2 2. What are two reasons to put your money in a bank? What is a bank?a business that stores and manages money for individuals and other businesses2. What are two reasons to put your money in a bank?keep it safeto earn interest3. Briefly describe the following banks:Retail bank - Banks that offer basic banking services to individualsCredit union - non profit banks that offer basic banking servicesCommercial banks - provide services to businessesInvestment banks - help businesses and other organizations raise money by issuing stocks and bonds.
3 5. What are the two main types of bank accounts? checking, savings 4. What is a bank account?a record of the transactions between you and your bank5. What are the two main types of bank accounts? checking, savings6. Why do people open savings accounts? to save money for future use7. What do personal checks include? Name and address in upper left cornerCheck number in upper right cornerBank informationRouting and Account numbers on the bottom8. What do some people do when they reach their savings goals?they might decide to invest some of their savings9. What do most people invest their money in?products such as stocks, bonds, or mutual funds
4 10. In which types of banks do most people open savings accounts? Retail banks or credit unions11. What is the difference between passbook and time savings account? passbooks earn less interest but are more flexible, time accounts require you to leave your money for a set amount of time12. Briefly describe money market accounts.Money market accounts offer a higher interest rate than a passbook savings account. There is usually a minimum balance a limit to amount of times you can withdraw money13. What are equity investments?you purchase stocks in a company.14. What are fixed income investments?you lend money to a business or government agency in exchange for a bond.15. What is an IRA?a personal savings plan that allows you to set aside money for retirement.
5 18. Describe the following types of life insurance: 16. What is the government program that pays monthly benefits to workers in the U.S. who pay the FICA tax?Social Security17. What is insurance?an investment that protects you financially against everyday risks 18. Describe the following types of life insurance:Term life insurance – provides protection for a specific dollar valuePermanent Life insurance – lets you save or invest money in a policy over time 19. What is the purpose of health insurance?protects you against the high cost of health care
6 20. What is estate planning? 21. What does a realtor do? The process of anticipating and arranging for the disposal of your assets after your death21. What does a realtor do?Helps people buy a house from showing, to making an offer, and closing22. What are things that you should consider when deciding whether to rent or buy a home?Lifestyle needs, credit history, net worth, current and future income23. What is a down payment and how much to do people usually put down on a house?A percentage of the home prices paid up front, usually 3 – 20% 24. How long do home loans usually last?15 or 30 years
7 25. Briefly describe the five parts a mortgage payment: Principal – amount of loan divided into equal paymentsInterest – percentage you pay to get the loanPoints – costs paid to the lender in order to get mortgage financingTaxes – real estate taxes that are assessed by your communityHomeowners insurance – protects against damage to your home or property26. What is a premium?The amount of money paid by the policy holder27. Describe the following types of insurance:Renter’s insurance – protects your property if you rent a homeAuto insurance – protects your car from theft or damageDisability Insurance – protects your income if you are too sick or hurt to workDental Insurance – protects you against the cost of dental care