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Module 1
Module 1
Module 1/2
Module 2
Module 2
100
Money you earn on your principal in the bank or money you pay the bank on top of your principal.
What is interest?
100
The purpose is to have a quick way to estimate how long it will take money to double.
What is the purpose of Rule of 72?
100
The difference between interest paid to depositors and interest charged from borrowers is the bank’s profit.
How do financial institutions earn some of their money?
100
I can monitor my checking account balance by going online to your bank’s website.
How can you monitor your checking account balance?
100
Out of Network, Bounced Check, and Service fees
What are the three possible banking fees?
200
72/interest rate = # of years to double interest rate
How is the Rule of 72 calculated?
200
It’s a bank account that’s used to hold your savings.
What is a savings vehicle?
200
1. A part of all I earn is mine to keep. 2. You should keep 10% of all you earn. 3. Every gold piece you save is a worker to work for you. Every copper it earns is its child that can also earn for you. 4. If you are to become wealthy, then what you save must earn and its children must earn and its children’s children must earn.
What are the four Laws that Govern the Building of Wealth?
200
The relationship between interest rate and liquidity is that the lower the liquidity, the higher the interest.
What is the relationship between interest rate and liquidity?
200
Retail banks renovate their branches, pay for their employees, pay for rent, give a little interest to their lenders, and the rest goes to the shareholders.
What do retail banks do with their profits?
300
The difference is that you only earn interest principal only for simple interest while interest is earned on principal and interest for compound interest.
What is the difference between simple interest and compound interest?
300
The difference is that when you’re paying interest to a bank you’re borrowing money from the bank. But when you’re earning interest from a bank, it means that the bank is paying you for lending money to the bank.
What is the difference between paying interest to a bank and earning interest from a bank?
300
1. Depositors are paid higher interest rates. 2. Borrowers pay lower interest rates on loans. 3. There are fewer banking fees.
What are 3 ways in which the non-profit financial institution returns “profit” to its members?
300
1. It is more liquid than a CD. 2. A savings account has a lower interest rate than a CD.
What are two (2) ways a savings account is different than a CD?
300
Credit unions are non-profit.
Which financial institution is non-profit?
400
The person or party that lends money
What is a lender?
400
The person that borrows money.
What is a borrower?
400
1. Eat at home instead of going out to eat. 2. Rent a movie instead of going to the movies. 3. Use alternative energy sources (i.e. solar) instead of normal electricity. (Answers may vary)
What are three (3) ways you could cut expenses?
400
1. You are able to write unlimited checks as long as there’s money in the account. 2. Usually doesn’t pay any interest.
What are two (2) ways a checking account is different than a savings account?
400
CD because you have to keep your money in the bank for a certain amount of time before you are able to withdraw that money out of your account.
Of the four types of bank accounts (checking, savings, money market, and CD), which is the most illiquid? Why?
500
Daily.
What is the most powerful compounding frequency?
500
Savings, Money Market, and Certificates of Deposit
What are the three (3) types of savings vehicles?
500
FDIC stands for Federal Deposit Insurance Corporation.
What does FDIC stand for?
500
The government backs FDIC.
What backs FDIC insurance?
500
$250,000 per person per bank.
How much money (per person, per bank, per account) is covered by FDIC?