Deck 4: Managing Your Cash and Savings

Question 1

Credit unions typically pay higher rates of return on savings than banks and savings and loan associations.

Answer 1

True

Question 2

One can avoid early withdrawal penalties on CDs by purchasing them through brokerage firms.

Answer 2

True

Question 3

Asset management accounts (AMAs)combine many cash management services into one account.

Answer 3

True

Question 4

S&Ls are the most popular segment of the financial institutions industry.

Question 5

There are no limitations on check writing for both MMDAs and MMMFs.

Question 6

NOW accounts are appropriate for people who need to keep substantial amounts of money in a checking account and use it for numerous transactions each month.

Question 7

FDIC covers stocks,bonds,and mutual funds purchased at banks.

Question 8

Money market mutual funds are insured up to $250,000 by the FDIC if purchased at an insured bank.

Question 9

Asset management accounts are protected by the Federal Deposit Insurance Corporation.

Question 10

Money market deposit accounts are insured by the FDIC if purchased at an insured bank.

Question 11

A savings account may be a useful tool in managing everyday household transactions.

Question 12

The rate of return on liquid assets is relatively high compared to other types of investments.

Question 13

Another term for the interest paid by credit unions on deposits is dividends.

Question 14

The main business of an S&L is to provide home mortgage and home improvement loans.

Question 15

Saving accounts are sometimes referred to as demand deposits.

Question 16

One could expect to earn a higher rate of interest on a certificate of deposit than on a checking account.

Question 17

There is a penalty for early withdrawal of funds from CDs purchased from brokerage firms.

Question 18

Savings and loan associations (S&Ls)channel the savings of depositors primarily into automotive loans.

Question 19

Certificates of deposit can be purchased only at banks,savings and loan associations,and credit unions.

Question 20

Specialization within the financial institutions industry continues to increase.

Question 21

A regular savings account is a time deposit.

Question 22

Financial institutions expect demand deposits to remain on deposit for a longer period of time than time deposits.

Question 23

Mark Helig has a checking account in his name and a joint savings account with his wife at the same bank.The maximum amount of deposit insurance the Heligs have is $250,000.

Question 24

If one wanted to make monthly deposits to accumulate funds for future expenditures,a money market account would be an appropriate savings vehicle.

Question 25

Credit union members are expected to have some common bond.

Question 26

Most credit unions provide their members with deposit insurance.

Question 27

As of 2014,the FDIC insures depositor's funds up to $250,000 at member banks.

Question 28

For married depositors,it is possible to increase the $250,000 of deposit insurance to up to $1,500,000 by opening a variety of accounts in different depositor names at the same institution.

Question 29

Savings and loan associations usually offer non-interest bearing checking accounts.

Question 30

If Suzie has $2,000 in checking,$50,000 in a money market deposit account,and $75,000 in certificates of deposit (all individual accounts)at her local bank,her accounts would be completely insured through FDIC.

Question 31

Credit unions are mainly found in the northeastern United States.

Question 32

The annual percentage yield (APY)formula considers compounding when determining an interest rate.

Question 33

Savings banks are mainly found in the northeastern United States.

Question 34

Asset management accounts (AMAs)are offered by brokerage firms and are protected by the Securities Investor Protection Corporation.

Question 35

Money market mutual funds invest in long-term treasury securities and other types of bonds.

Question 36

A money market mutual fund is one way to participate indirectly in the purchase of money market securities.

Question 37

EFTS allow you to make payments that occur on a regular basis.

Question 38

You should insure valuables,even if they are kept in a safe-deposit box.

Question 39

Convenience and improved record keeping are two advantages cited for online bill payment.

Question 40

From the bank's perspective,ATM transactions are more costly than online banking transactions.

Question 41

A certified check is a personal check for which the bank guarantees the funds are available.

Question 42

Compound interest means that a savings account earns interest on the interest previously earned.

Question 43

Series EE Savings bonds are also called Patriot Bonds.

Question 44

Treasury bills are sold at a discount of their maturity value.

Question 45

ATM transactions require the use of a PIN.

Question 46

Series HH bonds are issued at their full face value and pay interest semiannually at the current fixed rate.

