Wise practice questions

The most liquid type of investment is:

A money market account - The most liquid type of savings is a statement savings account. You can withdraw money from it quickly and easily at any time without penalty. Stocks, bonds, and real estate have less liquidity than statement savings accounts because these investments must first be sold before they can be converted to cash. Typically, the greater the liquidity and flexibility, the lower the interest rate paid. The cost of this flexibility and liquidity is a lower interest rate than is paid on certificates of deposit and other investments.

if a person has $1,000 in a savings account and earns $20 a year in interest on that account, the rate of return on the money is close to

2%; Though interest is calculated on a daily basis, the closest Annual Percentage Rate earned is 2% ($20 is 2% of $1000).

An advantage of declaring bankruptcy is:

: Most debts to creditors are eliminated; In filing for bankruptcy, consumers say they cannot pay off their debts and ask the bankruptcy court to take some of their assets, sell them, give the money to their creditors, and consider the debts discharged. Some debts, including child support, alimony, taxes, and recent student loans are not discharged in bankruptcy and are still owed after the bankruptcy is completed.

Which statement best describes the relationship between a person's educational level and that person's potential earning power?

A person with a professional degree is likely to earn at least four times as much per year as a person who did not complete high school; There is a direct relationship between educational level and potential earning power. A person with a professional degree, for example, is likely to earn at least four times as much per year as a person who never completed high school.

Josh is shopping for a car loan. A friend told him to compare the actual cost of the loan for one year expressed as a percentage from three banks. He needs to ask for the:

Annual percentage rate (APR); The true cost of credit expressed as a percentage is the Annual Percentage Rate (APR), while the finance charge is the cost of credit expressed in dollars and is used in calculating the APR.

Which financial product may pay a dividend?

Common stock- All of these types of accounts and financial products except for common stock earn interest. Some companies declare and pay dividends to their common stock shareholders.

New coins and currency make their way into the general economy, consumers and businesses, through the distribution system of the:

Federal Reserve System; The U.S. Federal Mint , which is an operating bureau of the Department of the Treasury, makes new coins. The U.S. Bureau of Engraving and Printing prints new currency. The coins and currency are sent to the Federal Reserve Banks, which distribute it as needed. Most new coins and currency replace damaged or worn out coins and currency being taken out of circulation.

Travelers checks, often used for vacations

Function as cash and are easily replaced if lost- Traveler's checks are documents that function as cash, can be replaced if lost or stolen, and are generally accepted throughout the world. For these reasons, they are often used on vacations and other trips. The purchaser signs a traveler's check immediately after purchasing it and again when paying for a purchase with it.

The common name of U.S. currency is:

Green backs; U.S. currency is primarily green.

Which of the following provides an increase in assets or wealth?

Having capital gains; Volunteering and running in a marathon are examples of giving one's time for a good cause. Taking out a loan creates debt not wealth. Capital gains are the profits from selling an investment product and will add to financial assets.

The phrase used for putting money into a savings account is:

Making a deposit - Putting money into an account is "making a deposit" and taking money out is "making a withdrawal." An account owner can deposit additional money into the account at any time.

Which documents should be stored in a safe-deposit box?

Mortgage loan papers- The purpose of having a safe deposit box is to have a fireproof, secure place to store valuables and irreplaceable items including legal documents such as a birth certificate and precious jewelry

Which financial product can you buy for $25, is safe, and will be worth $50 at a future date?

Series EE savings bond- Series EE savings bonds, which are issued and backed by the U.S. Treasury, are purchased for one-half of their face value. These bonds earn interest monthly, and a $50 Series EE bond, which is purchased for $25, is guaranteed to reach face value within 17 years, and may reach face value sooner.

"The Fed" is short for

The Federal Reserve System

When a borrower fails to repay a loan and there is a co-signer on the loan, the most likely result will be

The co-signer will be held responsible for the repayment of the entire loan plus fees or penalties; If the borrower does not pay the debt, the co-signer has the obligation to pay it.

