Chapter 5 FIN 381

Money market account

A savings account offered by banks, savings and loan associations, and credit unions that requires a minimum balance and has earnings based on market interest rates

Money markets fund

A savings investment plan offered by investment companies, with earnings based on investments in various short-term financial instruments

Credit union

A user owned, nonprofit, cooperative financial institution that is organized for the benefit of its members

trust

A _____ has the purpose of: managing the assets of a person

Automatic teller machine (ATM)

A computer terminal used to conduct making transactions a.k.a. cash machine

Mutual savings bank

A financial institution that is owned by depositors and specializes in savings accounts and mortgage

Commercial bank

A financial institution that offers a full range of financial services to individuals, businesses, and government agencies

Savings and loan Association

A financial institution that traditionally specialized in savings accounts and mortgage loans

Trust

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

certified check

A personal check with guaranteed payment is called a _____ _____.

Compounding

A process that calculates interest based on previously earned interest

Asset management account

All in one account that includes saving, checking, borrowing, investing, and other financial services for a single fee; a.k.a. cash management account

personal loans

An advantage credit unions may have over other financial institutions is low-cost _____ _____.

EE cashed

An advantage of investing in Series _____ U.S. Savings Bonds is interest is not taxed by the federal government until the bond is _____.

Share draft account

And interest-bearing checking account at a credit union

Activity accounts

Charge a fee for each check written and sometimes a fee for each deposit in addition to a monthly service but no minimum balance to maintain

deposit

Commercial banks, savings and loan associations, mutual savings banks, and credit unions call considered _____ institutions.

annual percentage yield

Comparison of earnings for different savings plans can best be accomplished using the:

face

Electric EE bonds can be purchased online at _____ value.

Financial services

Examples include cash availability, saving services, investment services, payment services, credit services, and other services

Deposit financial institutions

Examples include commercial banks, credit unions, savings and loan associations, and mutual savings banks

Non-deposit institutions

Examples include life insurance companies, investment companies, brokerage firm's, credit card companies, finance companies, and mortgage companies

High cost financial service providers

Examples include pawnshop, check cashing outlet, payday loan company, rent to own center, and car title loan company

Non-bank financial service providers

Examples include retailer stores, online banking service provider, online payment services, and peer to peer lending intermediaries

Certificate of deposit (CD)

Hey savings plan requiring that a certain amount be left on deposit for a stated time. To earn a specific interest rate

Overdraft protection

It's an automatic loan made to checking account customers to cover the amount of checks written in excess of the available balance in the checking account

T

T/F: An asset management account combines several financial services for a single fee.

T

T/F: The money market fund offered by investment companies is a relatively liquid financial service.

Debit card

Plastic access card used in computerized transactions a.k.a. cash card

F

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

Rate of return

The percentage of increase in the value of savings as a result of interest earned a.k.a. yield

Annual percentage yield (APY)

The percentage rate expressing the total amount of interest that would be received on a $100 deposit based on the annual rate and frequency of compounding for a 365 day.

yield

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

Trust service

Tim Gleason has set up a legal agreement that allows the First State Bank of Orlando to manage funds set aside for his daughter's college education. What type of financial service is Tim using?

discount rate

What is the rate that the Federal Reserve charges banks for loans called?

rising

When interest rates are _____ use long-term loans to take a vantage of current low rates and select short-term savings to take advantage of higher rates when they mature.

falling

When interest rates are _____ use short term loans to take advantage of lower rates when you refinance the loans and select long-term savings to lock in earnings at current high rates.

Indexed

Which CD pays earnings based on the stock market?

share

A savings account at a credit union is called a ____________ account.