Personal Finance Ch 4

D Common payment choices for everyday activities include all of the following exceptA. Cash.B. Check.C. Credit card.D. Short-term loan.E. Debit card.
B Many people make mistakes when managing current cash needs. Which of these is NOT a frequentlymade mistake?A. Borrowing for current expensesB. Budgeting spendingC. Failing to put unneeded funds in an investment planD. Having insufficient liquid assets to pay current billsE. Overspending due to impulse buying and using credit
D 30. A time deposit is also known asA. A checking account.B. A trust.C. A loan.D. A savings account.E. All of these are time deposits.
A 31. A demand deposit is also known asA. A checking account.B. A trust.C. A loan.D. A savings account.E. All of these are demand deposits.
C 32. A credit card is a type ofA. Checking account.B. Trust.C. Loan.D. Savings account.E. Cash account.
B 33. A legal agreement that provides for the management and control of assets by one party for the benefit ofanother is known asA. A checking account.B. A trust.C. A loan.D. A savings account.E. None of these.
B 34. Claudette’s grandchildren are 7 and 9 years old. When Claudette passed away, her grandchildren inheritedher money. However, the will stipulated that they should not get control of the money until age 25. Whichof the following should be set up to provide for the management and control of the funds?A. A checking accountB. A trustC. A loanD. A savings accountE. A certificate of deposit
D 35. Franklin is planning for a purchase of a vehicle in two years. Since he wants to be certain that his fundsare safe (insured), which of the following should he use?A. A credit card.B. A trust.C. A loan.D. A savings account.E. A home mortgage.
E 36. Investments and tax assistance, both tools for financial planning, are also known asA. Checking accounts.B. Trusts.C. Loans.D. Savings accounts.E. Financial services.
A 37. An all-in-one account that provides a complete financial services program for a single fee is knownasA. A cash management account.B. A checking account.C. A trust.D. A loan.E. A savings account.
C 38. Brenda lost her debit card. When she realized it was gone, her account had $173 in unauthorized charges.She notified her financial institution within two days. How much is she potentially liable for?A. $0.B. $25.C. $50.D. $173.E. This cannot be determined with the information provided.
D 39. Brandon lost his debit card. When he realized it was gone, his account had $238 in unauthorized charges.Since he was embarrassed about his loss, he didn’t contact his financial institution for 45 days. What isthe most that he is liable for?A. $0B. $50C. $188D. $238E. $500
C 40. ATM stands forA. Automatic taking machine.B. Available teller machine.C. Automatic teller machine.D. Available token machine.E. Automatic token machine.
C 41. Which of the following is NOT a financial publication that can provide information about financialservices and economic conditions?A. The Wall Street JournalB. The Financial TimesC. The Daily MarketD. BusinessWeekE. Forbes
D 42. When you select a financial services provider, you should ask all of the following questions exceptA. Will I be able to borrow money if I need it?B. How can I minimize the cost of checking and payment services?C. Where can I get the best return on my savings?D. All of these questions should be asked.E. None of these questions are needed.
A 43. When you select a financial services provider, you may find all of the following to be major factorsexceptA. Company logo.B. Convenience.C. Fee structure and other charges.D. Personal service.E. Rates for savings and borrowed funds.
C 44. All of the following are deposit institutions exceptA. A commercial bank.B. A credit union.C. A finance company.D. A mutual savings bank.E. A savings and loan association.
E 45. All of the following are nondeposit institutions exceptA. A credit card company.B. A investment company.C. A life insurance company.D. A finance company.E. A payday loan company.
B 46. Which of the following usually offers money market funds?A. A credit card companyB. An investment companyC. A life insurance companyD. A finance companyE. A payday loan company
D 47. Which of the following primarily provides loans for home purchases?A. A credit card companyB. An investment companyC. A life insurance companyD. A mortgage companyE. A payday loan company
C 48. When Angela wanted to provide financial security for her dependents, she considered purchasing aspecific type of account at aA. Credit card company.B. Investment company.C. Life insurance company.D. Finance company.E. Payday loan company.
