# Wise Interest,and Cost Of Money: Question Preview (ID: 13889)

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The Rule of 72 is an easy way to: |
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a) Approximate your savings balance each year | b) Calculate how fast your savings will double in value at given interest rates | c) Calculate how much tax you will owe on the interest earned | d) Calculate the length of time it takes to pay off a credit balance | |

The cost to use someone else's money for a period of time is called the: |
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a) Interest rate expressed as a percentage | b) Opportunity cost | c) Minimum payment | d) Inflation rate | |

If a person has $1,000 in a savings account and earns $20 a year in interest on that account, the rate of return on the money is close to |
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a) 5%. | b) 20% | c) 10% | d) 2% | |

The information that a lender must disclose to consumers applying for a cash loan is |
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a) The formula for compounded interest | b) The tax obligations | c) Full dollar amount being paid back on the loan over its life | d) The annual percentage rate (APR), and/or the finance charge | |

Money received today is worth more than the same amount of money received sometime in the future is: |
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a) The Rule of 72 | b) Investing | c) Not true | d) The time value of money | |

What should a person do when he believes he is being charged too high a rate of interest for a loan by a lending institution? |
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a) Accept the loan but pay it off early. | b) Notify the local Better Business Bureau. | c) Notify the lending institution about state usury laws. | d) Ask the lending institution to lower its rates. | |

The amount a lender charges to borrow money is called the: |
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a) Principal | b) Finance charge | c) Minimum payment | d) Opportunity cost | |

Interest earned on interest is known as: |
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a) Simple interest | b) Variable interest | c) Compounded interest | d) True interest | |

Lamar believes that interest rates are going to fall in the near future and remain low for a considerable period of time. She should invest in: |
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a) Nothing, she should put her money under her mattress | b) A short-term, fixed rate certificate of deposit | c) A long-term, fixed rate certificate of deposit | d) A variable rate certificate of deposit | |

Which type of financial institution usually pays the highest rate of interest on savings account balances? |
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a) Savings and loan associations | b) Investment firm money market accounts | c) Credit unions | d) Commercial banks | |

To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and |
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a) To determine the time value of depositing $100 in a savings account, a person needs to know the inte | b) whether the bank offers overdraft protection. | c) whether the account is FDIC protected. | d) the rate of inflation. | |

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