BM #3

Does a mutual fund pool the money of many investors primarily for the purchase of stocks and bonds?

yes

Due to reductions in regulation, do banks and nonbanks offer many of the same products and services today?

yes

Is NASDAQ the nation's first electronic stock market?

yes

Is a treasury bond the longest-term government security?

yes

Is the Federal Reserve System (the Fed) the central bank of the United States?

yes

Will the Social Security Administration and the Internal Revenue Service directly deposit checks into recipients' bank accounts?

yes

With EFT transactions, can money be transferred by computer?

yes

Do mutual savings banks emphasize long-term loans, such as mortgages, for the local community?

yes

Does a CD have a greater liquidity than a checking account?

yes

Does a bank accept demand deposits as well as make consumer and commercial loans?

yes

The entity that insures credit union deposits is the

A. NCUSIF

The lowest rate of interest at which large banks lend large sums to the best-qualified borrowers is the

A. prime rate

Public corporations that want to sell their stock to investors are listed on

A. stock exchange

Which statement is INCORRECT about CDs?

B. CDs can be purchased for any amount with no minimum

The use of money to make more money is known as

B. an investment

If a bank transfers money in and out of a business's checking account daily with the goal of keeping the balance low and maintaining most funds in higher interest paying accounts until needed, the bank is providing a(n)

B. cash management service

Not-for-profit financial institutions owned by their members are known as

B. credit unions

All of the following are nonbank institutions EXCEPT

B. savings and loan associations

An unsecured loan is one that is not backed by

C. collateral

Which of the following is NOT the name of a stock index?

C. commodities exchange index

With ATMs, bank customers can make

C. deposits and withdrawals and transfer funds

Which transaction CANNOT be handled by EFT?

C. payroll preparation

When the payee signs the back of the check legally transferring ownership, the action is called

D. endorsing

Which service is NOT typically provided by commercial banks?

D. provide venture capital to new entrepreneurs

Which factor should NOT be considered when setting investment goals?

D. reputation

Are commercial loans made to individuals as well as to businesses?

no

Can most skilled investors usually predict when the market will reach its high and low points?

no

Does a certificate of deposit usually earn a lower interest rate than a savings account?

no

Is a promissory note a written order requiring the financial institution to pay previously deposited money to a third party on demand?

no

Is a savings bond a negotiable security?

no

Is the primary purpose of nonbank financial institutions to handle demand deposits, commercial loans, and consumer loans?

no

Are investors who buy stock in newly developed corporations looking for maximum security?

yes

Are treasury instruments short-and-long-term securities sold to finance the cost of running the government?

yes

Can money market fund depositors withdraw funds by writing checks on the account?

yes

Do investors diversify to reduce risk?

yes