ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The amount of money he earns depends on the balance, i.e. the higher the account balance the higher the interest rate he would earn.
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The amount of money he earns depends on the number of accounts he has at the depository institution, i.e. the more accounts he has, the higher interest rate he will earn.
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Brett’s co-worker is talking about something that is illegal. A tieredaccount is promoted by scam artists who trick people into investing money in hopes of earning higher rates over time.
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The rate of interest earned increases over time, i.e. leaving money in the account for 3 months would earn a lower interest rate than leaving money in the account for 12 months.
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Detailed explanation-1: -His coworker is telling him about a money market acocunt he has that offers is a tiered interest rate. What is Brett’s coworker talking about? The ammount of money he earns depends on the balance, the higher the account balance the higher the interest rate he would earn.
Detailed explanation-2: -Expenses are what you spend money on. Expenses include: Bills: bills that are the same each month, like rent.
Detailed explanation-3: -Generally, the higher the potential return of an investment, the higher the risk. There is no guarantee that you will actually get a higher return by accepting more risk. Diversification enables you to reduce the risk of your portfolio without sacrificing potential returns.
Detailed explanation-4: -When taking advantage of the time value of money, which of the following is most likely to result in the largest return? Invest as long as possible and at the highest interest rate possible.
Detailed explanation-5: -CI(compound interest) is the rate or interest levied on the starting(initial) amount as well as the accumulated amount(which includes the invested amount and the prior year’s interest). The greater the compounding period, the greater the CI, which generates positive returns(interest on interest factor).