Deck 5: Deposits in Banks

Question 1

Basic checking accounts always pay interest on the balance deposited in the account.

Answer 1

False

Question 2

Which of the following accounts are you LEAST likely to encounter at a modern bank?

A)checking account
B)certificate of deposit
C) money market account
D) passbook savings account

Answer 2

D

Question 3

A transaction account allows transactions to occur at any time and in any number.

Answer 3

True

Question 4

Most banks offer essentially the same types of accounts.

Question 5

Banks may require up to a seven-day notice from a depositor who wants to withdraw money from a time deposit.

Question 6

Adding interest to the principal and paying interest on the new total is called paying

A)compound interest.
B)simple interest.
C) semiannual interest.
D) total interest.

Question 7

In the United States, the government plays the greatest role in determining how money is moving.

Question 8

Money doesn't just mean currency, but also checks, ledger transfers, and even credit.

Question 9

Which of the following accounts is the MOST liquid?

A)money market account
B)certificate of deposit
C) checking account
D) savings account

Question 10

For the purposes of computing interest compounded daily, a year is generally considered to be

A)336 days.
B)360 days.
C) 365 days.
D) 366 days.

Question 11

Principal is the price paid for using money.

Question 12

What term best describes companies obtaining financing directly from capital markets (without using banks for financing)?

A)rate chasers
B)interbank transactions
C) Check 21
D) disintermediation of funds

Question 13

Which of the following statements about reserve requirements is true?

A)Reserve requirements apply to the M1 and M2 money supply.
B)Reserve requirements are the most important factor in bank lending.
C) Reserve requirements do not change very often.
D) If reserve requirements are low, banks must keep back more money and therefore have less to lend.

Question 14

You cannot get your money from a certificate of deposit before the maturity date.

Question 15

Which of the following governing documents list interest rates in effect at the time for various types of accounts?

A)disclosure statements
B)account rules
C) fee schedules
D) deposit rate schedules

Question 16

Compound interest uses the same principal amount every time it is calculated.

Question 17

Banks are free to change governing documents, but they must give customers written notice of changes.

Question 18

The most common form of a transaction account is a

A)savings account.
B)checking account.
C) money market account.
D) certificate of deposit.

Question 19

Which of the following is NOT a time deposit?

A)savings account
B)checking account
C) money market account
D) certificate of deposit

Question 20

A joint tenancy checking account allows each owner to make deposits and withdrawals independently.

Question 21

A(n) ____________________ savings account provides a monthly or quarterly report detailing all account activity.

Question 22

The beginning amount used to calculate interest is called ____________________.

Question 23

Augie's savings account pays simple interest. He began with a deposit of $2,000; at the end of one year, he had earned $80 in interest. Find the interest rate on the account.

Question 24

Calculate the simple interest earned on a savings account in nine months that begins with a deposit of $500 and pays 3 percent interest.

Question 25

A(n) ____________________ checking account has two or more owners, each of whom has equal and independent access to it.

Question 26

Natasha's checking account charges a basic monthly fee of $5. It allows her to write ten checks each month for free; it charges her $2 for every additional check she writes. The account also charges Natasha $1 each time she uses an ATM machine. What total fees did Natasha pay in April if she wrote 17 checks and used the ATM machine six times?

Question 27

Keri's savings account pays simple interest at a rate of 4.5 percent. After nine months, the account had earned $202.50 in interest. Find the principal.

Question 28

A check that is dated six months or more before it is presented for payment or deposit is called a(n)

A)stale check.
B)postdated check.
C) bounced check.
D) overdraft check.

Question 29

Banks make and receive deposits to each other in ____________________ transactions.

Question 30

A(n) ____________________ savings account provides a ledger of activity that a teller updates when a customer makes deposits or withdrawals.

Question 31

Theo wrote 132 checks last year. How many checks did he write every month, on average?

Question 32

What is a demand deposit?

Question 33

All deposits to cover transactions that make automatic withdrawals or transfers to pay bills without writing checks are called ____________________ deposits.

Question 34

A(n) ____________________ certificate is equivalent to a certificate of deposit, except it is offered by a credit union rather than a bank.

Question 35

____________________ interest adds interest to the principal and pays interest on the new total.

Question 36

The date on which a certificate of deposit is paid is called the ____________________ date.

Question 37

Consumers who perpetually move their funds among various accounts to obtain the highest interest rates at any point in time are called ___________________.

Question 38

This Federal Reserve regulation requires banks to maintain adequate reserves for the funds they have on deposit.

A)Regulation C
B)Regulation CC
C) Regulation D
D) Regulation DD

Question 39

____________________ checking accounts offer a few simple services for minimal cost.

Question 40

Calculate the simple interest earned on a savings account in six months that begins with a deposit of $5,000 and pays 6 percent interest.

Question 41

What is the basic formula for calculating simple interest?

Question 42

Compare and contrast savings accounts and money market deposit accounts.

Question 43

What are disclosure statements?

Question 44

Explain the difference between APR and APY.

Question 45

What is a certificate of deposit?

Question 46

How do the total funds in transaction accounts affect the money supply?

Question 47

Describe how the Federal Reserve can put more money into the economy through its open market operations.

Question 48

Name three things a bank must do to meet the requirements of Federal Reserve Regulation CC.

Question 49

In general, what determines the money supply?

Question 50

Describe the benefits of an express checking account. What are some disadvantages?