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finance exam! > unit 4 financing > Flashcards

unit 4 financing Flashcards

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1
Q

verifying the accuracy of your checking account balance in relation to the bank’s records as reflected in the bank statement, which is an itemized listing of all transactions in the checking account

A

account reconciliation

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2
Q

a remote computer terminal that customers of depository institutions can use to make basic transactiona 24/7

A

automated teller machine (ATM)

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3
Q

A comprehensive deposit account, offered primarily by brokerage houses and mutual funds

A

Asset management account (AMA)

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4
Q

the routine, day to day administration of cash and near-cash resources (liquid assets) by an individual/family

A

cash management

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5
Q

a check payable to a third party that is drawn by a bank on itself in exchange for the amount specified plus (often) a service fee of 5-10 dollars

A

cashier’s check

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6
Q

a type of savings instrument issued by certain financial institutions in exchange for a deposit, which typically requires a minimum deposit and has a maturity ranging from 7 days-7+ years

A

certificate of deposit

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7
Q

a personal check that is guaranteed (for a fee of $10-15 or more) by the bank on which it is drawn

A

certified check

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8
Q

a booklet, provided with a supply of checks, used to maintain accurate records of all checking account transactions

A

checkbook ledger

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9
Q

when interest earned in each subsequent period is determinde by applying the nominal (stated) rate of interest to the sum of the initial deposit and the interest earned in each prior period

A

compound interest

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10
Q

specially coded plastic cards used to transfer funds from a customer’s bank account to the recipient’s account to pay for goods/services

A

debit cards

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11
Q

an account held at a financial institution from which funds can be withdrawn on demand by the account holder, same as a checking account

A

demand deposit

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12
Q

a type of insurane that protects funds on deposit against failure of the institution; can be insured by the FDIC & NCUA

A

deposit insurance

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13
Q

the annual rate of return that is actually earned (or charged) durin the period the funds are held/borrowed

A

effective rate of interest

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14
Q

systems used the latest telecommunications and computer technology to electronically transfer funds into and out of customers’ accounts

A

electronic funds transfer system (EFTSs)

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15
Q

savings bond issued at face value by the US treasury, whose partially fixed rate provides some inflation protection

A

I Savings Bond

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16
Q

online commercial bank

A

internet bank

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17
Q

A federally insured savings account, offered by banks and other depository institutions that competes with money market mutual funds

A

money market deposit account (MMDA)

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18
Q

a mutual fund that pools the funds of many small investors and purchases high-return, short-term marketable securities

A

money market mutual fund (MMMF)

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19
Q

a checking account on which the financial institution pays interest; no legal minimum balance

A

negotiable order of withdrawal (NOW) account

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20
Q

the promised rate of interest paid on a savings deposit or charged on a loan

A

nominal (stated) rate of interest

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21
Q

the result of writing a check for an amount greater than the current account balance

A

overdraft

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22
Q

an arrangement between the account holder and the depositoryinstitution whererein the institution automatically pays a check that overdraws the account

A

overdraft protection

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23
Q

a savings bond issued in various denominnations by the US treasury

A

series EE bond

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24
Q

an account ofered by credit unions that is similar to interest-paying checking accounts offered by other financial institutions

A

share draft account
Share-draft accounts do not have minimum balance requirements or charge account maintenance fees. They also earn interest, compounded on a quarterly basis.

25
Q

interest that is paid only on the initial amount of the deposit

A

simple interest

26
Q

an order made by an account holder instructing the depository institution to refuse payment on an already-issued check

A

stop payment

27
Q

a savings deposit at a financial institution, remains on deposit for a longer time than a demand deposit

A

time deposit

28
Q

a short-term (3-6 month maturity) debt instrument issued at a discount by the US treasury in the ongoing process of funding the national debt

A

US treasury bill (t-bill)

29
Q

a check sold (for a fee of 1-2%) by many large financial instituions, typically in denominations ranging from $20-100, that can be used for making purchases and exchanged for local currencies in most parts of the world

A

traveler’s check

30
Q

either held in cash or can be readily convereted tinto cash with little-no loss in value

A

liquid assets

31
Q
  • reduced costs of financing the massive federal budget deficit
  • help support the “too big to fail” banks
A

benefits of lower interest rates

32
Q
  • reduce income to retirees and pension funds
A

costs of lower interest rates

33
Q

a substitute for cash, offered by commercial banks and other financial instituions such as savings, loans, and credit unions

