CCP fin lit ch 5//:cook
Based on the following information, what amount would be SUBTRACTED from the BANK BALANCE side of a checking account reconciliation? Service charge $12, Outstanding checks $145, Interest $3.50, Deposit in transit $80
$145
A certificate of deposit is usually considered to be very liquid
False
A lost debit card results in potential losses similar to a lost credit card.
False
A regular savings account usually offers a higher rate of return to savers than other savings plans.
False
Savers should always attempt to obtain an interest rate that is less than the inflation rate.
False
The liquidity of a savings account refers to the rate of earning a person will receive.
False
____________ specialize in helping people save money in a manner than provides high liquidity.
Investment companies
A "free" checking account with a minimum balance of $500 has an opportunity cost of lost interest.
True
An asset management account combines several financial services for a single fee
True
Savings and loan associations offer mortgages
True
The money market fund offered by investment companies is a relatively liquid financial service.
True
Using a "debit" card is basically the same as writing a check.
True
Which of the following statements regarding debit and credit card liability is correct
a debit card carries more risk of loss to the card holder
The funds deposited in a checking account can be restricted for use by
a holding period.
Which of the following savings plans is not covered by federal deposit insurance?
a money market fund
A saver will usually earn the highest rate with which of the following types of savings plans?
certificate of deposit
Savings compounded ____________ would have the highest effective yield.
daily
Checking accounts are frequently referred to as ____________ deposits.
demand
checking accounts are frequently referred to as _________ deposits
demand
The profits from a mutual savings bank go to the:
depositors
The profits from a mutual savings bank go to the
depositors.
Joan Zemke expects interest rates to decline over the next few months. To maximize her long-term earnings she should use a:
five-year certificate of deposit
Joan Zemke expects interest rates to decline over the next few months. To maximize her earnings she should use a(n)
five-year certificate of deposit.
An advantage of U.S. savings bonds is
interest earned is deferred for federal tax purposes.
An advantage credit unions may have over other financial institutions is
low-cost personal loans
A trust has the purpose of:
managing the assets of a person
A trust has the purpose of
managing the assets of a person.
The major service offered by investment companies is
mutual funds.
The convenience of using a financial institution with 24-hour banking frequently requires a trade-off with
personal service
The storage of funds for future use is the purpose of ____________ services.
savings
Time deposits are another name for:
savings accounts
Time deposits consist of
savings accounts.
A savings account at a credit union is called a ____________ account.
share
When interest rates are rising, a person would be best served by
short-term savings instruments
When interest rates are rising, a person would be best served by:
short-term savings instruments
A service designed for people who write only a few checks each month is a(n) ____________ account.
special or activity
When preparing a bank reconciliation, outstanding checks should be
subtracted from the bank statement balance.
In the bank reconciliation process, service fees should be
subtracted from the checkbook balance.
the storage of funds for future use is a purpose of __________, which include savings accounts and certificates of deposit
time deposits
The purpose of a "special" endorsement is to
transfer a check to another person.
The purpose of a debit card is to
transfer money electronically.
a debit card deducts the amount of purchases from your checking account by:
transferring money electronically
A $200 savings account that earns $13 interest in a year has a yield of ____________ percent.
6. 5
ATM fees are about the same in different geographic areas.
False
Activity accounts are designed for people who write many checks each month
False
Consumer finance companies specialize in home mortgages.
False
Consumers will usually obtain the best overall value of their dollar by having all financial services with the same institution.
False
Direct deposit usually requires a waiting period for a availability of funds.
False
The more frequent the compounding, the less a person will earn on a savings account.
False
The use of electronic banking adds to the "float" time for financial services customers
False
Traditionally, a mutual savings bank offered the widest variety of financial services
False
When preparing a bank reconciliation, interest earned on your checking account is added to the bank statement balance.
False
A restrictive endorsement will usually include the words "for deposit only."
True
Credit unions frequently offer lower loan rates than other financial institutions
True
Demand deposits is another term for checking accounts.
True
Higher returns on savings will usually result in less liquidity
True
Kevin Friedman only needs to write a couple of checks each month. Which type of checking account would best serve his needs?
an activity account
Comparison of earnings for different savings plans can best be accomplished using the
annual percentage yield.
An all-purpose account that provides several services is a(n
asset management account
an all-purpose account offered by investment brokers that provides several services is a:
asset management account
In recent years, membership in credit unions has:
become more flexible
A ____________ endorsement would be used if a person is presenting a check in order to obtain cash.
blank
A personal check with guaranteed payment is called a
certified check.
The first information to be recorded when writing a check is
check stub or check register.
Traditionally, the greatest variety of financial services have been offered by a(n)
commercial bank.
Which of the following is organized as a corporation and owned by stockholders?
commercial banks
The Federal Deposit Insurance Corporation provides deposit insurance for
commercial banks and savings and loan associations.
In recent years, membership in credit unions has
continued to increase
The business hours and location of a financial institution refer to the ____________ factor of selecting a financial institution.
convenience
Direct deposit and automatic monthly payments are features of
electronic banking
When preparing a bank reconciliation, interest earned on your checking account is added to the bank statement balance.
false
A certificate of deposit usually has
limited liquidity.
An advantage credit unions may have over other financial institutions is:
lower loan rates
A common service offered by investment companies is:
money market funds
A financial institution organized for the main purpose of providing loans to purchase homes is a
mortgage company.
To avoid high fees for cash loans, a person should avoid borrowing from a:
pawnshop
To avoid high fees for loans, a person should not borrow from a
pawnshop.
The Truth-in-Savings law requires that financial institutions
report annual percentage yield on savings.
The most frequent users of payday loans are workers who have become trapped by debts or poor financial decisions.
true
The rate of return on a savings account is also referred to as
yield.
