Personal Finance Chapter i

Saving funds for future use is necessary for financial:

safely

a ________ and loan association traditionally specializes in savings accounts and mortgage loans.

savings

If there is a shortage of cash, you will have two basic choices to cope with the situation: ________ from a savings or ________ .

spend borrow

A credit union is owned by:

the members

Which of the following are considered demand deposits?

Checking accounts Payment accounts

Which of the following services do savings and loans offer?

Mortgages Savings accounts

What is the main function of a finance company?

To make loans to consumers and small businesses

Another name for an asset management account is:

a cash management account

The main purpose of life insurance is to provide financial security for

children

a _____ union is a user-owned, nonprofit, financial institution that is organized for the benefit of its members.

credit

Mutual savings banks are owned by

depositor

Banks may "call" CDs if the interest rates

fall

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

money market account -certificate of deposit

A ______ is a legal agreement that provides for the management and control of assets by one party for the benefit of another.

trust

Check-cashing outlets offer the following services:

utility bill payments. electronic tax filing. money orders.

While traditional financial institutions offer online banking services, FinTechs, neobanks, and Blank______ play a significant role in online and mobile banking.

web-only

If a card issuer uses the same rules as lost or stolen debit cards, what is the maximum amount of liability for lost or stolen credit cards reported within 60 days?

$50

EE bonds must be held for a minimum of _____ year(s)

1

What is not typically a basic concern of a financial services customer?

Does the bank offer tax preparation services?

Check-cashing outlets do not offer which of the following services?

Payday loans

Which of the following is a service not offered by savings and loans?

Trip planning services

A current shortage of cash can be overcome by liquidating savings or borrowing.

True

Another name for an automated teller machine (ATM) is:

a cash machine

The rent-to-own process is:

a lease and buy option

Payday loans are typically used by people who:

are driven into debt due to poor financial decisions are trapped by debts run up debt by free spending

Using savings for paying _________ expenses is one of the mistakes people make when managing current cash needs.

current

Financial services include all of the following except:

debt counseling.

Credit alternatives are only for people of limited resources.

false

There is no penalty on redemption of Series EE bonds if redeemed after _____ years.

five

Drawbacks of money market accounts include:

imposing fees for low balances. having a higher minimum balance requirement.

Which of the following is not a common fee associated with prepaid debit cards?

inflation fee

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

True

deposits include checking accounts and other payment methods.

demand

Drawbacks of CD (certificate of deposit) accounts include:

having an early withdrawal penalty. requiring a minimum deposit.

For callable CDs, banks may "call" these instruments if:

interest rates drop

Debit cards are different from credit cards because:

you are spending your own money when you use a debit card

Which services do finance companies typically not offer?

Checking accounts with unlimited withdrawals Frequent access to cash machines Savings accounts with high interest rates

What type of financial institution typically does not have federal deposit insurance?

Investment companies

A major concern with prepaid debit cards is which of the following?

The high fees often charged

Financial services can change due to such factors as changing interest rates and rising consumer prices.

True

Which of the following is true regarding credit cards versus debit cards?

With credit cards, you are borrowing money but you are spending your own money with debit cards.

A certificate of _______ is a savings plan requiring that a certain amount be left on deposit for a stated time period.

deposit

Benefits of money market accounts include:

having a favorable interest rate. carrying deposit insurance.

A drawback of U.S. savings bonds is:

lower rates for early redemption

Financial services are now offered by:

-insurance companies -credit card -companies investment brokers

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

Commercial

A debit or cash card is a plastic access card that activates ATM transactions and may also be used to make purchases.

True

High-cost financial services typically do not include:

credit unions. mutual savings banks.

a ______ CD has earnings based on the performance of the stock

index

Which services allow you to transfer money to pay necessary expense and for other business activities?

payment

Financial services will usually not be affected by:

stock prices.

Which type of institution does not offer financial services?

Catering company

This type of card is a plastic access card used in computerized banking transactions.

