Mod 14: Ch 16

Which of the following best describes a mutual savings bank?

A financial institution whose depositors are owners sharing in its profits

Which of the following best describes a money market mutual fund?

A fund of short-term, low-risk financial securities purchased with the pooled assets of investor-owners

Which of the following best describes a finance company?

A nondeposit institution that specializes in making loans to businesses and consumers

Which of the following best describes a pension fund?

A nondeposit pool of funds managed to provide retirement income for its members

When a U.S. firm wants to buy products from an international supplier, payment must be negotiated. Which type of payment option guarantees the bank will pay a predetermined amount at a future date?

Banker's acceptance

How does a nation's monetary policy affect the economic growth of the country?

By managing interest rates

Which of the following is the best example of a time deposit?

Certificate of deposit

Which liquid form of money instructs a bank to pay someone a specific sum of money on demand?

Check

Which of the following is the federal law that allows a receiving bank to make an electronic image of a paper check and electronically send the image to the paying bank for instant payment instead of waiting days for the paper check to wind its way back to the sender?

Check Clearing for the 21st Century Act

Which noninterest bearing form of M-1 money supply is held at the bank until withdrawn by the owner, or a designated payee?

Checking account

Which for-profit financial institutions can make loans, accept deposits, earn profits, pay interests to members, and allow members to have access to checking and savings accounts?

Commercial banks

Which of the following is a nonprofit, cooperative financial institution owned and operated by its members, usually employees of a particular organization?

Credit union

_____ consists of government-issued paper money and coins.

Currency

Which payment systems move funds among businesses and individuals without the use of a check or cash and can be used online, in stores, and internationally?

Electronic funds transfers

Which of the following supervises banks and insures deposits?

Federal Deposit Insurance Corporation (FDIC)

Which rate is based on supply and demand for funds and is the rate commercial banks charge when they lend overnight?

Federal funds rate

Workers who wish to supplement their income after they no longer work full-time can set up which type of account as a way to save pre-tax income?

Individual retirement account

Which nondeposit institution takes in money based on premiums charged for protections against losses, such as death, injury, or healthcare expenses?

Insurance companies

Which of the following is responsible for promoting stable exchange rates, providing short-term loans, and encouraging the development of a system for international payments?

International Monetary Fund (IMF)

In order to facilitate international trade and business, buyers and sellers must be able to negotiate costs based on fluctuating exchange rates. Which of the following is used as a promise by a bank to pay a certain amount of money when specified conditions are met?

Letter of credit

Which measure of the U.S. money supply includes cash (coins and currency), checks, and checking accounts (demand deposits)?

M-1

Which measure of the money supply is used by businesses and government agencies to aid in economic planning because it indicates how much money will be available for consumer purchases and investments?

M-2

Which of the following is defined as a medium of exchange based on its value or worth?

Money

Which of the following is a fund of short-term, low-risk financial securities purchased with the pooled assets of investor-owners?

Money market mutual fund

Organizations such as pension funds and securities investment dealers take in money and use the funds for purposes other than earning interest for depositors. What type of banks are these?

Nondeposit institutions

What type of equipment must be utilized to transfer payment when using credit or debit cards to shop at a brick-and-mortar store?

Point-of-sale terminal

What is the interest rate that banks offer to their most creditworthy customers?

Prime

Which institutions were created to encourage savings habits and provide financing for homes, but did not offer other services such as checking?

Savings and loan associations

These banking and payment devices have an embedded computer chip that can be programmed with "electronic" money.

Smart cards

There are many types of banking institutions in the United States. Which is the nation's central bank, with power to form monetary policy for the nation?

The Federal Reserve

Which of the following best describes discount rate?

The interest rate charged to commercial banks and other depository institutions for loans received from the Fed

Which type of M-2 money has a fixed term and cannot be transferred by check?

Time deposits

The Bank Secrecy Act (BSA) requires banks to do which of the following?

Track and report suspicious transactions, such as a sudden increase in wire transfers or cash transactions exceeding $10,000

Sometimes a person needs help ensuring regular, monthly bills are paid, or the estate of a deceased person needs to be managed. What type of banking service would help with the management of funds for those who cannot, or choose not to, do so on their own?

Trust services

Under which law are banks required to implement a customer identification program (CIP) to verify customers' identities, maintain records of their activities, and compare the identities of new customers with government terrorist lists?

USA Patriot Act

Which Act is designed to reduce terrorism risks and requires banks to better understand a customer's identity by obtaining and verifying their name, address, date of birth, and Social Security Number?

USA Patriot Act

Which organization does NOT act as a traditional bank but instead provides limited services that help build infrastructure in countries that borrow and help increase production capacity and international trade?

World Bank

Consumers around the world can now withdraw cash, transfers funds, and manage bank accounts through the use of ______.

automated teller machines

The value of one currency compared to another is its _____.

exchange rate

The purchase and/or sale of treasury securities by the Federal Reserve in order to expand or contract the U.S. money supply is known as _______.

open-market operations

The ________ is the percentage of deposits that a bank must keep on hand in cash in its vault or on deposit with Federal Reserve Banks.

reserve requirement