Personal Finance HW-Ch5S1 PF

A person can use their ATM card to take out money of their checking account.

False

Commercial banks are authorized to conduct business by the FDIC.

False

Savings & Loan Associations specialize in providing financial security for dependents.

False

The federally-charted bank that Jason Bourne uses suddenly shut down due to financial irresponsibility. Jason is concerned that he has lost his entire savings of $254,000. How much of his savings will Jason be able to recover? Explain.

Jason Bourne will be able to recover $250,000 because the FDIC will insure a federally chartered bank account with this amount. Also, federally-chartered banks must participate in this program. That is why Jason Bourne will be able to recover $250,000. Correct answer: $250,000-The FDIC insures each account in a federally-chartered bank up to $250,000 per account.

Charlie Babbit receives a paycheck on the last Friday of every month in the amount of $2,700.00. However, he works until 6:00 P.M. each day and his bank closes at 5:00 P.M. Charlie and his family are going out of town early Saturday morning. Hence, he will be unable to deposit his paycheck in his checking account until Monday. But, he desperately needs the money from his paycheck to use during the weekend. What banking service could Charlie have utilized to avoid this situation? Explain.

The banking service Charile could have utilized to avoid this situation was the direct deposit banking service. Correct answer: Direct Deposit: Electronic deposit of checks directly into a designated bank account.

Which of the following is NOT a deposit-type financial institution?

investment companies

Which of the following is NOT one of the three general categories of services provided by financial institutions?

legal consultations

Certificates of Deposit is a financial service that is typically utilized in what way?

long-term goals

Mutual Funds is a financial service that is typically utilized in what way?

long-term goals

Which of the following is generally NOT considered a short-term need?

major purchases

Which of the following things can a person NOT do at an ATM?

order checks

Checking account is a financial service that is typically utilized in what way?

short-term needs

Pre-paid cards is a financial service that is typically utilized in what way?

short-term needs

This type of card is reloadable and you cannot spend more than the amount is on the card. What type of plastic payment is this?

store valued cards

During each month, Ed Lewis pays a variety of fixed expenses. The expenses include his car payment, mortgage payment, insurance, cellular phone bill, and Internet connection fee. However, Ed has a difficult time keeping track of the expenses and their corresponding due dates each month. Hence, he oftentimes pays the bills late. What banking service could Ed use pay his bills on time every month and avoid penalties for late payments? Explain.

The banking service that Ed could use to pay his bills on time every month so he can avoid penalties for late payments is the automatic payments service. With this service the bank withdraws the amount for payment from a customer account and electronically transfers it to a company or lender. With this banking service the bills will automatically be paid for the date he has set. Correct answer: Automatic Payment--The bank withdraws the amount for payment from a customer account and electronically transfers it to a company or lender.

Zach Morris works his full-time job as a salesman for Pepsi on weekdays from 9-5 and does some construction work on the side on Saturdays. Zach has a hard time being able to get his money into his saving account while also withdrawing enough money for lunch each day. What electronic banking service should Zach be using so he can deposit his paycheck and get cash for lunch? Explain

The electronic banking service that Zach Morris should use so he can deposit his paycheck and get cash for lunch is ATM. An ATM is a computer terminal that allows you to withdraw cash from your cash accounts, make deposits and transfer money from one account to another. So the service he should use this service is the ATM because he is able to deposit his paycheck and able to get cash for lunch. That is why Zach should use the electronic banking service ATM. correct answer: ATM-A person can deposit checks and withdrawal money at an ATM.

Hank Ford recently started a job working on the assembly line at a car manufacturing plant. For the first time in his life, Hank is earning a paycheck. He decides that he wants to deposit his paycheck at a bank that offers a full range of services. Following various discussions with his new co-workers, Hank realizes that they all use the same financial institution. It offers lower rates and reduced fees as compared to most banks. What type of financial institution is being utilized by Hank's co-workers? Explain.

The type of finical institution that is being utilized by Hank's co-workers is a credit union. A credit union offers low rates and reduced fees compared to most banks. It also typically offers a full range of services. In addition, members traditionally have some common bond such as being employed by the same company. Credit Union- A financial institution owned by its members and organized for their benefit that offers a full range of services with lower rates and reduce fees.

Ray Kinsella stops at a sporting goods store on his way home from work to purchase a new wood baseball bat. Upon checking out with the store clerk, Ray realizes that he does not have any cash or checks to pay for the bat. He decides to use his debit card to complete the transaction. What type of transaction has Ray completed?

The type of transaction Ray Kinsella has completed is a Point-of-sale Transaction. Point of Sale Transaction

All federally-chartered banks must participate in the FDIC program.

True

The use of an ATM requires a Personal Identification Number (PIN).

True