Quiz 7
Time deposits do NOT include:
Multiple choice question.
savings accounts
checking accounts
certificates of deposits
Demand deposits are NOT:
Multiple choice question.
savings accounts
checking accounts
payment accounts
Select all that apply
Institutions typically offering online banking include:
Multiple select question.
payday loan company
Internet-only banks
Savings and Loans
pawn shops
"brick and mortar" banks
check-cashing outlets
Which of the following is not true regarding ATM's?
Multiple choice question.
Withdraw larger amounts to avoid fees on several small transactions
ATM's are also called cash machines
All financial institutions charge the same ATM fees
Use your own bank's ATM to avoid surcharges
Financial services will usually NOT be affected by:
Multiple choice question.
interest rate fluctuations
various economic factors
stock prices
rising consumer prices
Saving funds for future use is necessary for financial:
Multiple choice question.
safety
knowledge
liquidation
power
__________ deposits include checking accounts and other payment methods.
This is a one word answer.
Demand or checkable
Deposit institutions would not include:
Multiple choice question.
brokerage firm
mutual savings bank
credit union
commercial bank
Electronic banking allows a customer to:
Multiple select question.
transfer funds for online payments of mortgage payments or rent
direct deposit checks
close an account
exchange foreign currency
payments for online purchases
apply and receive approvals for loan
An automated teller machine (ATM) is oftentimes referred to as a "__________
machine." This is a one word answer.
Money or cash or bank
Which of the following services do savings and loans offer?
Multiple select question.
Checking accounts
Travel agents
Financial planning
Investments
Loans
Savings accounts
Financial services can change due to such factors as changing interest rates
and rising consumer prices.
True false question.
True
False
A money market fund is a:
Multiple choice question.
credit account
stock option
savings instrument
True or false: Time deposits include money in savings accounts and
certificates of deposits.
True false question.
True
False
Payday loans are typically used by people who:
Multiple select question.
are trapped by debts
are aware of their net worth
run up debt by free spending
watch their spending
have other financial resources
are driven into debt by misfortune
A _______ bank is a financial institution that offers a full range of services.
This is a one word answer.
Commercial
The savings alternative that offers less liquidity is:
Multiple choice question.
certificates of deposit
money market accounts
savings accounts
A regular savings account usually offers:
Multiple choice question.
a low or no minimum balance requirement
a high rate of interest
a high balance requirement
overdraft protection
Historically, savings and loans specialized in:
Multiple choice question.
a full range of services
check cashing services
savings accounts and mortgage loans
member owned benefits
A ______ fund is an account used for savings offered by investment
companies.
Multiple choice question.
money market
mutual market
municipal market
credit market
Most financial institutions impose a penalty for ____.
Multiple choice question.
checking accounts
early withdrawals of CD funds
time deposits of CD funds
accounts falling under the minimum balance
Payday loans are typically used by people who:
Multiple choice question.
are aware of their net worth
watch their spending
are trapped by debts
have other financial resources
The savings alternative that offers more liquidity is:
Multiple choice question.
money market accounts
certificates of deposit
A regular savings account usually does not have:
Multiple select question.
a low or no minimum balance requirement
a high balance requirement
overdraft protection
a high rate of interest
A ______ and loan association traditionally specializes in passbook accounts
and mortgage loans
Savings
Certificates of deposit require that a certain amount be on deposit for a
stated time period in exchange for
Multiple choice question.
a shorter term
compound instead of simple interest
a higher interest rate
a lower minimum balance
Benefits of money market accounts include:
Multiple select question.
charges for low balances
a favorable interest rate
deposit insurance
higher minimum balance required
The savings alternative that offers less liquidity is:
Multiple choice question.
money market accounts
savings accounts
certificates of deposit
Benefits of U.S. savings bonds include:
Multiple select question.
government guarantee
exemption from state and local taxes
low minimum deposit
lower rates for early redemption
EE bonds have a minimum holding period of:
Multiple choice question.
one year
six months
one month
five years
The rate of return is:
Multiple choice question.
the percentage change to switch accounts at banks.
the percentage required for fees on an account.
the percentage increase in the value of an account.
Most financial institutions impose a penalty for ____.
Multiple choice question.
accounts falling under the minimum balance
time deposits of CD funds
checking accounts
early withdrawals of CD funds
A $200 savings account that earned $8 after a year would have a rate of
return, or yield, of ______ percent.
Multiple choice question.
16
8
4
Drawbacks of money market accounts include:
Multiple select question.
higher minimum balance required
some institutions charging for low balances
insurance
a favorable interest rate
A drawback of U.S. savings bonds is:
Multiple choice question.
exempt from state and local taxes
Reason:
This is a benefit of a U.S. savings bond.
low minimum deposit
Reason:
This is a benefit of a U.S. savings bond.
lower rates for early redemption
government guaranteed
The ______ is the percentage rate expressing the total amount of interest that
would be received based upon time and compounding.
