Topic Test

Question 13 • Financial Math - MA2007

In 2007, the FDIC’s insurance limit was $100,000 per person per bank. Approximately 62% of Gil’s deposits were insured by the FDIC. Which of the following was a possible setup for Gil’s deposits?

Answer

A $13,000 money market account at Bank T; a $31,000 CD, $44,000 savings account, and $16,000 checking account at Bank U; a $70,000 CD and $28,000 money market account at Bank V

A $54,000 checking account and $84,000 savings account at Bank T; a $28,000 money market account, $27,000 savings account, and $20,000 CD at Bank U; a $130,000 CD at bank V

A $60,000 money market account and $70,000 savings account at Bank T; a $40,000 checking account and $92,000 savings account at Bank U; a $45,000 CD and $75,000 checking acount at Bank V

A $108,000 savings account and $46,000 CD at Bank T; a $36,000 money market account and $38,000 CD at Bank U; a $63,000 checking account, $80,000 savings account, and $70,000 money market account at Bank V

Explanation

FDIC coverage is capped at $100,000 per person at each bank, so accounts at the same bank must be added together before applying the limit. In choice D, the insured amounts are $100,000 at Bank T, $74,000 at Bank U, and $100,000 at Bank V, for $274,000 insured. Total deposits are $154,000 + $74,000 + $213,000 = $441,000, and $274,000 ÷ $441,000 is about 62%.

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