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.