A 49. Billy accepted a job at a company that specializes in providing money for short-term retail lending.Where did he go to work?A. A credit card companyB. An investment companyC. A life insurance companyD. A finance companyE. A payday loan company
E 50. Which of the following will likely provide the most expensive access to funds?A. A credit card companyB. An investment companyC. A life insurance companyD. A finance companyE. A payday loan company
A 51. Cathy needs a full range of financial services, including checking, savings, and lending. To which of thefollowing should she go?A. A commercial bankB. A check-cashing outletC. A pawnshopD. A payday loan facilityE. A rent-to-own center
A 52. Which of the following offers checking, savings, lending, and other services?A. A commercial bankB. A check-cashing outletC. A pawnshopD. A payday loan facilityE. A rent-to-own center
A 53. In which of the following are most of the investments insured?A. A commercial bankB. A check-cashing outletC. A pawnshopD. A payday loan facilityE. A rent-to-own center
C 54. Harvey needed some cash quickly, so he received a short-term loan based on the value of an old ring.Where did he go?A. A commercial bankB. A check-cashing outletC. A pawnshopD. A payday loan facilityE. A rent-to-own center
C 55. When Imogene brought a necklace to a _______, she received a loan based on its value.A. commercial bankB. check-cashing outletC. pawnshopD. payday loan facilityE. rent-to-own center
E 56. When Jack picked up a personal computer from the _____, he really was leasing it.A. commercial bankB. check-cashing outletC. pawnshopD. payday loan facilityE. rent-to-own center
D 57. Louise got caught in a cash flow trap and needed money quickly. Unfortunately, she didn’t shop aroundand she went to a _____. As a result, her annual percentage rate was higher than 375%!A. commercial bankB. check-cashing outletC. pawnshopD. payday loan facilityE. rent-to-own center
A 58. Why are some financial service operations referred to as financial supermarkets?A. They offer a combination of services from one source.B. Customers can receive cash and a receipt.C. They have many locations, like supermarkets.D. They are often located in supermarkets or convenience stores.E. Their prices are similar to those in a supermarket.
D 59. A drawback of a savings account isA. Easy access to deposits.B. Being insured.C. A low minimum balance.D. A low rate of return.E. Ease of withdrawal.
A 60. A drawback of a regular savings account isA. A low rate of return.B. A minimum required deposit.C. Not being insured.D. A possible penalty for early withdrawal.E. All of these are drawback of a regular savings account.
E 61. Another name for a regular savings account is aA. Certificate of deposit.B. Checking account.C. Money market account.D. Money market fund.E. Passbook or statement account.
E 62. A certificate of deposit that has different interest levels based on the stock market performance is calledaA. Bump-up CD.B. Callable CD.C. Portfolio CD.D. Promotional CD.E. Stock-indexed CD.
B 63. Karen wanted a certificate of deposit that would definitely be available until the maturity date. She wouldNOT want to consider aA. Bump-up CD.B. Callable CD.C. Portfolio CD.D. Promotional CD.E. Stock-indexed CD.
D 64. Wanda bought a certificate of deposit and automatically received a free bike. She purchased aA. Bump-up CD.B. Callable CD.C. Portfolio CD.D. Promotional CD.E. Stock-indexed CD.
E 65. Xavier bought a certificate of deposit whose interest rate changes with the stock market. In fact, he mighteven earn 0% interest on his investment for a time. He purchased aA. Bump-up CD.B. Callable CD.C. Portfolio CD.D. Promotional CD.E. Stock-indexed CD.
C 66. Zach wants to open an account, but he doesn’t know which kind is appropriate. He is interested in earninga higher interest rate and knows that he might not be able to write many checks from his account. Inaddition, he plans to keep at least $1,000 in his account so he can avoid paying a fee. He definitely wantsto have federal deposit insurance. What kind of account should he open?A. A certificate of depositB. An interest-earning checking accountC. A money market accountD. A money market fundE. A regular savings account
D Amber wants to open an account, but she doesn’t know which kind is appropriate. She is interested inearning a higher interest rate and plans to keep at least $1,000 in her account so she can avoid paying afee. Amber wants to open her account at an investment company. What kind of account should she open?A. A certificate of depositB. An interest-earning checking accountC. A money market accountD. A money market fundE. A regular savings account
B 68. Will wants to open an account that will allow him easy access to his funds (by checks, ATMs, or debitcard usage) from many locations and will pay at least a low interest rate. What kind of account should heopen?A. A certificate of depositB. An interest-earning checking accountC. A money market accountD. A money market fundE. A regular savings account
B 69. The text discusses several types of bonds. Which bond pays interest for 30 years that is exempt from stateand local taxes?A. Series EB. Series EEC. Series HHD. Series IE. Series Q
C 70. The text discusses several types of bonds. Which bond, which is no longer sold, electronically depositsinterest into your bank account every six months?A. Series EB. Series EEC. Series HHD. Series IE. Series Q
D 71. The text discusses several types of bonds. Which bond is purchased at face value and has twocomponents to the rate of interest earned—a fixed rate as well as a rate that adjusts twice a year forinflation?A. Series EB. Series EEC. Series HHD. Series IE. Series
B 72. Justin needs to have access to his money in five months. The best option for his savings is aA. Series EE bond.B. Money market account.C. Five-year certificate of deposit.D. Series I bond.E. Six-month certificate of deposit.
