Connect Chapter 5 - Smartbook Study Guide
A ________ ticket or slip is used to add funds to a checking account.
Deposit.
All of the following are deposit-type institutions that serve as financial intermediaries except:
Insurance companies.
What type of financial institution typically does not have federal deposit insurance?
Investment companies.
________ is the attribute of savings accounts that allows you to withdraw money on short notice without a loss of principal or fees.
Liquidity.
What is the purpose of liquidity?
To allow you to withdraw money on short notice.
A regular savings account usually does not have:
-A high rate of interest. -Overdraft protection. -A high balance requirement.
You are responsible for charges on your account if they are ________ :
-Authorized. -For broken products. -Made online.
What types of financial institutions have federal deposit insurance through FDIC?
-Commercial banks. -Credit unions. -Savings and loans.
Some things to consider when selecting your financial institution include:
-Convenience. -Online banking. -Fees and charges. -Services offered.
Benefits of money market accounts include:
-Favorable interest rate. -Deposit insurance.
Use a debit card to:
-Limit your spending to available money. -Avoid bills that will be paid in the future. -Obtain better fraud protection with security measures.
Financial services include:
-Savings. -Payment services. -Borrowing. -Financial planning. -Insurance. -Investments.
From which of the following sources can money orders be purchased?
-Stores. -Post offices. -Financial institutions.
Common mistakes made when managing current cash needs include:
-Using savings for current expenses. -Overspending. -Lacking sufficient funds.
You are in the 25% tax bracket, the after tax savings rate of return is 6%, the before-tax yield on the savings account is:
8%
A deposit ticket is used to add funds to ________.
An account.
When comparing savings accounts rates of return, you should choose one that:
Beats the rate of inflation.
A ________ check is a check drawn on a financial institution.
Cashiers.
A savings plan that requires a certain amount of money to be left for a specified amount of time, subject to penalty for early withdrawal, is called a ______.
Certificate of deposit.
The savings alternative that offers less liquidity is:
Certificates of deposit.
Minimizing bank fees may require:
Comparing financial institutions.
Using savings for ________ living expenses is one of the mistakes people make when managing current cash needs. This is a one-word answer.
Current.
Financial services include all of the following except:
Debt Counseling.
Common choices for making payments include all of the following except:
Installment loans.
The rate of ________ is the percentage increase in the value of savings as a result of interest earned.
Return.
A ________ draft account is an interest-bearing checking account at a credit union.
Share.
Online payments do not include
Smart cards.
Financial services will usually not be affected by:
Stock prices.
Overdraft protection is an automatic loan made to checking account customers to cover checks written in excess of:
Their balance.
You are not responsible for charges on your debit card account if they are:
Unauthorized.
Certified checks, cashier's checks, and money orders allow you to make a payment that the recipient knows is ________ .
Valid.
An opportunity cost is:
What you give up.
Which of the following are deposit-type institutions that serve as financial intermediaries?
-Credit unions. -Savings and loans. -Commercial banks.
Benefits of U.S. savings bonds include:
-Low minimum deposit. -Exemption from state and local taxes. -Government guarantee.
Share draft accounts at a credit union:
Are interest bearing.
Overdraft protection is designed to:
Cover underfunded checks.
Use a credit card to:
-Delay the payment for a purchase -Build a credit history with wise buying -Buy online or for major purchases
Drawbacks of money market accounts include:
-Higher minimum balance required. -Some institutions charging for low balances.
By comparing financial institutions, a customer can:
-Lower bank fees. -Minimize ATM fees.
A savings plan that requires a certain amount of money to be left for a specified amount of time is not a:
-Passbook savings account. -Money market account. -Stock option.
A money order:
Guarantees payment.
A drawback of U.S. savings bonds is:
Lower rates for early redemption.
A money market fund is a ______.
Savings instrument.
The rate of return is:
The percentage increase in the value of an account.
True or False: The rate of return you earn on your savings account should be compared with the inflation rate.
True.
A regular savings account usually offers:
A low or no minimum balance requirement.
Achieving your financial goals and carrying out your daily activities require many ________ services.
Financial.
A ______ fund is an account used for savings offered by investment companies.
Money market.
You are in the 25% tax bracket. So, the yield on the savings account is 8%, and the after-tax savings rate of return is ______.
6%
The savings alternative that offers more liquidity is:
Money market accounts.
A(n) ________ cost is what you give up when you evaluate, select, and use financial services.
Opportunity.
True or False: Achieving your financial goals and carrying out your daily activities require various financial services.
True.
True or False: Financial services can change due to such factors as changing interest rates and rising consumer prices.
True.