Personal Finance Chapter 4

Benefits of online banking include

convenience for transactions e-mail notifications for due dates time savings

High cost financial services typically do not include

credit unions mutual savings banks

The life insurance companies provide financial security for __________

dependents

Commercial banks offer services to:

gov't agencies businesses individuals

A(n) _______ CD has earnings based on the performance of the stock market

indexed

Common mistakes made when managing current cash needs include

lacking sufficient funds Leaving funds in low interest accounts too long Overspending Using savings for current expenses

Criteria for selection of a savings plan include:

liquidity rate of return restrictions and fees safety

When interest rates are falling, you should

lock in current rate by choosing long-term savings option "lock in" short-term loans

Share accounts are the same as __________, but are offered at credit unions

regular savings accounts

Savings accounts are considered __________, because they can have limits on transfers or withdrawals

time deposits

What is the main function of a finance company

to make loans to consumers and small businesses

The main function of a mortgage company

to provide loans to purchase homes

Time deposits do NOT include

-checking accounts -credit card and cash loans

The Six Steps to writing a check in order from first to last

1. Record the Date 2. Write the name of the person receiving the funds 3. Record the amount of the check in figures or numbers 4. Write the amount of the check in words 5. Sign the check 6. Note the reason for the payment

A customer should compare and select a financial service provider if:

Money can be borrowed when needed Its cost of checking and payment services is minimum The return on savings is the best

activity accounts charge a fee for each check writtern and each depost, as well as

a monthly service charge

A specific stop payment order given to a bank is designed to:

avoid paying a specific check that is lost or stolen

Deposit institutions would not include

brokerage firm

Which of the following are considered demand deposits

checking accounts payment accounts

______ banks are organized as corporations, with investors contributing the capital for operations

commercial

Overdraft protection is designed to:

cover underfunded checks

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

deposit

Common choices for making payments include all of the following except

installment loans

Life insurance has other uses, including

investment options Savings alternatives Providing for dependents

Credit alternatives to be used for borrowing if an individual more cash than is available include

personal loans credit cards

_____ checking accounts have a monthly service charge you can avoid if you keep a balance in the account

regular

the three main types of endorsements are

restrictive special blank

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

return

Payday loans are typically used by people who

run up debt by free spending Are trapped by debts Are driven into debt due to poor financial decision

A _________ and loan association traditionally specializes in savings accounts and mortgage loans

savings

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

savings and loans credit unions commercial banks

The main reason HH bonds are more used for retirement

semiannual interest

Financial services will usually NOT be affected by:

stock prices

Which of the following is not a reliable source of information for economic trends

the blogspot website

A current shortage of cash will require two basic choices: __________ savings or _________

withdraw ; borrow

This type of card is a plastic access card used in computerized banking transactions

Debit Card

________ deposits include checking accounts and other payment methods

Demand

Money market accounts are insured by federal deposit insurance, whereas money market mutual _______ are not

Funds

Financial Services include:

Insurance Borrowing Financial Planning Payment Services Investments Savings

Which of the following are the ways to use a debit card?

With your signature With your PIN

The _______ is the percentage rate expressing the total amount of interest that would be recieved based upon time and compounding

annual percentage yield

An automatic teller machine (ATM is also called a "_________ machine"

cash

A ______ check is a check drawn on a financial institution

cashier

A savings plan that requires a certain amount of money to be left for a specified amount of time is a:

certificate of deposit

Mutual Savings banks are owned by

Depositors

Select the types of federal savings bonds that are currently sold

I, EE

April 2006 fdic coverage increased for

Keogh Roth IRAs SEP IRA's Traditional IRAs

Drawback of CD accounts include

early withdrawal penalty Minimum deposit

Non-deposit institutions mentioned in the text include

investment companies Life insurance companies Brokerage firms

APY formula can be ex[pressed as APY=100(interest/_______)

principal

If a debit card with the same rules as a lost or stolen credit card is reported stolen withing two days of the lost card, maximum liability is

$50

If inflation is 3%, a saver would want to earn an interest rate greater than

3%

What types of financial institutions have federal deposit insurance through FDIC

Savings and loans Commercial banks

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

money market

Unauthorized use of your debit card number to make a purchase should be reported within ________ days of receiving your statement to protect your right not to be charged for the transaction

60

_________ is a process that calculates interest based on previously earned interest

Compounding

Some of the basic concerns of a financial services customer when comparing financial services include which of the following?

How can i minimize costs for checking and savings? Where can i get the best return on savings? Will i be able to borrow money when I need it?

Which of the following institutions offer financial services?

Life insurance companies Finance companies Credit Card companies Investment companies Mortgage companies

Which of the following services do savings and loans associations offer

Loans Financial Services Savings accounts

The Truth in Savings law requires the following items to be disclosed:

Other terms and conditions of the savings plan The annual percentage yield (APY) The interest rate Fees on deposit accounts

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

Share

Another name for an asset management account is:

a cash management account

Benefits of money market accounts include

a favorable interest rate & deposit insurance

A regular savings account usually offers a ________ balance requirement

a low or no minimum

What do you NOT do if you identity is stolen

call your frineds and neighbors Locate the person who stole your identity Leave the area until the problem is resolved

When interest rates are rising you should

choose short-term savings vehicles Use long-term loans

A __________ bank is a financial institution that offers a full range of services

commercial

A _______ union is a user-owned, nonprofit, financial institution that is organized for the benefit of its members

credit

When you sign the back of the check, this is a(n):

endorsement

a certified check is a personal check with

guaranteed payment

A money order:

guarantees payment

_______ is the attribute of savings accounts that allows you to withdraw money on short notice without a loss of principal or fees. This is taken directly from the text

liquidity

To achieve long-term financial goals, many people trade off ________ for a __________ return

liquidity ; higher

Smart cards offer electronic services such as

medical history Account balances insurance information transaction record

Historically, savings and loans specialized in

savings accounts and mortgage loans

A _______ card is the document that records the official signatures of the person or persons authorized to write checks on the account

signature

if you lose your debit card and report it after more than 60 days,your liability may be the _______ amount in your bank account

total

A ________ is a legal agreement that provides for the management and control of assets by one party for the benefit of another

trust