Question 1

A saving account is also known as a time deposit.

Accepted Answer

The answer of A saving account is also known as...

Question 2

A more recent product of banks is checking accounts that pay interest to depositors.

Accepted Answer

Checking accounts that pay interest to depositors have become a common product of banks in recent years.

Question 3

Some automatic teller machines (ATMs)allow users to pick up concert tickets and download MP3 music files.

Accepted Answer

Some ATMs offer additional services such as ticket purchasing and digital downloads.

Question 4

Historically,savings and loans always paid lower interest rates on time deposits.

Accepted Answer

The answer of Historically,savings and loans always paid lower interest...

Question 5

Pension funds are monies put aside by corporations,non-profit organizations,or unions to fund the financial needs of their employees,upon retirement.

Accepted Answer

Pension funds are indeed funds set aside by organizations to provide financial support to their employees after retirement.

Question 6

Commercial banks offer creditworthy customers automatic loans to cover checks written in excess of their checking account balance.

Accepted Answer

This practice is called overdraft protection, and it is a service offered by many commercial banks to their creditworthy customers. It allows them to overdraw their checking account by a certain amount, typically up to a specific limit, and the bank will automatically loan them the necessary funds to cover the overdraft. However, there may be fees or interest charged for this service.

Question 7

The Federal Reserve requires that ATM machines be located within 100 yards of a commercial bank.

Accepted Answer

There is no such requirement by the Federal Reserve. ATM machines can be located anywhere, including non-bank locations such as convenience stores and airports.

Question 8

A major cause of the 2008-2010 banking crisis was the neglect of banks to seriously scrutinize loan applicants for creditworthiness.

Accepted Answer

Subprime lending, where banks extended loans to borrowers with poor credit histories, played a significant role in the banking crisis. Banks were criticized for not thoroughly assessing the creditworthiness of borrowers and approving loans that borrowers could not afford to repay, leading to a high number of defaulting borrowers and ultimately the collapse of numerous banks.

Question 9

Technically,a bank can require depositors to give prior notice before they withdraw funds from time deposits.

Accepted Answer

This is true. Banks can place prior notice requirements on time deposits because these deposits have a maturity date that, once reached, allows the depositor to withdraw their funds without penalty or restriction. However, before that date, there may be restrictions on withdrawals and prior notice requirements.

Question 10

Banks focus on the creditworthiness of the borrower when determining whether to grant a loan.

Accepted Answer

Banks assess the creditworthiness of a borrower based on their credit history, income, and other factors to determine if they are a good candidate for a loan.

Question 11

Savings and loan associations,also known as thrift institutions,were created to promote consumer thrift and home ownership.

Accepted Answer

Savings and loan associations were indeed created to promote consumer thrift and home ownership, primarily through offering savings accounts and home mortgage loans to individuals.

Question 12

As nonprofit institutions,credit unions enjoy an exemption from federal income taxes.

Accepted Answer

Credit unions are exempt from federal income taxes under the Federal Credit Union Act.

Question 13

Many S&Ls failed when capital gains taxes increased in the late 70s and early 80s,making it less attractive to invest in real estate and causing investors to walk away from their property loans.

Accepted Answer

This statement is true. The increase in capital gains taxes reduced the profitability of real estate investments and led to many investors defaulting on their property loans, leading to the failure of many S&Ls.

Question 14

A savings and loan association (S&L)is a financial institution that accepts both savings and checking deposits and provides home mortgage loans.

Accepted Answer

This is the correct definition of a savings and loan association.

Question 15

Credit unions represent nonprofit,member-owned financial cooperatives that offer the full variety of banking services to their members.

Accepted Answer

Credit unions are nonprofit, member-owned financial cooperatives that provide a range of banking services to their members.

Question 16

Certificates of deposit (CDs)represent demand deposits issued by banks.

Accepted Answer

Certificates of deposit (CDs) are time deposits, not demand deposits. They are issued by banks for a fixed term and offer a higher interest rate than traditional demand deposits.

Question 17

According to the Spotlight on Small Business box in Chapter 20,as a result of the recent recession,banks have become much more lenient in their lending policies.

Accepted Answer

The Spotlight on Small Business box in Chapter 20 states that as a result of the recent recession, banks have become much more stringent in their lending policies.

Question 18

Credit unions are for-profit cooperatives.

Accepted Answer

The answer of Credit unions are for-profit cooperatives....

Question 19

According to the Spotlight on Small Business box in Chapter 20,angel investors usually invest in high-growth companies in fields like technology and biotech rather than local companies like restaurants and roofers.

Accepted Answer

The Spotlight on Small Business box in Chapter 20 states that angel investors typically invest in high-growth companies in fields like technology and biotech, rather than local service-based businesses like restaurants and roofers.

Question 20

The Small Business Administration has reduced its guaranteed loan program.

Accepted Answer

According to news reports and updates from the Small Business Administration, the agency has reduced its guaranteed loan program in response to the economic impact of the COVID-19 pandemic. This decision is intended to help the SBA manage its resources and support the highest priority loans during this challenging time.

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