Chapter 5

Which CD pays earnings based on the stock market?

Indexed

Which of the following is not a deposit institution

Life insurance company

A certificate of deposit usually has

Limited liquidity

An advantage credit unions may have over other financial institutions is

Low-cost personal loans

Which of the following savings plans in not covered by federal deposit insurance?

Money market fund with an investment company

What is the rate an individual will pay for borrowing to purchase a new home called

Mortgaage rate

What type of account would you expect to provide the poorest yield?

Passbook savings account

Which type of organization does not provide home mortgages?

Payroll check cashing services

Which CD attempts to attract life savers with gifts or special rates?

Promotional

Time deposits are another name for

Saving accounts

Nate rogers deposited $5000 in a 3 year bank CD which pays six percent interest. What type of financial service is Nate using?

Savings service

A savings account at a credit union is called a

Share account

In the bank reconciliation process service fees should be

Subtracged from the checked book balance

When preparing a bank reconciliation, outstanding checks should be

Subtracted from the bank statement balance

The purpose of a special endorsement is to

Transfer a check to another person

The purpose of decit card is to

Transfer money electronically

A free checking account with a minimum balance of $500 has an opportunity cost of lost interest.

True

All-in-one accounts may be used by financial institutions to simplify the maze of financial services and to attract customers.

True

An asset management account combines several financial services for a single fee.

True

The money market fund offered by investment companies is relatively liquid financial service.

True

Using a "debit" card is basically the same as writing a check.

True

Which of the following is an effective strategy in tkmes of falling interest rates?

Use short-term loans to take advantage of lower rates when you refinance loans

The expedited funds avaluability act requires that funds be available to depositors...

Within 2 days for local checks

The rate of return on a savings account is also referred to as

Yield

Comparison of earnings for different saving plans can best be accomplished using the...

Annual percentage yield

An all purpose account that provides several services is an

Asset management account

Which is a CD that offers a higher rate for every six months you are invested?

Bump-up

A saver will usually earn the highest rate with which one of the following types of savings plans?

Certificate of deposit

What type of account would be considered the most liquid?

Checking account

Traditionally, the greatest variety of financial services is offered by

Commerical banks

The federal deposit insurance corporation provides deposit insurance for

Commerical banks and savings and loans associations

In recent years, membership in credit union has

Continued to increase

Which of the following is a deposit institution

Credit Union

The profits of a mutual savings bank go to the

Depositors

What is the rate that the Federal Reserve chargws banks for loans

Discount rate

A regular savings account usually offers a higher rate of return to savers than other savings plans.

False

When preparing a bank reconciliation, interest esrned on your checking account is added to the bank statement balance.

False

A restrictive endorsement will usually the words "for deposit only."

True

Credit unions frequently offer lower loan rates than other financial institutions.

True

Savings and loans associations often offer mortgages.

True