When a person declares bankruptcy that fact will appear on the person?s credit report

for a 10 year period; Most of the adverse information on a credit report appears for 7 years. After a declared bankruptcy, the limit is 10 years.

Identify the background color of a U.S. $5.00 bill

green

A person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should

list the cash deposit separately from the check as well as the total of the deposit ; Deposit slips have columns for the depositor to list cash and each check that is being deposited separately. Aside from this information, the depositor lists the total of the deposits, the date and the account number (if it is not a preprinted slip taken from the individual?s check book) on the deposit slip.

A teenage boy has opened a checking account. He is surprised to find that though he is getting a written bank statement each month he is not getting his cancelled checks returned. The teenager should be aware that the reason cancelled checks are NOT returned is to

save the bank money associated with returning copies of these checks. -The bank must keep the original or copies of all checks written. If the bank does not have to make and mail copies of checks there is a savings of time and money

The denominations of coins in the United States are:

$.01, $.05, $.10, $.25, $.50, and $1.00; The denominations of coins in the United States are $.01 (penny), $.05 (nickel), $.10 (dime), $.25 (quarter), $.50 (half-dollar) and $1.00 (dollar). Higher denominations of legal tender are in paper currency. At times, the US Mint does issue special coins of additional denominations.

Lamar believes that interest rates are going to fall in the near future and remain low for a considerable period of time. She should invest in:

A long-term, fixed rate certificate of deposit; By investing now in a long-term, fixed rate certificate of deposit, she will lock in the higher current rate over a long period of time. If she waited until later to invest and interest rates had fallen, the certificate of deposit would have a lower interest rate. This is an example of interest rate risk.

You have a checking account balance of $100 and you deposit a personal $200 check from your brother in your checking account. When will you be able to withdraw $150 in cash?

3 to 7 days later, depending on your bank's check clearance policy -Checks deposited into checking accounts need to be on deposit for several days before the money can be withdrawn as cash because the check needs to clear

If you have been denied credit, a job, a license, an insurance policy, or a loan based on your credit report. You are entitled to receive a free copy of that credit report within how many days of denial?

60; You must write or call requesting a free credit report from the credit bureau that supplied the report that was the basis of denial within 60 days of the denial. At other times, you can be charged a reasonable fee (usually $8) to buy a credit report. If you want your credit report from all three of the national credit bureaus (credit reporting agencies), you would have to buy three reports. The reports do not necessarily have the same information on them so it is important to buy a report from each of the three main credit bureaus once a year or before you plan to apply for major credit such as a car loan or mortgage

What is meant by an uncollateralized loan?

A personal loan without assets to cover the loan amount; ?Collateral? is a tangible asset that is used to secure a loan. In the case of a mortgage, the actual house or apartment serves as the collateral for that loan. The same is true of a car loan. If the person who takes the loan, defaults on that loan, the bank or other lending agency has the right to keep the collateral. Therefore, an ?uncollateralized loan? is one that does not have an asset to support the loan.

Money orders are

A purchased certificate to pay a specified amount to a specific payee- A money order is a purchased certificate used to pay a specified amount to a specific payee. They are a safe, convenient way to send payment through the mail as an alternative to personal checks or cash. Money orders sold and backed by the U.S. Postal Service are called postal money orders. Private companies, such as banks, credit unions, supermarkets, convenience stores, and drug stores, also sell money orders for a fee.

The type of credit card issued by an oil company, bank, or department store is:

A revolving charge card; A revolving charge account has a pre-approved dollar limit that is the most the unpaid balance can be at any specific time. When a consumer charges a purchase on the card, it raises the balance. Making a payment reduces the balance by the amount of the payment minus the finance charge owed that month. Thus, the balance "revolves" up and down as the consumer charges purchases and makes payments.

Troy has $50 a month transferred electronically from his checking account to his savings account. This is an example of:

A savings plan- When a consumer requests that his or her bank or credit union electronically transfer money from a checking account to a savings account every month, it is a (forced) savings plan. If you manage your checking account so there are always enough funds to cover the transfer, a forced savings plan is a good option because you avoid the problem of not making regular deposits in your savings account and spending the money instead. Starting a (forced) savings plan with automatic deposits is one way to do what is known as "paying yourself first.