Multiple choice question.
federal deposit insurance limit
bond rate
annual percentage yield
money market rate
Redeemed EE bonds may be exempt from federal income tax if the funds are
used to pay tuition and fees at a college or qualified technical school for
yourself or for a dependent and if they were purchased by an individual who
is at least 24 years old.
True false question.
True
False
The rate of _ ________ is the percentage increase in the value of savings as a
result of interest earned.
Return or interest or yield or returns
The biggest advantage of using APY is:
Multiple choice question.
equal interest rates
ease of use
easy to compare rates
A $500 savings account that earned $25 after a year would have a rate of
return, or yield, of ______ percent.
Multiple choice question.
4
25
5
20
You are in the 25% tax bracket, the after tax savings rate of return is 6%, the
before-tax yield on the savings account is:
Multiple choice question.
4.5%
1.5%
6%
8%
What types of financial institutions have federal deposit insurance through
FDIC?
Multiple select question.
Commercial banks
Savings and loans
Investment companies
Credit unions
Annual percentage yield is also commonly expressed as:
Multiple choice question.
APL
AYP
APY
compound rate
Assume FDIC insurance limits are $100,000. John and Mary are married. John
has an account with $40,000. John and Mary have a joint account with
$60,000. How much FDIC coverage does John require? Remember that John
and Mary have equal ownership of the joint account.
Multiple choice question.
$100,000
$40,000
$70,000
$60,000
The typical dollar limit per person per financial institution for FDIC insurance
is:
Multiple choice question.
$250,000
$1,000,000
$100,000
$500,000
The APY formula can be expressed as: APY = 100 {(1 +
interest/principal) ________ /days in term -1}
365
Common payment choices do not include:
Multiple select question.
municipal bonds
ATM cards
corporate bonds
checks
cash
credit cards
You are in the 25% tax bracket. So, the yield on the savings account is
8%, and the after-tax savings rate of return is:
Multiple choice question.
6%
8%
4%
What type of financial institution typically does not have federal deposit
insurance?
Multiple choice question.
Savings and loans
Commercial banks
Investment companies
___________ checking accounts usually have a monthly service charge that
you can avoid by keeping a minimum balance in the account.
Regular or now or normal or most or many
Some 'shadow' banking services like money-market funds, reloadable
prepaid cards are not covered by ______ ________ insurance.
Federal
Deposit
What three actions should you NOT take if you are a victim of identity theft?
Multiple select question.
Leave the area until the problem is resolved.
Locate the person who stole your identity.
Call your friends and neighbors.
Place a fraud alert on your credit report.
File a police report.
Contact the Social Security administration.
True or false: Typically each person is insured up to $100,000 deposited in to
each financial institution.
True false question.
True
False
On an interest-bearing checking account, always compare the interest
earned with:
Multiple choice question.
any service fees
extra commuting expenses
any new services
any free gifts
Online payments do NOT include
Multiple choice question.
eBillme
PayNearMe
Google Wallet
Smart cards
Overdraft protection is designed to:
Multiple choice question.
increase the overall balance in the account
increase your prestige as a bank customer
cover underfunded checks
be only available to long standing customers
In a regular checking account, it is beneficial to:
Multiple choice question.
pay extra for online withdrawals
pay interest
pay a monthly fee
avoid the monthly service charge
________ protection is less costly than paying a fee for an unfunded check.
Overdraft
Checking account fees have _______ in recent years.
Multiple choice question.
increased
decreased
leveled off
A joint account means:
Multiple choice question.
an individual and a business owner
Reason:
A joint account can be opened with two or more owners. They are not
business accounts.
an individual and a government agency owner
Reason:
A joint account can be opened with two or more owners.
three or more owners
Reason:
A joint account can be opened with two or more owners.
two or more owners
Overdraft protection is an automatic loan made to checking account
customers to cover checks written in excess of:
Multiple choice question.
their balance
the expected balance
the reconciled balance
A(n) _________ is your signature on the back of the check.
Endorsement
The bank balance of the checking account is $500, the current balance in the
checkbook is $325, bank fees are $25, and outstanding checks are the only
additional item. How much are the outstanding checks?
Multiple choice question.
$175
$150
$200
$225
Writing a check when you do not have funds to cover it:
Multiple choice question.
is inexpensive
does not cost you anything
does not affect your credit
may cause a large fee to be charged
Traveler's checks require ___ signatures.
Multiple choice question.
