Finance chapter 5 study guide – Flashcards
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All "free" checking acocunt with a minimum balance of $500 has an opportuity cost of lost interest
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True
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All-in-one accounts may be used by financial institutions to simplify the maze of financial services and attract customers
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True
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An asset management account combines several financial services for a single fee
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True
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Using a "debit" card is basically the same as writing a check
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True
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Savings and loan associations offer mortgages
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True
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Credit unions frequently offer lower loan rates than other financial institutions
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True
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The money market fund offered by investment companies is a relatively liquid financial service
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True
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A regular savings account usually offers a higher rate of return to savers than other savings plans
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False
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A restrictive endorsement will usually include the words "for deposit only"
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True
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When preparing a bank reconciliation, interest earned on your checking account is added to the bank statement balance
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False
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An all-purpose account that provides several services is a(n):
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asset management account
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The purpose of a debit card is to:
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Transfer money electronically
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Time deposits are another name for:
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savings accounts
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Traditionally, the greatest variety of financial services is offered by:
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commercial banks
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The profits from a mutual savings bank go to the:
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depositors
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In recent years, membership in credit unions has:
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continued to increase
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An advantage credit unions may ha e over other financial institutions is:
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low-cost personal loans
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A savings account at a credit union is called a _______ account
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shared
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A certificate of deposit usually has:
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limited liquidity
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A saver will usually earn the highest interest rate with which one of the following types of savings plans?
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Certificate of Deposit
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Which of the following savings plans is not covered by federal deposit insurance?
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Money market fund with an investment company
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The rate of return on savings account is also referred to as:
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yield
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Comparison of earnings for different savings plans can be best be accomplished using the:
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annual percentage yield
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The Federal Deposit Insurance Corporation provides Deposit insurance for:
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commercial banks and savings and loan associations
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Which of the following is an effective strategy in times of falling interest rates?
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Use short-term loans to take advantage of lower rates when you refinance the loan
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The Expedited Funds Availability Act requires that funds be available to depositors:
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within 2 days for local checks
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The purpose of a "special" endorsement is to:
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transfer a check to another person
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When preparing a bank reconciliation, outstanding checks should be:
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subtracted from the bank statement balance
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In the bank reconciliation process, service fees should be:
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subtracted from the checkbook balance
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Nate Rogers reposted $5000 in a 3-year CD which pays six percent interest. What type of financial service is Nate using?
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Savings service
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What is the rate that the Federal Reserve charges bank for loans called?
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Discount rate
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Which of the following is a Deposit institutions?
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Credit union
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Which of the following is NOT a Deposit institution?
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Life insurance company
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Which CD attempts to attract savers with gifts or special rates?
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Promotional
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Which is a CD that offers a HIGHER RATE for every six months you are invested?
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Bump-up
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Which CD pays earnings based on the stock market?
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Index
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Which type of organization does not provide home mortgages?
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Payroll check cashing services
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What type of account would you expect to PROVIDE THE POOREST YIELD
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Passbook savings account
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What type of account would be considered MOST LIQUID
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Checking account
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What is the rate AN INDIVIDUAL WILL PAY for brooding to purchase a new home called?
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Mortgage rate
