Question 1

For banks,the check processing activities:

Accepted Answer

The answer of For banks,the check processing activities:
...

Question 2

Designed to create more confidence in banking institutions,the FDIC was established:

Accepted Answer

The FDIC, or Federal Deposit Insurance Corporation, was established in 1933 during the Great Depression in order to restore confidence in the banking system and protect depositors' savings.

Question 3

The ________ insures holders of accounts in savings and loan associations.

Accepted Answer

The Savings Association Insurance Fund, also known as SAIF, is a government-run program that insures account holders in savings and loan associations. It was established in 1985 to protect depositors in the event of a savings and loan association failure.

Question 4

Barry has $22,000 in a savings account with the Scott Credit Union.While economic conditions have caused financial institutions to struggle,Barry feels that his money is safe due to the fact that the credit union's accounts are protected by the:

Accepted Answer

The National Credit Union Administration (NCUA) is the governing body that provides insurance protection for deposits held in credit unions. The NCUA provides insurance for up to $250,000 per depositor, per insured credit union, making it a safe choice for Barry's savings account. Both the FDIC and the CUIF are insurance funds that protect deposits in traditional banks and other financial institutions, but they do not cover credit unions. The National Alliance of Credit Union Underwriters (NACUU) does not provide insurance coverage but instead offers training and resources for credit union professionals.

Question 5

Which of the following represent an independent agency of the U.S.government that insures bank deposits?

Accepted Answer

The Federal Deposit Insurance Corporation (FDIC) is a U.S. government agency that provides insurance to protect bank deposits. The other options listed do not exist as independent agencies of the U.S. government.

Question 6

How did the Fed contribute to the recent banking crisis?

Accepted Answer

The Fed kept interest rates suppressed, which encouraged banks to take on risky loans and create housing bubbles that eventually led to the banking crisis.

Question 7

The community college where Jake works requires all employees to contribute to a pension fund.At this time,he is not too worried about the safety of this contribution because:

Accepted Answer

The most likely reason that Jake is not too worried about the safety of his pension fund contribution is that pension funds usually make conservative investments. This means that they are less likely to take on risky investments that could result in a loss of funds. While options A, B, and C may offer some protection or reassurance, they are not necessarily the main reason why Jake is not worried about the safety of his contribution. Therefore, the best answer is D.

Question 8

During the early 1980s,the federal government responded to the severe problems plaguing savings and loan associations by:

Accepted Answer

The answer of During the early 1980s,the federal government responded...

Question 9

The purpose of creating the FDIC was to:

Accepted Answer

The creation of the FDIC was to restore confidence in banking institutions during the Great Depression. It provided federally guaranteed insurance for deposits up to a certain amount, helping to reassure the public that their money was safe in the bank.

Question 10

The Federal Deposit Insurance Corporation (FDIC)operates as a(n):

Accepted Answer

The FDIC is an independent agency of the U.S. government that provides deposit insurance to banks. It was created to protect depositors and maintain stability in the banking system, and is funded by premiums paid by member banks. Option A is incorrect as the FDIC is a separate entity from the Federal Reserve System and sells insurance to banks, not mortgage holders. Option C is incorrect as the FDIC is not an arm of the Department of the Treasury, although it does work with the Treasury Department on occasion. Option D is also incorrect as the FDIC is a government agency, not a private nonprofit cooperative.

Question 11

Xavier deposited $75,000 in various individual accounts at his local credit union.He and his wife also have a joint savings account worth $34,500.What portion of these deposits is insured?

Accepted Answer

The answer of Xavier deposited $75,000 in various individual accounts...

Question 12

The Connecting with Small Business box tells a story about a relatively new business in Austin,TX,called the Mango Store.Customers can cash paychecks and utilize a number of electronic methods such as debit cards and ATM machines to manage their funds.The popularity of this business is due to an ongoing need.Which of the following describes the situation?

Accepted Answer

The popularity of the Mango Store is due to the ongoing need of customers who don't have bank accounts. This suggests that at least ¼ of American households may not have bank accounts, making choice A) the best option.

Question 13

Herb has $20,000 in an interest-bearing time deposit with the Applebottom Bank and Trust Company.While earning a relatively attractive rate of interest,Herb had to agree to not withdraw any of the funds until the end of a three-year period.Herb's investment represents a(n):

Accepted Answer

Herb's investment represents a certificate of deposit (CD), which typically offer higher interest rates in exchange for a commitment to leave the funds deposited for a certain period of time (in this case, three years). The restrictions on withdrawal are a key characteristic of CDs.

Question 14

Pleased with the service provided by a national brokerage house when he bought and sold stocks and bonds,Ted would like to have this brokerage firm handle more of his financial needs.If Ted explores the services offered by such firms in more depth,he will find that:

Accepted Answer

The passage states that brokerage firms are becoming serious competitors for banks by offering high-yield combination savings and checking accounts and money market accounts, as well as certain types of loans. The passage does not state that federal law prohibits brokerage firms from competing with banks or that brokerage firms are less efficient at providing banking services. The passage also does not mention any restrictions on holding both a checking account and securities account with the same firm.

Question 15

After Bill and Jillian deposited nearly $30,000 in a savings account at Farmers National Bank,the bank failed and filed for bankruptcy.Because the Farmers National Bank was an FDIC member bank,Bill and Jillian's savings:

Accepted Answer

Since Farmers National Bank was an FDIC member bank, Bill and Jillian's savings should be protected because their account is fully insured by the FDIC. The FDIC insures deposits up to $250,000 per depositor, per ownership category, per bank. Therefore, the amount of their deposit is within the coverage limit and they should not lose any money.

Question 16

Tracing the cause of the recent banking crisis,which of the following organizations is not in the news as having been a contributor to the crisis?

Accepted Answer

While pension funds may have been affected by the banking crisis, they are not often cited as contributors to the crisis itself. The other options listed (A, B, and C) are commonly recognized as contributing factors to the crisis.

Question 17

Alfredo banks at a commercial bank that advertises its membership in the FDIC.This means that:

Accepted Answer

Membership in the FDIC (Federal Deposit Insurance Corporation) means that Alfredo's money is insured by an independent agency of the federal government. This insurance provides protection up to a certain amount in the event of the bank's failure or insolvency.

Question 18

Shana works as an investment specialist for the Teamsters Union Central States Pension Fund.Her job involves deciding how to invest the contributions paid into the fund.Which of the following statements about Shana's job are true?

Accepted Answer

Shana's job involves investing contributions into the fund, which implies that she is not working for a bank (option A is incorrect). As an investment specialist, she will probably invest most of the pension's funds in safe corporate stocks and other conservative investments like government securities to ensure that the fund grows and is sustainable in the long term (option B is correct). To qualify for maximum tax benefits, the contributions can come from both the employers and the union members themselves, so option C is incorrect. The purpose of the investments Shana is making is to grow the fund, not to increase current pay for union members, so option D is incorrect.

Question 19

The __________ insures deposits held in credit unions.

Accepted Answer

The National Credit Union Administration (NCUA) insures deposits held in credit unions.

Question 20

How did banks contribute to the recent financial crisis?

Accepted Answer

Banks made risky loans to borrowers who could not afford to pay them back, then packaged those loans into mortgage-backed securities which were sold to investors. When the borrowers default on their loans, the value of these securities plummeted, causing huge losses for both the banks and their investors.

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