2
4
no
3
An account with two or more owners is called a:
Multiple choice question.
dual account
multiple account
checking account
joint account
Saving money for retirement would be considered a(n):
Multiple choice question.
long-term goal
short-term goal
average goal
normal goal
When you sign the back of the check, this is a(n):
Multiple choice question.
signature card
endorsement
identification
autograph
Among other factors, a person's priorities, age, and _______ affect his or her
investment goals. (Enter only one word per blank.)
Values
Comparing your checkbook balance to the bank balance is called:
Multiple choice question.
checking
comparison
reconciliation
tedious
Traveler's checks allow you to make payments when you are:
Multiple choice question.
on vacation only
on business only
away from home
only in a foreign country
The rate of _______ can vary in percentage, yet every percent greater makes
a significant impact on future value.
Return or interest
_________ in an investment means minimal risk of loss while _________ in an
investment means a measure of uncertainty about an outcome.
Safety or safe
Risk
The process of saving money to buy a house in three years could be
considered an:
Multiple choice question.
intermediate goal
average goal
normal goal
long-term goal
Certificates of deposit, government bonds, and certain mutual funds are all
considered _________ investments.
Safe or safer
When looking at investment you should first ask yourself:
Multiple choice question.
what is the best alternative and do these alternatives meet F.D. I. C.
regulations?
which investment option should I choose and what investment company has
the best return?
how often should I invest, and at what intervals should I invest?
what is important to you and what do you value?
Speculative investments assume a:
Multiple choice question.
low level of risk
medium level of risk
high level of risk
zero risk level
Other than length of time invested, what other aspect significantly impacts
future value?
Multiple choice question.
Amount of credit
Rate of return
Line of credit
Investment agent
The amount of risk to assume is based upon:
Multiple choice question.
each option
each agent
each individual
each company
Tom wants an investment with a minimal chance of loss. He is mainly
concerned about the investment's:
Multiple choice question.
liquidity
safety
stock price
interest rate
"Safe" investments include:
Multiple select question.
government bonds
select mutual funds
new company stocks
certificates of deposit
penny stocks
Match the potential return on an investment to the risk.
low risk
matches
Choice, low return
low return
medium risk
matches
Choice, medium potential return
medium potential return
high risk
matches
Choice, high potential return
high potential return
Which of the following is not considered a speculative investment?
Multiple choice question.
New company stocks
Collectibles
Certificates of deposit
Options
If you invested $5,000 four years ago and today the value of that money is
$5,800, the rate of return for the entire period would be _____%
16 or sixteen
It is vital to determine the amount of risk you are willing to assume.
True false question.
True
False
If interest rates increase, the value of a bond will _______.
Decrease
What risk is the result of changes in the interest rates of the economy?
Multiple choice question.
Capital gains
Inflation risk
Interest rate risk
Common risk
The potential return on an investment should be:
Multiple choice question.
inversely related to the risk assumed
Reason:
Return and risk are positively (directly) related.
directly related to the risk assumed
statistically horizontal to the risk assumed
Reason:
Return and risk are positively (directly) related.
proportionally inverse to the risk assumed
Reason:
Return and risk are positively (directly) related.
Joe invests $3,000 dollars. At the end of 10 years the investment is worth
$3,300. What is the rate of return for the 10-year period?
Multiple choice question.
8%
12%
11%
10%
Interest rate decreases
matches
Choice, bond prices increase
bond prices increase
Interest rate increases
matches
Choice, bond prices decrease
bond prices decrease
True or false: Interest rate risk is the result of changes in the interest rates in
the economy.
True false question.
True
False
Market risk is the fluctuation of stock and bond prices due to the behaviors of
investors in the marketplace.
True false question.
True
False
Describe the relationship between the finances of a company and the market
price of the stock.
Multiple choice question.
They have an inverse relationship.
They have a horizontal relationship.
They have a direct relationship.
They are not always correlated.
For investment income, which of the following would be good choices?
(Select all that apply.)
Multiple select question.
small business stocks
corporate bonds
municipal bonds
all common stocks
preferred stocks
Fluctuation of prices due to the behaviors of investors in the marketplace is
known as:
Multiple choice question.
market risk
inflation risk
investment risk
failure risk
Changes in the market price for stocks are ______ to the financial health of
the company itself.
Multiple choice question.
directly related
never related
not always related
always related
The potential return on an investment should be:
Multiple choice question.
inversely related to the risk assumed
statistically horizontal to the risk assumed
proportionally inverse to the risk assumed
directly related to the risk assumed
True or false: Since 1926 stocks have returned approximately 5%, while
bonds have returned about 10% during this same time.
True false question.
True
False
Stocks have returned 10%, but bonds have only returned 5%.
Which of the following would not be a good choice when investing for
investment income?
Multiple choice question.
