Exam 5: Cash or Liquid Asset Management

Pick the advantage of a certificates of deposit from this list of possibilities.

Tony just received his checking account statement from his bank. He has a NOW account with free checking that pays 0.75% APR on the balance and requires a $500 minimum balance. His statement shows that he currently has a balance of $3,950. In looking at his statement he notices that his car payment check for $400 is still outstanding, and that his recently received payroll deposit of $3,600 had not posted at the time the statement was created. His normal living expenses average $1,500 per month including his car payment. Other than his car loan, he rarely writes any checks as he prefers to use his debit card and ATM card for day-to-day living expenses. He pays his credit card balance in full every month. Other than his checking account he does not own any investments. He has always dreamed of owning a house, and would like to buy one within the next five years. He has access to a 401K pension plan at work where his employer will match contributions up to 6% of his salary. He currently contributes 2% of his salary to this plan. -After balancing his checking account, what will his current balance be today?

A debit card is the same thing as Smart Card.

When using an ATM, keep in mind that

When you automate your savings you are less likely to spend those dollars because they never become part of the funds in your checking account.

Financial institutions that provide traditional checking and savings accounts are commonly referred to as

What is the name for comprehensive financial services packages offered by brokerage firms?

NOW accounts offer an option to traditional demand deposits. All of the following are characteristics of NOW accounts except one. Which is it?

You are considering an MMMF. The fund is taxable and pays 8.5% interest. If your top federal tax bracket is 25% and you live in a state that doesn't impose income taxes, what after-tax return would you realize from this investment?

The interest rate earned on a money market deposit account is generally higher than the interest earned on a Bank savings account.

The Truth in Savings Act of 1993

List the common deposit-type financial institutions.

With online banking you have access to your accounts, and are able to conduct business transactions through the internet, your mobile phone or some other online device.

What is the name for an automatic loan made to your checking account whenever your account does not contain enough cash to cover the checks that you have written against it?

Negotiable Order Of Withdrawal (NOW) accounts require consumers to keep a minimum balance in the account. This balance represents the ________ cost of those funds; in that, they cannot be used elsewhere.

Suppose that you go to a bank at which you have no account, give the bank cash, and in return obtain a check drawn against that bank which you will use to pay someone else. This is called a

Credit unions and Internet-only banks typically offer more attractive interest rates to both borrowers and savers.

Tony just received his checking account statement from his bank. He has a NOW account with free checking that pays 0.75% APR on the balance and requires a $500 minimum balance. His statement shows that he currently has a balance of $3,950. In looking at his statement he notices that his car payment check for $400 is still outstanding, and that his recently received payroll deposit of $3,600 had not posted at the time the statement was created. His normal living expenses average $1,500 per month including his car payment. Other than his car loan, he rarely writes any checks as he prefers to use his debit card and ATM card for day-to-day living expenses. He pays his credit card balance in full every month. Other than his checking account he does not own any investments. He has always dreamed of owning a house, and would like to buy one within the next five years. He has access to a 401K pension plan at work where his employer will match contributions up to 6% of his salary. He currently contributes 2% of his salary to this plan. -Tony has not received an Income Tax refund in 4 years. Is there anything you could recommend to him?

The deregulation of the 1980s has allowed brokerage firms to offer traditional banking services, and has also let banks offer services traditionally found only at investment companies.

Four banking conveniences are listed below. Which one is not typical?