Deck 4: Financial Services: Savings Plans and Payment Account

Question 1

The Truth in Savings Act requires financial institutions to disclose the interest rate on loans.

Answer 1

False

Question 2

A commercial bank is the same thing as a credit union.

Answer 2

False

Question 3

Liquidity and rate of return refer to the same thing.

Answer 3

False

Question 4

As inflation rates increase,the interest rates offered to savers usually increase.

Question 5

Money market funds are not covered by federal deposit insurance.

Question 6

The best option for borrowing money at a low rate is to use a payday loan organization.

Question 7

If you think that rates will fall in the future,you should buy a long-term CD to lock in your rate now.

Question 8

I bonds earn interest based on a fixed rate plus inflation.

Question 9

If you rent a big-screen television from a rent-to-own center for a week,you will be certain to own it at the end of the first week.

Question 10

A bump-up CD allows an investor to increase the amount invested.

Question 11

Making transactions using a credit card will immediately reduce your bank balance.

Question 12

If a bank allows online transactions,it must also allow face-to-face transactions at the bank.

Question 13

A benefit of investing in a certificate of deposit is the penalty for early withdrawal.

Question 14

The "safety" concern with banks and credit unions refers to the potential loss of money due to investors' bad spending habits.

Question 15

When Ted needs cash,his choices include liquidating savings and borrowing.

Question 16

A loan from a pawnshop will be more expensive than one from a bank.

Question 17

The only question you should ask yourself when selecting a financial service provider is "Where can I get the best return on my savings?
"

Question 18

When Flo says she's "going to the bank," she may be implying that she is visiting a credit union or stopping at an ATM.

Question 19

A savings account is also known as a demand deposit.

Question 20

A callable CD allows investors to "cash in" their investment early.

Question 21

An all-in-one account that provides a complete financial services program for a single fee is known as

A) A cash management account.
B) A checking account.
C) A trust.
D) A loan.
E) A savings account.

Question 22

Due to Check 21,the processing time for checks has increased.

Question 23

A legal agreement that provides for the management and control of assets by one party for the benefit of another is known as

A) A checking account.
B) A trust.
C) A loan.
D) A savings account.
E) None of these.

Question 24

Investments and tax assistance,both tools for financial planning,are also known as

A) Checking accounts.
B) Trusts.
C) Loans.
D) Savings accounts.
E) Financial services.

Question 25

A time deposit is also known as

A) A checking account.
B) A trust.
C) A loan.
D) A savings account.
E) All of these are time deposits.

Question 26

Claudette's grandchildren are 7 and 9 years old.When Claudette passed away,her grandchildren inherited her money.However,the will stipulated that they should not get control of the money until age 25.Which of the following should be set up to provide for the management and control of the funds?

A) A checking account
B) A trust
C) A loan
D) A savings account
E) A certificate of deposit

Question 27

Brenda lost her debit card.When she realized it was gone,her account had $173 in unauthorized charges.She notified her financial institution within two days.How much is she potentially liable for?

A) $0.
B) $25.
C) $50.
D) $173.
E) This cannot be determined with the information provided.

Question 28

A credit card is a type of

A) Checking account.
B) Trust.
C) Loan.
D) Savings account.
E) Cash account.

Question 29

Reconciling a checking account is not really necessary since the bank statement includes all activity from the bank's perspective.

Question 30

Franklin is planning for a purchase of a vehicle in two years.Since he wants to be certain that his funds are safe (insured),which of the following should he use?

A) A credit card.
B) A trust.
C) A loan.
D) A savings account.
E) A home mortgage.

Question 31

Two years ago,Sean deposited money into a savings account and received a toaster.The value of the toaster reduced the amount of interest he earned for the first year.

Question 32

A demand deposit is also known as

A) A checking account.
B) A trust.
C) A loan.
D) A savings account.
E) All of these are demand deposits.

Question 33

Lydia found a check that she was given for her birthday nine months earlier.Her bank should refuse to cash the check.

Question 34

Brandon lost his debit card.When he realized it was gone,his account had $238 in unauthorized charges.Since he was embarrassed about his loss,he didn't contact his financial institution for 45 days.What is the most that he is liable for?

A) $0
B) $50
C) $188
D) $238
E) $500

Question 35

Each year,check writing is being used more often.

Question 36

Many people make mistakes when managing current cash needs.Which of these is NOT a frequently made mistake?

A) Borrowing for current expenses
B) Budgeting spending
C) Failing to put unneeded funds in an investment plan
D) Having insufficient liquid assets to pay current bills
E) Overspending due to impulse buying and using credit

Question 37

ATM stands for

A) Automatic taking machine.
B) Available teller machine.
C) Automatic teller machine.
D) Available token machine.
E) Automatic token machine.

