Question 1

Depositors are penalized for early withdrawal of funds from

Accepted Answer

A)  demand deposits. 
B)  certificates of deposit. 
C)  lines of credit. 
D)  notes payable. 
E)  None of these answers is correct. 
A)  demand deposits. 
B)  certificates of deposit. 
C)  lines of credit. 
D)  notes payable. 
E)  None of these answers is correct.

Question 2

A system that allows large companies to transfer wages and salaries to employees' bank accounts without making out individual paychecks is called a(n)

Accepted Answer

A)  ATM. 
B)  EFT. 
C)  ACH. 
D)  POS. 
E)  ECC. 
A)  ATM. 
B)  EFT. 
C)  ACH. 
D)  POS. 
E)  ECC.

Question 3

Inflation is a general rise in the level of prices.

Accepted Answer

A) True 
 B)False

Question 4

The minimum amount of the purchase price of certain stock transactions that must be paid in cash is called the

Accepted Answer

A)  down payment. 
B)  reserve requirement. 
C)  collateral. 
D)  margin. 
E)  line of credit. 
A)  down payment. 
B)  reserve requirement. 
C)  collateral. 
D)  margin. 
E)  line of credit.

Question 5

There are approximately 2,500 savings and loan associations in the United States.

Accepted Answer

A) True 
 B)False

Question 6

The Federal Reserve System is controlled by the

Accepted Answer

A)  board of governors. 
B)  president of the United States. 
C)  U.S. Senate. 
D)  member banks. 
E)  U.S. Treasury Department. 
A)  board of governors. 
B)  president of the United States. 
C)  U.S. Senate. 
D)  member banks. 
E)  U.S. Treasury Department.

Question 7

Tavia Jacobson is the owner of Jacobson's Home Interiors. She would like to begin accepting Visa, MasterCard, or Discover credit cards, but she is concerned about the cost. As a merchant she should expect to pay between ____ percent to the credit-card company for processing credit-card transactions.

Accepted Answer

A)  1 and 2 
B)  1 and 3 
C)  1.5 and 4 
D)  2.5 and 5 
E)  2 and 6 
A)  1 and 2 
B)  1 and 3 
C)  1.5 and 4 
D)  2.5 and 5 
E)  2 and 6

Question 8

As a result of the Fair Credit Reporting Act, every consumer has the right to know what information is in his or her credit bureau file.

Accepted Answer

A) True 
 B)False

Question 9

In what ways can a banker provide international banking services to help business firms import and export goods?

Accepted Answer

A banker can provide a variety of intern

Question 10

Through a process called deposit expansion, commercial banks can fund more loans.

Accepted Answer

A) True 
 B)False

Question 11

GE Capital is an example of a(n)

Accepted Answer

A)  credit union. 
B)  insurance company. 
C)  finance company. 
D)  retailer. 
E)  investing banking firm. 
A)  credit union. 
B)  insurance company. 
C)  finance company. 
D)  retailer. 
E)  investing banking firm.

Question 12

Dollar General takes out a long-term business loan. Which of the following is least likely to be the intended use of the loan?

Accepted Answer

A)  Replacement of store equipment 
B)  Expansion of existing facilities 
C)  Addition of retail facilities 
D)  Development of the firm's product mix 
E)  Purchase of inventory 
A)  Replacement of store equipment 
B)  Expansion of existing facilities 
C)  Addition of retail facilities 
D)  Development of the firm's product mix 
E)  Purchase of inventory

Question 13

Jack owns a chain of health food stores that has been growing rapidly. He decides that new, larger locations would be extremely successful, and he sells stock for the first time to obtain the needed funding to build the new stores. What type of financial institution can assist Jack in the new common stock issue?

Accepted Answer

A)  Finance company 
B)  Commercial bank 
C)  Insurance company 
D)  Investment banking firm 
E)  Brokerage firm 
A)  Finance company 
B)  Commercial bank 
C)  Insurance company 
D)  Investment banking firm 
E)  Brokerage firm

Question 14

Community Bank
Jeffrey is the training manager for the Community Bank in Maryland. Jeffrey has developed a training program for all new employees that emphasizes understanding the basics of money. Jeffrey and the bank's management believe that if the employees understand the basics of money, they can utilize the information in their own personal finances as well as guide and answer questions from bank customers.
The bank recently hired Laila. She was hired at a high-level position because she brought with her extensive bank management experience. Laila's responsibilities included making sure that the reserve requirement would always be met and keeping track of the interest rate that the Federal Reserve System charged for loans to member banks.
-Refer to Community Bank. In his training, when Jeffrey suggests that money should retain its value over time, which of the following characteristics is he referring to?

Accepted Answer

A)  Difficulty of counterfeiting 
B)  Liquidity 
C)  Divisibility 
D)  Stability 
E)  Portability 
A)  Difficulty of counterfeiting 
B)  Liquidity 
C)  Divisibility 
D)  Stability 
E)  Portability

Question 15

The current amount of deposit insurance for deposits in banks and credit unions insured by the FDIC or the NCUA is $250,000 per depositor.

