Ch. 7 & 8 Vocab, Terms, Etc.

$780

Silas deposited $750 in a savings account that pays 4 percent simple interest. How much money will he have in the account after one year?

there are no costs associated with using checking accounts

Which is not an advantage of using a checking account?

cashier's check

a bank's own personal check signed by a bank employee is a

true

a popular way to transfer money electronically is through an automated teller machine

direct deposit

authorizing your employer to place a certain amount of each paycheck into your savings account

APR

banks must report _______, the actual interest rate that an account pays per year

true

simple interest is earned on just your principal, not on the interest earned previously

check register

the book in which a person keeps a record of the checks he or she has written and the deposits made is called a

true

the difference in the interest charged by banks on loans and the interest paid on money deposited is the bank's income

face value

the dollar value printed on a bond

false

when you receive a check, you must deposit all of it in your own checking account

true

when you save, you trade spending now for the ability to spend in the future

HH bonds

Becky's parents had $10,000 in U.S. government Series EE bonds that matured. They chose to exchange these bonds for another type of government bond that pays a fixed interest rate that is sent to their bank account electronically every six months. What type of U.S. government bonds did they acquire?

savings bank

Coop lives in a city where there are several types of financial institutions form which to choose. He has $5,000 to deposit. He would prefer to own part of the institution where he makes his deposit in order to receive dividends. Which institution matches his preferences?

I bond

Kameelah worries about inflation reducing the purchasing power of her savings. To avoid this possibility she has decided to purchases a type of U.S. government savings bond called ________________

savings and loans associations

Lucas and Jewel have a down payment for a home and have found the home they want to purchase. Which type of financial institution specializes in lending money to consumers to buy homes?

third-party check

Muong's great aunt gave him a check for $200. Since Muong does not have a checking account he will give the check to his mother, Fay. On the back of the check, he signs his name; immediately under his signature he writes, "pay to the order of Fay Nguyen" this type of check is known as

debit card

Octavio often travels on business. While he is traveling he does not like to carry a large amount of cash with him and worries that a store might not take his personal check. What could he use that would provide electronic access to his checking account to make payments at stores, restaurants, etc by immediately transferring funds from his account to the store's account?

250,000

The FDIC insures a depositor's money up to...

certified check

Tracy and Jon will close on the home they are buying. At the closing, they will sign several legal documents and provide the mortgage company with a $15,000 down payment. Tracy and Jon do not want to carry that much cash with them; the mortgage company will not accept their personal check for that large a sum of money. What can they obtain in advance to make the $15,000 down payment?

principal

Vikki placed $3,000 in a certificate of deposit in a one-year period of time. At the end of the year she had earned $150 in interest on her investment. Her original $3000 is known as

true

a certified check guarantees that your account can cover the check

false

a credit union is a financial institution that serves individuals and businesses with a wide variety of accounts, loans, and other financial services

false

a dividend is not actually a share of a company's profits

bond

a written promise to pay a debt by a specified date

deposit

adding money to your checking accounts

true

almost all deposits are insured by a federal government agency

interest

amount of money that a bank pays its customers for keeping their money in a savings account

electronic funds transfer

an electronic communication that moves money from an account in one bank to an account in a different bank

treasury bill

as a real estate agent, Allegra receives monthly commission checks. This month her commission check will be over $5,000. She wants to place the entire $5,000 in a safe investment for six months. Given the amount she has to invest and her preferences, what would be her best choice?

credit union

as a school teacher, Liz can choose to join a financial institution with other school employees that offers her a membership when she deposits her money there or opens a checking account. This type of financial institution is known as

safe deposit box

banks provide a place for you to keep your noncash items

false

banks usually send you reports of your checking account activity each month

wire transfer

bryce is the business manager for a large dress-making company in NYC. His company just sold $125,000 worth of dresses to a company located in Germany. What type of banking arrangement can the German company make with its bank to immediately move $125,000 of its money into the NYC company's bank in order to pay for dresses?

traveler's checks

checks for which you pay in advance and, if they are lost or stolen, the company from which you bought these checks will replace them

true

checks provide safety, convenience, and written records of transactions

canceled

each month Hope receives from her bank her bank statement and the checks that have been cleared her checking account in that month. Each of these checks has been stamped to show that her bank has paid the check. What are these checks called?

credit unions

financial institutions that offer memberships to people who share a common bond, such as people in a particular profession, company, or labor union

automatic withdrawal

having the bank deduct a certain amount from your checking account each month to pay a bill

simple interest

interest paid annually at the end of the year on the average balance in a savings account

compound interest

interest that is paid on the principal and on previously earned interest, assuming that interest is left in the account

false

it is good policy to record a checking transaction as soon as you can find the time

false

it is wise to give your PIN to a few of your close friends

true

money market accounts pay higher interest rates than regular savings accounts do

currency

paper money and coins used for financial transactions

true

there are many compound interest calculators available on the World Wide Web

bartering

trading goods and services without using money is