A type of electronic funds transfer (EFT) is:

An ATM transaction; According to the Electronic Funds Transfer Act, Electronic funds transfers (EFTs) are any transfers of funds, other than a transaction originated by check, draft, or other paper instrument, initiated through electronic terminal, telephone, or computer, to authorize a financial institution to debit or credit an account. EFT's can be used to carry out many financial transactions, for example, to pay utility bills, make installment loan payments, and transfer funds from a savings account to a checking account or vice versa.

When money is not used and goods and services are exchanged for other goods and services, this system is called

Barter; Bartering means exchanging goods and services with another person and makes it possible to satisfy needs and wants without spending money. Bartering cannot be used for many transactions including the purchase of investments or insurance.

How can you protect yourself against credit card fraud?

Be extremely careful about disclosing account information to unsolicited callers; Preventive measures are always the best safeguard. Potential credit issuers need to know some personal information in order to learn about your credit history and determine your credit-worthiness. Information is power; keep yours secure, and give it out only when you make the call

Money for saving, investing, or spending cannot be from:

Capital losses from the sale of stock; A job-holder receives money in the form of a salary or wage. Sometimes people receive a gift of money gift. Money and other items received from the estate of a person who died is called an inheritance. Money could also come from a capital gain on an investment that is sold. If someone buys a stock at $40 a share and sells it at $25 per share, the $15 per share drop is considered a "capital loss" and therefore is money that no longer exists to be spent

Nora needed to make a long-distance call from a pay phone and did not have the cash. She was able to make the call by using her:

Cash card; Consumers purchase cash cards for a specific amount of money. The amount paid is stored in the card's memory, and the card can be used to pay for goods or services specific to a particular store or action until the amount stored, or "loaded" on the card, has been spent. The type of cash card Nora used is called a phone card. Some retail chain stores sell cash cards which can be used to pay for their products. Cash cards are either disposable or re-loadable. Disposable cash cards cannot be replenished (loaded again). With re-loadable cash cards, the consumer can return to the merchant and pay to have the balance on the card replenished.

Which financial product typically pays the highest rate of interest?

Certificate of deposit- All of these types of accounts and financial products earn interest except for common stock. They all earn interest at different rates. Generally, certificates of deposit have the highest interest rate and savings accounts the lowest. Some companies declare and pay dividends to their shareholders.

Which financial product has the most predictable income?

Certificate of deposit- Most certificates of deposit (CDs) are issued with an interest rate that is fixed at a specified rate for the entire term of the deposit. The main virtue of a fixed-rate CD is its predictability. The investor knows exactly how much interest will be received annually and over the life of the CD.

Money in the United States includes:

Checking account balances on which checks can be drawn; The total amount of money in the United States, termed the money supply, consists of coins, paper currency, checking account balances on which checks can be drawn, savings deposits, and time deposits such as CDs and money market funds. This measure of money, known as M2, is followed by the Federal Reserve as a key indicator of economic well being.

Interest earned on interest is known as

Compounded interest; Compound interest enables the saver to earn interest on the interest that was earned earlier.

You were approved for a loan that combines all your debts into one loan with lower payments based on a longer repayment period or lower APR. This type of loan is a:

Consolidation loan; Consolidation loans combine all your consumer credit into one loan so you have only one payment. However, consolidation loans often cost more in total finance charges because you take longer to pay off the debt.

A blank endorsement on a check

Creates a check that can be cashed by anyone- A blank endorsement is your signature only and is like cash. Anyone who holds the check can present it for payment at a bank or credit union. Therefore, a blank endorsement should not be used unless you are in the financial institution when you endorse the check. Some banks and credit unions are asking for a picture ID before they will cash a check.

Pat has a savings account and a car loan from a not-for-profit financial institution owned by its members. She is probably a member of what type of financial institution?