Debit card

Your maximum liability for a lost or stolen debit card is $500 if the card issuer uses the same rules that apply to lost or stolen credit cards.

False

High-cost financial services typically include:

pawnshops. rent-to-own centers. payday loans. check-cashing outlets.

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

Savings and loans Credit unions Commercial banks

Banking online and electronic banking have expanded in recent years.

True

In the context of categories of financial services, payment services allow you to pay expenses and for other business activities.

True

Concerns of online banking include:

overspending due to ease of access. security violations. online scams.

Non-deposit institutions mentioned in the text include:

-investment companies -brokerage firms -life insurance companies

Which of the following is not true regarding ATMs?

All financial institutions charge the same ATM fees

To minimize ATM fees, you should do which of the following?

Compare several financial institutions

Asset management accounts are a collection of financial services offered for a single fee.

True

Some of the basic concerns of a financial services customer when comparing financial services include which of the following?

Will I be able to borrow money when I need it? How can I minimize costs for checking and savings? Where can I get the best return on savings

An automatic teller machine (ATM) is also called as a(n) " ______ machine

cash

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

commercial

Benefits of online banking include:

convenience for transactions e-mail notices for due dates time savings

a ________ union is a user-owned, nonprofit, financial institution that is organized for the benefit of its members.

credit

Benefits of U.S. savings bonds include:

government guarantee, low minimum deposit, and exemption from state and local taxes

Credit alternatives to be used for borrowing if an individual needs more cash than is available include:

personal loans. credit card cash advances.

Payday loans are typically used by people who:

are trapped by debts

Financial services include:

borrowing payment services financial planning savings insurance investments

Which of the following is not true regarding ATM's?

All financial institutions charge the same ATM fees

Which of the following institutions offer financial services?

Credit card companies Mortgage companies Investment companies Life insurance companies Finance companies

A challenge of rising-rate CDs is that they have a high interest rate at the ______ of the term (maybe only for a couple of months) Multiple choice question.

END

What types of financial institutions have federal deposit insurance?

Savings and loans Credit unions Commercial banks

What is the main purpose of life insurance?

To provide financial security for dependents.

A challenge of rising-rate CDs includes:

high interest rates at end of the term (maybe only for a couple of months).

Other financial services include insurance, ______, tax assistance, and financial planning.

investments

A ______ fund is an account used for savings offered by investment companies.

money market

Deposit institutions would not include a:

brokerage firm.

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

insurance companies.

The ______ process is defined as a store that leases products to consumers who will eventually keep the items after completing a certain amount of payments.

rent-to-own

Historically, savings and loans specialized in:

savings accounts and mortgage loans

A money market fund is a:

savings instrument

Benefits of CDs (certificates of deposit) include:

carrying deposit insurance. having a guaranteed rate of return.

a _______ savings bank is owned by depositors and specializes in savings and mortgages.

mutual

Which services do mortgage companies typically not offer?

Checking accounts with unlimited withdrawals Frequent access to cash machines Savings accounts with high interest rates

Which of the following is not an example of a type of financial service that is focused on payment services? In other words, which of the following does not involve payment of money on your part?

Regular savings account

A regular savings account usually does not have:

a high balance requirement. a high rate of interest. overdraft protection.

Money market accounts are insured by federal deposit insurance, whereas money market mutual _____ are not.

fund

Apart from basic financial services, additional services provided by banks and other financial institutions include:

investments. financial planning. tax assistance. insurance.

Common mistakes made when managing current cash needs include:

overspending. leaving funds in low-interest accounts too long. lacking sufficient liquid assets to pay current bills. using savings for current expenses.

A trust is a legal agreement that:

provides control of assets. enables management of assets. is created by one party for benefit of another.

Life insurance has other uses, including:

providing for dependents investment options savings alternatives

Benefits of CDs (certificates of deposit) include:

requiring a minimum deposit. having an early withdrawal penalty.

What is the main function of a mortgage company?

To provide loans to purchase homes

A regular savings account usually offers:

a low or no minimum balance requirement

Indexed CDs have rates that vary with the:

stock market