A

interest checking account

34
Q

savings accounts are available at any time, but funds cannot be withdrawn by check, MMDAs require a fairly large minimum deposit ($1000+) and offer check writing privileges

A

savings account/money market deposit

35
Q

a savings instrument where funs are left on deposit for a stipulated period (one week-a year+,) imposes a penalty for withdrawing funds early, they vary by size and maturity and have no check-writing privileges

A

certificate of deposit

36
Q

short-term, highly marketable security issued by the US treasury (originally issued with maturies of 13-26 weeks)

A

US treasury bill

37
Q

the face value of a banknote, coin, or postage stamp

A

denominations

38
Q

long term security issued by the US treasury

A

US treasury note (T-bond)

39
Q

issued at a discount from face value by the US treasury, rate of interest is tied to US treasury securities, long a popular savings vehicle and matures to face value in approximately 5 years, sold in denominations of $25 or more

A

US Savings bond EE

40
Q

comprises all institutions that market various kinds of financial products (such as checking and savings accounts, credit cards, loans and mortgages, insurance, and mutual funds) and financial services (such as financial planning, securities brokerage, tax filing and planning,, estate planning, real estate, trusts, and retirement)

A

financial services industry

41
Q
  • vast majority of financial transactions take place at depositorry financial institutions- - commercial banks (both physical and online), savings and loans associations, savings banks, and credit unions
A

depository financial institutions

42
Q

financial institutions that don’t accept deposits like traditional banks

A

nondepository financial institutions

43
Q

provided to the depositor per insured bank rather than a deposit account, so the checking and savings accounts are insured as long as the maximum insurable amount per bank is not exceeded

A

deposit insurance

44
Q

as a depositor, it’s possible to increase traditional $250,000 of traditional deposit insurance by opening accounts in different insurance by opening accounts in different depositor names at the same institution ex. a married couple can over on emillion by setting up several accounts:
- one in the name of each spouse
- joint account
- separate trust or self directed retirement

A
45
Q

channels the savings of depositors primarily into mortgage loans for purchasing and improving homes, also offers many of the same checking, saving, and lending products as commercial banks & often pays slightly higher interest on savings as do commercial banks

A

savings and loan association

46
Q

offers checking and savings accounts and a full range of financial products and services; the only institution that can offer noninterest-paying checking accounts (demand deposits) and is also the most popular of the depository financial institutions

A

commercial bank

47
Q

most are mutual associations (their depositors are their owners and thus recieve a portion of the profits in the form of interest on their savings)

A

savings bank

48
Q

a nonprofit, member-owned financial cooperative that procides a full range of financial prodcuts and services to its members, who must belong to a common occupation, religious, or fraternal order/residential area, they are generally small institutions when compared to saving & loan assocations and commercial banks, they also offer interest-paying checking accounrs ( draft accounts) and a variety of saving and lending programs, because they are tun to benefit their members, they paay higher interest on savings and charge lower rates on loands than other depository financial institutions

A

credit union

49
Q

national credit union administration = ncua
fdic= federal deposit insurance cooperation

A
50
Q

allow you to recieve automatic deposits or make payments that occur regularly

A

preauthoritized deposits and payments from EFTS (electronic funds transfer systems)

51
Q
  • watch out for scammers
  • don’t use public wi-fi for private banking
  • keep computer and mobile anti-virus software up to date
  • use a bank that supports multifactir autheticaton
A

financial planning tips

52
Q
  • rented drawer in bank’s vault so bank gets one key and you get one key and it can only be opened with both kets, often used for jewwelery, contracts, stock certificates, etc.
A

safe deposit box

53
Q

provide investment and estate planning afvice, managing and administering investments in a trust account or from an estate

A

trust services

54
Q

common requirement to maintain a min. baance of $500-$1000or more to avoid service charges in checking accounts

A
55
Q
  • monthly fees
  • limitations on the number or type of transactions
  • atm access fees
  • not having mobile and online access
  • overdraft protection prices
A

red flags in bank accounts

56
Q
  • no federal deposit insurance
  • no liquidity
  • fees
A

savings accounts red flags

57
Q

always write checks in ink, include the name of the person being paid, date, and amount on the check, sign the check the same way as the signature card as you filled out when opening the account, and note the check’s purpose on it

A

check guidelines

58
Q

bounced check= not enough in the bank for the check (rip)

A
59
Q

itemized listing of all transactions in checking account checks written

A

monthly statements include

finance exam! (4 decks)

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