Credit union-Credit unions are not-for-profit savings and lending financial institutions. Membership in a credit union is made up of individuals who have something in common, such as a place of employment, membership in a professional organization, or residence in the same geographic area. Loans are made to its members from the savings of other members. Loan costs tend to be lower and savings interest rates higher at credit unions than at other types of financial institutions.

Using someone else's money, promising to repay at a future date, and paying a fee for use of the money, is the definition for:

Credit; The key elements of credit are using someone else's money, paying it back, and paying interest. Credit has a cost just like any other good or service, and the cost of credit is the interest. If you do not promise to pay the money you borrow in the future, the money received would be considered a gift

Claire got a new credit card from American Bank and wants to cancel her USA credit card. The best method is to dispose of her USA credit card is to:

Cut up the card, put parts in different garbage bags, and instruct the credit card company in writing or by phone to close the account; People trying to use other people's credit accounts often go through the garbage to find credit cards and credit account statements, called "dumpster diving." They then use the credit card or account number to buy items using the victim's credit account.

The best suggestion you gave a friend who is writing a check for the first time is:

Date the check because it is usually proof of payment- Date the check because checks are proof of payment. Checks written in pencil or erasable ink can be changed to pay a different payee or amount than the check writer intended to pay. Keep a record of the check written in the checkbook register or stub and deduct the amount from your checkbook balance so you know how much money you have left and you can reconcile your checking account against the bank statement. In addition, it is harder for a forger to change the dollar amount if, on the second line, it is printed rather than written in cursive.

When Mary bought a DVD player, she charged it on her credit card. Her purchase created a(an):

Debt; A debt is created when one person owes another person, company, organization, or government money. A credit debt may be created by making a purchase with a credit card, buying large items like a car or house using a credit contract, or getting a cash loan.

What action should a person take who must make a tuition payment at the end of August each year

Decide how much money will be needed and then place 1/12th of that amount in a separate account each month- This is an example of ?pay yourself first.? The best way to save in order to make a yearly purchase, in this case a tuition payment, is to immediately deposit a portion of the payment in a form of savings account (so it can earn interest throughout the year) as soon as the person is paid each payroll period

Purchases made with your debit card are usually:

Deducted immediately from your checking account; Debit card purchases are immediately deducted from your checking account balance while credit card purchases are added to your credit card balance. You have about 20 days after receiving a credit card bill to pay it without being charged interest. Through the use of a credit card, you get use of goods or services before they are paid for.

Which of the following is considered to be open-end credit?

Department store charge cards; Open-end credit is a revolving live of credit that is offered by banks and other lenders to consumers. There is a limit set on the line of credit and the funds, products or services are accessed using a credit or debit card, check, store charge card or cash advance. Consumers pay interest on the outstanding balance. A car loan is made for a specified amount and a specific length of time and is therefore considered closed-end credit. A mortgage loan is also considered a form of closed-end credit since the house serves as collateral for the loan which is made at a specified interest rate for a specified time period.

When a person is reconciling a checking account and notices that the balance in the checkbook does not match the balance on the statement from the bank, which action is it appropriate for the person to take first?

Determine that checks already written have cleared- Quite often, the balance reported on a checking account?s bank statement differs from the balance in the person?s checkbook. Reasons for that difference may be due to checks that have been written, and therefore are in the checkbook?s register, but that have not been cleared (returned to the bank for payment). Therefore, first, the person must looked at the bank?s statement and compare it to his/her checkbook register to see that all checks written have cleared

To make sure you will always remember your automated teller machine (ATM) card personal identification number (PIN), you should write the PIN and keep it:

In a secure place at home; You should never write any PIN on something that might be stolen. Write your PIN down and keep it in a secure place in your home.

The cost to use someone else's money for a period of time is called the:

Interest rate expressed as a percentage; Consumers usually pay a price for the goods and services they buy. The cost to buy the right to use someone else's money for a period of time is called the interest rate.

