Question

1. Tierra purchased a new dress for $75.00. She used her credit card, which has a 21% interest rate. Calculate her new balance if she chooses not to pay it before the end of the month.

A
$131.71
B
$157.50
C
$90.75
D
$96.00

2. Kathleen made a purchase with her credit card. She paid half her balance before the end of the month. Based on this information, what should Kathleen expect to pay?
A
Remaining balance plus interest
B
Annual fee
C
Remaining balance
D
Late fee

3.Jessie's savings account pays an interest rate of 4% on her average balance annually. If her average balance is $125,000.00, how much interest will she earn at the end of the year?
A
$12,350.00
B
$2,500.00
C
$5,000.00
D
$31,250.00

4. Sam's savings account pays an interest rate of 2% on her average balance annually. If her average balance is $1,200.00, how much interest will she earn at the end of the year?
A
$24.00
B
$120.00
C
$240.00
D
$12.00

5. In terms of using a credit card, which of the following is best defined as the percent of money paid if the balance is not repaid within 30 days?
A
Interest
B
Annual fee
C
Billing cycle
D
Grace period

6.What is the Average Daily Balance Method used for?
A
Adjusts a credit card limit from month to month
B
Figures out the amount of interest owed on an account
C
Determines how much a person spends on a daily basis
D
Determines how long a person's billing cycle should be

7.
Which of the following best defines interest?
A
Amount of money you lose when you lend someone else money
B
The length of time you can borrow money at any given time
C
What you are paid when you lend your money to someone else
D
The number of loans you can have out at one time

8.Ms. Yellowfish has $5,500 in her savings account. She is earning 4% interest each year. What will her balance be at the end of two years if her account is a simple interest account and she doesn't make any deposits?
A
$5,504.00
B
$5,948.80
C
$5,508.00
D
$5,940.00

9.Calculate the balance after two years for the following account.
Account balance: $1,500.00
Interest: 3.5%
Type of Account: Annual Compound Interest
A
$4,500.00
B
$1,606.84
C
$2,077.50
D
$1,552.50

10.In terms of a credit card grace period, which of the following statements is true?
A
If you pay your entire balance off before the end of the grace period, you will have borrowed the money for nothing.
B
If you don't pay your entire balance off before the end of the grace period, you will be charged a late fee.
C
If you don't pay your entire balance off before the end of the grace period for 12 consecutive months, you will be charged an annual fee.
D
If you pay your entire balance off before the end of the grace period, any potential charges for the remaining year will be waived.

11.Accounts that compound interest monthly always have an interest rate that is figured as a monthly rate.

False

True

12.In terms of saving money, interest is considered a passive form of income.

False

True

13.Mr. Alvarez's simple interest savings account currently has a balance of $12,500. He earns 6% interest annually. Calculate his balance for one year if no additional deposits are made.
A
$13,500
B
$12,560.00
C
$13,250.00
D
$12,506.00

14.Calculate the new balance on the credit card described below.
Original balance: $950.00
Interest Rate: 19%
A
$1,130.50
B
$1,096.50
C
$969.00
D
$1,025.00

15.
Interest is the price of using money.

False

True

Answer 1

Answers:

1. $75 x 21% = 15.75 / 15.75 + 75 = 90.75, so answer is C

2. Answer is A. Remaining balance plus interest.

3. $125,000 / 12 = 10,416.67 / 10,416.67 * 4% = 416.67 / 416.67 x 12 = 5,000, so answer is C

4. 1,200 / 12 = 100 / 100 * 2% = 2 / 2 x 12 = 24, so answer is A

5. The answer is A

6. The answer is B

7. The answer is C

8. 5,500 * 4% = 220 / 220 * 2 = 440 / 440 + 5,500 = P5,940, so answer is D

9. Answer is B

10. The answer is A

11. Answer is false

12. Answer is false

13. 12,500 x 6% = 750 / 750 + 12,500 = 13,250, so answer is C

14. 950 * 19% = 180.50 / 180.50+950 = 1,130.50, so answer is A

15. Answer is false