Exam 4: Managing Your Cash and Savings

Money market deposit accounts are insured by the FDIC if purchased at an insured bank.

An asset management account provides a

Joe Gustafson is a very busy person who likes to handle all his financial service needs with one account if possible.Which of the following types of accounts would best serve this need?

Lower borrowing costs encourage the substitution of debt for equity in corporate capital structures,which increases financial risk.

A regular savings account is a time deposit.

Which of the following accounts has special tax advantages under certain conditions when used to fund qualified college education expenses?

Which of the following would be an appropriate savings vehicle if you expected interest rates to fall over the next few months?

The minimum denomination of T-bills you can buy is

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Money market deposit accounts [are | are not] insured by an agency of the federal government.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -You [would | would not] expect to receive a cash flow of interest from your Series EE bonds.

You can stop payment when you purchase an item with your debit card.

The nominal rate of interest will be lower than the effective rate of interest when an account compounds monthly.

Maggie wants to open a checking account that will be the least expensive given her normal financial transactions.She typically writes 15 checks a month and uses an ATM 35 times a month.Her minimum checking balance falls to about $350 in an average month.Which of the following accounts would be least expensive for Maggie? (Show all your work.) Account A: ∙No monthly fee is charged if a minimum balance of at least $300 is maintained. ∙A $5.00 fee is charged in any month the minimum balance falls below $300. ∙An ATM fee of $0.10 per transaction is charged on all transactions. Account B: ∙No monthly fee is charged if a minimum balance of at least $500 is maintained. ∙A $3.00 fee plus $0.10/check is charged in any month the minimum balance falls below $500. ∙There is no ATM fee on transactions.

The annual percentage yield (APY)formula considers compounding when determining an interest rate.

A cashier's check is written on the bank's account rather than on a customer's account.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -A bank customer would expect to be able to write checks on his regular checking account and on his [certificate of deposit | money market fund].

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Low interest rates that have persisted since the financial crisis of 2008-09 have been a net benefit to [borrowers | retirees].

Money market mutual funds are insured up to $250,000 by the FDIC if purchased at an insured bank.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -A bank customer would typically expect to receive higher interest rates on her [certificate of deposit | money market deposit account].

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -You would expect to find an asset management account at a [commercial bank | brokerage firm].