Personal Finance: Chapter 5

principal

A sum of money set aside on which interest is payed

Internet banking

Accessing and managing you account online

C

All of the following may be required to open a checking account except: A) security questions, B) signature card, C) cashiers check, D) minimum deposit

A

An ATM card: A) can only be used to make with drawls and deposit at ATM machines, B) is the same as a debit card, C) has all the same protections provided with credit cards, D) can be used to make purchases

B

Checks that the bank has processed: A) certified checks B) cancelled checks C) truncated checks D) checks in transit

C

If you set aside $1,000 for one year at 6% simple interest, how much money in interest will you have earned after 1 year: A)$0.60 B)$6.00 C)$60.00 D)600.00

B

Interest paid only on the principal is called A) Interest expense B) simple interest C) compound interest D) imputed interest

D

Overdraft protection helps you avoid: A) ATM fees B) Inactive account fees C) Monthly service fees D) Non-sufficient funds fees

bank reconciliation

The process of adjusting the check register and bank statement balances so that they agree

True

True or False: A cancelled check serves as proof of payment for bills or purchases

True

True or False: If a check is not properly endorsed, it may be returned by the bank to the customer and not deposited.

True

True or False: Paper money is also known as banknotes

False

True or False: The payee is the person who is writing the check

False

True or False: Third-party check can easily be cashed or deposited into any account

False

True or False: When a check is cashed, the check is said to be truncated

False

True or False: You should reconcile your bank statements at least once a year

False

True or False: checks over one year old are not valid for cashing or depositing

False

True or False: future value of money is the amount of money you would need to deposit today in order to accumulate a specific amount in the future

False

True or False: online banks are not subject to the same laws and regulations as a traditional bank

True

True or False: savings accounts at banks generally are insured by the FDIC up to the legal limit of $250,000 per deposit per bank

True

True or False: when the check bounces, the person or business that deposited it is charged a fee

C

Using the rule of 72, if you invest your money at 10% interest rate, how long till your money doubles: A) 5 years B) 6 years C) 7.2 years D) 8.5 years

C

Which of the following endorsements would have the following instructions, "for deposit only": A) blank, B) Full C) restrictive D) special

B

Which of these cannot be completed with internet banking? A) paying bills B) withdrawing cash C) monitoring accounts D) transferring money

debit card

a bank card used to withdraw or deduct money from your checking account

smart card

a card that contains a computer chip that stores electronic money

Cashier's Check

a check issued against the bank's funds

Bounced Check

a check that is returned to the payee's bank due to nonsufficient funds

postdated check

a check written with a date that will occur in the future

savings account

a demand deposit account designed for the accumulation of money in a safe place for future use

checking account

a demand deposit at a bank on which checks are drawn

U.S. Savings Bond

a discount bond issued by the federal government that pays a guaranteed rate of interest

Annuity

a fixed amount set aside on a regular basis over time

Rule of 72

a quick formula for computing how long it will take to double money invested at a given interest rate

endorsement

a signature, with or without instructions, written on the back of a check

Certificate of Deposit (CD)

a time deposit that pays a fixed rate of interest for a specified length of time

Check Register

a tool used to track checking account transactions

Money market account

a type of savings account that earns the market rate of interest on the money deposited

Check

a written order to a bank to pay a status amount to a person

stop payment

an instruction to the bank not to honor a check that has been issued or lost

simple interest

interest computed on principal once during a certain time period

compound interest

interest earned on both principal and previously earned interest

deposit

money added to a checking or savings account

withdrawal

taking money from your account

floating a check

writing a check and planning to make a deposit later to cover it before the check is processed