14 Banking

Question 1

What is a financial service best suited for saving money over a period of years?

Answer 1

COD certificate of deposit

Question 2

What do credit cards allow you to do?

Answer 2

Borrow money in short term

Question 3

Problematic financial issues don’t include what?

Answer 3

Savings and loans associations

Question 4

The Federal Deposit Insurance Corporation insures deposits against loosing their money in case of??

Answer 4

Bank failure

Question 5

T/F) money in a checking account is called demand deposit

Answer 5

T

Question 6

T/F) a prepaid phone card is an example of a debit card

Answer 6

F

Question 7

A savings and loans association is a financial institution that is owned by its members (T/F)

Answer 7

F

Question 8

T/F) a finance company specializes in savings accounts and mortgage loans

Answer 8

F

Question 9

T/F)pawn shops will offer payday loans with high finance charges to desperate borrowers

Answer 9

F

Question 10

T/F)a stop-payment order is a request that a bank or other financial institution is not cash a particular check

Answer 10

T

Question 11

T/F)you can write checks from a money market account

Answer 11

F

Question 12

T/F)According to the Truth in Savings Law, financial institutions have to guarantee you a minimum interest rate on your deposits

Answer 12

T

Question 13

T/F) overdraft protection is an automatic loan made to an account of the balance will not cover the checks written

Answer 13

T

Question 14

T/F) A restrictive endorsement allows you to transfer check to an organization or another person

Answer 14

T

Question 15

Compared with commercial banks what do credit unions generally offer?

Answer 15

Lower fees and loan rates

Question 16

To earn high interest rates on a COD, you don’t have to accept what?

Answer 16

Completing a monthly bank reconciliation

Question 17

In what kind of savings plan does the interest rate vary from month to month?

Answer 17

Money market

Question 18

If you deposit $100 in an account with an annual interest rate of 6% compounded monthly after 12 months you will have what?

Answer 18

$106.18

Question 19

The first step in balancing a checkbook is?

Answer 19

Comparing checks in the check record with those on the statement

Question 20

Direct deposit

Answer 20

Automatic deposit of an employees paycheck into designated bank account

Question 21

Compounding

Answer 21

The process in which interest is earned on both the principal and any previously earned interest

Question 22

Credit union

Answer 22

A non profit financial institution that is owned by its members and organized for their benefit

Question 23

Debit card

Answer 23

A card issued by a financial institution that allows you to withdraw money from your account or pay for purchases by deduction funds directly from your account

Question 24

Money market account

Answer 24

A savings account in which the interest rate varies as market rates change

Question 25

Annual percentage yield

Answer 25

The amount of interest that a financial institution would pay on a $100 deposit after compounding for one year

Question 26

Certificate of deposit COD

Answer 26

A savings alternative in which money is left on deposit for a stated amount of time to earn a specific rate of return

Question 27

Rate of return

Answer 27

The percentage of increase in the value of savings from earned interest

Question 28

Endorsement

Answer 28

The signature of a payee in the back of a check

Question 29

Commercial bank

Answer 29

A for profit institution that offers a full range of financial services