E 73. If you want to buy U.S. savings bonds, you may purchase themA. Through a TreasuryDirect account.B. At a financial institution.C. Online.D. All of these.E. Online and through TreasuryDirect.
D 74. Earnings on savings can be measured by theA. Compounding.B. Liquidity.C. Minimum deposit.D. Rate of return.E. Safety.
A 75. Earning interest on interest is calledA. Compounding.B. Liquidity.C. Minimum deposit.D. Rate of return.E. Safety.
A 76. The Truth in Savings Act requires financial institutions to disclose the _____ on savings accounts.A. annual percentage yield (APY)B. compoundingC. liquidityD. tax rateE. safety certification
D 77. Which of the following is correct about inflation?A.If inflation is 7% and your rate of return in your savings account is 4%, you will experience an overallgain in buying power.B. As inflation rates increase, interest rates offered to savers decrease.C. Inflation does not affect interest rates for savings accounts.D. In order to increase buying power, you need to earn a rate higher than the rate of inflation.E. If you earn 5% and inflation is 10%, your buying power will increase.
B 78. Which of the following refers to the opportunity to withdraw money on short notice without incurring aloss in value?A. CompoundingB. LiquidityC. Minimum depositD. Rate of returnE. Safety
C 79. Which of the following provides deposit insurance for credit unions?A. FDCUB. FDICC. NCUAD. SAIFE. None of these
D 80. The insurance coverage provided by the FDIC for a savings account is ________ per depositor untilJanuary 1, 2014.A. $50,000B. $100,000C. $150,000D. $250,000E. $500,000
D 81. Which of the following is a type of electronic payment?A. Certified checkB. Interest-earning checking accountC. Money orderD. Smart cardE. Traveler’s check
C 82. Jennifer received a $50 gift card for her favorite retailer. What kind of card did she receive?A. A debit card.B. An online payment.C. A stored-value card.D. A smart card.E. All of these.
E 83. Aidan wants to be able to complete his payment transactions electronically. Which of the following toolsshould he use?A. A debit card.B. An online payment.C. A stored-value card.D. A smart card.E. All of these.
A 84. Quentin wants his retail purchases to be deducted directly from his checking account. Which of thefollowing tools should he use?A. A debit card.B. A credit card.C. A stored-value card.D. PayNearMe.E. All of these.
B 85. Patrick is interested in opening a different account that will allow him to write checks, but he doesn’twant to maintain a minimum balance. He should open a(n)A. Regular checking account.B. Activity account.C. Interest-earning checking account.D. All of these are correct.E. None of these is correct.
C 86. Preston never opened his bank statements, so he was surprised to see that he received a service chargethat exceeded the interest he earned for the month. What kind of account does Preston have?A. A regular checking account.B. A activity account.C. An interest-earning checking account.D. All of these are correct.E. None of these is correct.
A 87. Ursula has an account that will allow her to waive the minimum balance if she keeps a certain amount insavings. What kind of account does she have?A. A regular checking account.B. An activity account.C. An interest-earning checking account.D. All of these are correct.E. None of these is correct.
D 88. Which of the following is NOT correct?A. Check 21 decreases the processing time for checks.B. Check 21 allows a substitute check to be an equivalent of the original check.C. A substitute check is a digital reproduction of the original paper check.D. Check 21 increases the fees
E 89. In general, which fees have recently changed for checking accounts?A. Overdraft fees.B. Stop-payment orders.C. Check printing.D. All of these fees have decreased.E. All of these fees have increased.