Question 47

Debit and ATM card transactions are linked to your checking account.

Question 48

If Lois has $2,000 in checking,$50,000 in a money market mutual fund,and $75,000 in certificates of deposit (all individual accounts)at her local bank,her accounts would be insured through FDIC for $77,000.

Question 49

Your savings will grow faster with monthly interest compounding than with quarterly interest compounding.

Question 50

Internet-only banks typically pay lower interest rates on savings than traditional banks.

Question 51

The minimum denomination for Treasury bills is now $1,000.

Question 52

If your bank states that it compounds monthly,the effective interest rate (APY)will be greater than the nominal interest rate.

Question 53

A bank cannot advertise as "free" a checking account that requires a minimum balance,even though depositors who maintain the minimum balance pay no service fees.

Question 54

The rate of return on a Series EE savings bond changes semiannually.

Question 55

Stop-payment services are easier with electronic funds transfers than with traditional check payments.

Question 56

Joint checking accounts typically imply the right of survivorship if one party should die.

Question 57

Although there are no legal minimum balances for a NOW account,many institutions impose their own requirement,often between $500 and $1,000 before they pay any interest.

Question 58

Treasury bills are sold at their face value.

Question 59

You can stop payment when you purchase an item with your debit card.

Question 60

The rate of return on a Series EE savings bond will be constant over the life of the bond.

Question 61

Factors typically influencing the choice of where to maintain a checking account are

A)convenience and cost
B)convenience and services
C)cost and services
D)convenience, services, and cost

Question 62

Which of the following would be an appropriate savings vehicle if you expected interest rates to fall over the next few months?

A)money market deposit account
B)money market mutual fund
C)certificate of deposit
D)Series EE US savings bond
E)a and b

Question 63

In the wake of the recent financial crisis,the U.S.personal saving rate decreased.

Question 64

Low interest rates have increased the supply of credit.

Question 65

When an S&L is a mutual association,it means that it is owned by the

A)borrowers.
B)creditors.
C)depositors.
D)management.
E)local government.

Question 66

A major reason for overdrafts is the inability of a check writer to keep an accurate checkbook ledger.

Question 67

A certified check is written on the bank's account rather than on a customer's account.

Question 68

If your checkbook is lost or stolen,there is no need to stop payment on the checks.

Question 69

The nominal rate of interest will be lower than the effective rate of interest when an account compounds monthly.

Question 70

You put $1,000 into a 12-month certificate of deposit.After seven months,you really need the money.The bank will let you have it before 12 months,but you will pay a penalty.

Question 71

With low interest rates,savers have begun investing in stock where higher yields can be found.

Question 72

Money market mutual funds

A)allow check writing.
B)are not federally insured.
C)pool the funds of many small investors.
D)pay interest rates of 1 to 3 percent higher than those paid on regular savings accounts.
E)all of these.

Question 73

Historically,the primary purpose of savings and loan associations was to

A)provide passbook accounts paying interest above that of commercial banks.
B)compete directly with commercial banks.
C)provide NOW accounts.
D)provide demand deposits.
E)channel savings into mortgages.

Question 74

Lower borrowing costs encourage the substitution of debt for equity in corporate capital structures,which increases financial risk.

Question 75

Credit unions are

A)mutual associations.
B)mortgage lenders.
C)available to the general public.
D)special commercial lenders.
E)not providers of insured deposits.

Question 76

Janice Sanders plans on saving $12,000 for 3 years until she returns to college for her master's degree in personal financial planning.She would like to receive a fixed rate of return over that period.Which of the following would you recommend?

A)money market deposit account
B)1-year certificate of deposit
C)3-year certificate of deposit
D)Series EE US savings bond
E)b or c

Question 77

A cashier's check is written on the bank's account rather than on a customer's account.

Question 78

Low interest rates that have persisted since the financial crisis of 2008-09 have been a net benefit to retirees.

Question 79

Money market deposit accounts

A)allow unlimited check writing.
B)are typically federally insured.
C)have stated maturity dates.
D)are offered only by credit unions.
E)all of these.

Question 80

You should invest in long-term CDs when you expect interest rates to fall.