Exam 4: The Banking Services of Financial Institutions

Savers should always attempt to obtain an interest rate that is less than the inflation rate.

Mortgage and loan companies specialize principally in home mortgages and long-term loans.

If the annual rate is 8%, and the interest is compounded annually, what is the effective annual rate?

Credit unions frequently offer lower loan rates than other financial institutions.

ATM fees may be different in different geographic areas.

Which of the following savings plans is not covered by federal deposit insurance?

ATM fees are about the same in different geographic areas.

Kevin Friedman only needs to write a couple of cheques each month. Which type of chequing account would best serve his needs?

Briana Legett expects interest rates to decline over the next few months. To maximize her earnings she should use a(n):

Comparison of earnings for different savings plans can best be accomplished using the

Brad Kellogg maintains a monthly balance in his chequing account of approximately $150, writes about 25 cheques a month, and makes three deposits each month. How would Brad decide which of the following chequing accounts to use? I. a regular chequing account with a monthly fee of $4.50 for an unlimited number of cheques and no monthly balance required; no interest earned II. an interest-bearing chequing account paying 4 percent interest on balances over $300; monthly service charge of $6 when the balance is below $300 III. a special chequing account that charges 35 cents a cheque and 20 cents for each deposit; no interest earned IV. a minimum-balance account that requires a $200 minimum balance to avoid the $10 monthly fee; interest earned when balance is above $400.

Time deposits consist of

When interest rates are rising, a person would be best served by

Lower returns on savings will usually result in less liquidity.

If the annual rate is 10%, and the interest is compounded quarterly, what is the effective annual rate?

An all-purpose account that provides several services is a(n):

Which of these is not a characteristic of the compound interest bond?

When preparing a bank reconciliation, interest earned on your chequing account is subtracted from the bank statement balance.

A service designed for people who write only a few cheques each month is a(n) ____________ account.

A regular savings account usually offers a higher rate of return to savers than other savings plans.