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
