Question 1

A(n)_____ is a noninterest-paying demand deposit account.

Accepted Answer

A regular checking account is a noninterest-paying demand deposit account, meaning it allows for frequent withdrawals and deposits without earning interest.

Question 2

Which of the following are protected by the Federal Deposit Insurance Corporation (FDIC)?

Accepted Answer

Money market deposit accounts are protected by the FDIC up to $250,000 per depositor, per insured bank. Money market mutual funds, asset management accounts, stocks and bonds, and life insurance policies are not protected by the FDIC.

Question 3

Share draft accounts are offered by:

Accepted Answer

Credit unions offer share draft accounts, which are similar to checking accounts offered by banks.

Question 4

Which of the following is an interest-bearing checking account?

Accepted Answer

A negotiable order of withdrawal (NOW) account is an interest-bearing checking account. Options A, B, D, and E are not checking accounts. Option E is a non-interest-bearing checking account.

Question 5

You have $450 in your checking account when your ATM card and PIN are stolen.You could lose up to _____ if you notify your bank about the lost ATM card within 2-8 business days.

Accepted Answer

The answer of You have $450 in your checking account...

Question 6

A bank customer withdraws funds by writing checks from his or her negotiable order of withdrawal (NOW)account and:

Accepted Answer

A NOW account is simply a type of checking account that typically pays interest on the balance. Therefore, the most likely option for a customer to withdraw funds from it would be a regular checking account. The other options listed are not related to checking accounts or do not allow for easy withdrawal of funds via check writing.

Question 7

Money market mutual funds:

Accepted Answer

Money market mutual funds allow check writing above a stipulated minimum amount. The other options are incorrect as money market mutual funds are not federally insured, do not have floating maturity dates, are not offered by S&Ls and credit unions, and typically pay higher interest rates compared to regular savings accounts.

Question 8

Laura has a $100,000 balance in her checking account at Best Bank,and she has purchased a certificate of deposit (CD)worth $50,000 issued by Best Bank.Laura is also thinking of investing $200,000 either in Best Bank or in Trust Bank.Which of the following is a suitable strategy for Laura if she wants her deposits to be completely insured?

Accepted Answer

The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per depositor, per insured bank, for each account ownership category. Laura already has $150,000 (checking account + CD) at Best Bank. Investing another $100,000 in Best Bank's MMDA keeps her within the $250,000 limit there. Investing $100,000 in Trust Bank's asset management account spreads her risk and ensures that investment is also fully insured, as it's in a different bank.

Question 9

Funds in commercial banks are protected by the:

Accepted Answer

Commercial banks are insured by the Federal Deposit Insurance Corporation (FDIC). The National Credit Union Administration (NCUA) is responsible for insuring credit unions, and the Savings Association Insurance Fund (SAIF) insures savings and loan associations. The Federal Depositors Assurance Corporation (FDAC) is not a real organization. The National Credit Union Share Insurance Fund (NCUSIF) is also responsible for insuring credit unions.

Question 10

Cash and near-cash resources are known as _____.

Accepted Answer

Cash and near-cash resources are considered liquid assets because they can be easily converted into cash without significant loss of value. Long-lived assets (B) are assets that are expected to provide economic benefits for more than one year, noncurrent assets (C) are assets that are not expected to be converted into cash within one year, fixed assets (D) are assets that have a long useful life and are not meant for resale, and noncash assets (E) are assets that do not involve actual cash payments.

Question 11

Joe Gustafson is a very busy person who prefers to use one account to handle all his financial services needs like checking,investing,and borrowing.Which of the following types of accounts is most suitable for Joe?

Accepted Answer

An asset management account allows for checking, investing, and borrowing all in one account. This would be the most suitable option for Joe Gustafson.

Question 12

Money market deposit accounts:

Accepted Answer

Money market deposit accounts are federally insured, which means that up to a certain amount (typically $250,000), the funds in the account are guaranteed by the government in the event of bank failure. The other options are incorrect: A is false because money market deposit accounts typically have limits on check writing; C is false because money market deposit accounts have a fixed maturity date; D is false because money market deposit accounts are also offered by banks; and E is false because money market deposit accounts typically offer higher interest rates than traditional checking accounts.

Question 13

Credit unions are:

Accepted Answer

Credit unions are member-owned financial cooperatives that provide financial services to their members. They are not open to the general public and do not generally operate as large institutions compared to commercial banks. While credit unions may offer mortgage lending, this is only one of their many services offered to members.

Question 14

Which of the following is true of asset management accounts?

Accepted Answer

The answer of Which of the following is true of...

Question 15

You have $900 in your checking account when your ATM card and PIN are stolen.You could lose up to _____ if you notify your bank about the lost ATM card after 60 business days after your periodic statement is mailed.

Accepted Answer

If you notify your bank after 60 business days, you could be liable for all the money taken from your account, up to the full amount in the account, which is $900 in this case.

Question 16

Mike has $450 in his checking account when his ATM card and PIN are stolen.If Mike notifies his bank within two business days after he discovers the card missing,his loss is limited to _____.

Accepted Answer

According to the Electronic Fund Transfer Act, if Mike notifies his bank within two business days after he discovers the card missing, his loss will be limited to a maximum of $50. Therefore, the best choice is C.

Question 17

When a savings bank is a mutual association,it is owned by the:

Accepted Answer

When a savings bank is a mutual association, it is owned by the depositors. This means that the depositors have a say in the decisions and operations of the bank, and any profits the bank earns are returned to the depositors in the form of dividends or interest. The other options listed (borrowers, creditors, management, and local government) do not typically have ownership rights in a mutual savings bank.

Question 18

Christina's bank allows her employer to directly deposit her paycheck into her personal bank account.This service provided by Christina's bank is called a(n):

Accepted Answer

The service provided by Christina's bank is an electronic funds transfer system (EFTS) service, which allows for direct deposit of her paycheck into her personal bank account.

Question 19

An investor receives the highest interest rate on his or her:

Accepted Answer

Money market deposit accounts (MMDAs) generally offer higher interest rates than other types of accounts listed. MMDAs invest in short-term, low-risk securities, such as government bonds, and are subject to federal regulations that limit the amount of withdrawals and transfers. This makes them a good choice for investors who want to earn interest while maintaining easy access to their funds.

Question 20

Compared to other depository financial institutions,credit unions:

Accepted Answer

Credit unions typically offer lower interest rates on loans to their members compared to other depository financial institutions. This is because credit unions are non-profit organizations, so they prioritize serving their members rather than making a profit. Additionally, credit unions may have eligibility requirements or limited branch locations, which may limit the number of account holders or branches they have. However, for those who are eligible to join and have access to a branch, credit unions can offer more beneficial rates on loans.

Quiz 4: Managing Your Cash and Savings

A(n) _____ is a noninterest-paying demand deposit account.

Which of the following are protected by the Federal Deposit Insurance Corporation (FDIC) ?