Exam 6: Managing Your Money

Which of the following is true about a NOW account?

You should attempt to have a sufficient amount of funds in liquid assets to draw on when your cash outflows exceed your cash inflows.

Since the potential for default is very low for some types of money market securities,it's not necessary to assess the risk before investing your money in one.

To achieve both liquidity and an adequate return,you should consider investing in

Liquidity is necessary because there are times during the year when your cash inflows are not adequate to cover your cash outflows.

Stopping payment on a check should be used if you paid to have your bathroom remodeled and the job was not completed.

________ management is a series of decisions made over a short-term period regarding cash inflows and outflows.

You have a choice between investing $10,000 in a CD that in six months will pay you $10,190 or investing $9,800 in a T-bill that in 182 days will return $10,000.Ignoring any opportunity cost between the two investments,which will give you the higher annualized return and what will the annualized return be?

To achieve both liquidity and an adequate return,you should consider investing in only one money market investment with a fixed interest rate and a long maturity date.

Money market funds (MMFs)offer all of the following except

Since CDs are insured by the FDIC,the rates are usually the same from one institution to another.

Because most regular checking accounts do not pay interest,you should keep only enough funds in your account to cover anticipated expenses with a small reserve for unanticipated expenses.

Risk management of money market investments involves assessing the risk exhibited by the investment.

A money market account combines deposit accounts with a brokerage account,provides a single consolidated statement,and "sweeps" the unused balance from the checking account to a savings account daily.

Describe your short-term investments and how they affect your personal budget,income statement,and balance sheet in terms of return and liquidity.

An asset management account combines deposit accounts with a brokerage account and provides a single account statement.

Which of the following securities is likely to have the most credit risk?

All of the following money market securities are insulated from credit risk except

An asset management account that moves any unused balance in the brokerage account into a money market investment at the end of each business day is called a(n)

Which of the following should not be considered when evaluating a checking account?