Personal Finance- Chapter 5- Managing Checking and Savings Accounts

Monetary Asset (cash) management How you handle your monetary assets
Liquidity Ease with which an asset can be converted to cash
Financial services industry Companies that provide monetary asset management and other services
Depository institutions Organizations licensed to take deposits and make loans
Commercial banks A type of bank that provides services such as accepting deposits, making business loans, and offering basic investment products
Credit union (CU) Member-owned, not-for-profit, insured financial institutions that provide checking, savings, and loan services to members
Federal deposit insurance Insures deposits, both principal amounts that accrued interest, up to $250,000 per account for most accounts
Mutual funds Investment companies that raise money by selling shares to the public and then invest that money in a diversified investment portfolio
Checking account At depository institutions, allows depositors to write checks against their deposited funds, which transfer deposited funds to other people and organizations
Interest-earning checking account Any account on which you can write checks that pay interest
Tiered interest A way to calculate interest where the account that pays lower interest on smaller deposits and higher interest on larger balances
Minimum-balance account Checking account that requires customers to keep a certain minimum amount for a specified time period to avoid fees
Average-balance account Checking account for which service fees are assessed if the account’s average daily balance drops below a certain level during a specified time
Stop-payment order Notifying your bank not honor a check when it’s presented for payment
Money market account Interest-earning accounts that pay relatively high interest rates and offer limited check-writing privileges
Money market-deposit accounts Government-insured money market account with minimum-balance requirements and tiered interest rates
Money market mutual fund (MMMF) Money market account in a mutual fund rather than at a depository insitution
Annual percentage yield (APY) Return on total interest received on a $100 deposit for 365-day period, given the institution’s simple annual interest rate and compounding frequency
Pay yourself first Treating savings as the first expenditure after-or even before-getting paid rather than simply the money left over at the end of the month
Certificate of deposit (CD) An interest-earning savings instrument purchased for a fixed period of time
Asset management account (AMA, or central asset account) Multiple-purpose, coordinated package that gathers most monetary asset management vehicles into a unified account and reports activity on a single monthly statement to a client
Electronic funds transfers (EFTs) Funds shifted electronically (rather than by check or cash) among various accounts or to and from other people and businesses
ATM transaction fee Payments levied each time an automated teller machine (ATM) is used
Periodic statements Monthly reports that show all electronic transfers to and from accounts, fees charged, and opening and closing balances
Card registration service Firm that will notify all companies with which you have debit and credit cards if your cards are lost or stolen
__typically pay the highest rates of interest on savings Credit unions
Darla had $750 in her checking account when her debit card was stolen. Assuming the thief made $525 in purchases with the card, how much could she save by reporting the stolen ATM card immediately rather than waiting more than three months before reporting it? $475
The speed and ease by which an asset can be converted into cash is referred to as it liquidity
A check drawn on financial institutions, backed by the financial institution’s finances, and made out to a specific payee is called a cashier’s check
A customer who wanted to directly transfer funds from his or her bank account to a retailer’s bank account would use a(n) electronic funds transfer
Bob and Tina Cisneros want to build a $10,000 emergency fund. Which of the following would be the most appropriate choice for the emergency fund? Money market deposit account
In general, you will receive higher rates of interest on your certificate of deposit___the maturity and the__ the dollar amount invested longer; larger
Which of the following is (are) required to withdraw money from an automated teller machine (ATM)? ATM card and personal identification number
A___ is a firm that notifies all companies with which you have debit and credit cards in the event that the cards are lost card registration service
Which of the following is the least expensive way of protecting yourself from fees you should have overdraft your checking account. An automatic funds transfer agreement
Molly went to her bank, gave the teller $200 plus a small fee, and received ten $20 checks that do not have a payee identified. What kind of checks were these? traveler’s checks
Which of the following is not a benefit of a savings account? Account holders must give 30 to 60 days’ notice for withdrawals
Tom and Mindy want to keep $420,000 in cash equivalents that are federally insured. They could accomplish this by Dividing it equally into two different joint accounts in two different federally insured savings banks
Which of the following types of payment instruments could you get at your local post office? money order
Common financial services offered by depository institutions include checking, lending, and savings
When an account pays one rate of interest on a minimum amount on deposit and a higher rate of interest on additional deposits, this is called__ interest tiered
A person who is a joint owner of an__ account should understand that his/her share of the assets in the account are distributed to the heirs of the deceased according to the terms of his/her will tenancy in common
If Gus believes interest rates are going to fall in the near future and remain low for several years, Gus should now invest in a long-term, fixed-rate certificate of deposit
Savers should select an institution that calculates interest daily
How can a person transfer money out of his or her checking account? All of these (write a check, use a debit card, make electronic funds transfers)
Which of the following forms is used to notify you of the taxable interest you have earned in a given year from a checking or savings account? 1099 Form
Which of the following are examples of monetary assets? Money market accounts, cash on hand, and certificates of deposit
Which of the following certificates of deposit is not covered by bank deposit insurance offered by the FDIC? investment certificate
Which of the following accounts could accurately be called a money market account? Asset management account
Which of the following does not apply to monetary assets? high return

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