Chapter 5

Will is currently in a 22% tax bracket and has a 7.2% savings rate of return. What is his after-tax savings rate of return?

5.62%

Will wants to open an account with $500 that will allow him easy access to his funds (by checks, ATMs, or debit card usage) from many locations. He also wants to earn at least a low interest rate and have federal deposit insurance. What kind of account should he open?

An interest-earning checking account

which is not a fee that is mentioned for pre-paid cards?

Cash deposit fee

which is one of the main advantages of pre-paid cards versus cash?

Pre-paid cards are considered more secure.

Brenda lost her debit card. When she realized it was gone, her account had $173 in unauthorized charges. She notified her financial institution within two days. How much is she potentially liable for?

$50.

Heather is currently in a 15% tax bracket and has a 3.4% savings rate of return. What is her after-tax savings rate of return?

2.89%

Marsha invests $1,350 and earns a $105 return at the end of one year. What is her annual percentage yield (APY)?

7.78%

Quentin wants his retail purchases to be deducted directly from his checking account. Which of the following tools should he use?

A debit card.

___________________ individuals are those who have bank accounts, but still use high-cost financial service companies.

Underbanked

all of the following are advantages of pre-paid cards, except:

Unlimited purchasing

A drawback of a regular savings account is

low rate of return

The insurance coverage provided by the FDIC for a savings account is ________ per depositor per insured financial institution.

$250,000

Anual Percentage Yield (APY) formula

100 (interest/principal)

what is the most common reason that the adjusted bank balance and your checkbook balance don't agree?

Either you or the bank made a mistake.

If a check is lost or stolen, you should use a

stop payment order

which of the following is not mentioned as a financing opportunity for the unbanked?

Corporate Bonds

Zach wants to open an account, but he doesn't know which kind is appropriate. He is interested in earning a higher interest rate and knows that he might not be able to write many checks from his account. In addition, he plans to keep at least $1,000 in his account so he can avoid paying a fee. He definitely wants to have federal deposit insurance. What kind of account should he open?

A money market account

Amber wants to open an account, but she doesn't know which kind is appropriate. She is interested in earning a higher interest rate and plans to keep at least $1,000 in her account so she can avoid paying a fee. Amber wants to open her account at an investment company and understands that her account will not be covered by federal deposit insurance. What kind of account should she open?

A money market fund

________________________ is a check that you have written but has not been presented to the bank for payment.

An outstanding check

which of the following is mentioned as a tip or trick regarding high-cost financial services?

Ask questions, read the fine print, and understand the risks involved with the high-cost loans and Compare the interest rate to the average interest rate for loans from a bank or similar financial institution.

what is step 3 in the bank reconciliation process for individuals?

Subtract any bank fees, ATM withdrawals, automatic payments, and other charges made by the bank that have not been recorded in your checkbook.