Question 38

A college ID that includes prepaid amounts for meals is called a debit card.

Question 39

The FDIC insures a depositor's savings account up to $200,000 per insured financial institution.

Question 40

Common payment choices for everyday activities include all of the following except

A) Cash.
B) Check.
C) Credit card.
D) Short-term loan.
E) Debit card.

Question 41

A drawback of a regular savings account is

A) A low rate of return.
B) A minimum required deposit.
C) Not being insured.
D) A possible penalty for early withdrawal.
E) All of these are drawback of a regular savings account.

Question 42

Why are some financial service operations referred to as financial supermarkets?

A) They offer a combination of services from one source.
B) Customers can receive cash and a receipt.
C) They have many locations, like supermarkets.
D) They are often located in supermarkets or convenience stores.
E) Their prices are similar to those in a supermarket.

Question 43

In which of the following are most of the investments insured?

A) A commercial bank
B) A check-cashing outlet
C) A pawnshop
D) A payday loan facility
E) A rent-to-own center

Question 44

When you select a financial services provider,you should ask all of the following questions except

A) Will I be able to borrow money if I need it?
B) How can I minimize the cost of checking and payment services?
C) Where can I get the best return on my savings?
D) All of these questions should be asked.
E) None of these questions are needed.

Question 45

When Imogene brought a necklace to a _______,she received a loan based on its value.

A) commercial bank
B) check-cashing outlet
C) pawnshop
D) payday loan facility
E) rent-to-own center

Question 46

Harvey needed some cash quickly,so he received a short-term loan based on the value of an old ring.Where did he go?

A) A commercial bank
B) A check-cashing outlet
C) A pawnshop
D) A payday loan facility
E) A rent-to-own center

Question 47

Which of the following is NOT a financial publication that can provide information about financial services and economic conditions?

A) The Wall Street Journal
B) The Financial Times
C) The Daily Market
D) BusinessWeek
E) Forbes

Question 48

All of the following are deposit institutions except

A) A commercial bank.
B) A credit union.
C) A finance company.
D) A mutual savings bank.
E) A savings and loan association.

Question 49

Which of the following will likely provide the most expensive access to funds?

A) A credit card company
B) An investment company
C) A life insurance company
D) A finance company
E) A payday loan company

Question 50

When Jack picked up a personal computer from the _____,he really was leasing it.

A) commercial bank
B) check-cashing outlet
C) pawnshop
D) payday loan facility
E) rent-to-own center

Question 51

When Angela wanted to provide financial security for her dependents,she considered purchasing a specific type of account at a

A) Credit card company.
B) Investment company.
C) Life insurance company.
D) Finance company.
E) Payday loan company.

Question 52

Which of the following offers checking,savings,lending,and other services?

A) A commercial bank
B) A check-cashing outlet
C) A pawnshop
D) A payday loan facility
E) A rent-to-own center

Question 53

All of the following are nondeposit institutions except

A) A credit card company.
B) A investment company.
C) A life insurance company.
D) A finance company.
E) A payday loan company.

Question 54

Which of the following primarily provides loans for home purchases?

A) A credit card company
B) An investment company
C) A life insurance company
D) A mortgage company
E) A payday loan company

Question 55

When you select a financial services provider,you may find all of the following to be major factors except

A) Company logo.
B) Convenience.
C) Fee structure and other charges.
D) Personal service.
E) Rates for savings and borrowed funds.

Question 56

Which of the following usually offers money market funds?

A) A credit card company
B) An investment company
C) A life insurance company
D) A finance company
E) A payday loan company

Question 57

Louise got caught in a cash flow trap and needed money quickly.Unfortunately,she didn't shop around and she went to a _____.As a result,her annual percentage rate was higher than 375%!

A) commercial bank
B) check-cashing outlet
C) pawnshop
D) payday loan facility
E) rent-to-own center

Question 58

A drawback of a savings account is

A) Easy access to deposits.
B) Being insured.
C) A low minimum balance.
D) A low rate of return.
E) Ease of withdrawal.

Question 59

Cathy needs a full range of financial services,including checking,savings,and lending.To which of the following should she go?

A) A commercial bank
B) A check-cashing outlet
C) A pawnshop
D) A payday loan facility
E) A rent-to-own center

Question 60

Billy accepted a job at a company that specializes in providing money for short-term retail lending.Where did he go to work?

A) A credit card company
B) An investment company
C) A life insurance company
D) A finance company
E) A payday loan company

Question 61

Earnings on savings can be measured by the

A) Compounding.
B) Liquidity.
C) Minimum deposit.
D) Rate of return.
E) Safety.