A cash card generally:

Is purchased with a specific amount of money that can be used to pay for goods or services; Consumers purchase cash cards for a specific amount of money. The amount paid is stored in the card's memory, and the card can be used to pay for goods or services specific to a particular store or action until the amount stored, or "loaded" on the card, has been spent. Some retail chain stores sell cash cards which can be used to pay for their products. Cash cards are either disposable or re-loadable. Disposable cash cards cannot be replenished (loaded again). With re-loadable cash cards, the consumer can return to the merchant and pay to have the balance on the card replenished.

Which factor would most likely lead to an increase the interest rate on a person?s credit card?

Late payment; Before setting interest rates, credit card companies look at the individual?s capacity to repay outstanding obligations. If the capacity is limited then the person is likely to make late payments.

When you mail your credit card payment on the due date, your payment will be considered

Late, and the company will assess you a late fee; A credit card payment is considered to have been made on the date the payment is posted to the account, not when it is mailed. Since it takes several days for the payment to reach the creditor and go through the posting process, your payment would not be posted to your account "by" the due date and thus would be a late payment

The term used to describe the ease and speed with which you can convert savings or an investment to cash is:

Liquidity- The ease and speed with which you can convert savings or an investment to cash is called liquidity. Checking and statement savings accounts are highly liquid because deposits and withdrawals can be made at any time. A certificate of deposit has less liquidity because it has a fixed term - a period during which money must be kept on deposit. There can be substantial penalties for cashing in a certificate of deposit before the end of its term, perhaps losing up to three to six months' interest.

Which of the following does the Federal Reserve use to regulate the nations money supply?

Monetary Policy; monetary policy is Directed at expanding or contracting the supply of money and credit in the U.S. economy. In theory, if there is too little money in circulation, consumers will spend less, interest rates will be high, and unemployment will rise. In this situation , the Fed can deliberately increase the amount of money in circulation, leading to lower interest rates, increases in consumer spending, and higher employment rates. If there is too much money in circulation, however, prices rise and the value of the dollar decreases (inflation).

The best reason for depositing money in a bank or credit union savings account instead of keeping your money "under the mattress" is that:

Money deposited in savings accounts are F.D.I.C. insured - Deposits in virtually all banks or credit unions earn interest. Banks send statements showing all deposits, withdrawals, and current account balances each month. Money earns a higher rate of interest in a savings account than in a checking account that pays interest. Money is easy to withdraw from a checking or a savings account. Money kept "under the mattress" could be stolen or lost in a fire and does not earn interest.

A person has three credit cards with very large outstanding balances and is unable to make payments on any of them. Which action should the person take?

Notify the credit card companies in order to negotiate a new payment plan.; When experiencing financial difficulties, the first action to take is to notify creditors, in this case the three credit card companies. Quite often the company will assist in negotiating new terms

Dawn graduated from high school and wants to get a credit card. How can Dawn establish credit-worthiness?

Opening a checking account, making regular deposits, and avoiding penalties for insufficient funds; To establish credit-worthiness, Dawn must have credit and use it responsibly. Creditors will only give new debtors small amounts of credit because creditors cannot tell whether the applicant is likely to use the credit responsibly. Having a checking account in good standing helps you to establish a record of being responsible.

Which of the following lenders charge the highest interest rate?

Pawn shop; Pawnshops accept items that have a market value as collateral on cash loans given to customers. If the customer does not pay back the loan principal and interest in a specified period, the pawnshop has the contractual right to sell the item. Because pawnshops do not evaluate the debtor?s credit-worthiness, they charge extremely high interest rates usually to debtors with bad credit records who could not get a cash loan at traditional financial institutions.

Margaret wants to store a valuable coin collection and important papers. Generally, consumers should:

Rent a safe deposit box for their valuables - Bank customers can rent safe deposit boxes from the bank. They are metal boxes kept in the bank vault where customers often keep valuable papers, financial records, jewelry, and collections.

