Deck 5: Managing Checking and Savings Accounts

Question 1

Credit unions with federal charters have their accounts insured through the FDIC.

Answer 1

False

Question 2

Credit unions typically offer the widest variety of financial services.

Answer 2

False

Question 3

The goal of monetary asset management is to maximize interest earnings and minimizing fees while keeping funds safe and readily available.

Answer 3

True

Question 4

Today,even stock brokerages and insurance companies provide certain products for use in cash management.

Question 5

Mutual savings banks are called "mutual" because the depositors own the institution and share in the earnings.

Question 6

Deposits in credit unions with federal charters are insured through the National Credit Union Share Insurance Fund (NCUSIF).

Question 7

Money deposited in mutual funds is insured by the federal government.

Question 8

Monetary asset management includes setting money aside in a savings account for use later when making investments.

Question 9

Unlike other providers of financial services,depository institutions can both take deposits and make loans to consumers.

Question 10

In monetary asset management,safety means the speed and ease with which an asset can be converted to cash.

Question 11

Commercial banks typically offer the widest variety of financial services.

Question 12

One can increase the amount of money covered by FDIC insurance by dividing his or her money among different branch offices of the same depository institution.

Question 13

The total protection an individual might have with any institution,including all its branches,is $250,000 with no more than $125,000 each on single-ownership and joint accounts.

Question 14

Stock brokerage firms are federally insured institutions.

Question 15

Stock brokerage firms earn commissions on clients' stock transactions.

Question 16

Liquidity is the speed and ease with which an asset can be converted to cash.

Question 17

Cash management focuses primarily on your investment assets.

Question 18

A mutual fund is an investment company that raises money by selling shares to the public and then invests that money in a diversified portfolio of investments.

Question 19

The primary focus of savings banks is to accept savings from consumers and provide mortgage and consumer loans.

Question 20

A stock brokerage firm is a licensed financial institution that specializes in selling and buying stocks,bonds,and other investment alternatives.

Question 21

Fees of no more $10 are generally charged for money orders,certified checks and cashier's checks.

Question 22

If your checking account balance drops to less than perhaps $50 at any point during a month you would likely be better off with a minimum deposit account in order to avoid fees.

Question 23

Checking accounts that pay no interest are called NOW accounts.

Question 24

Traveler's check companies guarantee replacement of lost checks if their serial numbers are identified.

Question 25

NOW accounts get their name because they are considered demand deposits.

Question 26

A share draft account is the credit union version of a NOW account.

Question 27

NOW accounts and share draft accounts with tiered interest will pay higher interest rates on larger balances.

Question 28

You can save on fees for a checking account by having your paycheck directly deposited into your account electronically by your employer.

Question 29

Share draft accounts at credit unions are generally more expensive than NOW accounts at commercial banks.

Question 30

College students who are independent of their parents may qualify for very low-cost lifeline banking accounts.

Question 31

Banks offering a "free" checking account means that there are no fees for writing bad checks or using another bank's ATM.

Question 32

The only reason to have a checking account is so that one has an account for writing checks.

Question 33

Interest-earning checking accounts are offered through savings banks and mutual savings banks as well as credit unions.

Question 34

Acceptance for a lifeline banking account is dependent on one's income and net worth.

Question 35

When you use a debit card,funds are instantaneously removed from your account.

Question 36

The interest rate you earn on your checking and savings account can vary with the amount you have in the accounts.

Question 37

Costs for a share draft account are often higher than for those for a checking account at a bank or savings bank.

Question 38

Checks allow you to transfer funds from your account to other people and organizations.

Question 39

A stop-payment order works only if the check has not yet cleared your financial institution.

Question 40

A written stop-payment order is valid for up to three years.

Question 41

Interest rates on longer-term CDs are usually higher than the comparable rates on shorter-term instruments.

Question 42

In general,the shorter the maturity time on a certificate of deposit,the higher the rate of interest that will be paid.

Question 43

Institutions usually have a rule requiring that savings account holders give 30 to 60 days notice for withdrawals,although this restriction is seldom enforced.

Question 44

Funds on deposit in a savings account are considered demand deposits.

Question 45

CD laddering is a technique that smoothes out the fluctuations in interest rates and lowers inflation rate risk.

Question 46

Bump-up CDs allow savers to bump up the interest rate once to a higher market rate.

Question 47

Time deposits are savings that are expected to remain on deposit in a financial institution for an extended period.

Question 48

While the majority of certificates of deposit pay a fixed rate of interest,variable-rate certificates of deposit are available.

Question 49

Time deposits specify a period that the savings must be left on deposit,such as six months or three years.

Question 50

Funds on deposit in a savings account are considered time deposits rather than demand deposits.

Question 51

Fixed-time deposits specify a period of time that the savings must be left on deposit.

Question 52

Money withdrawn from a CD before the end of the specified time period is subject to interest penalties.

Question 53

A long-term,fixed-rate certificate of deposit would be most appropriate when interest rates are moving up.

Question 54

The safest type of endorsement on a check is a blank endorsement.

Question 55

Institutions have a rule requiring that savings account holders give 30 to 60 days' notice for withdrawals.

Question 56

If one believes interests rates will move lower in the months ahead,he or she should invest in long-term,fixed-rate savings investments.

Question 57

It is possible to lose money on a certificate of deposit if the early withdrawal penalty is greater than the interest earned.

Question 58

It is highly recommended that CD investments be made at local institutions,even though some yield may be sacrificed.

Question 59

The interest rate in force when a CD is purchased typically remains fixed for the entire term of the deposit.

Question 60

Demand deposits are savings that are expected to remain on deposit in a financial institution for an extended period.

Question 61

A check with a blank endorsement contains only the payee's signature on the back.

Question 62

If you have an automatic overdraft loan agreement with your bank,money will be borrowed from your MasterCard or Visa as a cash advance when you write a bad check.

Question 63

A grace period is the time period in days during which deposits or withdrawals can be made and still earn the same interest as other savings from a given day of the interest period.

Question 64

A payable-on-death designation can be used to set up an individual account that automatically goes to another person when you die.

Question 65

If the balance on either a super NOW account or a money market deposit account falls below a specified level,the account generally earns interest at the lower rate paid on a regular NOW account.

Question 66

A person whose income is dependent on commissions generally needs more readily available emergency fund than a salaried employee.

Question 67

Periodically,you should conduct an account reconciliation in which you compare your records with your bank's records.

Question 68

Brokered certificates of deposit are available through stockbrokers.

Question 69

The Truth in Savings Act requires depository institutions to disclose a standardized rate of interest so that depositors can easily compare various savings options.

Question 70

In community property states,the rights of the husbands and wives are unequally protected.

Question 71

One should accumulate enough savings to cover living expenses for six to nine months.

Question 72

The more frequent the compounding,the greater the effective return for the saver.

Question 73

Checks mailed to the bank for deposit should always be endorsed with a restrictive endorsement.

Question 74

A joint account that gives each owner access to the account (without the other's signature)is called a joint tenancy account with right of survivorship.

Question 75

Completing a signature card is part of the process when opening a checking account.

Question 76

The term money market account describes a variety of high-interest earning accounts that normally have unlimited check-writing privileges.

Question 77

Writing a "bad check" can be very expensive because of fees assessed by both the bank and the payee.

Question 78

Courtesy overdraft/bounce protection can be very helpful if the institution will honor your debit card even if you have insufficient funds.

Question 79

An automatic funds transfer agreement is usually the most expensive way to avoid bad check fees.

Question 80

A tenancy by the entirety account may be opened only by spouses.