Question

what is the role of ncua insurance? *
a. to insure deposits at federally insured banks up to $250,000.

b. to protect money kept in a money market account, but not a traditional savings account.

c. to provide federal protection for deposits up to $250,000 for credit union accounts

d. to guarantee a fixed yield on certificates of deposit (cds).

how does compounding interest work in a savings account? *
a. the interest rate is calculated only on the original amount deposited and does not change.

b. it is a fixed rate that never changes, regardless of the federal reserves actions.

c. it is a feature that allows you to easily make withdrawals from your account without penalty.

d. the interest earned on your account is added to your account balance and you begin earning interest on the new balance

Explanation:

First Question: What is the role of NCUA Insurance?

• Option A: FDIC insures bank deposits, not NCUA. Eliminate A.
• Option B: NCUA insures both money market and traditional savings in credit unions. Eliminate B.
• Option C: NCUA provides federal deposit insurance for credit union accounts up to $250,000. This matches NCUA's role.
• Option D: NCUA doesn't guarantee CD yields. Eliminate D.

• Option A: Describes simple interest, not compound. Eliminate A.
• Option B: Compounding interest rate isn't fixed and can change. Eliminate B.
• Option C: Compounding relates to interest growth, not withdrawals. Eliminate C.
• Option D: Compounding interest adds earned interest to the balance, and interest is then earned on the new (higher) balance. This is the correct definition.

Answer:

C. To provide federal protection for deposits up to $250,000 for credit union accounts

Second Question: How does Compounding Interest work in a savings account?