Financial Literacy and Banking Services Quiz

A savings account can be readily converted into cash without significant loss of value.

APR represents the yearly cost of borrowing, including interest and fees, expressed as a percentage.

Compound interest allows for exponential growth of savings over time, as interest is earned on both the principal and accrued interest.

Retail stores primarily engage in selling goods and services, unlike financial institutions which deal with monetary transactions.

Liquidity denotes how easily an asset can be converted into cash without affecting its market value.

While income influences financial decisions, credit scores primarily consider payment history, credit utilization, length of credit history, types of credit used, and new credit inquiries.

Central banks control money supply, interest rates, and financial stability in an economy.

SWIFT codes facilitate secure and efficient international money transfers by identifying specific bank branches.

Credit scores evaluate an individual's credit risk, determining their likelihood of repaying debts responsibly.

Checking accounts are typically used for frequent transactions and daily expenses, while savings accounts are designed for accumulating funds over time.

CDs offer a fixed interest rate for a set duration, providing a predictable return on investment compared to other savings accounts.

The SEC regulates securities markets, enforces securities laws, and ensures fair and transparent trading practices to protect investors' interests.

The FDIC protects depositors by insuring bank deposits up to a certain limit, ensuring financial stability.

Diversification spreads investment across various assets to minimize the impact of market fluctuations on overall portfolio performance.

401(k) plans enable individuals to contribute pre-tax income for retirement, with potential employer matches and tax-deferred growth.

The Federal Reserve influences economic growth, inflation, and employment through monetary policy tools while supervising and regulating banks to maintain financial stability.

Basel III enhances banking sector stability by prescribing minimum capital requirements, liquidity ratios, and risk management standards to mitigate financial risks and crises.