Question 1

A __________ represents an unconditional agreement by a bank to pay a specified amount at a particular time.

Accepted Answer

A banker's acceptance is a legal instrument issued by a bank that promises to pay a specified amount at a specific time in the future. It is a guarantee of payment by the bank and is often used in international trade transactions as a means of providing assurance to the seller that they will receive payment for their goods or services. Certified trade acceptance is not a common term, and guaranteed funds agreement is not specific to payment guarantees by a bank. A letter of credit is a different type of payment guarantee provided by a bank, but it requires specific conditions to be met before payment is made.

Question 2

First Data Corporation has developed the GO-Tag,where:

Accepted Answer

The GO-Tag developed by First Data Corporation is described as a small chip that can be attached to a cell phone or smaller card such as a badge and can make a transaction from one account to another without the need to swipe the card. This description matches option D. Options A, B, and C describe different types of electronic payment systems but do not match the specific functionality of GO-Tag.

Question 3

Which of the following can include an embedded radio-frequency antenna that allows the holder to access secure areas in buildings or buy gas with the swipe of a card?

Accepted Answer

Smart cards can have a built-in radio-frequency antenna that enables the holder to access secure areas or make purchases with a swipe of the card. Direct deposit cards, e-cards, and check conversion cards do not typically include this feature.

Question 4

Payroll debit cards:

Accepted Answer

Payroll debit cards can be issued to individuals without bank accounts, and can be used to access cash from an ATM machine, making them a convenient option for those who may not have access to traditional banking services. They can also be used to pay bills online, providing added functionality. Additionally, payroll debit cards may offer fraud protection if lost or stolen.

Question 5

The ________ provides the same results as a check because it withdraws funds from a checking account.

Accepted Answer

A debit card is linked directly to a checking account and withdraws funds from that account when used, similar to a check.

Question 6

When a customer purchases an item with a debit card:

Accepted Answer

When a customer purchases an item with a debit card, the funds are automatically transferred from the customer's account to the store's account. There is no short-term loan or bill involved, and the transaction does not duplicate the process of a credit card.

Question 7

Which of the following accurately presents a major difference between Internet banks and traditional banks?

Accepted Answer

Internet banks operate solely online, eliminating the need for physical branches and significantly reducing overhead costs. Traditional banks, on the other hand, have to maintain physical branches and pay for staff, utilities, and other expenses associated with them. This difference in operating costs allows Internet banks to offer higher interest rates and lower fees to their customers.

Question 8

John searched for a new bank prior to filling out his direct deposit form at his new employer.He noted that Twenty/Four/Seven E-Bank,Inc. ,offered better interest rates on savings accounts and money market accounts;and it offered other amenities such as online banking and funds transfer that many traditional banks offer.What is the most logical reason that Twenty/Four/Seven can compete for customers by offering higher interest rates?

Accepted Answer

Since Twenty/Four/Seven does not have buildings and locations, it has lower overhead costs and is able to offer higher interest rates to its customers to remain competitive with traditional banks.

Question 9

A __________ represents an agreement by a bank to pay a foreign company a given amount if certain conditions are met.

Accepted Answer

A letter of credit is a financial instrument that represents an agreement by a bank to pay a foreign company a given amount if certain conditions are met. It is often used in international trade to ensure that the seller will receive payment from the buyer. A certificate of deposit is a financial instrument that represents a deposit made with a bank for a fixed period of time, typically earning a higher interest rate than a regular savings account. A banker's acceptance is a financial instrument issued by a bank that represents a promise to pay a specified amount at a future date. A callable option is a financial instrument that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price within a specified time period, but can be called back by the issuer before the expiration date.

Question 10

Which of the following is a bank service provided to help companies conduct business in other countries?

Accepted Answer

Currency exchange is a bank service that helps companies conduct business in other countries by allowing them to convert one currency into another. This is essential for international trade and commerce. Transaction letters, certificates of deposit, and banker's depositories are not specific services related to international business.

Question 11

If the Fed increases interest rates in the U.S.relative to other nations,

Accepted Answer

When the Fed increases interest rates in the U.S. relative to other nations, it makes investments in the U.S. more attractive to foreign investors seeking higher returns. Therefore, foreign investors are likely to transfer funds to U.S. investments.

