Deck 2: Banking Services

Question 1

Interest compounded semiannually is compounded four times a year.

Answer 1

False

Question 2

Margarite wants to take a trip to Japan in 8 years.She knows she will need about $4,200.How much should she deposit into an account now that pays 3.5% interest,compounded daily,to meet her goal? Round to the nearest dollar.

A) $1,026
B) $1,706
C) $3,174
D) $3,781

Answer 2

$3,174

Question 3

Loretta deposits $350 every quarter into a savings account that earns 4.5% interest compounded quarterly.What is the balance after 7 years?

A) $10,312.63
B) $11,344.18
C) $11,444.27
D) $12,477.74

Answer 3

$11,444.27

Question 4

To reconcile a check register means to match all the entries in the register with the statement received from the bank and correct any discrepancies.

Question 5

What does the variable n represent in the formula below?
​

Question 6

Malcolm wants to make a deposit into an account that earns interest.He wants to be able to access the money on a limited basis.What type of account should he NOT consider?

A) Money market account
B) Statement savings account
C) Certificate of deposit (CD)
D) Savings account

Question 7

Jackson deposited $5,000 at 3.8% interest,compounded continuously,when he was 18 years old.How much will be in the account when he is 40 years old if he made no other deposits or withdrawals?

A) $19,000.19
B) $11,535.60
C) $10,691.38
D) $8,800.00

Question 8

Tamika opened a money market account that has a 4.25% annual interest rate,compounded annually.She deposits $1,750 into the account each year.How much interest will the account earn after 15 years?

A) $9,419.40
B) $33,949.40
C) $35,699.40
D) $71,398.40

Question 9

Maxine deposited $1,000 into an account that pays 4.5% interest,compounded daily.At the end of six months,she has earned $12 in interest.

Question 10

The Federal Deposit Insurance Corporation insures bank accounts up to a particular amount.This means that if the bank fails,the money is guaranteed by the government.

Question 11

Bob and Kathy want to save a total of $500,000 for retirement.How much should they deposit monthly into an account that pays 3.9% interest,compounded monthly,to meet their goal in 24 years?

A) $950.41
B) $2,102.34
C) $1,051.17
D) $4,446.41

Question 12

Erin has a balance of $1,150.34 in her check register.On her statement,the balance of her account is $844.93.Not reported on the bank statement are deposits of $125.56,$50,and $212.34.There are outstanding checks in the amount of $15 and $78.25 and an ATM withdrawal of $40.After Erin reconciles her check register with her statement,what entry does she need to make in her register?

A) Adjusting entry of $101.76
B) Adjusting entry of -$101.76
C) Adjusting entry of $50.76
D) Adjusting entry of -$50.76

Question 13

James and Terry open a savings account that has a 2.75% annual interest rate,compounded monthly.They deposit $500 into the account each month.How much will be in the account after 20 years?

A) $48,407.45
B) $159,744.59
C) $330,600.15
D) $580,894.18

Question 14

Aaron wants to know how much he needs to save each month in his savings account to have a certain amount in the future.He should use the formula for present value of a periodic deposit investment.

Question 15

Amy opened a savings account with $1,750 she received for graduation.The account pays 4.3% simple interest.What is the balance after 6 months?

Question 16

LaToya has $113.94 in her checking account.During the week,she goes to an ATM and withdraws $40.She is charged a usage fee of $2.50.The following week she deposits her paycheck of $189.73.She writes two checks,one for $22.50 and the other for $70.18.What is the current balance in her checking account?

A) $170.99
B) $168.49
C) $145.99
D) -$21.24

Question 17

Compound interest earns more than simple interest at the same interest rate because compounding pays interest on the interest earned.

Question 18

How much more would $1,000 earn in 5 years in an account compounded continuously than in an account compounded quarterly if the interest rate on both accounts is $3.7%?

A) $86.40
B) $51.07
C) $36.10
D) $1.02

Question 19

Annual percent yield is higher than the annual percentage rate because APY takes into account the additional interest earned by compounding.

Question 20

Conrad Savings Bank has a $50 overdraft fee.On Friday,Mr.McQuire deposited his paycheck of $468.92 for a total account balance of $712.34.The next morning,his wife wrote a check for $1,267.45 for a new refrigerator and stove.The check cleared the bank by the end of the day.What is the current balance in the McQuires' account?

