Unit 3

Question 1

Safe Deposit Box

Answer 1

secure containers that you can rent inside the vaults of banks.

Question 2

Cashier’s Check

Answer 2

a check guaranteed by a bank, drawn from it’s own funds and signed by a cashier or teller.

Question 3

Money Order

Answer 3

a printed order for payment of a specified sum, issued by a bank or Post Office

Question 4

Overdraft Protection

Answer 4

guarantees that a check, ATM, wire transfer, or debit car transaction will clear if the account balance falls below zero

Question 5

Stop Payment

Answer 5

bank is instructed not to honor a check that has been issued or lost.

Question 6

Online Banking

Answer 6

a method of banking in which transactions are conducted electronically via the Internet.

Question 7

Savings

Answer 7

money set aside for the future

Question 8

Liquidity

Answer 8

the measure of how quickly an asset can be turned into cash

Question 9

Safety of Principal

Answer 9

there is no risk in losing the original money you put in.

Question 10

Savings Account

Answer 10

a type of savings plan that earns a low rate of interest with a few restrictions.

Question 11

Money Market Account

Answer 11

a type of savings plan that earns the market rate of interest on the money deposited.

Question 12

Certificate of Deposit

Answer 12

a type of savings plan that pays a fixed rate of interest for a specified length of time.

Question 13

Simple Interest

Answer 13

interest computed on principal once during a certain time period.

Question 14

Principal

Answer 14

amount of money depostited

Question 15

Compound Interest

Answer 15

interest earned not only on the original principal, but also on the interest earned during previous interest periods.

Question 16

Future Value of Money

Answer 16

the value of a current asset at a specified date in the future based on an assumed rate of growth.

Question 17

Rule of 72

Answer 17

divide annual interest rate into 72 = number of years it will take at that rate to double the amount invested.

Question 18

short-term goals

Answer 18

1 year or less

Question 19

medium-term goals

Answer 19

1-5 years

Question 20

Long-term goals

Answer 20

over 5 years

Question 21

interest formula

Answer 21

principal x rate x time

Question 22

Checking Account

Answer 22

an account at a bank against which checks and other withdrawals can be drawn by the account depositor. Deposits can also be made to this account.

Question 23

Check

Answer 23

a written order to a bank to pay a person or business

Question 24

Withdrawal

Answer 24

involves taking money from your account.

Question 25

Stale Check

Answer 25

a check that is held for too long of a period before trying to be cashed. The period is normally 6 months.

Question 26

Postdated Check

Answer 26

a check written with a date that will occur in the future

Question 27

Nonsufficient Fund Check

Answer 27

a check that is written but there is not enough money in the account to cover the amount of the check.

Question 28

Outstanding Check

Answer 28

check that has been written but not cashed

Question 29

Canceled Check

Answer 29

checks that have been cashed and processed by the bank

Question 30

Deposit

Answer 30

money added to a checking or savings account

Question 31

Direct Deposit

Answer 31

an electronic payment from one bank account to another

Question 32

Endorsement

Answer 32

a signature with or without instructions, written on the back of a check

Question 33

Checkbook Register

Answer 33

a tool used to track checking account

Question 34

Bank Reconciliation

Answer 34

the process of adjusting the checkbook register and bank statement so they agree

Question 35

credit union

Answer 35

member, non-profit

Question 36

blank endorsement

Answer 36

the payee signs the back of the check and authorizes the bank to cash or deposit it

Question 37

restrictive endorsement

Answer 37

the payee signs the back of the check and writes additional instructions that limits the use of the check

Question 38

special endorsement

Answer 38

when you pay someone else by giving them a check that was paid to you