Exam 4: Managing Your Cash and Savings

Gordon started saving $25 a month at age 20 in an account earning 4%,compounded monthly.At age 40,he would have _____ in this account.(Use time value tables or financial calculator.Select the closest answer.)

You put $1,000 into a 12-month certificate of deposit.After seven months,you really need the money.The bank will let you have it before 12 months,but you will pay a penalty.

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. -Your bank pays 3% interest,compounded quarterly.At the end of one year,your $5,000 will have earned [$150 | over $150] interest.

When asavings bank is a mutual association,it means that it is owned by the:

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. -Lower borrowing costs encourage the substitution of [debt for equity | equity for debt] in corporate capital structures.

Factors typically influencing the choice of where to maintain a checking account are:

If you write a check for an amount greater than your account balance,the result will be:

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. -Today the differences between a commercial bank and a savings and loan association (S&L)are [minor | major].

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. -Interest rates will be lower on your [savings | checking] accounts.

When doing an account reconciliation,interest earned on your account should be:

Funds in a _____ should not be withdrawn for a stated time period in order to avoid an interest penalty.

Savings banks are mainly found in the northeastern U.S.

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 | NOW account].

ATM transactions require the use of a PIN.

If your bank states that it compounds monthly,the effective interest rate will be greater than the nominal interest rate.

One could expect to earn a higher rate of interest on a certificate of deposit than on a checking account.

If one wanted to make monthly deposits to accumulate funds for future expenditures,a money market deposit account would be an appropriate savings vehicle.

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 have [increased | not impacted] the supply of credit.

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. -Financial institutions [must pay at least a federally mandated minimum interest rate | may pay any interest rate they want] on their various accounts.

Low interest rates that have persisted since the financial crisis of 2008-09 have been a net benefit to retirees.