A) -$798.53
B) -$605.11
C) -$555.11
D) -$405.11

Question 21

Annalise has an online checking account at Wells Fargo Bank.Her balance at the beginning of the month was $5,000.00.During the month,she made deposits totaling $5,478.42,was charged a maintenance fee of $18,and earned $1.87 in interest.Her balance at the end of the month was $4,187.93.Annalise grew concerned because she spent considerably more than she made during the month.How much did Annalise spend during the month?

Question 22

Steve inherited $100,000 from his grandmother and deposited it into an account that compounds interest monthly at a rate of 4.9%.Each month,he withdraws $500 from the account.How long will it take him until the account has a balance of $0? Round your answer to the nearest tenth of a year.

Question 23

Anne has opened up a systematic savings account into which she deposits $500 per month compounded monthly at a rate of 7.8%.How long will it take her to reach $500,000? Round your answer to the nearest tenth of a year.

Question 24

Sonja and Jake just got married.They received $4,500 in gift money and deposited it into a savings account that pays 2.85% simple interest.How much will they have in savings after 3 years?

Question 25

Tammy sold a diamond ring for $10,000.She placed half of the money into a CD with a 3.9% interest rate compounded daily.She placed the other half into a CD with the same interest rate but compounded monthly.What is the difference in the interest earned on each amount after 4 years?

Question 26

Landry deposits $10,000 into an account that compounds interest continuously at a rate of 2.375%.How long will it take his money to grow to $11,000? Round your answer to the nearest tenth of a year.

Question 27

What is the interest earned on $20,000 for 5 years,at an interest rate of % compounded continuously?

Question 28

Curtis deposited $10,000 into an account that compounds interest annually at a rate of 5%.He wants to know how long it will take for his money to double but doesn't have a calculator with logarithms.If he estimates the answer to his question using the Rule of 72s,and then later tries to verify his estimate with a better calculator,how many days will his estimate be off? Round your answer to the nearest day.

Question 29

Ron and Annie have $1,239.45 in their checking account.During the week,Annie goes to an ATM and withdraws $80.The following week Ron deposits his paycheck of $689.65.Annie then pays bills online in the amounts of: $212.80,$55,$49.76,and $110.35.What is the current balance in their checking account?

Question 30

Huong deposits $2,000 into an account that earns 4.2% interest compounded daily.What is the annual percentage yield (APY)to the nearest hundredth of a percent?

Question 31

Edward wants to have $50,000 in 10 years for college.What single deposit would he need to make now into an account that pays 4.3% interest,compounded daily,to meet his goal?

Question 32

Jericho wants to start saving to purchase a house.His goal is to save $95,000.If he deposits $56,000 into an account that pays 3.75% interest compounded daily,approximately how long will it take for his money to grow to the desired amount? Round your answer to the nearest tenth of a year.

Question 33

Rajesh invested $30,000 into an account that has a monthly rate of return of 0.79%.He has made arrangements to withdraw $250 automatically every month to pay off his 10-year student loan.Will Rajesh have enough money in the account to cover all of the required loan payments? If so,how long can he continue to withdraw $250 each month to put toward a car payment? (Round to the nearest year. )

Question 34

Alesha wants to deposit $25,000 into an account that compounds interest.She hopes to have $40,000 in 7 years for a down payment on a house.What interest rate must she find in order to accomplish her goal? Round your answer to the nearest hundredth of a percent.

Question 35

The Parsons have a balance of $3,664.47 in their check register.On their bank statement,the balance on the account is $2,346.89.Not reported on the bank statement are checks of $324.56,$25.50,$78.92,and $30.25.There are outstanding deposits in the amount of $500 and $1,456.81.There are three ATM withdrawals of $60 each.What do the Parsons need to do to reconcile their checkbook?

Question 36

Carmencita is 12 years old and she is saving for a car.She wants to have $5,000 by the time she is 16 years old.She opens a savings account with an APR of 3.9% compounded weekly.How much should she deposit into her account each week to meet her goal?

Question 37

Ashley and Dwayne are saving for retirement.Their goal is to have $250,000 in 15 years.They open up an account with an APR of 3.7% compounded monthly.How much should they deposit each month to meet their goal?

Question 38

Tyrone opens an account at the local bank by depositing $50 of his birthday money.He continues to deposit $50 each month for 5 years.If the account pays % interest compounded monthly,how much is in the account after 5 years?