Final Exam

Question 1

define compound interest

Answer 1

earned on both the principal – the money you deposited in your savings account – and any interest you earned on it

Question 2

define money market fund

Answer 2

a fund that is a kind of mutual fund, or pool of money

Question 3

define money market deposit account

Answer 3

banks, savings and loans, and credit unions have their own form of money market fund

Question 4

what is the FDIC

Answer 4

a government agency, that insures bank accounts for up to $250,000

Question 5

define liquidity

Answer 5

the ability to quickly turn an investment into cash

Question 6

the interest rates on most savings accounts ________ with inflation

Answer 6

increase

Question 7

the main risk is which ______ where you are ______ into an interest rate over a long period of time

Answer 7

CDs ; locked

Question 8

the government _____ earnings

Answer 8

taxes

Question 9

difference between common and preferred stock

Answer 9

common- dividend rate not fixed
voting rights

preferred- fixed dividend rate
dividends and claims paid first
limited voting rights