finance chpt 5-8
when comparing savings account rates of return you should choose one that
beats the rate of inflation
use a debit card to
-avoid an annual fee -avoid bills to be paid in the future -avoid possible interest charges
what types of financial institutions have federal deposit insurance through FDIC
-commercial banks -savings and loans
common trade-offs for financial services include
-convenience -no-fee services -liquidity
where can you purchase money orders
-financial institutions -post offices -stores
types of certificates of deposit
-liquid CD -zero-coupon CD -callable CD -indexed CD
common mistakes when managing current cash needs
-overspending -using savings for current purchases -lacking sufficient funds
drawbacks of money market accounts
-some institutions charging for low balances -higher minimum balance required
share draft accounts at a credit union are
interest bearing
a ____ draft account is an interest-bearing checking account at a credit union
share
online payments do not include
smart cards
a regular savings account usually does not have
-a high balance requirement -difficulty in withdrawal -a high rate of interest
you are in the 25% tax bracket, the before-tax savings rate of return is 12%, the after-tax yield on the savings account is
9%
a regular savings account usually offers
a low or no minimum balance requirement
what is a money market account
a savings account that has a higher interest rate than a regular savings account great place to keep your emergency fund
all of the following serve as financial intermediates except
insurance companies
overdraft protection is an automatic loan made to checking account customers to cover checks written in excess of
their balance
the savings alternative that offers more liquidity is
money market accounts
types of federal bonds
-I -EE
a savings plan that requires a certain amount of money be left for a specified amount of time, subject to penalty for early withdrawal is
certificate of deposit
what type of financial institution typically does not have federal depoist insurance
investment companies
certified checks, cashier's checks, and money orders allow you to make a payment that a recipient knows is
valid