Personal Finance CH 5

Check-cashing outlets usually charge fees of:

1% to 20% of the face value of the check.

Which of the following services do savings and loans associations offer?

Checking accounts, Investments, Financial planning, Savings accounts, Loans

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

Commercial

True or false: Web-only banks have declined in recent years.

False; There has actually been a significant increase in Web-only banks.

True or false: A current shortage of cash will require two basic choices: liquidate savings or borrow.

True: A shortage is a current problem; therefore, these are the only real choices.

True or false: Asset management accounts are a collection of financial services offered for a single fee.

True; Asset management accounts are designed to be an all-purpose account location.

True or false: One criterion for choosing a saving plan is the interest rate.

True; Interest rate is a major criterion for selecting a savings account.

True or false: Achieving your financial goals and carrying out your daily activities require various financial services.

True; There is no "one-stop" financial option to achieve your financial goals.

Credit alternatives include:

cash loans, home mortgages, credit cards

Which type of financial institution typically charges higher rates?

check-cashing outlets

A trust is a legal agreement that provides for:

creation of a beneficiary, management of assets, control of assets

Financial services include all of the following except:

debt counseling

Most financial institutions impose a penalty for

early withdrawals of CD funds

The ability to transfer money to others is:

necessary for daily business activities.

Financial services include:

payment services, savings, borrowing, insurance, financial planning, investments

A money market fund is a

savings instrument

A reduction in long-term financial security can be caused by

using savings, increased borrowing

Which of the following is not true regarding ATMs?

All financial institutions charge the same ATM fees.

Trusts are commonly managed by

a bank

Certificates of deposit require that a certain amount be on deposit for a stated time period in exchange for:

a higher interest rate.

A consolidated financial services account is called a(n)

asset management account

You are responsible for charges on your account if they are

authorized, for broken products, made online

Trusts are typically created by a

bank, lawyer

When comparing savings accounts rates of return, you should choose one that:

beats the rate of inflation.

Deposit institutions would not include:

brokerage firm

Another name for an automated teller machine (ATM) is

cash machine

Another name for an asset management account is:

cash management account

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

Parents who set aside funds for their children will often intend for the money to be used for

education

Money market accounts at commercial banks are insured by ______, whereas money market funds are not.

federal deposit insurance

Achieving your financial goals and carrying out your daily activities require many BLANK services.

financial, finance, or monetary

Criteria for selection of a savings plan include:

liquidity, interest rate, safety, convenience

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

money market

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

Which of the following are potential benefits of an asset management account that consolidates most of your financial services?

simplifies communication about your financial affairs, keeps track of your money in a single location, lower fees

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

trip planning services

Parents who want to set aside money for their children's education often use a

trust

You are not responsible for charges on your debit card account if they are:

unauthorized

A current shortage of cash will require two basic choices:

use savings or borrow

Credit cards are different from debit cards because:

you are borrowing additional money.

True or false: Credit alternatives are only for people of limited resources.

False; Credit options are available for people of all different levels of financial ability.

True or false: The ability to transfer money is not a necessary part of daily business activities.

False; The ability to transfer money leads to increased liquidity and is an essential element of daily business activities.

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

funds

A BLANK is a legal agreement that provides for the management and control of assets by one party for the benefit of another. This is a one-word answer.

trust

Debit cards are different from credit cards because:

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

Using savings and increasing borrowing reduce your net worth and:

your potential for long-term financial security.