Question 1

Based on the following information,what amount would be subtracted from the bank statement side of the checking account reconciliation? Service charge $12; Outstanding checks $145; Interest $3.50; Deposit in transit $80.

Accepted Answer

Outstanding checks of $145 are subtracted from the bank statement side during reconciliation.

Question 2

Tim Gleason has set up a legal agreement that allows the First State Bank of Orlando to manage funds set aside for his daughter's college education.What type of financial service is Tim using?

Accepted Answer

Tim is using a trust service, as he has set up a legal agreement (a trust) that designates the First State Bank of Orlando to manage funds for his daughter's college education. Trust services can be used for a variety of purposes, including managing assets for beneficiaries (such as Tim's daughter) and providing estate planning.

Question 3

Neil Guest writes a check to pay for day care for his son.What type of financial service is Neil using?

Accepted Answer

Neil Guest is using a payment service by writing a check to pay for day care for his son.

Question 4

When preparing a bank reconciliation,outstanding checks should be:

Accepted Answer

Outstanding checks are checks that have been written and recorded in the checkbook balance but have not yet cleared the bank. Therefore, they should be subtracted from the bank statement balance to reconcile the bank's balance with the checkbook balance.

Question 5

A ____________ endorsement would be used if a person is presenting a check in order to obtain cash.

Accepted Answer

A blank endorsement is when the endorser signs their name on the back of the check without specifying to whom the check is payable. This type of endorsement turns the check into a bearer instrument, meaning that whoever holds the check can cash it. This would be the appropriate type of endorsement to use when presenting a check to obtain cash.

Question 6

Which of the following is a drawback of a money market fund from an investment company?

Accepted Answer

Money market funds are not insured by the FDIC, which means that investors cannot count on government protection in case the investment company defaults or experiences losses in their portfolio. This is a significant drawback compared to other investment options that are covered by FDIC insurance, such as bank deposits or CDs.

Question 7

Which of the following institutions makes loans based on the value of tangibles possessions,such as jewelry and other valuables?

Accepted Answer

Pawnshops are known for making loans based on the value of tangible possessions, such as jewelry and other valuables.

Question 8

In the bank reconciliation process,total fees should be:

Accepted Answer

Total fees should be subtracted from the checkbook balance because they represent charges that reduce the account balance, which may not yet be reflected in the checkbook.

Question 9

Which of the following is a user-owned,nonprofit,cooperative financial institution?

Accepted Answer

A credit union is a user-owned, nonprofit, cooperative financial institution that offers financial services such as savings and checking accounts, loans, and credit cards to its members. Unlike banks, credit unions are not-for-profit organizations and are owned and controlled by their members. This means that any profits made by a credit union are returned to its members in the form of lower fees, higher interest rates, and better services.

Question 10

David Wynn gets an auto loan from his credit union for $10,000.David will make monthly payments over the next four years to repay the loan.What type of financial service is David using?

Accepted Answer

David is using a credit service since he is borrowing money from the credit union and will pay it back over time with interest.

Question 11

Which of the following doesnot offer deposit services?

Accepted Answer

Life insurance companies do not offer deposit services. Instead, they provide life insurance policies and investment products such as annuities. The other options listed all offer deposit services, including accepting and holding deposits from their customers. Commercial banks are traditional, full-service banks that offer a wide range of financial services, including deposit accounts, loans, and other financial products. Savings and loan associations, credit unions, and mutual savings banks are all financial institutions that specialize in accepting deposits and making loans, but differ in their ownership structure, membership requirements, and specific types of services offered.

Question 12

What is the rate an individual will pay to borrow for the purchase of a new home called?

Accepted Answer

The rate an individual will pay to borrow for the purchase of a new home is called the mortgage rate. The prime rate is the interest rate that a bank offers to its most creditworthy customers. The discount rate is the interest rate that the Federal Reserve charges commercial banks for short-term loans. Treasury bond rate refers to the interest rate on U.S. government-issued bonds while the corporate bond rate refers to the interest rate on bonds issued by corporations.

Question 13

A _______ endorsement is especially useful when you are depositing checks.

Accepted Answer

A restrictive endorsement limits the use of the check to the specified purpose, such as deposit only. This type of endorsement is helpful when depositing checks to ensure that the funds are only used for the intended purpose.

Question 14

What is the term used to refer to the yield on a long term bond issued by the U.S.government?

Accepted Answer

Treasury bond rate is the term used to refer to the yield on a long term bond issued by the U.S. government.

Question 15

What is the rate that banks charge large corporations for loans called?

Accepted Answer

Prime rate is the rate that banks charge their most creditworthy customers, which includes large corporations. This rate serves as a benchmark for other loan rates and is closely tied to the federal funds rate set by the Federal Reserve.

Question 16

The purpose of a "special endorsement" is to:

Accepted Answer

A special endorsement is also known as an endorsement in full. It is used when the payee wants to transfer the rights to the funds to someone else. In this type of endorsement, the payee has to sign the check and write the name of the person to whom the check is being transferred. The person who receives the transferred check can then deposit it or cash it.

Question 17

Which of the following institutions is organized primarily to provide loans to purchase homes?

Accepted Answer

A mortgage company is specifically organized to provide loans for purchasing homes. Life insurance companies and investment companies may offer home loans, but it is not their primary function. Finance companies may provide different types of loans, including personal loans, and pawnshops do not provide home loans at all.

Question 18

Nate Rogers deposited $5,000 in a 3-year bank certificate of deposit which pays six percent interest.What type of financial service is Nate using?

Accepted Answer

Nate is using a savings service by depositing his money into a bank certificate of deposit which earns interest over a period of 3 years.

Question 19

A personal check with guaranteed payment is called a:

Accepted Answer

A certified check is a personal check that has been verified and guaranteed by the bank. This means that the funds are guaranteed to be available when the check is cashed, making it a secure form of payment for both the recipient and the payer.

Question 20

What is the rate that the Federal Reserve banks charge financial institutions for loans called?

Accepted Answer

The rate that the Federal Reserve banks charge financial institutions for loans is called the discount rate.

Quiz 5: Financial Services: Savings Plans and Payment Accounts