Safe-deposit boxes are

Safe and can be accessed only by the owner of the box-Safe-deposit boxes are metal boxes in a bank's vault. Taking two keys, one owned by the bank and one by the customer, to open the safe-deposit box provides more safety for the customer. Only the owner can access the box. The bank customer pays a small annual rental fee to the bank for use of the safe-deposit box

The primary sources of income for most people between the ages of 20 and 35 who are not living on a pension or social security are

Salaries, wages, and tips; Earned income is also the primary source of income for most other age groups. Very few people have sufficient unearned income - dividends, interest, rents, or profits - to live on without holding a job or running a business.

How can individuals be prepared for losing their job or having a large medical expense?

Save at least three months of income- People generally need three to six months' of income in a savings account to cover unknown and unexpected events and expenses

Financial services and products generally offered by banks and credit unions include:

Savings and loans-The basic financial functions offered by banks and credit unions are checking accounts, savings accounts, and personal and business loans. Insurance is sold only by insurance companies, stocks and bonds are sold by brokerage firms, and legal services are provided by attorneys. Banks can sell financial products if they sell the products on behalf of a partner or affiliate investment firm.

A bank Certificate of Deposit is a:

Savings instrument that requires a deposit for a period of time during which there is a penalty for withdrawals; A certificate of deposit (CD) is a savings instrument that requires a deposit for a period of time (term) during which the saver cannot withdraw money from the plan without a penalty. CDs are issued with terms from 31 days up to eight years. The longer the consumer agrees to loan the money to the bank or credit union, generally the higher the interest rate. It is considered a form of savings because the consumer is paid interest based on the dollar amount and term of the CD. If the consumer does not collect his/her money at the end of the term, the money may be rolled over into another CD.

Consumer finance companies, which are often advertised on TV, are also known as:

Small loan companies- Consumer finance companies specialize in making small loans to individuals or businesses. They primarily make loans to people who cannot qualify for credit elsewhere because of a poor credit history, low income, or minimal assets. For these reasons, interest rates are usually higher than loans from a bank or credit union.

Joan wants to open a checking account and wonders if checking accounts pay interest. How would you answer her question?

Some types of checking accounts pay interest-Regular checking accounts do not earn interest. NOW (negotiable order of withdrawal) accounts do earn interest but tend to have higher minimum balance requirements than regular checking accounts and often limit the number of checks that can be written each month without a fee

Victims of predatory lending practices are typically:

The elderly and people with a poor credit history; Predatory lending uses abusive practices in any type of credit but the lenders primarily target applicants for home mortgages, home equity, and home refinancing loans. This practice tends to occur in low-income neighborhoods, particularly those with a large number of elderly or minority homeowners who have a poor credit history, or need cash quickly. These lenders use deceptive advertising and high pressure salespeople and give repayment terms that the borrower cannot afford.

Employees prefer direct deposits because:

The money is generally deposited in their checking account sooner than it would be if they had to deposit it in person- Instead of a negotiable check, the wage earner receives a pay stub which lists the amount that was directly deposited and the amounts withheld for taxes, health insurance, etc. Through direct deposit, earnings are transferred electronically into the recipient's bank account. Direct deposit is more convenient, safer, and usually faster than receiving and manually depositing a paycheck.

The financial institution where Ms. Sanchez has her checking account will continue to pay out money for the checks she writes as long as:

There is enough money in Ms. Sanchezs account to cover the amount of the checks - The financial institution is not obligated to honor a check if it is written for more money than the current checking account balance. The customer will be charged an insufficient funds penalty for each check not covered by a sufficient balance in the account.

Which of the following is a disadvantage of using phone cards, debit cards, electronic transfers, and ATM cards?

They expose consumers to greater likelihood of identity theft; The growing number of transactions that can be carried out without cash increases convenience for consumers who have credit cards, phone cards, debit cards, etc., but also exposes consumers to greater likelihood of fraud and/or identity theft.

When James received his paycheck, he planned to cash it at a check cashing store. You advise him to cash it at his own bank if possible. Why?

