Question 1

Credit unions with federal charters have their accounts insured through the FDIC.

Accepted Answer

Credit unions with federal charters have their accounts insured through the National Credit Union Share Insurance Fund (NCUSIF), not the FDIC.

Question 2

Credit unions typically offer the widest variety of financial services.

Accepted Answer

While credit unions offer a range of financial services, they may not offer the widest variety compared to larger financial institutions such as banks.

Question 3

The goal of monetary asset management is to maximize interest earnings and minimizing fees while keeping funds safe and readily available.

Accepted Answer

Monetary asset management involves strategically managing cash and financial instruments to ensure maximum returns while minimizing costs and maintaining liquidity. The ultimate goal is to earn the highest possible interest while keeping funds safe and readily available for business operations.

Question 4

Today,even stock brokerages and insurance companies provide certain products for use in cash management.

Accepted Answer

Many financial institutions provide products for cash management, including stock brokerages and insurance companies.

Question 5

Mutual savings banks are called "mutual" because the depositors own the institution and share in the earnings.

Accepted Answer

Mutual savings banks are owned by their depositors, who are also considered members of the bank. Because of this ownership structure, they are referred to as "mutual" institutions. As owners, depositors/shareholders share in the earnings of the bank through dividends and other forms of payouts.

Question 6

Deposits in credit unions with federal charters are insured through the National Credit Union Share Insurance Fund (NCUSIF).

Accepted Answer

Deposits in credit unions with federal charters are insured up to $250,000 per depositor through the NCUSIF, which is administered by the National Credit Union Administration (NCUA), an independent federal agency.

Question 7

Money deposited in mutual funds is insured by the federal government.

Accepted Answer

Money deposited in mutual funds is not insured by the federal government. Mutual funds are not guaranteed by the FDIC (Federal Deposit Insurance Corporation) like bank deposits are. However, mutual funds are regulated by the SEC (Securities and Exchange Commission) to protect investors from fraud and other illegal activities.

Question 8

Monetary asset management includes setting money aside in a savings account for use later when making investments.

Accepted Answer

Monetary asset management involves making decisions about how to allocate funds and where to invest them. Setting money aside in a savings account is an important part of this process as it provides a secure and accessible place for funds to be held until they are ready to be used for investment purposes.

Question 9

Unlike other providers of financial services,depository institutions can both take deposits and make loans to consumers.

Accepted Answer

Depository institutions such as banks and credit unions can accept deposits from customers and use that money to make loans to other customers, unlike other financial service providers such as investment banks or insurance companies which do not typically accept deposits.

Question 10

In monetary asset management,safety means the speed and ease with which an asset can be converted to cash.

Accepted Answer

Safety in monetary asset management refers to the protection of the principal amount from loss, not the liquidity or ease of converting an asset to cash.

Question 11

Commercial banks typically offer the widest variety of financial services.

Accepted Answer

Commercial banks offer a wide range of financial services such as accepting deposits, making loans, offering credit cards, issuing cashier's checks, etc.

Question 12

One can increase the amount of money covered by FDIC insurance by dividing his or her money among different branch offices of the same depository institution.

Accepted Answer

FDIC insurance is based on the depositor's ownership category at each bank, not the number of branches where accounts are held. So, dividing money among different branches of the same bank does not increase FDIC coverage.

Question 13

The total protection an individual might have with any institution,including all its branches,is $250,000 with no more than $125,000 each on single-ownership and joint accounts.

Accepted Answer

The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per depositor, per insured bank, for each account ownership category. This means an individual can have up to $250,000 insured in a single-ownership account and an additional $250,000 per co-owner in joint accounts at the same insured bank.

Question 14

Stock brokerage firms are federally insured institutions.

Accepted Answer

Stock brokerage firms are not federally insured institutions. However, some of the securities and cash held by the firm on behalf of clients may be protected by the Securities Investor Protection Corporation (SIPC), which is a non-profit, non-governmental organization that provides certain protections for investors if a brokerage firm fails.

Question 15

Stock brokerage firms earn commissions on clients' stock transactions.

Accepted Answer

Stock brokerage firms typically earn commissions on clients' stock transactions.

Question 16

Liquidity is the speed and ease with which an asset can be converted to cash.

Accepted Answer

Liquidity refers to the ability of an asset to be easily and quickly sold or converted into cash without affecting its market value.

Question 17

Cash management focuses primarily on your investment assets.

Accepted Answer

Cash management focuses on managing a company’s cash inflows and outflows to ensure there is enough cash available to meet financial obligations and take advantage of investment opportunities. It does not primarily focus on investment assets, although cash management decisions may impact investment decisions.

Question 18

A mutual fund is an investment company that raises money by selling shares to the public and then invests that money in a diversified portfolio of investments.

Accepted Answer

This is the definition of a mutual fund.

Question 19

The primary focus of savings banks is to accept savings from consumers and provide mortgage and consumer loans.

Accepted Answer

Savings banks are specifically focused on accepting savings from consumers and then using those savings to fund mortgage and consumer loans. While they may offer other financial services, such as checking accounts or credit cards, their primary function is to facilitate savings and lending.

Question 20

A stock brokerage firm is a licensed financial institution that specializes in selling and buying stocks,bonds,and other investment alternatives.

Accepted Answer

A stock brokerage firm is indeed a licensed financial institution that specializes in selling and buying stocks, bonds, and other investment alternatives.

Quiz 5: Managing Checking and Savings Accounts