Connect Chapter 5 - Smartbook Study Guide

A ________ ticket or slip is used to add funds to a checking account.

Deposit.

All of the following are deposit-type institutions that serve as financial intermediaries except:

Insurance companies.

What type of financial institution typically does not have federal deposit insurance?

Investment companies.

________ is the attribute of savings accounts that allows you to withdraw money on short notice without a loss of principal or fees.

Liquidity.

What is the purpose of liquidity?

To allow you to withdraw money on short notice.

A regular savings account usually does not have:

-A high rate of interest. -Overdraft protection. -A high balance requirement.

You are responsible for charges on your account if they are ________ :

-Authorized. -For broken products. -Made online.

What types of financial institutions have federal deposit insurance through FDIC?

-Commercial banks. -Credit unions. -Savings and loans.

Some things to consider when selecting your financial institution include:

-Convenience. -Online banking. -Fees and charges. -Services offered.

Benefits of money market accounts include:

-Favorable interest rate. -Deposit insurance.

Use a debit card to:

-Limit your spending to available money. -Avoid bills that will be paid in the future. -Obtain better fraud protection with security measures.

Financial services include:

-Savings. -Payment services. -Borrowing. -Financial planning. -Insurance. -Investments.

From which of the following sources can money orders be purchased?

-Stores. -Post offices. -Financial institutions.

Common mistakes made when managing current cash needs include:

-Using savings for current expenses. -Overspending. -Lacking sufficient funds.

You are in the 25% tax bracket, the after tax savings rate of return is 6%, the before-tax yield on the savings account is:

8%

A deposit ticket is used to add funds to ________.

An account.

When comparing savings accounts rates of return, you should choose one that:

Beats the rate of inflation.

A ________ check is a check drawn on a financial institution.

Cashiers.

A savings plan that requires a certain amount of money to be left for a specified amount of time, subject to penalty for early withdrawal, is called a ______.

Certificate of deposit.

The savings alternative that offers less liquidity is:

Certificates of deposit.

Minimizing bank fees may require:

Comparing financial institutions.

Using savings for ________ living expenses is one of the mistakes people make when managing current cash needs. This is a one-word answer.

Current.

Financial services include all of the following except:

Debt Counseling.

Common choices for making payments include all of the following except:

Installment loans.

The rate of ________ is the percentage increase in the value of savings as a result of interest earned.

Return.

A ________ draft account is an interest-bearing checking account at a credit union.

Share.

Online payments do not include

Smart cards.

Financial services will usually not be affected by:

Stock prices.

Overdraft protection is an automatic loan made to checking account customers to cover checks written in excess of:

Their balance.

You are not responsible for charges on your debit card account if they are:

Unauthorized.

Certified checks, cashier's checks, and money orders allow you to make a payment that the recipient knows is ________ .

Valid.

An opportunity cost is:

What you give up.

Which of the following are deposit-type institutions that serve as financial intermediaries?

-Credit unions. -Savings and loans. -Commercial banks.

Benefits of U.S. savings bonds include:

-Low minimum deposit. -Exemption from state and local taxes. -Government guarantee.

Share draft accounts at a credit union:

Are interest bearing.

Overdraft protection is designed to:

Cover underfunded checks.

Use a credit card to:

-Delay the payment for a purchase -Build a credit history with wise buying -Buy online or for major purchases

Drawbacks of money market accounts include:

-Higher minimum balance required. -Some institutions charging for low balances.

By comparing financial institutions, a customer can:

-Lower bank fees. -Minimize ATM fees.

A savings plan that requires a certain amount of money to be left for a specified amount of time is not a:

-Passbook savings account. -Money market account. -Stock option.

A money order:

Guarantees payment.

A drawback of U.S. savings bonds is:

Lower rates for early redemption.

A money market fund is a ______.

Savings instrument.

The rate of return is:

The percentage increase in the value of an account.

True or False: The rate of return you earn on your savings account should be compared with the inflation rate.

True.

A regular savings account usually offers:

A low or no minimum balance requirement.

Achieving your financial goals and carrying out your daily activities require many ________ services.

Financial.

A ______ fund is an account used for savings offered by investment companies.

Money market.

You are in the 25% tax bracket. So, the yield on the savings account is 8%, and the after-tax savings rate of return is ______.

6%

The savings alternative that offers more liquidity is:

Money market accounts.

A(n) ________ cost is what you give up when you evaluate, select, and use financial services.

Opportunity.

True or False: Achieving your financial goals and carrying out your daily activities require various financial services.

True.

True or False: Financial services can change due to such factors as changing interest rates and rising consumer prices.

True.