Deck 4: Financial Services: Saving Plans and Payment Accounts

Question 1

A benefit of investing in a certificate of deposit is the penalty for early withdrawal.

Answer 1

False

Question 2

The "safety" concern with banks and credit unions refers to the potential loss of money due to investors' bad spending habits.

Answer 2

False

Question 3

As inflation rates increase, the interest rates offered to savers usually increase.

Answer 3

True

Question 4

I bonds earn interest based on a fixed rate plus an inflation rate.

Question 5

A commercial bank is the same thing as a credit union.

Question 6

Making transactions using a credit card will immediately reduce your bank balance.

Question 7

If you rent a big-screen television from a rent-to-own center for a week, you will be certain to own it at the end of the first week.

Question 8

The Truth in Savings Act requires financial institutions to disclose the interest rate on loans.

Question 9

The only question you should ask yourself when selecting a financial service provider is "Where can I get the best return on my savings?"

Question 10

Liquidity and rate of return refer to the same thing.

Question 11

A loan from a pawnshop will be more expensive than one from a bank.

Question 12

When Ted needs more cash than he has available, his choices include liquidating savings and borrowing.

Question 13

If you think that rates will fall in the future, you should buy a long-term CD to lock in your rate now.

Question 14

A callable CD allows investors to "cash in" their investment early.

Question 15

A savings account is also known as a demand deposit.

Question 16

Web-only banks offer both online transactions and face-to-face transactions.

Question 17

The best option for borrowing money at a low rate is to use a payday loan organization.

Question 18

Money market funds are not covered by federal deposit insurance.

Question 19

A bump-up CD allows an investor to increase the amount invested at various intervals.

Question 20

When Flo says she's "going to the bank," she may be implying that she is visiting a credit union or stopping at an ATM.

Question 21

A school ID that includes prepaid amounts for school lunches is called a debit card.

Question 22

A time deposit is also known as

A) A checking account.
B) A trust.
C) A loan.
D) A savings account.
E) All of these are time deposits.

Question 23

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

Question 24

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

A) Cash.
B) Check.
C) Credit card.
D) Short-term loan.
E) Debit card.

Question 25

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

Question 26

Two years ago, Sean deposited money into a savings account and received a toaster as a free gift, which required him to leave his money on deposit for a year. The value of the toaster reduced the amount of interest he earned for the first year.

Question 27

An asset management account is an all-in-one account that is also called a cash management account.

Question 28

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?

A) A checking account
B) A trust
C) A loan
D) A savings account
E) A certificate of deposit

Question 29

Smishing is a scam that uses email spam or pop-up messages to deceive you into revealing your credit card number, social security number, passwords, or other private information.

Question 30

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

A) A checking account.
B) A trust.
C) A loan.
D) A savings account.
E) None of these.

Question 31

A credit card is a type of

A) Checking account.
B) Trust.
C) Loan/borrowing.
D) Savings account.
E) Cash account.

Question 32

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

A) Using savings or borrowing to pay for current expenses
B) Budgeting spending
C) Failing to put unneeded funds in an investment plan
D) Having insufficient liquid assets to pay current bills
E) Overspending due to impulse buying and over using credit

Question 33

Bank customers may now make withdrawals from ATMs using a smartphone, a cash code, and a PIN.

Question 34

Financial service activities through your smartphone or tablet include text banking, mobile web banking, and banking apps.

Question 35

A $200 savings account that earned $5 after one year would have a rate of return, or yield, of 5 percent.

Question 36

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

Question 37

Each year, check writing is being used more often.

Question 38

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?

A) A credit card.
B) A trust.
C) A loan.
D) A savings account.
E) A home mortgage.

Question 39

A demand deposit is also known as

A) A checking account.
B) A trust.
C) A loan.
D) A savings account.
E) All of these are demand deposits.

Question 40

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

Question 41

When Angela wanted to provide financial security for her dependents, she considered purchasing a specific type of account at a

A) Credit card company.
B) Investment company.
C) Life insurance company.
D) Finance company.
E) Payday loan company.