Question 62

Will wants to open an account that will allow him easy access to his funds (by checks,ATMs,or debit card usage)from many locations and will pay at least a low interest rate.What kind of account should he open?

A) A certificate of deposit
B) An interest-earning checking account
C) A money market account
D) A money market fund
E) A regular savings account

Question 63

Karen wanted a certificate of deposit that would definitely be available until the maturity date.She would NOT want to consider a

A) Bump-up CD.
B) Callable CD.
C) Portfolio CD.
D) Promotional CD.
E) Stock-indexed CD.

Question 64

A certificate of deposit that has different interest levels based on the stock market performance is called a

A) Bump-up CD.
B) Callable CD.
C) Portfolio CD.
D) Promotional CD.
E) Stock-indexed CD.

Question 65

Amber wants to open an account,but she doesn't know which kind is appropriate.She is interested in earning a higher interest rate and plans to keep at least $1,000 in her account so she can avoid paying a fee.Amber wants to open her account at an investment company.What kind of account should she open?

A) A certificate of deposit
B) An interest-earning checking account
C) A money market account
D) A money market fund
E) A regular savings account

Question 66

Zach wants to open an account,but he doesn't know which kind is appropriate.He is interested in earning a higher interest rate and knows that he might not be able to write many checks from his account.In addition,he plans to keep at least $1,000 in his account so he can avoid paying a fee.He definitely wants to have federal deposit insurance.What kind of account should he open?

A) A certificate of deposit
B) An interest-earning checking account
C) A money market account
D) A money market fund
E) A regular savings account

Question 67

The text discusses several types of bonds.Which bond is purchased at face value and has two components to the rate of interest earned-a fixed rate as well as a rate that adjusts twice a year for inflation?

A) Series E
B) Series EE
C) Series HH
D) Series I
E) Series Q

Question 68

Wanda bought a certificate of deposit and automatically received a free bike.She purchased a

A) Bump-up CD.
B) Callable CD.
C) Portfolio CD.
D) Promotional CD.
E) Stock-indexed CD.

Question 69

Which of the following provides deposit insurance for credit unions?

A) FDCU
B) FDIC
C) NCUA
D) SAIF
E) None of these

Question 70

Xavier bought a certificate of deposit whose interest rate changes with the stock market.In fact,he might even earn 0% interest on his investment for a time.He purchased a

A) Bump-up CD.
B) Callable CD.
C) Portfolio CD.
D) Promotional CD.
E) Stock-indexed CD.

Question 71

Justin needs to have access to his money in five months.The best option for his savings is a

A) Series EE bond.
B) Money market account.
C) Five-year certificate of deposit.
D) Series I bond.
E) Six-month certificate of deposit.

Question 72

The Truth in Savings Act requires financial institutions to disclose the _____ on savings accounts.

A) annual percentage yield (APY)
B) compounding
C) liquidity
D) tax rate
E) safety certification

Question 73

Earning interest on interest is called

A) Compounding.
B) Liquidity.
C) Minimum deposit.
D) Rate of return.
E) Safety.

Question 74

The text discusses several types of bonds.Which bond pays interest for 30 years that is exempt from state and local taxes?

A) Series E
B) Series EE
C) Series HH
D) Series I
E) Series Q

Question 75

Which of the following refers to the opportunity to withdraw money on short notice without incurring a loss in value?

A) Compounding
B) Liquidity
C) Minimum deposit
D) Rate of return
E) Safety

Question 76

Which of the following is correct about inflation?

A) If inflation is 7% and your rate of return in your savings account is 4%, you will experience an overall gain in buying power.
B) As inflation rates increase, interest rates offered to savers decrease.
C) Inflation does not affect interest rates for savings accounts.
D) In order to increase buying power, you need to earn a rate higher than the rate of inflation.
E) If you earn 5% and inflation is 10%, your buying power will increase.

Question 77

The insurance coverage provided by the FDIC for a savings account is ________ per depositor until January 1,2014.

A) $50,000
B) $100,000
C) $150,000
D) $250,000
E) $500,000

Question 78

If you want to buy U.S.savings bonds,you may purchase them

A) Through a TreasuryDirect account.
B) At a financial institution.
C) Online.
D) All of these.
E) Online and through TreasuryDirect.

Question 79

The text discusses several types of bonds.Which bond,which is no longer sold,electronically deposits interest into your bank account every six months?

A) Series E
B) Series EE
C) Series HH
D) Series I
E) Series Q

Question 80

Another name for a regular savings account is a

A) Certificate of deposit.
B) Checking account.
C) Money market account.
D) Money market fund.
E) Passbook or statement account.