Personal Finance – Chapter 5

A quick source of cash is to liquidate savings. T/F True
Demand deposits refer to money deposited in savings accounts. T/F False
A credit union usually offers a wider range of financial services than a commercial bank. T/F False
A savings account with daily compounding will have higher earnings than an account with quarterly compounding. T/F True
A CD account is a checking account that earns interest. T/F False
The fewest financial services would probably be offered by a(n) Investment company.
The rate of return on a savings account may also be referred to as Yield.
The savings plan that is likely to have a set rate of return is a Certificate of deposit.
Debit cards transactions are most commonly deducted from funds in a person’s __________________ account. Checking
A personal check with guaranteed payment is a Certified check.
Trust A legal agreement tat provides for the management and control of assets by on party for the benefit of another.
Asset management account An all-in-one account that includes savings, checking, borrowing, investing, and other financial services for a single fee; also called a cash management account.
Automatic teller machine (ATM) A computer terminal used to conduct banking transactions; also called a cash machine.
Debit card A plastic access card used in computerized banking transactions; also called a cash card.
Commercial bank A financial institution that offers a full range of financial services to individuals, businesses, and government agencies.
Savings and loan associations (S&L) A financial institution that traditionally specialized I savings accounts and mortgage loans.
Mutual savings bank A financial institution that is owned by depositors and specializes in savings accounts and mortgage loans
Credit union A user owned, nonprofit, cooperative financial institution that is organized for the benefit of its members.
Money market fund A savings-investment plan offered by investment companies, with earnings based on investments in various short-term financial instruments.
Share account A regular savings account at a credit union.
Certificate of deposit (CD) A savings plan requiring that a certain amount be left on deposit for a stated time period to earn a specified interest rate.
Money market account A savings account offered by banks, savings and loan associations, and credit unions that requires a minimum balance and has earnings based on market interest rates.
Rate of return The percentage of increase in the value of savings as a result of interest earned; also called yield.
Compounding A process that calculates interest based on previously earned interest.
Annual percentage yield (APY) The percentage rate expressing the total amount of interest that would be received on a $100 deposit based on the annual rate and frequency of compounding for a 365-day period.
Share draft account An interest-bearing checking account at a credit union.
Overdraft protection An automatic loan made to checking account customers to cover the amount of checks written in excess of the available balance in the checking account.

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