Ch 4 Hw
________________________ is a check that you have written but has not been presented to the bank for payment.
An outstanding check
A payday loan company charges 6 percent interest for a two-week period. What would be the annual interest rate from that company? (Assume an even 52 weeks per year. Enter your answer as a whole percent.)
Annual interest rate 156%
What would be the annual percentage yield for a savings account that earned $56 in interest on $800 over the past 365 days? (Enter your answer as a whole percent.)
Annual percentage yield 7%
According to the video, which of the following is mentioned as a tip or trick regarding high-cost financial services?
Ask questions, read the fine print, and understand the risks involved with the high-cost loans, Determine the annual interest rate for a prospective loan, and Compare the interest rate to the average interest rate for loans from a bank or similar financial institution.
According to the video, which is not a fee that is mentioned for pre-paid cards?
Cash deposit fee
According to the video, what is the most common reason that the adjusted bank balance and your checkbook balance don't agree?
Either you or the bank made a mistake.
An ATM with a service fee of $2 is used by a person 100 times in a year. What would be the future value in 10 years (use a 2 percent rate) of the annual amount paid in ATM fees? Use Exhibit 1-B. (Round discount factor to 3 decimal places and final answer to 2 decimal places.)
Future value $2,190
What is the annual opportunity cost of a checking account that requires a $300 minimum balance to avoid service charges? Assume an interest rate of 3 percent. (Input the amount as a positive value.)
Opportunity cost $9
According to the video, which is one of the main advantages of pre-paid cards versus cash?
Pre-paid cards are more secure, easier to track the expenses, and loyalty points are available with certain stores.
According to the video, what is step 3 in the bank reconciliation process for individuals?
Subtract any bank fees, ATM withdrawals, automatic payments, and other charges made by the bank that have not been recorded in your checkbook.
Heather is currently in a 15% tax bracket and has a 3.4% savings rate of return. What is her after-tax savings rate of return?
2.89%
Marsha invests $1,350 and earns a $105 return at the end of one year. What is her annual percentage yield (APY)?
7.78% APY = 100(Interest/Principal) = 100(105/1,350) = 7.78%
According to the video, which of the following is not mentioned as a financing opportunity for the unbanked?
Corporate Bonds
Will is currently in a 22% tax bracket and has a 7.2% savings rate of return. What is his after-tax savings rate of return?
Step 1: Determine your top (marginal) tax rate = 22% Step 2: Subtract your tax rate from 1.0 = 1.0 - 0.22 = 0.78 Step 3: Multiply the yield on your savings account with step 2 answer. = 0.072 x 0.78 = 5.62%
___________________ individuals are those who have bank accounts, but still use high-cost financial service companies.
Underbanked
Janie has a joint account with her mother with a balance of $562,000. Based on $250,000 of Federal Deposit Insurance Corporation coverage, what amount of Janie's savings would not be covered by deposit insurance?
Uninsured amount $31,000
According to the video, all of the following are advantages of pre-paid cards, except:
Unlimited purchasing
What would be the net annual cost of the following checking accounts? a. Monthly fee, $3.75; processing fee, 25 cents per check; checks written, an average of 14 a month. (Do not round intermediate calculations. Input the amount as a positive value.) b. Interest earnings of 4 percent with a $500 minimum balance; average monthly balance, $600; monthly service charge of $15 for falling below the minimum balance, which occurs three times a year (no interest earned in these months). (Round your answer to 2 decimal places. Do not round intermediate calculations. Input the amount as a positive value.)
a) Net annual cost $87 b) Net annual cost $27