They typically charge high fees- Check-cashing stores usually charge high fees to cash checks and sometimes encourage consumers to take out high interest rate payday loans.

Which of the following statements is usually true about individuals who are financially literate?

They understand the basics of personal finance and money management; Financial literacy is knowledge of facts, concepts, and technological tools that are basic to being smart about money. People who are not financially literate are more likely to fall prey to consumer scams, have excessive consumer debt, and spend their money without a spending plan. Ultimately, they may end up in serious financi

If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the

US Treasury Department; In order to track large deposits, the federal government requires that deposits of $10,000 or more be reported to the Treasury Department. Some concerns may be that a person might be trying to avoid paying taxes on game winnings or perhaps illegal gains

Jami lost her debit card. She did not report it missing for 3 months. If an unauthorized person used her debit card, her maximum liability is:

Unlimited liability; According to the Electronic Fund Transfer Act, if a consumer reports the theft or loss of an ATM or debit card to the issuing financial institution within two business days, he/she is liable for not more than $50 of unauthorized purchases. If reported within 60 days, the consumer is liable for up to $500 of unauthorized purchases. If reported after 60 days or not reported, the consumer may be liable for the entire amount of unauthorized purchases.

Scott just got an ATM card to use and must choose a PIN (Personal Identification Number). How should he select a PIN that will give him maximum protection against anyone else being able to find out what the PIN is?

Use a random selection of letters and numbers; A PIN (personal identification number) is a secret code that protects the privacy of your accounts and allows only you to access them. The numbers should not be composed of numbers easily associated with the person choosing the PIN such as birth date, telephone number, or street number address. It should be a random series of numbers and letters that would be hard for unauthorized users to guess. Also, never write your PIN on your ATM or debit card or in your check book because then a thief would you?re your confidential information needed to make purchases or withdraw all the money out of your account.

Which is the best example of a way to reduce fees paid for ATM transactions?

When making supermarket purchases with a debit card, a person adds $50 in cash to the transaction instead of using an ATM machine. - Most supermarkets have a policy permitting patrons to add a cash withdrawal to a purchase made with a debit card or check without charging a fee. All of the other choices (using store ATMs, banks other than the issuing bank, and using any machine at night or the weekend) will most likely result in the person incurring ATM fees

When a person brings an item to a pawnshop to obtain cash, the transaction is considered

a collateralized loan; Since pawnshops make loans based on determining the value of collateral (a tangible object such as jewelry, cameras, musical instruments) they receive, the loan is considered a collateralized loan.

To qualify for a Federal Housing Administration (FHA) loan, a person must generally

fulfill income guidelines; The Federal Housing Administration (FHA) insures lenders who make mortgage loans that are riskier than regular bank loans because FHA loans are made to individuals who usually would not qualify for regular low-cost mortgages from banks (usually first-time home buyers with lower income and a weaker credit score). The objective of this federal agency is to encourage home ownership while helping to protect the lenders at the same time.

A good practice when using credit cards is to routinely

pay the complete balance each month; Credit card companies charge considerable interest for not paying the complete balance each month. Therefore having a monthly balance shows the person is spending more money (charging) than the person can afford and therefore the individual is not a good money manager. It also might be a situation where the individual does not realize just how much buying on credit and not paying off the entire balance is actually costing in the long run.

To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and

the rate of inflation; The ?time value of money? is a way of looking at how much a saving or investment is worth at the end of a period of time when it is compared to the rate of inflation during that period and the person?s earning power. For example, it may not seem as though depositing $100 a month in a retirement account when someone is 23 makes a whole lot of sense; why not wait until age 40 when it will probably be a lot easier to deposit $250 or $300 a month in the account. However, because of the miracle of compounding interest, that $100 will be worth a lot more when the person is older than the money that is deposited at age 40. However, the other factor to consider in making deposits to a regular savings account is the rate of interest as compared to the rate of inflation. If the annual rate of inflation is 03% and the interest earned on money is 01%, the deposit is actually going to have less purchasing power at the end of the year than it did at the start.