Question 1

The ________ is the return on an investment that is guaranteed for a specified period.

Accepted Answer

A)  risk-free rate 
B)  risk premium 
C)  specific return 
D)  fair market return 
A)  risk-free rate 
B)  risk premium 
C)  specific return 
D)  fair market return A

Question 2

When the Federal Reserve wishes to ________ interest rates, it ________ the amount of funds at commercial banks.

Accepted Answer

A)  increase; increases 
B)  reduce; reduces 
C)  reduce; increases 
D)  Both A and B are correct. 
A)  increase; increases 
B)  reduce; reduces 
C)  reduce; increases 
D)  Both A and B are correct. C

Question 3

You have $3,000 that you may need any day to replace the furnace in your house. Which of the following would be the best place to put the $3,000?

Accepted Answer

A)  A one-year CD earning 4% 
B)  A common stock mutual fund earning 9% 
C)  A savings account earning 2% 
D)  Shares of stock in a high-tech company that could double in 6 months 
A)  A one-year CD earning 4% 
B)  A common stock mutual fund earning 9% 
C)  A savings account earning 2% 
D)  Shares of stock in a high-tech company that could double in 6 months C

Question 4

A nondepository institution facilitating transactions in stocks or bonds is a(n) ________.

Accepted Answer

The answer of A nondepository institution facilitating transactions in stocks...

Question 5

An example of a depository financial institution is an insurance company.

Accepted Answer

A) True 
 B)False

Question 6

The relationship between risk and return is positive because

Accepted Answer

A)  the longer the term of the investment, the more exposed it is to negative inflation effects. 
B)  investors need to be compensated with additional return on investment to bear additional risk. 
C)  not every investment has risk, so there is really no distinct relationship. 
D)  Both A and B are correct. 
A)  the longer the term of the investment, the more exposed it is to negative inflation effects. 
B)  investors need to be compensated with additional return on investment to bear additional risk. 
C)  not every investment has risk, so there is really no distinct relationship. 
D)  Both A and B are correct.

Question 7

Which of the following is not a fee that financial institutions may charge?

Accepted Answer

A)  Checking account service charge 
B)  ATM usage fee 
C)  Depository insurance 
D)  Safety deposit box rental 
A)  Checking account service charge 
B)  ATM usage fee 
C)  Depository insurance 
D)  Safety deposit box rental

Question 8

Lorenzo is considering two banks for his checking account. Suny Bank requires a minimum deposit of $100 and charges a monthly fee of $8, plus 5 cents a check. Merchants Bank also requires a minimum deposit of $100, it charges a per check fee of 15 cents but no monthly fee. How many checks would Lorenzo need to write each month to make Suny Bank cheaper to use than Merchants?

Accepted Answer

A)  over 50 
B)  over 60 
C)  over 70 
D)  over 80 
A)  over 50 
B)  over 60 
C)  over 70 
D)  over 80

Question 9

Which of the following is not a disadvantage of using ATM cards?

Accepted Answer

A)  Forgetting to record the transaction 
B)  Fees from your bank and other banks for using out-of-network machines 
C)  Increased fees if you make too many transactions per period 
D)  Difficulty of withdrawing funds 
A)  Forgetting to record the transaction 
B)  Fees from your bank and other banks for using out-of-network machines 
C)  Increased fees if you make too many transactions per period 
D)  Difficulty of withdrawing funds

Question 10

Savings institutions accept deposits and provide mortgage and personal loans to individuals. Another name for these financial institutions is

Accepted Answer

A)  trust institutions. 
B)  economy institutions. 
C)  insured institutions. 
D)  thrift institutions. 
A)  trust institutions. 
B)  economy institutions. 
C)  insured institutions. 
D)  thrift institutions.

Question 11

A ________ is a check that is written on behalf of a person to a specific payee and will be charged against a financial institution's account.

Accepted Answer

A)  cashier's check 
B)  money order 
C)  traveler's check 
D)  personal check 
A)  cashier's check 
B)  money order 
C)  traveler's check 
D)  personal check

Question 12

________ are nondepository institutions that facilitate the purchase or sale of securities by firms or individuals by providing investment banking services and brokerage services.

Accepted Answer

A)  Finance companies 
B)  Securities firms 
C)  Insurance companies 
D)  Mutual funds 
A)  Finance companies 
B)  Securities firms 
C)  Insurance companies 
D)  Mutual funds

Question 13

Interest rate changes are affected by the relationship of the total supply of funds provided by all investors and the total demand for funds by all borrowers.

