LUOA Personal Finance Module 2
If you borrow $15,000.00 for 5 years at 5% interest, the principle is...
$15,000.00
The present limit for insuring any account at participating banks through the FDIC is...
$250,000.00
Alexander Hamilton was the first Secretary of ________________________ . He believed in a strong federal government with a centralized ________________________ . His critics attacked Hamilton by stating that a central government run bank would be ______________________________ . The first Bank of the United States was a ____________________ institution and was owned by a majority (70%) of __________________ investors.
-the Treasury -banking system -a monopoly and unconstitutional -private -foreign
What information is typically on a personal check?
-the account and routing numbers -the institution name and address -unique check number for each check -the account holder(s) name(s)
The Great Depression began with the stock market crash of...
1929
Which of the following lists of investment accounts are considered tax deferred plans of some kind?
401(k), 403(b), 457, IRA
The first Secretary of the Treasury of the United States was
Alexander Hamilton
The formula for calculating simple interest is
I = prt
What does the Bible say about work and retirement?
Man will have to work until his time of death.
For each type of investment or savings options listed choose either taxed or tax deferred depending on typical government and IRS regulations.
ONLINE (2.8.1)
Match up the tax deferred plan to the people who are able to participate in the different plans.
ONLINE (2.8.1)
Most ATM's that accept debit cards for transactions also require you to enter your PIN as well. What is a PIN?
Personal Identification Number
A debit card purchase is much like a credit card purchase except...
a debit card purchase transfers money directly from your checking or savings account
ATM fee
a fee charged when you use an ATM out of your bank's network
wire transfer fee
a fee charged when you wire money from your account to someone else's account
Tax deferred accounts...
are taxed later when a person has retired and is in a lower tax bracket
Most people participate in tax deferred savings and investments accounts for...
retirement and travel
When you want to know the interest income you will receive on an investment, you can calculate the simple interest by using the formula, i = prt, where i is the _______________________ , p is the ______________ , r is the __________________ and t is the _________________ . The rate is always expressed as a ________________ and the time is always expressed in _________________
- interest you earn -principle -interest rate -time -decimal fraction -years
Choose all statements that describe a "thrift."
-a financial institution -mutually held corporations with decisions made by depositors and borrowers -limited by law as to the amount of assets that can be used for commercial loans -also known as a savings and loans association -specializes in making money off mortgages and personal loans to its members
As a person applying for a new account what should you do to make sure you are ready to approach a financial institution to open an account?
-a good knowledge of the responsibilities of an account holder -know how to balance a passbook or checkbook -proper identification -money or a check to make an initial deposit
What forms or account records are associated with a checking account?
-check register -account statements -deposit slips -checks
Financial institutions do not offer their services for free. You may have a free checking account, and you may receive interest on the money you have in a savings account, CD or money market account; however, the institution will enforce fees for a variety of reasons. Choose all charges that can be levied against an account owner that are discussed in the lesson.
-overdraft fee -check cashing fee when cashing a check from a different bank -ATM transaction fee -non-sufficient funds fee -minimum balance fee -monthly or annual account fees -membership fees at credit unions
FDIC is a banking acronym for which the letters stand for...
Federal Deposit Insurance Corporation
What is the FDIC?
The Federal Deposit Insurance Corporation is an independent federal agency created in 1933 to promote public confidence and stability in the nation's banking system.
What event in American history had a profound affect on modern day banking regulations and policy?
The Great Depression
minimum balance fee
a fee charged when your account goes below a certain minimum balance
membership fee
a fee that a credit union charges its members to open an account
When you buy stock in a company, it is like being...
a part owner
Simple interest is interest based on...
a yearly rate and calculated once a year
Where are the safest places to keep your money until you need it for a purchase or other reasons?
banks, credit unions, and thrift
People enjoy using online banking because it is...
convenient and saves time
A direct withdrawal is an electronic transaction similar to direct deposit except a direct deposit...
deposits money into your account while a direct withdrawal takes money out of your account to pay someone else
Building a good relationship with a financial institution can help an individual...