Question 42

All of the following are non-deposit institutions except

A) A credit card company.
B) A investment company.
C) A life insurance company.
D) A finance company.
E) A payday loan company.

Question 43

ATM stands for

A) Automatic taking machine.
B) Available teller machine.
C) Automatic teller machine.
D) Available token machine.
E) Automatic token machine.

Question 44

When you select a financial services provider, you should ask all of the following questions except

A) Will I be able to borrow money if I need it?
B) How can I minimize the cost of checking and payment services?
C) Where can I get the best return on my savings?
D) All of the questions above should be asked.
E) None of these questions are needed.

Question 45

Which of the following usually offers money market funds?

A) A credit card company
B) An investment company
C) A life insurance company
D) A finance company
E) A payday loan company

Question 46

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

A) An asset management account.
B) A checking account.
C) A trust.
D) A loan.
E) A savings account.

Question 47

Which of the following is organized as a corporation with investors (stockholders) contributing the needed capital to operate?

A) A commercial bank
B) A check-cashing outlet
C) A pawnshop
D) A payday loan facility
E) A rent-to-own center

Question 48

Which of the following primarily provides loans for home purchases?

A) A credit card company
B) An investment company
C) A life insurance company
D) A mortgage company
E) A payday loan company

Question 49

Which of the following is NOT a financial publication that can provide information about financial services and economic conditions?

A) The Wall Street Journal
B) The Financial Times
C) The Daily Market
D) Bloomberg's Businessweek
E) Forbes

Question 50

All of the following are deposit institutions except

A) A commercial bank.
B) A credit union.
C) A finance company.
D) A mutual savings bank.
E) A savings and loan association.

Question 51

Cathy needs a full range of financial services, including checking, savings, and lending. To which of the following should she go?

A) A commercial bank
B) A check-cashing outlet
C) A pawnshop
D) A payday loan company
E) A rent-to-own center

Question 52

Billy accepted a job at a company that specializes in providing money for short-term retail lending. Where did he go to work?

A) A credit card company
B) An investment company
C) A life insurance company
D) A finance company
E) A payday loan company

Question 53

Which of the following will likely provide the most expensive loans?

A) A credit card company
B) An investment company
C) A life insurance company
D) A finance company
E) A payday loan company

Question 54

When you select a financial services provider, you may find all of the following to be major factors except

A) Company logo.
B) Convenience.
C) Fee structure and other charges.
D) Personal service.
E) Rates for savings and borrowed funds.

Question 55

Which of the following offers a full range of financial services including checking, savings, lending, and other services?

A) A commercial bank
B) A check-cashing outlet
C) A pawnshop
D) A payday loan company
E) A rent-to-own center

Question 56

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?

A) $0
B) $50
C) $188
D) $238
E) $500

Question 57

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

A) Checking accounts.
B) Trusts.
C) Loans.
D) Savings accounts.
E) Financial services.

Question 58

Harvey needed some cash quickly, so he received a short-term loan based on the value of an old ring. Where did he go?

A) A commercial bank
B) A check-cashing outlet
C) A pawnshop
D) A payday loan company
E) A rent-to-own center

Question 59

When Imogene brought a necklace to a _______, she received a loan based on its value.

A) commercial bank
B) check-cashing outlet
C) pawnshop
D) payday loan company
E) rent-to-own center

Question 60

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?

A) $0.
B) $25.
C) $50.
D) $173.
E) $500.

Question 61

Another name for a regular savings account is a

A) Certificate of deposit.
B) Checking account.
C) Money market account.
D) Money market fund.
E) Passbook or statement account.

Question 62

The text discusses several types of bonds. Which bond, which is no longer sold, electronically deposits interest into your bank account every six months?

A) Series E
B) Series EE
C) Series HH
D) Series I
E) Series Q

Question 63

The text discusses several types of bonds. Which bond pays interest for 30 years that is exempt from state and local taxes?

A) Series E
B) Series EE
C) Series HH
D) Series I
E) Series Q

Question 64

Zach wants to open an account, but he doesn't know which kind is appropriate. He is interested in earning a higher interest rate and knows that he might not be able to write many checks from his account. In addition, he plans to keep at least $1,000 in his account so he can avoid paying a fee. He definitely wants to have federal deposit insurance. What kind of account should he open?

