Exam 2

Question 1

Types of financial institutions

Answer 1

Deposit and non-deposit institutions

Question 2

Deposit instutions

Answer 2

serves as intermediaries between suppliers and users of funds (commercial banks, s&ls, mutual savings bank, credit unions)

Question 3

non-deposit institutions

Answer 3

offer various financial services that are nonbank

Question 4

Commercial banks

Answer 4

a financial institution that offers a full range of financial services to individuals, businesses, and government agencies

Question 5

Savings and loan association

Answer 5

a financial institution that traditionally specialized in savings account and mortgage loans

Question 6

Mutual savings bank

Answer 6

a financial institution that is owned by depositors and specializes in savings accounts and mortgage loans

Question 7

credit unions

Answer 7

a user-owned, nonprofit, cooperative financial institution that is organized for the benefit of its members

Question 8

money market fund

Answer 8

a savings– investment plan offered by investment companies, with earnings based on investments in various short-term financial instruments

Question 9

debit card

Answer 9

a plastic access card used in computerized banking transactions; also called a cash card

Question 10

What is the purpose of a credit card?

Answer 10

delay payments, build credit history, major purchasing, earn rewards

Question 11

What is the purpose of a debit card?

Answer 11

limit spending, avoid bills, avoid interest

Question 12

stored value cards

Answer 12

prepaid debit cards for telephone service, transit fares, highway tolls, laundry service, and school lunches

Question 13

Types of payments

Answer 13

Digital, checking etc

Question 14

What is the cost of a lost debit card?

Answer 14

Fee’s can vary from $50 - all the money in your account or more

Question 15

FDIC insurance

Answer 15

prevents a loss of money due to the failure of the insured institution

Question 16

credit

Answer 16

an arrangement to receive cash, goods, or services now and pay for them in the future

Question 17

finance charge

Answer 17

the total dollar amount paid to use credit

Question 18

interest

Answer 18

a periodic charge for the use of credit

Question 19

How much net income should be spent on credit

Answer 19

15% or less

Question 20

The 5 Cs of credit

Answer 20

Character, capacity, capital, collateral, & conditions

Question 21

credit bureau

Answer 21

an agency that collects information on how promptly people and business pay their bills

Question 22

appraisal

Answer 22

an estimate of the current value of a propety

Question 23

renting pros and cons

Answer 23

pro: easy to move, fewer responsibilities, minimal financial commitment. cons: no tax benefits, limitations on remodeling, restrictions such as no pets

Question 24

buying pros and cons

Answer 24

ownership, financial benefits, lifestyle flexibility. cons: financial commitment, higher living expenses, limited mobility

Question 25

types of housing

Answer 25

single-family dwellings, multi unit dwellings, condos, cooperative housing, factory built houses, & building your own

Question 26

PMI (private mortgage insurance)

Answer 26

usually required if the down payment is less than 20 percent

Question 27

types of mortgages

Answer 27

Conventional 30-year mortgage, conventional 15-20 year mortgage, FHA/VA fixed rate mortgage, adjustable rate mortgage