Finance tompkins ch 4
Compared to other depository financial institutions, credit unions:
Charge lower rates on loans
The Federal Deposit Insurance Corporation (FDIC) covers stocks, bonds, and mutual funds purchased at banks
False
Funds in commercial banks are protected by the:
Federal Deposit Insurance Corporation
A _____ is an interest-bearing checking account.
NOW account
Which of the following is true of safe-deposit boxes offered by banks?
They can be used as a storage place for important documents
When doing account reconciliation, interest earned on your account should be:
added to your checkbook ledger
Christina works at a company that offers to directly deposit her paycheck into her personal bank account. This service is called:
an electronic funds transfer system (EFTS) service
money market deposit accounts
are federally insured
s the routine, day-to-day administration of cash and near-cash resources, also known as liquid assets, by an individual or family.
cash management
Whenever you write a check or make a deposit, an entry should be made in your
checkbook ledger
Factors typically influencing the choice of where to maintain a checking account are
convenience, services, and cost
In account reconciliation, one of the steps in calculating adjusted bank balance is
deducting total withdrawals still outstanding from bank balance
Which of the following features is a disadvantage of asset management accounts
deposit insurance
The FDIC insures each ____ up to a stated maximum dollar amount at any given financial institution.
depositor
Cash is the only kind of liquid asset
false
Cash management does not help in personal financial planning.
false
The recent extremely low interest rates favor investors and boost the incentive to save.
false
cash and near-cash resources are known as ____.
liquid assets
Higher interest rates on certificates of deposit are associated with:
longer maturities
Individuals prefer to invest their savings in stocks rather than traditional instruments like Treasury Bonds because of
low interest rates
Credit unions are
member-owned financial cooperatives
Liquid assets would include your savings account and your
money market deposit account
offer banking services but do not accept deposits like traditional banks.
nondepository institutions
Low interest rates are helpful in:
reducing the service cost on the national debt
Interest rates are the lowest on
regular checking account
A check you issued last week has been stolen. You can prevent the amount on the check from being withdrawn from your account by an unauthorized person by:
requesting a stop payment
A(n) _____ is a rented drawer in a bank's vault.
safe-deposit box
It costs financial institutions more if their customers perform
teller transactions
The least expensive method for banks to interact with their customers is:
through the internet
You are going on an overseas trip, and you want to carry checks. You should purchase:
traveler's check
A certified check is a personal check that the bank certifies to guarantee that funds are available.
true
Compound interest means that a savings account earns interest on the interest previously earned.
true
Daily balance requirements are an important criteria while comparing checking accounts offered by different banks.
true
Debit and ATM card transactions are linked to your checking account
true
Interest earned for a period should be added to the adjusted bank balance while reconciling your account.
true
Your savings will grow faster with monthly interest compounding than with quarterly interest compounding for a given nominal interest rate.
true