establish a good credit rating
In the 1970's under the Carter administration, the United States was plagued with...
high inflation and high unemployment
The "Rule of 72" is an investment principle that...
is a way of estimating your interest earnings over time
When you buy bonds, it is more like you being a...
lender
Compound interest is interest that is a result of...
making interest on interest
When using your personal computer to carry out banking transactions it is important that no one else knows your...
passwords
Before a bank completes processing your account, they may...
run a credit report
Once someone opens an account at a financial institution, who is responsible for keeping up with the account balance, any fees deducted from the account, and any deposits or withdrawals?
the person who opens/owns the account
When you pay for your purchases at a store and you use a check, why do they sometimes give you your check back instead of keeping it?
the store used an EFT system to automatically withdraw the money from your account
While in a financial institution that is federally insured deposited money is safe from...
theft, loss, and fire
Electronic banking or electronic funds transfer can include which of the following? choose all that apply
-use your personal computer to transfer money from your checking account to your savings account -direct deposit of your payroll to your bank account -automatic insurance bill draft off your account monthly -electronic check conversion at a store for payment for merchandise -ATM withdrawals -phone activated transfer from one account to another
Choose all the descriptors that tell about the functions and policies related to banks.
-regulated by the government -lends money to individuals and invests in capital markets to earn interest -have to abide by guidelines regarding capital holdings and ratios for lending money -for profit corporations charging fees and interest -accepts deposits to accounts
What are some steps a bank may take or do before allowing someone to open an account with the bank? choose all appropriate answers
-run a credit report on you -see your passport if you a citizen of another country -verify your identity -review your use or history of previous checking accounts
You can use your debit card to make purchases...(choose all correct responses)
-over the phone -in person at a store -online -at a gas pump that accepts debit cards
401(k) plan - tax deferred money market account - taxed regular savings account - taxed stock dividends or stock splits - taxed bond dividends or payments - taxed 403(b) plan - tax deferred IRA account - tax deferred 457 plan - tax deferred certificates of deposit - taxed
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The Federal Reserve System was established in ____________ and was the ___________ attempt by the United States government to establish a central banking system. Unlike its two other predecessors, the Federal Reserve System was not limited to a _______________ by the passing of the McFadden Act of 1927. The Banking Act of 1933 established the ________________________________________ to protect the deposits of consumers against bank failure. ________________ financial institutions are members of the Federal Reserve System today.
-1913 -third -20 year charter -Federal Deposit Insurance Corporation -Some
Online financial services associated with a bank, credit union or thrift may include which of the following services? select all that apply
-Certificate of Deposit (CD) -checking account -loans -savings account -IRA (Individual Retirement Account) -bill paying options -credit lines -debit cards
A bank may need what three items or information from you in order to verify your identity? choose the three best answers
-Individual Taxpayer Identification Number -your Social Security number -a photo identification (like a driver's license)
Even though we should be careful with our money and valuables, what does the Bible say about the things of this world and wealth?
-Jesus said to the rich young ruler, "You lack one thing: go, sell all that you have and give to the poor, and you will have treasure in heaven; and come, follow me." -Lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. -Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal. -For where your treasure is, there your heart will be also.
Financial institutions may charge certain operational fees to help defray the costs of doing business. Choose the fees listed below that are common to financial institutions.
-overdraft fees -transaction fees -minimum balance fees -nonsufficient funds fees -returned check fees
Because a bank is federally regulated, what are some of the guidelines used to make sure banks comply to the regulations? Choose all that apply.
-a bank is insured by the FDIC and must follow its guidelines in order for its depositors to be covered against loss -a bank has to abide by guidelines set up by the Federal Reserve System -a bank is regulated to make sure it does not lend more money than it can safely cover with assets and depositors' monies -a bank has to maintain certain ratios related to how much it lends compared to its capital assets -a bank has to have a minimum amount of capital holdings to do business
Online financial institutions offer all services a "brick and mortar" institutions offer EXCEPT:
-a teller working at a walk-up office -branch manager offices to sit down and discuss your account
There are several reasons why people should use a financial institution to help them with managing their money. Choose all valid reasons to have an account with a financial institution.
