be equal to APY. Interest is compounded daily. Interest is compounded quarterly. Interest is compounded semi-annually. Interest is compounded annually.

22. Why do CDs pay higher rates of interest than traditional savings accounts? We would expect to earn a higher rate of interest if we are “giving up” our money for a longer period of time (the trade-off is less liquidity but more return).

23. Why is FDIC insurance important to savers? The federal government, through the FDIC, insures our money in commercial banks up to $250,000 per account holder per institution.

24. What is the best way for a person to start saving money? We should treat “savings” as a “fixed expense” and “pay ourselves first”. This is best done by setting up automatic transfers from a checking account to a savings account.

25. How does a credit union differ from a commercial bank?

26. Given today’s economy and current interest rates, should a person invest in a 5-year CD? Why or why not? Today’s rates are extremely low. It is not wise to lock into a low interest rate for a long period of time because if rates do increase, you will be missing out on earning a higher rate of return.