Personal Finance Chapter 3

A _____ draft account is an interest-bearing checking account at a credit union.

Blank 1: share or shared

Commercial banks are in business to make money for their

Blank 1: shareholders or stockholders

Which of the following deposit-type institutions serve as financial intermediaries?

Credit unions Savings and loans Commercial banks

A regular savings account usually offers:

a safe place to put your money

A stop payment order is designed to:

avoid payment of a specific check

All of the following are deposit-type institutions that serve as financial intermediaries except:

insurance companies

If you bought a house for $100,000 that could be sold for $120,000 right now and you have a mortgage for $70,000, how much home equity would you have?

$50,000 Reason: 120,000-70,000

True or false: Prepaid tuition plans lock in tuition prices.

True

If you bought a house for $100,000 that could be sold for $120,000 right now and you have a mortgage for $70,000, how much home equity would you have?

$50,000

Which deposit-type institution is user-owned, nonprofit, cooperative organization?

Credit union

Which life stage are people typically making the most money in their career?

Empty nest

True or False: A 529 plan is a type of retirement account.

False

True or false: Debit cards allow you to wait to deduct the amounts from your account.

False

A savings account provides a safe storage for funds to be used in the future.

True

True or False: Savings institutions are for-profit and are usually locally owned.

True

On an interest-bearing checking account, always compare the interest earned with:

any service fees

Share draft accounts at a credit union:

are interest bearing

A savings plan that requires a certain amount of money to be left for a specified amount of time is a:

certificate of deposit

Which is considered a demand deposit:

checking accounts

Common payment choices include:

checks credit cards cash debit cards

Share accounts are typically offered by:

credit unions

Drawbacks of CD (certificate of deposit) accounts include:

early withdrawal penalty minimum deposit

Benefits of CD (certificate of deposit) accounts include:

guaranteed rate of return

If you have equity in your home (your home is worth more than you owe) then you can borrow money in the form of a ____.

home equity line of credit

During the independent life stage, you should consider adding which of the following:

individual retirement account checking account

Comparing your checkbook balance to the bank balance is called:

reconciliation

Share accounts are the same as:

regular savings/checking accounts

Online payments do not include:

smart cards

If you see a teller in person at a bank you might be charged a ____ fee.

teller

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

their balance

The steps in writing a check include:

writing the amount of the check in words signing the check writing the name of the person receiving the funds noting the reason for the payment recording the amount of the check in numerals recording the date

The bank balance of the checking account is $500, the current balance in the checkbook is $325, bank fees are $25, and outstanding checks are the only additional item. How much are the outstanding checks?

$200

The bank balance of the checking account is $500, the current balance in the checkbook is $325, bank fees are $25, and outstanding checks are the only additional item. How much are the outstanding checks?

$200 Reason: $500 - 325 + 25 = $200

Which of the following are types of mortgage loans:

Adjustable-rate Balloon payment Fixed-rate

Which of the following are types of mortgage loans:

Balloon payment Fixed-rate Adjustable-rate

______ banks are organized as corporations, with investors contributing the capital for operations.

Blank 1: Commercial

A specific stop payment order given to a bank is designed to:

avoid paying a specific check that is lost or stolen Reason: A specific stop payment order given to a bank is designed to avoid paying a specific check that is lost or stolen. If several checks are lost or stolen it might be cheaper to just open a new account and close the existing one.

A savings plan that requires a certain amount of money to be left for a stated time period to earn a specific rate of return and imposes penalty for early withdrawal is called a:

certificate of deposit

Overdraft protection is designed to:

cover underfunded checks

A 401k plan is a retirement plan offered by __________.

employers

Common choices for making payments include all of the following except:

installment loans

_____ deposits include checking accounts and other payment methods.

Blank 1: Demand or Checkable

A _____ bank is a financial institution that offers a full range of services.

Blank 1: commercial

An individual _____ arrangement (IRA) allows you to invest money now and receive favorable tax treatment on the investment gains.

Blank 1: retirement

Drawbacks of CD (certificate of deposit) accounts include:

minimum deposit early withdrawal penalty