-allows quick access to your money -insured against losses up to federal maximum amount -cheaper than other possible alternatives -possibility of renting a safe deposit box to store valuable documents and other items -provides a safe place for money -helps with establishing credit and getting loans
What information should you record in your check register? Choose all applicable answers.
-amount of all written checks -check numbers of written checks -account balance -dates that go with any transactions -amount of any deposits
The FDIC insures different kinds of accounts at participating financial institutions. Choose all of the accounts or investing programs that are covered by the FDIC. Check the FDIC website https://www.fdic.gov/edie/ (Links to an external site.) if you need help.
-certificate of deposits (CD's) -statement savings accounts -checking accounts -Money Market Deposit Acounts -passbook savings accounts
What are the three main types of accepted financial institutions that are used extensively in today's financial market?
-credit unions -banks -thrifts or saving and loans associations
What four responsibilities does the Federal Reserve System have that were also the responsibilities of its predecessors, the First and Second Bank of the United States? Choose all correct answers.
-hold deposits for the federal government -receive revenues for the federal government -act as the federal government's fiscal agent -making payments for the federal government
Choose all statements that describe a "bank."
-invests in capital markets to make money for the institution as well as its customers -accepts deposits to accounts -regulated by the government -a financial institution -charges fees and interest to pay administrators and stock holders
Choose all the descriptors that tell about the functions and policies related to credit unions.
-member owned and governed -profits and surpluses used to pay administrative costs and member service -offers financial services similar to banks, but to members only -not for profit -provides services to members only
Choose all statements that describe a "credit union."
-not for profit -a financial institution -profits and surpluses go to pay administrators and for services for members -member owned -provides services only to its members -accepts deposits to accounts like a bank
A transaction fee can be assessed against an account for the following transactions: choose all possible answers
-withdrawals over the maximum allowed -checks cashed off other bank accounts -transfers to other accounts -copies of bank statements -deposits over the maximum number allowed
Most financial institutions offer ATM or debit cards that allow you to withdraw funds from your account at places other than your institution. What is an ATM?
Automated Teller Machine
The Banking Act of 1933 established the FDIC. The FDIC is the...
Federal Deposit Insurance Corporation
Some financial institutions especially banks are members of the...
Federal Reserve System
Since being created in 1933, how much money have depositors that have accounts with FDIC member banks lost because of banks failing?
No depositor has ever lost a penny of insured deposits since the FDIC was created in 1933.
The Consumer Credit Protection Act established provisions requiring lenders to provide information about credit terms and the cost of credit. These are known as...
The Truth in Lending provisions
Financial institutions are safe places to keep your money because...
They are regulated by federal guidelines and are in business to make money for its depositors, members and/or stock holders.
Most financial institutions offer ATM or debit cards that allow you to withdraw funds from your account at places other than your institution. These are similar to credit cards except...
a debit card drafts directly from your checking or savings account
returned check fee
a fee charged when you deposit a check from someone that is returned because the check has insufficient funds to cover the check
transaction fee
a fee charged when you exceed a set number of transactions in a month for deposits or withdrawals
overdraft fee
a fee charged when you write a check and your account does not have the money to cover the check
The first thing you need to do to open a new financial account is to go through a process called...
account verification
Interest is money that us earned or paid based on...
an agreed upon interest rate that is expressed as a percent
What are the three main types of financial institutions available for helping you manage you finances?
banks, credit unions, and thrifts
What is the source of funding used by the FDIC to pay insured depositors of a failed bank?
premiums already paid by insured banks and interest earnings on its investment portfolio of U.S. Treasury securities
To help with getting the United States economy to improve after the stock market crash of 1929, President Franklin Roosevelt supported a plan referred to as...
the "New Deal"
When you require a wire transfer of money from your account to another person, your bank may charge you a...
wire transfer fee
Can a financial institution decide to close your account once it is open?
yes, if you do not follow the rules presented to you upon opening your account