Question 12

An)__________ allows money to be exchanged electronically more quickly and more economically than with paper checks.

Accepted Answer

Electronic funds transfer (EFT) system allows for money to be exchanged electronically, bypassing the need for paper checks. It is faster and more economical as there are no physical checks to be mailed or processed. Options A, C, and D are not the correct choices as they do not accurately describe the process of electronic money transfer.

Question 13

Juan has an authorized work permit issued by the U.S.government to work in the U.S.Each day,Juan travels from Mexico to El Paso,TX,to work in the construction trade.At the time that he was first employed his U.S.employer issued him an)___________ .Each week,the employer scans his work stipend onto it.Juan can purchase with it,access cash through an ATM with it,and transfer funds with it.The risk for Juan is:

Accepted Answer

The best choice is option C, the payroll debit card, because it provides convenience for Juan to access his pay and transfer funds, but it also carries risks if lost or stolen. However, if he promptly reports any unauthorized transactions, he may have recourse to recover the stolen funds. Option A, the paycheck, also has the risk of being lost or stolen, but at least he can cancel the original check and request a new one. Option B, the payroll debit card that serves as a credit card, has higher risk since it involves a credit line that Juan may not be able to pay off if stolen. Option D, ETF, may have minimal risk, but it may not be as practical or accessible for Juan to use compared to the other options.

Question 14

Banks prefer that customers use an electronic funds transfer system rather than traditional methods of payment because:

Accepted Answer

Electronic funds transfer is more efficient and less expensive for banks than traditional check-based payments.

Question 15

On payday,employers can designate their banks to electronically transfer funds from the business' checking account to the employees' checking account.This represents an example of an):

Accepted Answer

This represents an example of direct deposit, where employers electronically transfer funds from their business' checking account to employees' checking accounts on payday. A debit card system involves the use of a card issued by a financial institution, while check kiting refers to an illegal practice of writing checks from accounts with insufficient funds. Electronic check conversion allows merchants to convert paper checks into electronic transactions for processing.

Question 16

A few retailers enable their customers to pay for gas by using a ________ card that electronically transmits information through an embedded radio-frequency antenn A.

Accepted Answer

The question specifically mentions "embedded radio-frequency antenna", which is a feature of smart cards. Therefore, the best choice is B)smart card.

Question 17

As is common payroll procedure for most employers,Marissa's company _____________ her paycheck bi-monthly into her checking account.This is a paperless process and no check is issued to the employee.By logging into her personnel system,Marissa has record of the net pay that was deposited into her personal checking account and an account of how much was taken out for taxes,Medicare,social security FICA)and other deductions.Marissa's company has adopted an efficient _________ system.

Accepted Answer

Direct deposits are the electronic transfer of an employee's net pay into their bank account, whereas electronic funds transfer is a general term for various electronic money transfer methods. Therefore, option C is the most accurate. Option A is incorrect because debits are not necessarily associated with enterprise funds transfer. Option B is incorrect because electronic funds transfer is too general and does not specify the method of payment. Option D is incorrect as it is unrelated to the context of the question.

Question 18

Chad travels extensively for his company.He stays at hotels that provide him with an)____________ that is imbedded with his personal information as well as a code to unlock his hotel room.

Accepted Answer

A smart card is a type of technology that can store personal information and be used to electronically unlock hotel rooms. RFID tags are also used for this purpose, but typically do not contain as much personal information as a smart card. Credit cards and automatic keys are not typically used for hotel room access.

Question 19

Which of the following explains why Internet banks often offer their customers better interest rates than traditional banks?

Accepted Answer

Internet banks do not have to maintain physical branches or hire as many employees, which results in lower operating costs. As a result, they can offer their customers better interest rates than traditional banks.

Question 20

___________ replace the typical magnetic strip on a credit or debit card with a microprocessor.

Accepted Answer

Smart cards have a microprocessor embedded in them which replaces the magnetic strip on a traditional credit or debit card. This microprocessor allows for increased security and additional functionalities, such as storing personal information and conducting secure transactions. Direct deposit cards and e-cards may utilize smart card technology, but these terms do not exclusively refer to smart cards. Check conversions are not related to smart card technology.

Quiz 20: Money,financial Institutions,and the Federal Reserve