Exam 5: Banking and Interest Rates

ATM cards are declining in use because they are expensive and the machines are becoming more difficult to locate.

Which of the following is not a reason that your checking account balance might change from one month to another?

In saving or investing, the ________ the risk, the ________ the potential return.

Use the following two columns of items to answer the matching questions below: -investment 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

A(n) ________ card allows you to pay for a purchase directly from your checking account without writing a check.

________ are nondepository institutions that sell shares to individuals and use the proceeds to invest in securities to create mutual funds.

Investments with a higher risk of default pay higher rates of interest than those that are less risky.

If you are anticipating a rising interest rate environment, your planning and analysis of your loan and investment portfolio should focus on

Your checkbook balance at the end of May is $1,041.52. When you receive May's bank statement, you discover the following additional items: Bank fees, $27.00; Interest earned, $16.35. Your adjusted checkbook balance after considering these items is

To prevent an overdraft or "bounced check," it is always a good idea to record each check written in your check register and reconcile your account balance when you receive your monthly bank statement.

Because of potential security concerns, it is unlikely that you will find a financial institution that offers mobile applications.

Use the following two columns of items to answer the matching questions below: -securities firm 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

Your commercial bank is offering a one-year CD with an interest rate of 7%. A financial company offers an interest rate of 10% on its one-year certificate (not a CD). The risk premium offered by the financial company is

The risk-free rate on borrowed funds is determined by

Which of the following is classified as a nondepository institution?

Discuss interest rates in general in the United States and the effects of rising and falling interest rates. Does the Federal Reserve take an active role in setting interest rates?

Lucky Louie's bank requires a minimum balance at all times of $1500 in order to provide free checking services. The bank pays .5% per annum interest on the minimum balance. If you do not maintain the balance, account service fees are $4 per month. Assuming Lucky can earn 2.5% on his money not sitting at the bank, what is his net benefit to maintaining the minimum balance?

Which of the following should not affect your choice of a financial institution?

When you invest in a CD that has a maturity of one year, you are guaranteed the interest rate offered on that CD. Your return would be

Your great aunt Mary passed away and left you an inheritance of $5,000. Since you don't have a need for the money in the near future, which of the following would be the best place to put the $5,000?