Answers: Chapter 17 - Other Investments



17.1: You can buy Certificates of Deposits or CDs from which of the following

  1. Banks

  2. Book stores

  3. Amazon

The correct answer is #1
Certificates of deposit, or CDs as they are commonly known, are small loans investors make to banks for a few months to several years

 

17.2: Certificates of Deposits or CDs can be characterized by all of the following except for one:

  1. They are insured by the Federal Deposit Insurance Corporation

  2. They pay interest

  3. The interest you receive on them is usually higher than the interest on regular bank savings account

  4. They are guaranteed by the bank or the financial institution that sells them to you

The correct answer is #4
CDs are insured by a government insurance agency called the Federal Deposit Insurance Corporation. The interest rates you will receive on CDs are small, but they are usually better than interest rates on regular saving accounts.They are not "guaranteed" by the bank or financial institution that sells them to you, however.

 

17.3: True or False. U.S. Savings Bonds can be characterized as loans American citizens  make to the U.S. government. The correct answer is True.

 

17.4: True or False. The EE Savings bonds will pay interest for up to 30 years. The correct answer is True.

 

17.5: True or False. You can buy paper or electronic savings bonds in various denominations. The correct answer is False.

The U.S. Treasury stopped issuing paper savings bonds – you merely register to buy the securities at the website, www.treasurydirect.gov.

 

17.6: Which of the following savings bonds pays you a fixed interest rate

  1. Series EE Bonds

  2. I Savings Bonds

The correct answer is #1
The way Series EE Bonds work is that you are promised a certain fixed interest rate over a 30-year period. The I Savings Bonds are similar to the Series EE Bonds with one important distinction: the Series I Bond interest rate is adjusted periodically based on the inflation rate. Specifically, the interest rate is based on a formula, which adds a fixed interest rate, and a rate related to the CPI-U inflation rate. Thus, the I Savings Bonds does not pay a fixed interest rate.