Exam 5: Banking and Interest Rates

Use the following two columns of items to answer the matching questions below: -risk-free rate A)an additional return beyond the risk-free rate B)a return on an investment that is guaranteed for a specified period

A risk premium is the amount of interest you might receive over and above the risk-free return insured by the federal government.

Debit cards allow you to pay for a purchase later when the bill arrives.

Use the following two columns of items to answer the matching questions below: -financial conglomerates A)nondepository institutions that facilitate the purchase and sale of securities by firms or individuals B)financial institutions that accept deposits and provide loans C)financial institutions that offer a diverse set of services D)a nondepository institution that sells shares to individuals and uses the proceeds to invest in securities and create a mutual fund E)a nondepository institution that provides insurance to protect against adverse events F)a nondepository institution that specializes in providing personal loans

Use the following two columns of items to answer the matching questions below: -insurance company A)nondepository institutions that facilitate the purchase and sale of securities by firms or individuals B)financial institutions that accept deposits and provide loans C)financial institutions that offer a diverse set of services D)a nondepository institution that sells shares to individuals and uses the proceeds to invest in securities and create a mutual fund E)a nondepository institution that provides insurance to protect against adverse events F)a nondepository institution that specializes in providing personal loans

Bank fees for use of an automated teller machine (ATM) do not need to be considered when choosing a bank since fees are set by the federal government and are the same for all banks.

When borrowing money from a bank for a home mortgage, 30-year interest rates are generally

The opening balance in your checking account was $1000. During the month you had the following activity: wrote checks for $45.00 and $75.00 but only the first one cleared; had debit card transactions for $50 and $35.20; received a bank charge for the account of $6, deposited a check you received from a friend for $100 but it did not clear by month end. What is your month end account balance?

Interest rates could change due to all of the following, except

Which of the following is not an advantage of using ATM cards?

Since rates and fees differ only slightly between all national banks, there is little need to consider these when choosing your financial institution.

If you have $10,000 that you do not currently need for expenses and you wish to put it somewhere so that it will earn a return, which of the following financial institutions would you not choose?

When interest rates rise, individuals who make deposits will earn a ________ rate of interest, while individuals who need to borrow funds will have to pay a ________ rate.

If you wish to make purchases that are charged against your checking account without writing a check you need to have a(n) ________.

Financial institutions loan funds at ________ they pay depositors.

Organizations that offer a diverse set of financial services to individuals and firms are ________.

A financial conglomerate offers a diverse set of services that include which of the following?

$5 per ATM transaction is the maximum fee a bank can charge under Federal banking law

Which of the following is true with regard to rising interest rates?

Which of the following financial institutions specializes in making personal loans to people who are perceived to have a higher risk of default?