A) A certificate of deposit
B) An interest-earning checking account
C) A money market account
D) A money market fund
E) A regular savings account

Question 65

Karen wanted a certificate of deposit that would definitely be available the entire length of time until maturity. She would NOT want to consider a

A) Bump-up CD.
B) Callable CD.
C) Portfolio CD.
D) Promotional CD.
E) Indexed CD.

Question 66

Earnings on savings can be measured by the

A) Compounding.
B) Liquidity.
C) Minimum deposit.
D) Rate of return.
E) Safety.

Question 67

Earning interest on previously earned interest is called

A) Compounding.
B) Liquidity.
C) Minimum deposit.
D) Rate of return.
E) Safety.

Question 68

Marcus bought a certificate of deposit whose interest rate is based on the stock market. Sometimes, his earnings are higher than other similar cds, and at other times, his earnings are lower. He purchased a

A) Bump-up CD.
B) Callable CD.
C) Portfolio CD.
D) Promotional CD.
E) Indexed CD.

Question 69

If you want to buy U.S. savings bonds, you may purchase them through

A) The State government office.
B) The executive branch.
C) A beneficiary.
D) The local government office.
E) A TreasuryDirect account.

Question 70

The text discusses several types of bonds. Which bond is purchased at face value and has two components to the rate of interest earned-a fixed rate and an inflation rate that changes twice a year?

A) Series E
B) Series EE
C) Series HH
D) Series I
E) Series Q

Question 71

A drawback of a regular savings account is

A) A low rate of return.
B) A minimum required deposit.
C) Not being insured.
D) A possible penalty for early withdrawal.
E) All of these are drawbacks of a regular savings account.

Question 72

Wanda bought a certificate of deposit and automatically received a free bike. She purchased a

A) Bump-up CD.
B) Callable CD.
C) Portfolio CD.
D) Promotional CD.
E) Indexed CD.

Question 73

Why are some financial service operations referred to as financial supermarkets?

A) They offer a combination of services from one source.
B) Customers can receive cash and a receipt.
C) They have many locations, like supermarkets.
D) They are often located in supermarkets or convenience stores.
E) Their prices are similar to those in a supermarket.

Question 74

When Jack picked up a personal computer from the _____, he was really leasing it.

A) commercial bank
B) check-cashing outlet
C) pawnshop
D) payday loan company
E) rent-to-own center

Question 75

Amber wants to open an account, but she doesn't know which kind is appropriate. She is interested in earning a higher interest rate and plans to keep at least $1,000 in her account so she can avoid paying a fee. Amber wants to open her account at an investment company and understands that her account will not be covered by federal deposit insurance. What kind of account should she open?

A) A certificate of deposit
B) An interest-earning checking account
C) A money market account
D) A money market fund
E) A regular savings account

Question 76

A certificate of deposit that has earnings based on the stock market is called a (n)

A) Bump-up CD.
B) Callable CD.
C) Portfolio CD.
D) Promotional CD.
E) Indexed CD.

Question 77

Louise got caught in a cash flow trap and desperately needed money quickly. Unfortunately, she didn't shop around and she went to a _____. As a result, her annual percentage rate was higher than 780%!

A) commercial bank
B) check-cashing outlet
C) pawnshop
D) payday loan company
E) rent-to-own center

Question 78

A drawback of a regular savings account is

A) Easy access to deposits.
B) Being insured.
C) A low minimum balance.
D) A low rate of return.
E) Ease of withdrawal.

Question 79

Will wants to open an account with $500 that will allow him easy access to his funds (by checks, ATMs, or debit card usage) from many locations. He also wants to earn at least a low interest rate and have federal deposit insurance. What kind of account should he open?

A) A certificate of deposit
B) An interest-earning checking account
C) A money market account
D) A money market fund
E) A regular savings account

Question 80

Justin needs to have access to his money in five months. The best option for his savings is a

A) Series EE bond.
B) Money market account.
C) Five-year certificate of deposit.
D) Series I bond.
E) Six-month certificate of deposit.