C 90. Which of the following is correct?A. Canceled checks are typically returned to customers.B. Overdraft protection is a loan banks make for their checking customers whose balances are positive.C. Bank customers typically are provided with online access to view and print checks that have been paid.D. Overdraft protection is usually more costly than fees charged for checks with insufficient funds.E.Checking account packages with many services included for a single fee usually are a good value evenif you don’t use many of the services in the package.
A 91. Nora bought a used car and was told that she needed a check with guaranteed payment. She obtainedaA. Certified check.B. Cashier’s check.C. Money order.D. Personal check.E. Traveler’s check.
C 92. Kylie went to a post office to obtain aA. Certified check.B. Cashier’s check.C. Money order.D. Personal check.E. Merchant’s check.
B 93. Logan paid a bill with a special form. He received this form at his financial institution and had to pay theamount of the check plus a fee. He used aA. Certified check.B. Cashier’s check.C. Merchant’s check.D. Personal check.E. Traveler’s check.
E 94. Anders went to Norway and went shopping. He had to sign his name once when he purchased thisdocument and a second time at the store. Anders used aA. Certified check.B. Cashier’s check.C. Money order.D. Personal check.E. Traveler’s check.
D 95. A joint account with Sara and John allowsA. Only John to write checks.B. Only Sara to write checks.C. Sara or John to complete a signature card.D. John and Sara to both write checks on the account.E. All of these.
A 96. Chloe signed the back of her check with nothing else by it. She used a(n)A. Blank endorsement.B. Restrictive endorsement.C. Deposit ticket.D. Special endorsement.E. Individual account.
B 97. Zoe signed the back of her check with the words “for deposit only.” She used a(n)A. Blank endorsement.B. Restrictive endorsement.C. Deposit ticket.D. Special endorsement.E. Individual account.
D 98. Margaret signed the back of her check with the words “pay to the order of Penelope.” She used a(n)A. Blank endorsement.B. Restrictive endorsement.C. Deposit ticket.D. Special endorsement.E. Individual account.
C 99. Which of the following is NOT required when writing a check?A. The amount of check written in wordsB. The date writtenC. A driver’s license numberD. The name of person or organization receiving paymentE. A signature
A 100.If a check is lost or stolen, you should use aA. Stop-payment order.B. Stale check.C. Bank statement.D. Blank endorsement.E. Deposit ticket.
D 101.Nancy invested $5,000 in a certificate of deposit earning 4% per year. Unfortunately, she needed towithdraw it before the maturity date. If the penalty was two months of interest, what was her total penalty(round to the nearest dollar)?A. $0B. $4C. $20D. $33E. $200
D 102.Neil invested $10,000 in a certificate of deposit earning 9% per year. Unfortunately, he needed towithdraw it before the maturity date. If the penalty was two months of interest, what was his totalpenalty?A. $0B. $9C. $75D. $150E. $900
B 103.What is the APY for a savings account with a $250 balance that receives $12 interest for the year?A. 2.4%B. 4.8%C. 5%D. 10.4%E. 20.8%
E 104.What is the APY for a one-year $4,000 certificate of deposit with $560 interest?A. 5.6%B. 7%C. 8%D. 11.2%E. 14%
C 105.Nicholas earned 10% in his savings account. If he is in the 28% tax bracket, what is his after-tax savingsrate of return?A. 2.5%B. 3.6%C. 7.2%D. 10%E. 28%
C 106.Opal earned 5% in her savings account. If she is in the 25% tax bracket, what is her after-tax savings rateof return?A. 2%B. 2.5%C. 4.5%D. 5%E. 25%pg 125
D 107.Evan had three accounts as listed below. In 2011, how much was his total coverage by the FDIC?• Bank A: $125,000• Bank B: $50,000• Bank C: $325,000A. $125,000B. $250,000C. $375,000D. $425,000E. $475,000
C 108.Gwen had three accounts as listed here. In 2011, how much was her total coverage by the FDIC?• Bank A: $250,000• Bank B: $50,000• Bank C: $275,000A. $50,000B. $250,000C. $550,000D. $575,000E. $825,000
E 109.Victor read the fine print for a checking account he was thinking about using. The fine print said, “Aminimum balance of $500 is required. If your balance falls below this level, you will be assessed amonthly fee of $10.” Since Victor was planning to keep only a $50 balance in his account, how muchcould he be charged each year?A. $0.00B. $10.00C. $40.00D. $50.00E. $120.00

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