Government Agencies

Question 8 • POP Financial Math 26/27

In 2007, the FDIC’s insurance limit was $100,000 per person per bank. Approximately 59% of Mark’s deposits were insured by the FDIC. Which of the following is a possible setup for Mark’s deposits?

Answer

A $50,000 savings account and $31,000 money market account at Bank G; a $71,000 money market account, $109,000 CD, and $39,000 checking account at Bank H; a $55,000 checking account, $84,000 savings account, and $38,000 CD at Bank I

A $109,000 savings account, $124,000 checking account, and $36,000 money market account at Bank G; a $52,000 CD and $86,000 money market account at Bank H; a $79,000 checking account, $42,000 savings account, and $88,000 CD at Bank I

A $107,000 money market account and $150,000 savings account at Bank G; a $22,000 checking account, $31,000 savings account, and $40,000 CD at Bank H; a $70,000 CD, $47,000 money market account, and $59,000 savings account at Bank I

A $28,000 checking account and $30,000 CD at Bank G; a $77,000 savings account, $60,000 money market account, and $28,000 CD at Bank H; a $64,000 checking account, $92,000 CD, and $112,000 money market account at Bank I

Explanation

FDIC coverage is limited to $100,000 per person at each bank, so add Mark’s accounts at each bank before applying the limit. In choice A, the bank totals are $81,000 at Bank G, $219,000 at Bank H, and $177,000 at Bank I; therefore, $81,000 + $100,000 + $100,000 = $281,000 is insured. The total deposits are $477,000, and $281,000 ÷ $477,000 is about 59%, so choice A is possible.

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