Fin Lit Chapter 5
based on the following information what amount would be subtracted from the bank balance side of the checking account reconciliation? service charge is $12 outstanding checks is $145 interest is $3.50 deposit in transit $80
$145.00
your bank statement shows a balance of 670 your checkbook shows a balance of 462 you earned 2$ of interest and a service charge of 4$ there are no outstanding deposits what is the amount of outstanding checks
210
a $200 savings account that earns $13 interest in a year has a yield of ____________ percent
6.50
Which cd starts with a higher rate has a long time to maturity and can be retired by the bank after a set time period
Callable
This type of financial institution is known to frequently offer the lowest Loan rates
Credit union
A higher rate of return would result from a savings account that had which if the following compounding frequencies
Daily
Which of the following is a drawback of a money market fund from an investment company
Lack of fdic insurance
Which of the following represent the use of credit
Mortgage
Purchasing a new cd upon maturity of the current cd is commonly referred to as
Rolling over
T or F: Credit unions frequently offer lower loan rates than other financial instituions
T
comparison of earnings for different savings plans can best be accomplished using the
annual percentage yield
A person borrows $200 from a payday loan company and pays $10 interest for two weeks this would result in an annual interest rate of approximately ____ percent ignore compounding
130
The federal deposit insurance corporation insures deposits up to $250000 per person per financial institution Suzanne has 200000 in and individual account and 424000 in a joint account how much is. Not covered
162000
Series EE bonds continue to earn interest for how many years
30
An asset management account typically offers the following service
All of these
What is the term used to refer to the rate financial institutions Are charged to. Borrow funds from federal reserve banks
Discount rate
Which type of organization does not provide home mortgages
Employee credit unions
T or F: a regular savings account usually offers a higher rate of return to savers than other savings plan
F
Which cd pays earnings based on the stock market
Indexed
What type of account would you expect to provide the poorest yield
Passbook savings account
Which of the following institutions makes loans based on the value of tangibles possessions such as jewelry and collectibles
Pawn shop
Which one of the following financial service providers should be avoided because the loans they offer are considered expensive and high risk
Pawn shop
The face value of a series Ee savings bond refers to the
Redemption value at maturity
This type of savings plan is idually considered to be very liquid
Regular savings account
T or F: All in one accounts may be used by financial institutions to simplify the maze of financial service s and to attract customers
T
T or F: Usisn a debit card is basically the same as writing a check
T
T or F: an asset management account combines several financial services ofr a single fee
T
True or False: A free checking account with a minimum balance of 500 has an opportunity cost of lost interest
T
True or False: Higher returns on savings will usually result in less liquidity
True
Which law requires banks and other financial institutions to disclose fees the annual percentage yield and the other terms and conditions on checking and savings accounts
Truth in savings law
Which of the following is a way to reduce atm surcharges
Withdraw larger amounts rather than making multiple smaller withdrawals
a _____________ endorsement would be used if a person is presenting a check in order to obtain cash
blank
an all purpose account that provides sseveral services is an
asset management account
which of the following is a deposit instituion
credit union
checking accounts are frequently referred to as __________ deposits
demand
the profits from a mutual savings bank go to the
depositors
what is the rate that the federal reserve charges banks for loans called
discount rate
joan zemke expects interet rates to decline over the next few months. to maximize her earnings she should use a
five year certificate of deposit
a certificate of deposit usually has
limited liquidity
an advantage credit unions may have over other financial institutions is
low cost personal loans
a trust has the purpose of
managing the assets of a person
what is the rate an individual will pay for borrowing to purchase a new home called
mortgage rate
the major service offered by investment companies is
mutual funds
time deposits are another name for
savings accounts
Which cd attempts to attract savers with gifts or special rates
Promotional
T or F: Demand deposits are another term for checking accounts
T
T or F: Savings and loan associations offer mortgages
T
T or F: The money market fund offered by investment companies is a relatively liquid financial service
T
which of the following statements regarding debit and redit card liability is correct
a debit card carrier more risk of loss to the cardholder
david wynn gets a personal loan from his credit union for $1000 david will make monthly payments $85.15 over the next year to repay the laon. whay type of financial service is david using
borrowing service
a saver will usually earn the highest rate with which one of the following types of savings plans
certificate of deposit
a personal check wiith guaranteed payment is called a
certified check
traditionally the greatest variety of financial services is offered by
commercial banks
the federal deposit insurance corporation provides deposit insurance for
commercial banks and savings and loan associations
in recent years membership in credit unions has
continued to increase
the business hours and location of a financial instituition refer to the _______________ factor of selecting a financial institution
convenience
savings compounded _______________ would have the highest effective yield
daily
t or f a certificate of deposit is usually considered to be very liquid
f
t or f the more frequent the compounding the less a person will earn on a savings account
f
t or f when preparing a bank reconciliation interest earned on your checking account is added to the bnk statement balance
f
which is an advantage of investing in series EE US savings bonds
interest is not taxed by the federal government unti lthe bond is cashed
which of the following is not a deposit instituion
life insurance company
which one of the following savings plans is not covered by federal deposit insurance
money market fund with an investment company
which of the following institutions is organized primarily to provide loans to purchase homes
mortgage company
to avoid high fees for loans, a person should avoid borrowing from a
pawn shop
neil guest writes a check to pay for day care for his son. what type of financial is neil using
payment service
what is the rate tha commercial banks charge large corporations for loans called
prime rate
the truth in savings law requires that financial institutions
report annual percentage yield on savings
a limit on the amount you must keep on deposit in order to earn interest or avoid a service charge is an example of a
restriction
a ____________ endorsement is especially useful when you are depositing checks
restrictive
the storage of funds for future use is a purpose of ___________ services
savings
nate rogers deposited $5000 in a 3 year bank CD which pays six percent interest. What type of financial service is nate using
savings service
a savings account at a credit union is called a _______________________ account
share
when interest rates are rising, a person would be best served by
short term savings instruments
when preparing a bank reconcilitiation outstanding checks hsould be
subtracted from the bank statement balance
in the bank reconciliation process service fees should be
subtracted from the checkbook balance
t or f a restrictive endorsement will usually include the words for deposit only
t
t or f the most frequent users of payday laons are workers who have become trapped by debts or poor financial decisions
t
the purpose of a special endorsement is to
transfer a check to another person
the purpose of a debit card is to
transfer money electronically
what is the term used to refer to the yield on a long term bond issuewd by the federal government
treasury bond rate
tim gleason has set up a legal agreement that allows the first state bank of orlando to manage funds set aside for his daughter's college eduation what type of financial service is tim using
trust service
which of the following is an effective strategy in times of falling interest rates?
use short term loans to take advantage of lower rates when you refinance the loans
the expedited funds availability act requires that funds be available to depositors
within 2 days for local checks
the rate of return on a savings account is also referred to as
yield
An estimated ______\ people in the us are unbanked using a variety of alternative services rather than having a bank account
17 million
Determine the rate of return in a savings account in which you deposited $300 and earned $6 in interest after one year
2%
A savings account earns 4% if the saver is in a 28% tax bracket the after tax savings rate of return would be ________%
2.88
A pawnshop with a monthly interest rate of 2.75% would have an annual interest rate of _______ percent. Ignore compounding
33.00
Sue deposited 1000 in an account paying 3% interest the inflation is 5% what is the buying power of the account after 1 year
980
Which is a cd that offers a higher rate for every six months you are invested
Bump up
What type of account would be considered the most liquid
Checking account
Demand deposits are another term for
Checking accounts
Which of the following types of financial institution provide federal deposit insurance coverage
Commercial banks credit unions and savings and loans
