Ch. 4

The text discusses several types of bonds. Which bond is purchased at face value and has two components to the rate of interest earned-- a fixed rate and an inflation rate that changes twice a year?

Series I

Which of the following offers a full range of financial services including checking, savings, lending, and other services?

a commercial bank

All are non-deposit institutions

a credit card company a life insurance company an investment company a finance company

Amber wants to open an account, but she doesn't know which kind is appropriate. She is interested in earning a higher interest rare and plans to keep at least $1,000 in her account so she can avoid paying a fee. Amber wants to open her account at an investment company and understands that her account will not be covered by federal deposit insurancce. What kind of account should she open?

a money market account

All of the following are deposit institutions

a mutual savings bank a credit union a commercial bank a savings and loan association

Which of the following will likely provide the most expensive loans?

a payday loan company

Franklin is planning for a purchase of a vehicle in two years. Since he wants to be certain that his funds are safe (insured), which of the following should he use?

a savings account

Based on the following information, what amount would be subtracted from the bank balance side of a checking account reconciliation? Service charge $39 Outstanding checks $290 Interest $11 Deposit in transit $860

$290

Given the information here, what should Jason's adjusted checkbook balance be? Bank balance: $480 Outstanding checks: $219 Deposit in transit: $122 ATM fees: $44 Interest earned: $5 Checkbook balance: $422

$383 Adjusted checkbook balance = checkbook balance - Fees, ATM withdrawals + Interest earned, direct deposits [checkbook balance - ATM Fee + Interest earned (nothing else)]

Evan had three accounts as listed below. In 2014, how much was his total coverage by the FDIC? Bank A: $95,00 Bank B: $60,00 Bank C: $300,00

$405,00

Brenda lost her debit card. When she realized it was gone, her account had $173 in unauthorized charges. She notified her financial institution within two days. How much is she potentially liable for?

$50

Gwen had three accounts as listed here. In 2014, how much was her total coverage by the FDIC? • Bank A: $280,000 • Bank B: $35,000 • Bank C: $280,000

$535,000 The maximum coverage in 2014 was $250,00 per insured institution. Therefore Gwen received full coverage for Bank B and coverage up to $250,00- at Bank A and C

A $350 savings account that earns $5.00 interest in a year has a yield of _____ percent.

1.43

What is the APY for a one-year $5,200 certificate of deposit with $884 interest?

17% interest/CD

What is the APY for a savings account with a $430 balance that receives $20 interest for the years?

4.65% interest/savings account

Common payment choices for everyday activities include all of the following except

short-term loan

Opal earned 10% in her savings account. If she is in the 28% tax bracket, what is her after-tax savings rate of return?

7.20% After-tax rate = Return x (1-Tax rate)

Nicolas earned 11.5% in his savings account. If he is in the 33% tax bracket, what is his after-tax savings rate of return?

7.71% After-tax rate = Return x (1-Tax rate)

A legal agreement that provides for the management and control of assets by one party for the benefit of another is known as

A trust

Investments, insurance, and tax assistance are tools for financial planning and are also known as

Financial services

Louise got caught in a cash flow trap and desperately needed money quickly. Unfortunately, she didn't shop around and she went to a ______. As a result, her annual percentage rate was higher than 780%

Payday loan company

Cathy needs a full range of financial services, including checking, savings, and lending. To which of the following should she go?

A commercial bank

Which of the following primarily provides loans for home purchases?

A mortgage company

ATM stands for

Automated Teller Machine

Justin needs to have access to his money in five months. The best option for his saving is

Money market account

Claudette's grandchildren are 7 and 9 years old. When Claudette passed away, her grandchildren inherited her money. However, the will stipulated that they should not get control of the money until age 25. Which of the following should be set up to provide for the management and control of the funds?

a trust

An all-in-one account that provides a complete financial services program for a single fee is known as

an asset management account

Which of the following usually offers money market mutual funds?

an investment company

Many people make mistakes when managing current cash needs. What are frequently made mistakes?

having insufficient liquid assets to pay current bills overspending due to impulse buying and over using credit failing to put unneeded funds in an investment plan using savings or borrowings to pay for current expenses

A time deposit is also known as

savings account

Brandon lost his debit card. When he realized it was gone, his account had $238 in unauthorized charges. Since he was embarrassed about his loss, he didn't contact his financial institution for 70 days. What is the most that he is liable for?

$238

Which of the following is organized as a corporation with investors (stockholders) contributing the needed capital to operate?

A commercial bank

Billy accepted a job at a company that specializes in providing money for short-term retail lending. Where did he go to work?

A credit card company

All of the following are non-deposit institutions except?

A credit union

All of the following are deposit institutions except?

A finance company

Zack wants to open an account, but he doesn't know which kind is appropriate. He is interested in earning a higher interest rate and knows that he might not be able to write many checks from his account. In addition, he plans to keep at least $1,000 in his account so he can avoid paying a fee. He definitely wants to have federal deposit insurance. What kind of account should he open?

A money market account

Harvey needed cask quicky, so he received a short-term loan based on the value of an old-ring. Where did he go?

A pawnshop

Many people make mistakes when managing current cash needs. Which of these is NOT a frequently made mistake?

Budgeting spending

When you select a financial services provider, you may find all of the following to be major factors except

Company Logo

When you select a financial services provider, you may fins all of the following to be major factors

Convenience Rates for savings and borrowed funds Fee structure and other charges Personal service

When you select a financial services provider, you should ask all of the following questions

How can I minimize the cost of checking and payment services? Where can I get the best return on my savings? Will I be able to borrow money if I need it?

When Angela wanted to provide financial security for her dependents, she considered purchasing a product that would provide income replacement in the event of her untimely death and also provide a savings/investment component while she is alive. Which company would she most likely do business with?

Life insurance company

A credit card is a type of

Loan/borrowing

When Jack picked up a personal computer from the ______, he was really leasing it.

Rent-to-own center

The text discusses several types of bonds. Which bond pays interest for 30 years that is exempt form state and local taxes?

Series EE

The text discusses several types of bonds. Which bond, which is no longer sold, electronically deposits interest into your bank account every six months?

Series HH

Which of the following is NOT a financial publicationn that can provide information about finanical services and economic conditions?

The Daily Market

Which of the following is a financial publication that can provide information about financial services and economic conditions?

The Financial Times The Wall Street Journal Bloomberg Businessweek Forbes

Why are some financial service operations referred to as financial supermarkets?

They offer a combination of services from one source

A drawback of a regular savings account is

a relatively low rate of return

Will wants to open an account with $500 that will allow him easy access to his funds (by checks, ATMs, or debit card usage) from many locations. He also wants to earn at least a low interest rate and have federal deposit insurance. What kind of account should he open?

an interest-earning checking account

Common payment choices for everyday activities include all of the following

check credit card cash debit card

A demand deposit is also known as

checking account

Another name for a regular savings account is a

passbook or statement account

When Imogene brought a necklace to a _______, she received a loan based on its value.

pawnshop