Accepted Answer

A) True 
 B)False

Question 14

To join a credit union, you need to

Accepted Answer

A)  have a steady job. 
B)  be a member of a group with a common bond. 
C)  have established good credit. 
D)  be sponsored by an existing member of that credit union. 
A)  have a steady job. 
B)  be a member of a group with a common bond. 
C)  have established good credit. 
D)  be sponsored by an existing member of that credit union.

Question 15

________ are nondepository institutions that provide insurance to protect individuals or firms against possible adverse events.

Accepted Answer

A)  Finance companies 
B)  Securities firms 
C)  Insurance companies 
D)  Investment companies 
A)  Finance companies 
B)  Securities firms 
C)  Insurance companies 
D)  Investment companies

Question 16

Describe four factors you should consider when choosing a financial institution.

Accepted Answer

Several answers are acceptable

Question 17

To speed the process of paying your bills and to save money on stamps, you could

Accepted Answer

A)  agree with the service provider to pay quarterly. 
B)  use your bank's online banking capability. 
C)  pay with money orders. 
D)  use your bank's wire transfer capability. 
A)  agree with the service provider to pay quarterly. 
B)  use your bank's online banking capability. 
C)  pay with money orders. 
D)  use your bank's wire transfer capability.

Question 18

Use the following two columns of items to answer the matching questions below:
-debit card
A)automatically deducts an amount from a checking account
B)extends the payment time through credit

Accepted Answer

The answer of Use the following two columns of items...

Question 19

List four types of financial institutions that you have made use of or might deal with in the future.

Accepted Answer

Finance companies, securities

Question 20

Financial institutions offering traditional checking and savings accounts as well as providing loans to both individuals and firms are called ________.

Accepted Answer

depository

The ________ is the return on an investment that is guaranteed for a specified period.

When the Federal Reserve wishes to interest rates, it the amount of funds at commercial banks.

You have $3,000 that you may need any day to replace the furnace in your house. Which of the following would be the best place to put the $3,000?

A nondepository institution facilitating transactions in stocks or bonds is a(n) ________.

An example of a depository financial institution is an insurance company.

The relationship between risk and return is positive because

Which of the following is not a fee that financial institutions may charge?

Which of the following is not a disadvantage of using ATM cards?

Savings institutions accept deposits and provide mortgage and personal loans to individuals. Another name for these financial institutions is

A ________ is a check that is written on behalf of a person to a specific payee and will be charged against a financial institution's account.

________ are nondepository institutions that facilitate the purchase or sale of securities by firms or individuals by providing investment banking services and brokerage services.

Interest rate changes are affected by the relationship of the total supply of funds provided by all investors and the total demand for funds by all borrowers.

To join a credit union, you need to

________ are nondepository institutions that provide insurance to protect individuals or firms against possible adverse events.

Describe four factors you should consider when choosing a financial institution.

To speed the process of paying your bills and to save money on stamps, you could

Use the following two columns of items to answer the matching questions below: -debit card A)automatically deducts an amount from a checking account B)extends the payment time through credit

List four types of financial institutions that you have made use of or might deal with in the future.

Financial institutions offering traditional checking and savings accounts as well as providing loans to both individuals and firms are called ________.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

Exam 5: Banking and Interest Rates

The ________ is the return on an investment that is guaranteed for a specified period.

When the Federal Reserve wishes to ________ interest rates, it ________ the amount of funds at commercial banks.

You have $3,000 that you may need any day to replace the furnace in your house. Which of the following would be the best place to put the $3,000?

A nondepository institution facilitating transactions in stocks or bonds is a(n) ________.

An example of a depository financial institution is an insurance company.

The relationship between risk and return is positive because

Which of the following is not a fee that financial institutions may charge?

Which of the following is not a disadvantage of using ATM cards?

Savings institutions accept deposits and provide mortgage and personal loans to individuals. Another name for these financial institutions is

A ________ is a check that is written on behalf of a person to a specific payee and will be charged against a financial institution's account.

________ are nondepository institutions that facilitate the purchase or sale of securities by firms or individuals by providing investment banking services and brokerage services.

Interest rate changes are affected by the relationship of the total supply of funds provided by all investors and the total demand for funds by all borrowers.

To join a credit union, you need to

________ are nondepository institutions that provide insurance to protect individuals or firms against possible adverse events.

Describe four factors you should consider when choosing a financial institution.

To speed the process of paying your bills and to save money on stamps, you could

Use the following two columns of items to answer the matching questions below: -debit card A)automatically deducts an amount from a checking account B)extends the payment time through credit

List four types of financial institutions that you have made use of or might deal with in the future.

Financial institutions offering traditional checking and savings accounts as well as providing loans to both individuals and firms are called ________.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

When the Federal Reserve wishes to interest rates, it the amount of funds at commercial banks.