Unit 1: Banking
What is a discretionary expense?
What is the interest on a loan of 500 of a year with an APR of 2%?
$10
What 3 credit Bureaus track all of your credit information?
Equifax, Experian and TransUnion
Your local car dealer has cars from the following years:
2010, 2010, 2012, 2015, 2018, 2019, 2019.
What is the median year?
2015
Rank the investments from the most attractive to the least attractive for a principal of $1,000 for 10 years.
A) an APR of 6.7% simple interest
B) an APR of 6.75% compounded yearly
C) an APR of 6.25% compounded monthly
D) an APR of 6% compounded daily.
B, C, D, A
Interest compounded quarterly is compounded how many times a year?
quarterly- 4 times a year
If you have student loans, how is your student loan payment applied?
The monthly loan payment is first applied to any accrued interest. The remaining portion of the payment is then allocated towards paying down the principal balance of the loan.
What is the APR on a loan that has a monthly rate of 3.68%
44.16%
You purchased a used car for $3,000. Your state charges 10% tax for the car, $50 for registration, $100 for a new title certificate, and $20 for a state safety and emissions inspection. How much do you need to pay in total?
$3,470
You have these daily balances on your credit card for your last billing period. You did not pay the card in full the previous month, so she will have to pay a finance charge. The APR is 15.8%
2 days @ $50
6 days @ $190
3 days @ $20
What is the average daily balance?
%118.18
Which Pays Higher Interest and Why?
Compound Interest VS Simple Interest
Compound Interest because compounding pays interest on the interest earned.
You are offered a subsidized loan your senior year of $2,500. How much interest will it accumulate if you start paying back 6 months after you graduate?
FICO, or credit, scores range from what score to what score (lowest to highest).
300-850
Your local car dealer has cars from the following years:
2010, 2010, 2012, 2015, 2018, 2019, 2019.
What percent of cars are older than 2010?
75%
You have $35.09 in your checking account. You want to buy lunch so you withdraw $20. You are charged a usage fee of $3.23. You deposit $5, some money you find in your coat pocket. You write OCSA a check for a show this weekend for $10. What is your current balance in your checking account?
$6.86
What is the Difference between a Money Market and a Certificate of Deposit? Which would you use when you don't need to pull from your money for a longer period of time?
Money Market- Higher savings than a typical Savings Account. Flexible with pulling your money.
CD- Higher Interest Rate than a MM. Must be ale to deposit minimum amount. You are securing your money for a set period of time (can pull early with penalty).
* CD*
What is the difference between Subsidized and Unsubsidized Loans?
**Both can be paid back up to 6 months after graduation**
Sub- Needs based, Interest charged to government (No interest to you) until end of grace period
UnSub- Not Needs Based, Interest is charged to you immediately
Which factors are most important in calculating your credit score?
Payment history and amounts owed
You use your car for business. You knows that your tank was full when you started your business trip, but you forgot to write down the odometer reading at the beginning of the trip. When the trip was over, the odometer read 100,001. Jessica’s car gets 13 miles per gallon. When she filled up the tank with gas that cost $3.39 per gallon, her total bill for the trip was $59.87. Determine Jessica’s beginning odometer reading (to the nearest tenth of a mile).
99771.41 miles
You are offered $1,000 in subsidized loans and $5,000 in unsubsidized loans. Both have an interest rate of 3.05%.
If you accept both loans for ALL FOUR years of college and plan to start paying back those after the 6-month grace period, what will be your total principal when you start your payment plan?
$25,830
Which is usually Higher and why?
APR VS APY
APY is higher because APY takes into account compounding
Which of the following is a good strategy to use when it comes to paying for college?
A. Make a financial plan to figure out how you are going to pay for 4-5 years of college BEFORE you go
B. See how much you can borrow in loans before applying for scholarships
C. Spend the money that you earn from your summer job so you can get more financial aid
D. Save your earnings from your summer job so that you can reduce the amount of loans you need to take
A & D
Make a financial plan to figure out how you are going to pay for 4-5 years of college BEFORE you go and Save your earnings from your summer job so that you can reduce the amount of loans you need to take
What are some benefits of using Credit Cards?
- Establish/ Build Credit
- Rewards Points
- Can buy without having total amount present
What are some other things to consider when buying a used car other than the list price?
- Maintenance Costs
- Safety Ratings
- Interest fees on Loans
- Total payment will be higher than list price
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What are the 5 components that make up your credit score and their percentages?
- Payment history:35% , Credit utilization:30%, Length of Credit History:15%, New Credit:10%, Credit Mix:10%