Unit 4 Notes
Banking
FED = (Federal Reserve Bank) 1. Checking Account -
Controls the money supply of the
United States O____________
Depository Institutions Checking Account Math
∙ Commercial Banks
∙ Debit Cards –
∙ Credit Unions
∙ For added protection:
∙ Pure Online Savings
Accounts
Consumer Liability
∙ Federal Deposit Insurance
Corporation (FDIC) 2. Savings Account -
∙ National Credit Union 3. Money Market Deposit
Administration (NCUA) Account -
∙ Interest - 4. Certificate of Deposit
(CD) -
∙ Interest rate -
5. Savings Bond -
Managing Your Cash
Liquidity Label the Investment Risk
Pyramid
Five types of Cash Management
Tools
Financial Institution Comparison Activity
Name Founde Savings Savings CD CD Checkin Checkin
d Rate Min. Min/Max Min/Max g g
Bal. Time Rate Min. Fee
Dep.
Saving
Savings vs. Investing Simple Interest Equation: Step 1
Why are Saving & Investing
Important? Simple Interest Math
Saving Math
Compounding Interest Equations
Time Value of Money
∙ Time
Interest Rate
∙ Amount of Money:
How Do Interest Rates Affect Time
Value of Money? ∙ Trade-off -
Definitions ∙ P____ Y__________ F______
Simple Interest vs. Compounding
Interest
How Much to Save?/What is the
Rule?
P___________
When are “toys” purchased?
Investing
∙ 22% interest rate
Rule of 72 How long to double the debt?
Jacob’s Car
∙ $5,000 to invest
∙ Wants investment to double in
What the “Rule of 72” can 4 years
determine What interest rate is required?
Another Example
∙ $3,000 to invest
∙ Wants investment to double in
10 years
Things to Know about the “Rule of What interest rate is required?
72”
Rhonda’s Treasury Note
∙ $2,500 invested at age 22
∙ 7.5% interest
How many times will investment
Doug’s Certificate of Deposit double before age 70?
∙ Invested $5,000
∙ Interest Rate is 11% Another Example
How many years to double? ∙ $500 invested at age 18
∙ 7% interest
Another Example How many times will investment
∙ The average stock market double before age 65?
return since 1926 has been
11% Taxes
How long to double an ∙ Taxable Account –
investment?
∙ Tax Deferred Account –
Jessica’s Credit Card Debt
∙ $2,200 balance on credit card 401k and IRA’s
∙ 18% interest rate ∙ 401K
How long to double the debt?
Another Example ∙ Roth IRA
∙ $6,000 balance on credit card
Inflation
∙ IRA
Conclusion
∙ 401K ∙ The Rule of 72 can tell a
person:
Taxes Example & Effects of taxes
∙ 33% Tax Bracket
∙ Both have a 6% interest rate
Which account should George
invest his money into?
Fees Things individuals must remember
about the Rule of 72 include:
Online Brokerage Comparison Activity
Name Min. Transac Service Mutual Cost YTD% Return
Balance tion Fee Name
to Open Fee
Stock Market
The Language of the Stock Market
Why Learn About Stocks
Cyclical Stock
Why Companies Issue Stock Countercyclical Stock
Speculative Stock
Risk vs. Return Blue-chip Stock
Diversification: Price/Earnings Ratio
Stock Market Math P/E Ratio Continued
Beta How Well the Stock Market is Doing
Overall
3 Basic Indicators
Stock Classifications
Growth Stock Purchasing Stock
Brokers
Income Stock
Supply vs. Demand
Value Stock