Accepted Answer

A) True 
 B)False

Question 16

Payless Shoes finds that it does not have enough cash to purchase new sandals for the upcoming summer season. What type of arrangement would you recommend for purchasing the shoes?

Accepted Answer

A)  Collateral 
B)  Short-term business loan 
C)  Selling corporate bonds 
D)  Issuing stock 
E)  Long-term loan 
A)  Collateral 
B)  Short-term business loan 
C)  Selling corporate bonds 
D)  Issuing stock 
E)  Long-term loan

Question 17

The definition of M₂ includes M₁ (currency and demand deposits) plus savings accounts, certain money-market securities, and

Accepted Answer

A)  the value of stock owned by individuals. 
B)  the value of homes owned by individuals. 
C)  time deposits of more than $100,000. 
D)  certificates of deposit of less than $100,000. 
E)  foreign currency deposited in U.S. banks. 
A)  the value of stock owned by individuals. 
B)  the value of homes owned by individuals. 
C)  time deposits of more than $100,000. 
D)  certificates of deposit of less than $100,000. 
E)  foreign currency deposited in U.S. banks.

Question 18

Which of the following organizations would provide credit reports for individuals?

Accepted Answer

A)  Dun & Bradstreet 
B)  Credit Information Corporation of the United States 
C)  Equifax Credit Information Services 
D)  Federal Deposit Insurance Corporation 
E)  The Federal Reserve System 
A)  Dun & Bradstreet 
B)  Credit Information Corporation of the United States 
C)  Equifax Credit Information Services 
D)  Federal Deposit Insurance Corporation 
E)  The Federal Reserve System

Question 19

Maria Salvador from Dallas sighed as she wrote a check for her last payment to a Houston jeweler from whom she had bought a beautiful diamond. She anticipated that it would take four to five days for the check to reach the jeweler and for him to deposit it and another two or three days for the check to clear through the

Accepted Answer

A)  Federal Reserve System. 
B)  Federal Reserve Board. 
C)  Federal Reserve Open Market Committee. 
D)  jeweler's bank. 
E)  Houston bank. 
A)  Federal Reserve System. 
B)  Federal Reserve Board. 
C)  Federal Reserve Open Market Committee. 
D)  jeweler's bank. 
E)  Houston bank.

Question 20

Which of the following is considered the most important advantage of online banking for financial institutions?

Accepted Answer

A)  Increased security 
B)  Lower cost of technology assistance for customers 
C)  Increased numbers of personnel 
D)  Larger numbers of technology-capable customers 
E)  Lower cost of processing large numbers of transactions 
A)  Increased security 
B)  Lower cost of technology assistance for customers 
C)  Increased numbers of personnel 
D)  Larger numbers of technology-capable customers 
E)  Lower cost of processing large numbers of transactions

Exam 18: Understanding Money, Banking, and Credit

Depositors are penalized for early withdrawal of funds from

A system that allows large companies to transfer wages and salaries to employees' bank accounts without making out individual paychecks is called a(n)

Inflation is a general rise in the level of prices.

The minimum amount of the purchase price of certain stock transactions that must be paid in cash is called the

There are approximately 2,500 savings and loan associations in the United States.

The Federal Reserve System is controlled by the

As a result of the Fair Credit Reporting Act, every consumer has the right to know what information is in his or her credit bureau file.

In what ways can a banker provide international banking services to help business firms import and export goods?

Through a process called deposit expansion, commercial banks can fund more loans.

GE Capital is an example of a(n)

Dollar General takes out a long-term business loan. Which of the following is least likely to be the intended use of the loan?

The current amount of deposit insurance for deposits in banks and credit unions insured by the FDIC or the NCUA is $250,000 per depositor.

Payless Shoes finds that it does not have enough cash to purchase new sandals for the upcoming summer season. What type of arrangement would you recommend for purchasing the shoes?

The definition of M₂ includes M₁ (currency and demand deposits) plus savings accounts, certain money-market securities, and

Which of the following organizations would provide credit reports for individuals?

Which of the following is considered the most important advantage of online banking for financial institutions?

Exploring the World of Business and Economics

A: Being Ethical and Socially Responsible

B: Being Ethical and Socially Responsible

A: Exploring Global Business

B: Exploring Global Business

Choosing a Form of Business Ownership

Small Business, Entrepreneurship, and Franchises

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees and Teams

Enhancing Union-Management Relations

Building Customer Relationships Through Effective Marketing

A: Creating and Pricing Products That Satisfy Customers

B: Creating and Pricing Products That Satisfy Customers

Wholesaling, Retailing, and Physical Distribution

Developing Integrated Marketing Communications

Social Media, E-Business, and Accounting

Using Management and Accounting Information

Mastering Financial Management

A: Understanding Personal Finances and Investments

B: Understanding Personal Finances and Investments

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