Question 1

An all-in-one account that provides a complete financial services program for a single fee is known as

Accepted Answer

A cash management account is an all-in-one account that typically includes a checking account, savings account, and investment account, all for a single fee. This provides a complete financial services program for the account holder. Therefore, choice A is the best option.

Question 2

Due to Check 21,the processing time for checks has increased.

Accepted Answer

Check 21 shortened the processing time.

Question 3

A legal agreement that provides for the management and control of assets by one party for the benefit of another is known as

Accepted Answer

A trust is a legal agreement in which one party, known as the trustee, holds and manages assets on behalf of another party, known as the beneficiary. The trustee has a fiduciary duty to act in the best interest of the beneficiary and follow the guidelines set forth in the trust agreement. This arrangement provides a level of asset protection and can be used for various purposes, such as estate planning and charitable giving.

Question 4

Investments and tax assistance,both tools for financial planning,are also known as

Accepted Answer

Investments and tax assistance are specific financial services offered by professionals who specialize in financial planning. Checking accounts, trusts, loans, and savings accounts may be related to financial planning, but they are not specific tools for investment or tax assistance.

Question 5

A time deposit is also known as

Accepted Answer

A time deposit is a savings account where the funds are placed for a specific period of time and generally earn a higher interest rate than a standard savings account. It is not a checking account, trust, or loan.

Question 6

Claudette's grandchildren are 7 and 9 years old.When Claudette passed away,her grandchildren inherited her money.However,the will stipulated that they should not get control of the money until age 25.Which of the following should be set up to provide for the management and control of the funds?

Accepted Answer

A trust is the best choice in this scenario as it allows for the management and control of the funds until the grandchildren reach the age of 25, as stipulated in the will. This ensures that the funds are protected and used appropriately until the grandchildren are mature enough to handle them responsibly. Checking account, savings account, certificate of deposit or a loan do not provide the same level of management and control that a trust would offer.

Question 7

Brenda lost her debit card.When she realized it was gone,her account had $173 in unauthorized charges.She notified her financial institution within two days.How much is she potentially liable for?

Accepted Answer

Under the Electronic Fund Transfer Act (EFTA), if a consumer reports a lost or stolen debit card within two business days, their liability is limited to $50 for unauthorized charges.

Question 8

A credit card is a type of

Accepted Answer

A credit card is essentially a loan from a bank or financial institution that allows a user to purchase goods and services on credit. The user is required to pay back the amount borrowed, along with interest and any fees charged by the issuer.

Question 9

Reconciling a checking account is not really necessary since the bank statement includes all activity from the bank's perspective.

Accepted Answer

Banks sometimes make errors, so a bank reconciliation should be done each month.

Question 10

Franklin is planning for a purchase of a vehicle in two years.Since he wants to be certain that his funds are safe (insured),which of the following should he use?

Accepted Answer

Franklin should use a savings account because it is a safe and insured way to save money for a future purchase. Credit cards and loans may come with high-interest rates, while trusts and home mortgages may not be necessary for a vehicle purchase.

Question 11

Two years ago,Sean deposited money into a savings account and received a toaster.The value of the toaster reduced the amount of interest he earned for the first year.

Accepted Answer

If Sean had withdrawn his money before a certain time period, he may have received less interest, which means some of the earnings may have been used to cover the cost of the toaster.

Question 12

A demand deposit is also known as

Accepted Answer

A demand deposit is a type of account that allows the account holder to withdraw funds on demand, typically through writing checks or using a debit card. This is commonly referred to as a checking account in the United States. Option B is incorrect, as a trust is a legal arrangement where one party holds and manages assets on behalf of another party. Option C is incorrect, as a loan involves borrowing money and then repaying the borrowed amount with interest. Option D is incorrect, as a savings account typically limits the number of withdrawals the account holder can make per month. Option E is partially correct, as all demand deposits are checking accounts, but not all checking accounts are demand deposits.

Question 13

Lydia found a check that she was given for her birthday nine months earlier.Her bank should refuse to cash the check.

Accepted Answer

Banks usually do not honor checks with "stale" dates, usually six months or more old.

Question 14

Brandon lost his debit card.When he realized it was gone,his account had $238 in unauthorized charges.Since he was embarrassed about his loss,he didn't contact his financial institution for 45 days.What is the most that he is liable for?

Accepted Answer

The answer of Brandon lost his debit card.When he realized...

Question 15

Each year,check writing is being used more often.

Accepted Answer

Although paper checks account for a smaller portion of payments each year, a checking account is still the common source for most debit card transactions and online payments.

Question 16

Many people make mistakes when managing current cash needs.Which of these is NOT a frequently made mistake?

Accepted Answer

Budgeting spending is not a frequently made mistake. In fact, creating and sticking to a budget is a key component of effective cash management.

Question 17

ATM stands for

Accepted Answer

ATM stands for Automatic Teller Machine, which is a machine that allows individuals to perform different banking transactions without the help of a bank teller.

Question 18

A college ID that includes prepaid amounts for meals is called a debit card.

Accepted Answer

A college ID that stores prepaid amounts may be a stored-value card or a smart card (if it is embedded with a microchip).

Question 19

The FDIC insures a depositor's savings account up to $200,000 per insured financial institution.

Accepted Answer

The limit is $250,000 per depositor per insured financial institution until January 1, 2014.

Question 20

Common payment choices for everyday activities include all of the following except

Accepted Answer

Short-term loans are not a common payment choice for everyday activities; they are typically used for larger, more significant expenses that cannot be covered by cash, checks, credit cards, or debit cards.

Quiz 4: Financial Services: Savings Plans and Payment Account