finance chpt 5-8

when comparing savings account rates of return you should choose one that

beats the rate of inflation

use a debit card to

-avoid an annual fee -avoid bills to be paid in the future -avoid possible interest charges

what types of financial institutions have federal deposit insurance through FDIC

-commercial banks -savings and loans

common trade-offs for financial services include

-convenience -no-fee services -liquidity

where can you purchase money orders

-financial institutions -post offices -stores

types of certificates of deposit

-liquid CD -zero-coupon CD -callable CD -indexed CD

common mistakes when managing current cash needs

-overspending -using savings for current purchases -lacking sufficient funds

drawbacks of money market accounts

-some institutions charging for low balances -higher minimum balance required

you are in the 25% tax bracket, the before-tax savings rate of return is 12%, the after-tax yield on the savings account is

9%

a regular savings account usually offers

a low or no minimum balance requirement

the savings alternative that offers more liquidity is

money market accounts

what is a money market account

a savings account that has a higher interest rate than a regular savings account great place to keep your emergency fund

all of the following serve as financial intermediates except

insurance companies

share draft accounts at a credit union are

interest bearing

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

share

online payments do not include

smart cards

a regular savings account usually does not have

-a high balance requirement -difficulty in withdrawal -a high rate of interest

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

their balance

types of federal bonds

-I -EE

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

certificate of deposit

what type of financial institution typically does not have federal depoist insurance

investment companies

certified checks, cashier's checks, and money orders allow you to make a payment that a recipient knows is

valid