Personal Finance Chapter 4
Benefits of online banking include
convenience for transactions e-mail notifications for due dates time savings
High cost financial services typically do not include
credit unions mutual savings banks
The life insurance companies provide financial security for __________
dependents
Commercial banks offer services to:
gov't agencies businesses individuals
A(n) _______ CD has earnings based on the performance of the stock market
indexed
Common mistakes made when managing current cash needs include
lacking sufficient funds Leaving funds in low interest accounts too long Overspending Using savings for current expenses
Criteria for selection of a savings plan include:
liquidity rate of return restrictions and fees safety
When interest rates are falling, you should
lock in current rate by choosing long-term savings option "lock in" short-term loans
Share accounts are the same as __________, but are offered at credit unions
regular savings accounts
Savings accounts are considered __________, because they can have limits on transfers or withdrawals
time deposits
What is the main function of a finance company
to make loans to consumers and small businesses
The main function of a mortgage company
to provide loans to purchase homes
Time deposits do NOT include
-checking accounts -credit card and cash loans
The Six Steps to writing a check in order from first to last
1. Record the Date 2. Write the name of the person receiving the funds 3. Record the amount of the check in figures or numbers 4. Write the amount of the check in words 5. Sign the check 6. Note the reason for the payment
A customer should compare and select a financial service provider if:
Money can be borrowed when needed Its cost of checking and payment services is minimum The return on savings is the best
activity accounts charge a fee for each check writtern and each depost, as well as
a monthly service charge
A specific stop payment order given to a bank is designed to:
avoid paying a specific check that is lost or stolen
Deposit institutions would not include
brokerage firm
Which of the following are considered demand deposits
checking accounts payment accounts
______ banks are organized as corporations, with investors contributing the capital for operations
commercial
Overdraft protection is designed to:
cover underfunded checks
A ________ ticket or slip is used to add funds to a checking account
deposit
Common choices for making payments include all of the following except
installment loans
Life insurance has other uses, including
investment options Savings alternatives Providing for dependents
Credit alternatives to be used for borrowing if an individual more cash than is available include
personal loans credit cards
_____ checking accounts have a monthly service charge you can avoid if you keep a balance in the account
regular
the three main types of endorsements are
restrictive special blank
The rate of _______ is the percentage increase in the value of savings as a result of interest earned
return
Payday loans are typically used by people who
run up debt by free spending Are trapped by debts Are driven into debt due to poor financial decision
A _________ and loan association traditionally specializes in savings accounts and mortgage loans
savings
Which of the following deposit-type institutions serve as financial intermediaries?
savings and loans credit unions commercial banks
The main reason HH bonds are more used for retirement
semiannual interest
Financial services will usually NOT be affected by:
stock prices
Which of the following is not a reliable source of information for economic trends
the blogspot website
A current shortage of cash will require two basic choices: __________ savings or _________
withdraw ; borrow
This type of card is a plastic access card used in computerized banking transactions
Debit Card
________ deposits include checking accounts and other payment methods
Demand
Money market accounts are insured by federal deposit insurance, whereas money market mutual _______ are not
Funds
Financial Services include:
Insurance Borrowing Financial Planning Payment Services Investments Savings
Which of the following are the ways to use a debit card?
With your signature With your PIN
The _______ is the percentage rate expressing the total amount of interest that would be recieved based upon time and compounding
annual percentage yield
An automatic teller machine (ATM is also called a "_________ machine"
cash
A ______ check is a check drawn on a financial institution
cashier
A savings plan that requires a certain amount of money to be left for a specified amount of time is a:
certificate of deposit
Mutual Savings banks are owned by
Depositors
Select the types of federal savings bonds that are currently sold
I, EE
April 2006 fdic coverage increased for
Keogh Roth IRAs SEP IRA's Traditional IRAs
Drawback of CD accounts include
early withdrawal penalty Minimum deposit
Non-deposit institutions mentioned in the text include
investment companies Life insurance companies Brokerage firms
APY formula can be ex[pressed as APY=100(interest/_______)
principal
If a debit card with the same rules as a lost or stolen credit card is reported stolen withing two days of the lost card, maximum liability is
$50
If inflation is 3%, a saver would want to earn an interest rate greater than
3%
What types of financial institutions have federal deposit insurance through FDIC
Savings and loans Commercial banks
A _______ fund is an account used for savings offered by investment companies
money market
Unauthorized use of your debit card number to make a purchase should be reported within ________ days of receiving your statement to protect your right not to be charged for the transaction
60
_________ is a process that calculates interest based on previously earned interest
Compounding
Some of the basic concerns of a financial services customer when comparing financial services include which of the following?
How can i minimize costs for checking and savings? Where can i get the best return on savings? Will i be able to borrow money when I need it?
Which of the following institutions offer financial services?
Life insurance companies Finance companies Credit Card companies Investment companies Mortgage companies
Which of the following services do savings and loans associations offer
Loans Financial Services Savings accounts
The Truth in Savings law requires the following items to be disclosed:
Other terms and conditions of the savings plan The annual percentage yield (APY) The interest rate Fees on deposit accounts
A ______ draft account is an interest-bearing checking account at a credit union
Share
Another name for an asset management account is:
a cash management account
Benefits of money market accounts include
a favorable interest rate & deposit insurance
A regular savings account usually offers a ________ balance requirement
a low or no minimum
What do you NOT do if you identity is stolen
call your frineds and neighbors Locate the person who stole your identity Leave the area until the problem is resolved
When interest rates are rising you should
choose short-term savings vehicles Use long-term loans
A __________ bank is a financial institution that offers a full range of services
commercial
A _______ union is a user-owned, nonprofit, financial institution that is organized for the benefit of its members
credit
When you sign the back of the check, this is a(n):
endorsement
a certified check is a personal check with
guaranteed payment
A money order:
guarantees payment
_______ is the attribute of savings accounts that allows you to withdraw money on short notice without a loss of principal or fees. This is taken directly from the text
liquidity
To achieve long-term financial goals, many people trade off ________ for a __________ return
liquidity ; higher
Smart cards offer electronic services such as
medical history Account balances insurance information transaction record
Historically, savings and loans specialized in
savings accounts and mortgage loans
A _______ card is the document that records the official signatures of the person or persons authorized to write checks on the account
signature
if you lose your debit card and report it after more than 60 days,your liability may be the _______ amount in your bank account
total
A ________ is a legal agreement that provides for the management and control of assets by one party for the benefit of another
trust