Corporate bonds
Preferred stock
Municipal bonds
Just any common stock
Which of the following are some of the typical asset classes utilized in asset
allocation?
Multiple select question.
Small, medium, and large corporation stocks
Foreign stocks
Bonds
Extended credit
Checks
The type of market risk that affects a specific company or industry is ________
risk.
Unsystematic
Match your time horizon with the applicable investment option.
Stocks
matches
Choice, 5-10 years
5-10 years
Certificates of deposit
matches
Choice, 2 years or less
2 years or less
Since 1926, stocks have had positive gains ______ than they have lost money.
Multiple choice question.
in a similar way
less often
about as often
more often
Another factor affecting investing is your age. Younger investors can afford to
invest a larger percentage in growth stocks because if their investment fails:
Multiple choice question.
they have time to make it up
their family can help them
they can fire their financial adviser
it does not affect anyone
Small cap stocks are those issued by small, rapidly _____________ companies
Growing or expanding
When investing in stocks, the investor must know the company has no
requirement to ___________ the money and no obligation to
provide _____________.
Repay or return or refund
Dividends
True or false: The less time you have to let your investments work, the more
advantageous it is to invest in stocks rather than short-term government
bonds and certificates of deposit.
True false question.
True
False
What are the functions of securities markets?
Multiple choice question.
They provide long term funding for businesses and a place for investors to
buy and sell stocks and bonds
They exchanges provide an opportunity for small investors to meet one
another through IPOs
They offer short term loans for homes and businesses
They provide advice and counseling services for small businesses
A person with little to no investing experience may choose mutual funds
because they offer:
Multiple choice question.
professional management
money quickly
income monthly for life
income monthly for 10 years
The younger you are as an investor, the more likely you are to invest
a ________ portion in growth investments.
Larger or greater or bigger or higher or high or large or big
Many beginning investors believe that real estate is an investment that
Multiple choice question.
Provides positive returns every year.
Never changes in value.
Is very liquid.
Increases in value every year.
Corporations are under a legal obligation to pay dividends.
True false question.
True
False
As an investor, you want to ask your real estate agent about which of the
following?
Multiple select question.
Taxes
Sellers family credit
Sellers family history
Financing
Building condition
There are two basic types of stock: common stock and ________ stock.
Preferred
People choose mutual funds because they invest in many different
investments at one time. This is known as _________ .
Diversification
Year-to-year real estate values nationally increase ________ to _________% on
average.
3 or three
5 or five
A distribution of money, stock, or other property that a corporation pays to
stockholders is called a:
Multiple choice question.
dividend
corporate bond
government bond
mutual fund
interest
distribution
_________ is the most important factor for real estate investments.
Location
Real estate is considered to have a low ______ factor.
Multiple choice question.
growth
risk
liquidity
safety
income
A person with little to no investing experience may choose mutual funds
because they offer:
Multiple choice question.
income monthly for 10 years
money quickly
income monthly for life
professional management
Which of the following is the last step for effective investment planning?
Multiple choice question.
Choose at least two different investments
Reduce possible investments to a reasonable number
Determine the amount of money you need to obtain your goals
Establish your investment goals
Continue to evaluate your investment program
After making your investments, it is crucial to:
Multiple choice question.
monitor their activity
not leave your investments in the same market for more than 10 years
switch investment types after five years
switch investment types after two years
The minimum record-keeping requirements consist of which of the following?
Multiple select question.
Records of dollar amount of investments
Records of fees or commissions payed
Daily changes in investment values
Monthly changes in investment values
Records of income (dividends, interest payments)
Government bonds are considered a(n) ________ safety, __________ risk,
investment.
High
Low
The first step for effective investment planning is to:
Multiple choice question.
list different investment methods you want to evaluate
specify the amount of money you currently have to invest
establish your investment goals
determine the amount of money you need to obtain your goals
Accurate record keeping can help you decide if you want to invest __________
funds in a particular investment.
Additional or more or extra or less
True or false: Monitoring is the process of keeping track of your investments
and following their progress.
True false question.
True
False
Taxes can affect which of the following areas of investing?
Multiple select question.
Administrative cost
Rental income
Fees
Interest
Dividends
When establishing the minimum record-keeping requirements you want to
keep track of dividends, interest paid, and other sources of _________.
Income
This activity helps you spot opportunities to maximize profits or reduce
losses when you sell your investments.
Multiple choice question.
Government financial overseers
Financial agent
Accurate record keeping
Family advisers
___________ consequences affect many areas of investing including
dividends, interest, and rental income.
Tax
The minimum record-keeping requirements consist of which of the following?
Multiple select question.
Records of dollar amount of investments
Records of fees or commissions payed
Monthly changes in investment values
Records of income (dividends, interest payments)
Daily changes in investment values
