Chapter 4

Low interest rates create economic distortions, especially when real, inflation-adjusted interest rates are positive.

False. Low interest rates create economic distortions, especially when real, inflation-adjusted interest rates are negative. Such rates discourage savings and discourage the reduction of overall debt levels in the economy.

A married couple can deposit up to _____ in several accounts at one bank and still be fully insured. A. $1,500,000 B. $500,000 C. $750,000 D. $250,000

A. $1,500,000 A married couple can consider their individual accounts, joint accounts, and separate trust or self-directed retirement accounts as separate legal entities for insurance purposes.

The Federal Deposit Insurance Corporation (FDIC) covers stocks, bonds, and mutual funds purchased at banks. True False

False. Deposit insurance covers only deposit accounts, including certificates of deposit (CDs). Securities purchased through a bank are not protected by any form of deposit insurance.

With low interest rates, savers have begun to invest in _____. A. Treasury bonds B. stocks C. certificates of deposit D. Treasury bills

B. Stocks Low interest rates encourage investors to search for investments that pay income.

Which of the following is an example of a nondepository financial institution? A. Credit unions B.Stock brokerage firms C. Commercial banks D. Savings banks

B.Stock brokerage firms Nondepository financial institutions offer banking services but do not accept deposits like traditional banks.

To purchase a $100 Series EE bond, you will need just: A. $100. B. $25 C. $50. D. $75.

C. $50. The purchase price of a Series EE bond is a uniform 50 percent of the face amount.

If you fail to notify your bank within _____of an error made on an electronic funds transfer, the bank has no obligation under federal law to conduct an investigation or return your money. A. 25 days B. 30 days C. 60 days D. 40 days

C. 60 days

Money market mutual funds are an example of _____. A. noncurrent assets B. fixed assets C. liquid assets D. intangible assets

C. Liquid assets Money market mutual funds are short-term investments that mature within a year.

Trust services of a bank provide: A. online banking and bill payment services. B. phone banking and account reconciliation services. C. investment and estate planning advice. D. a safe place to store jewelry and property documents.

C. investment and estate planning advice. Trust services manage and administer the funds in a trust account or from an estate.

Which of the following is true of asset management accounts? A. Fixed annual fees and account charges on deposit account B. Limited free checking of available balance C. Borrowing and investing facility unavailable to accountholders D. Sweeping of excess balances into money market deposit account (MMMF) E. Deposits are protected by the Securities Investor Protection Corporation (SIPC)

E. Deposits are protected by the Securities Investor Protection Corporation (SIPC) Asset management accounts are protected by the Securities Investor Protection Corporation and the firm's private insurance.