Exam 5: Cash or Liquid Asset Management

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

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

Your bank,First Bank,charges you $1.50 every time you use an ATM that is not owned by them.Unfortunately,there is no First Bank ATM near your school.There is a Second Bank ATM in the Student Center,which you use several times a week to withdraw $10 at a time for lunch,video games,etc.What is the best piece of advice regarding these transactions?

Which of the following is not an advantage of a CD as a cash management alternative?

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

A debit card,also known as a memory card,can hold ID information,insurance information,and medical history.

Brenda White had her bank certify one of her personal checks as being good.Which type of check has been issued?

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

When you are considering different investment options and want to maximize your returns,be sure to compare the investments'

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

Name the three Cs of choosing a financial institution.

A store-valued card,only used at one store for one purpose,is known as an "open-loop" card.

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?

The Johnson family is very conservative financially. They have a retirement plan where John works and share a joint checking account at their bank. They keep a lot of money in their checking account to cover short-term needs and emergencies. Both of them want to step up to a higher interest rate than a checking or savings account pays, and at the same time stay with their bank. -Which of the following is not an advantage of a CD as a cash management alternative for John and Maile?

What is involved with proper cash management?

Keeping your funds in liquid assets is riskier than keeping them in illiquid assets and therefore investors require a higher expected rate of return on liquid assets.

Which of the following is not a common fee arrangement for checking accounts?

Christopher 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 401(k) 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. -What recommendations would you give Christopher about his goal of buying a house in five years?

The Johnson family is very conservative financially. They have a retirement plan where John works and share a joint checking account at their bank. They keep a lot of money in their checking account to cover short-term needs and emergencies. Both of them want to step up to a higher interest rate than a checking or savings account pays, and at the same time stay with their bank. -What financial principle do they need to understand better?

Which of the following financial institutions is a not-for-profit organization that is open only to members of that institution and tends to offer more favorable interest rates to borrowers and savers?