Question 1

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

Accepted Answer

The yield on a long term bond issued by the federal government is referred to as the Treasury bond rate.

Question 2

The Expedited Funds Availability Act requires that funds be available to depositors:

Accepted Answer

The Expedited Funds Availability Act mandates that funds from local checks must be made available to depositors within 2 business days.

Question 3

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

Accepted Answer

A blank endorsement does not specify a particular person or entity as the recipient of the funds, allowing the check to be cashed by anyone who possesses it. This type of endorsement is commonly used when a person is presenting a check in order to obtain cash.

Question 4

A limit on the amount you must keep on deposit in order to earn interest or avoid a service charge is an example of a(n):

Accepted Answer

A restriction is a limitation on a customer's account, such as a minimum balance requirement that must be maintained in order to earn interest or avoid a service charge. The other options (holding period, overdraft fee, share draft, certified deposit fee) do not relate to this concept.

Question 5

The purpose of a "special" endorsement is to:

Accepted Answer

A special endorsement is used to transfer a check to another person or entity. It involves signing the back of the check and including a specific message indicating the transfer or endorsement, such as "Pay to the order of [person or entity name]."

Question 6

Which of the following is an effective strategy in times of falling interest rates?

Accepted Answer

The answer of Which of the following is an effective...

Question 7

The Federal Deposit Insurance Corporation provides deposit insurance for:

Accepted Answer

The Federal Deposit Insurance Corporation (FDIC) provides deposit insurance for commercial banks and savings and loan associations.

Question 8

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 9

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

Accepted Answer

Outstanding checks are subtracted from the bank balance side of the reconciliation.

Question 10

In the bank reconciliation process, service fees should be:

Accepted Answer

Service fees are deducted from the checkbook balance because they represent charges that the bank has taken from the account, which the account holder needs to account for in their records.

Question 11

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

Accepted Answer

Nate Rogers is using a savings service, specifically a bank CD (certificate of deposit), which allows him to earn interest on his deposit over a fixed period of time.

Question 12

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

Accepted Answer

The rate that commercial banks charge large corporations for loans is called the prime rate.

Question 13

What is the rate that the Federal Reserve charges banks for loans called?

Accepted Answer

The rate that the Federal Reserve charges banks for loans is called the discount rate. Therefore, the correct choice is B. A is incorrect because the prime rate is the interest rate that commercial banks charge their most creditworthy customers. C, D, and E are incorrect because they refer to different types of interest rates.

Question 14

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, which is a financial service that allows a trustee to manage and distribute funds according to a legal agreement. In this case, the funds are being managed for the specific purpose of Tim's daughter's college education.

Question 15

Comparison of earnings for different savings plans can best be accomplished using the:

Accepted Answer

The answer of Comparison of earnings for different savings plans...

Question 16

David Wynn gets a personal loan from his credit union for $1,000. David will make monthly payments $85.15 over the next year to repay the loan. What type of financial service is David using?

Accepted Answer

David is using a borrowing service by obtaining a personal loan from his credit union and making monthly payments to repay the loan over time.

Question 17

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

Accepted Answer

Neil is using a payment service by writing a check to pay for day care services.

Question 18

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

Accepted Answer

The mortgage rate is the rate an individual will pay for borrowing to purchase a new home. The prime rate is the rate at which banks lend to their most creditworthy customers, the discount rate is the interest rate at which banks can borrow money from the Federal Reserve, the treasury bond rate is the interest rate at which the government can borrow money, and the corporate bond rate is the interest rate at which corporations can borrow money. None of these refers specifically to borrowing for a home purchase.

Question 19

A personal check with guaranteed payment is called a:

Accepted Answer

A certified check is a personal check with guaranteed payment. The bank verifies that the funds are available in the account and puts a hold on the amount, ensuring that the check will clear. The other options (A, B, D, E) are not personal checks but rather different types of payment methods.

Question 20

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.

Quiz 5: Financial Services: Savings Plans and Payment Accounts