Question 1

Purchasing a new CD upon maturity of the current CD is commonly referred to as:

Accepted Answer

A)   creating a CD portfolio.
B)   rolling over.
C)   refinancing.
D)   calling a CD.
E)   bumping up.F) A) and B)
G) A) and C)

Question 2

Neil Guest writes a check to pay for day care for his son. What type of financial service is Neil using?

Accepted Answer

A)   Payment service
B)   Savings service
C)   Borrowing service
D)   Trust services
E)   Asset managementF) C) and E)
G) A) and B)

Question 3

What type of account would be considered the most liquid?

Accepted Answer

A)   Certificate of deposit
B)   Checking account
C)   Money market account
D)   Brokerage account
E)   Share of stockF) A) and C)
G) C) and E)

Question 4

Credit unions frequently offer lower loan rates than other financial institutions.

Accepted Answer

A) True 
 B)False

Question 5

Sue deposited $1,000 in an account paying 3 percent interest. The inflation rate is 5 percent. What is the buying power of the account after one year?

Accepted Answer

A)   $1,050
B)   $1,030
C)   $1,000
D)   $980
E)   $950F) C) and E)
G) B) and D)

Question 6

An estimated _____ people in the U.S. are "unbanked", using a variety of alternative services rather than having a bank account.

Accepted Answer

A)   1 million
B)   6 million
C)   12 million
D)   17 million
E)   25 millionF) A) and D)
G) D) and E)

Question 7

A certificate of deposit usually has:

Accepted Answer

A)   high interest-rate risk.
B)   low safety for savers.
C)   limited liquidity.
D)   a variable rate of return.
E)   no minimum deposit amount.F) B) and D)
G) A) and B)

Question 8

A pawnshop with a monthly interest rate of 2.75 percent would have an annual interest rate of ____ percent. Ignore compounding.

Accepted Answer

A)   33.00
B)   27.50
C)   20.00
D)   5.50
E)   2.75F) C) and E)
G) None of the above

Question 9

Which CD pays earnings based on the stock market?

Accepted Answer

A)   Bump-up
B)   Indexed
C)   Callable
D)   Global
E)   PromotionalF) None of the above
G) D) and E)

Question 10

Savings and loan associations offer mortgages.

Accepted Answer

A) True 
 B)False

Question 11

This type of financial institution is known to frequently offer the lowest loan rates:

Accepted Answer

A)   Commercial bank
B)   Savings and loans association
C)   Mutual savings bank
D)   Credit union
E)   Investment companiesF) C) and D)
G) All of the above

Question 12

Which of the following is a deposit institution?

Accepted Answer

A)   Life insurance company
B)   Investment company
C)   Mortgage company
D)   Pawn shop
E)   Credit unionF) B) and E)
G) A) and B)

Question 13

The rate of return on a savings account is also referred to as:

Accepted Answer

A)   liquidity.
B)   compounding.
C)   yield.
D)   opportunity cost.
E)   asset turnover.F) A) and B)
G) C) and D)

Question 14

When preparing a bank reconciliation, outstanding checks should be:

Accepted Answer

A)   added to the bank statement balance.
B)   subtracted from the bank statement balance.
C)   added to the checkbook balance.
D)   subtracted from the checkbook balance.
E)   ignored until they have cleared.F) C) and E)
G) C) and D)

Question 15

Nate Rogers deposited $5,000 in a 3-year bank CD which pays six percent interest. What type of financial service is Nate using?

Accepted Answer

A)   Payment service
B)   Savings service
C)   Borrowing service
D)   Trust service
E)   Asset managementF) A) and D)
G) A) and E)

Question 16

Savings compounded ____________ would have the highest effective yield.

Accepted Answer

A)   daily
B)   annually
C)   semi-annually
D)   monthly
E)   weeklyF) B) and D)
G) C) and D)

Question 17

The Federal Deposit Insurance Corporation provides deposit insurance for:

Accepted Answer

A)   credit unions and mutual savings banks.
B)   commercial banks and savings and loan associations.
C)   investment companies and finance companies.
D)   insurance companies and credit unions.
E)   commercial banks and credit unions.F) None of the above
G) B) and D)

Question 18

When preparing a bank reconciliation, interest earned on your checking account is added to the bank statement balance.

Accepted Answer

A) True 
 B)False

Question 19

Using a "debit" card is basically the same as writing a check.

Accepted Answer

A) True 
 B)False

Question 20

Time deposits are another name for:

Accepted Answer

A)   checking accounts.
B)   loans and charge accounts.
C)   savings accounts.
D)   government securities.
E)   profits earned by a financial institution.F) B) and E)
G) A) and E)

Exam 5: Financial Services: Savings Plans and Payment Accounts

The Federal Deposit Insurance Corporation provides deposit insurance for:

Correct AnswerverifiedShow Answer

Sue deposited $1,000 in an account paying 3 percent interest. The inflation rate is 5 percent. What is the buying power of the account after one year?

Correct AnswerverifiedShow Answer

What type of account would be considered the most liquid?

Correct AnswerverifiedShow Answer

Purchasing a new CD upon maturity of the current CD is commonly referred to as:

Correct AnswerverifiedShow Answer

Which of the following is a deposit institution?

Correct AnswerverifiedShow Answer

Neil Guest writes a check to pay for day care for his son. What type of financial service is Neil using?

Correct AnswerverifiedShow Answer

When preparing a bank reconciliation, outstanding checks should be:

Correct AnswerverifiedShow Answer

Savings compounded ____________ would have the highest effective yield.

Correct AnswerverifiedShow Answer

The rate of return on a savings account is also referred to as:

Correct AnswerverifiedShow Answer

Credit unions frequently offer lower loan rates than other financial institutions.

Correct AnswerverifiedShow Answer

A pawnshop with a monthly interest rate of 2.75 percent would have an annual interest rate of ____ percent. Ignore compounding.

Correct AnswerverifiedShow Answer

Using a "debit" card is basically the same as writing a check.

Correct AnswerverifiedShow Answer

Nate Rogers deposited $5,000 in a 3-year bank CD which pays six percent interest. What type of financial service is Nate using?

Correct AnswerverifiedShow Answer

When preparing a bank reconciliation, interest earned on your checking account is added to the bank statement balance.

Correct AnswerverifiedShow Answer

Savings and loan associations offer mortgages.

Correct AnswerverifiedShow Answer

Time deposits are another name for:

Correct AnswerverifiedShow Answer

An estimated _____ people in the U.S. are "unbanked", using a variety of alternative services rather than having a bank account.

Correct AnswerverifiedShow Answer

A certificate of deposit usually has:

Correct AnswerverifiedShow Answer

This type of financial institution is known to frequently offer the lowest loan rates:

Correct AnswerverifiedShow Answer

Which CD pays earnings based on the stock market?

Correct AnswerverifiedShow Answer

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