Question 1

When preparing a bank reconciliation,outstanding checks should be:

Accepted Answer

A)  added to the bank statement balance.
B)  subtracted from the bank statement balance.
C)  added to the checkbook balance.
D)  subtracted from the checkbook balance.
E)  ignored until they have cleared.

Question 2

The Federal Deposit Insurance Corporation provides deposit insurance for:

Accepted Answer

A)  credit unions and mutual savings banks.
B)  commercial banks and savings and loan associations.
C)  investment companies and finance companies.
D)  insurance companies and credit unions.
E)  commercial banks and credit unions.

Question 3

The rate of return on a savings account is also referred to as:

Accepted Answer

A)  liquidity.
B)  compounding.
C)  yield.
D)  opportunity cost.
E)  asset turnover. C

Question 4

Which of the following institutions makes loans based on the value of tangibles possessions,such as jewelry and collectibles?

Accepted Answer

A)  life insurance company
B)  finance company
C)  mortgage company
D)  pawnshop
E)  investment company

Question 5

The purpose of a debit card is to:

Accepted Answer

A)  obtain a discount on consumer purchases.
B)  make credit card purchases.
C)  quickly obtain a cash loan.
D)  make investments with an investment company.
E)  transfer money electronically.

Question 6

Higher returns on savings will usually result in less liquidity.

Accepted Answer

A) True 
 B)False

Question 7

Using a "debit" card is basically the same as writing a check.

Accepted Answer

A) True 
 B)False

Question 8

Time deposits consist of:

Accepted Answer

A)  checking accounts.
B)  loans and charge accounts.
C)  savings accounts.
D)  government securities.
E)  profits earned by a financial institution.

Question 9

A savings account earns 4 percent.If the saver is in a 28 percent tax bracket,the after-tax savings rate of return would be ____ percent.

Accepted Answer

A)  28.00
B)  16.72
C)  4.00
D)  2.88
E)  1.12

Question 10

A saver will usually earn the highest rate with which one of the following types of savings plans?

Accepted Answer

A)  certificate of deposit
B)  debit account
C)  passbook account
D)  share account
E)  NOW account A

Question 11

What type of account would be considered the most liquid?

Accepted Answer

A)  certificate of deposit
B)  checking account
C)  money market account
D)  brokerage account
E)  share of stock

Question 12

The business hours and location of a financial institution refer to the ____________ factor of selecting a financial institution.

Accepted Answer

A)  safety
B)  cost
C)  compounding
D)  liquidity
E)  convenience

Question 13

A limit on the amount you must keep on deposit in order to earn interest or avoid a service charge is an example of a (an) :

Accepted Answer

A)  holding period.
B)  restriction.
C)  overdraft fee.
D)  share draft.
E)  certified deposit feE.

Question 14

The purpose of a "special" endorsement is to:

Accepted Answer

A)  cash a check.
B)  deposit a check.
C)  transfer a check to another person.
D)  withdraw cash from your account.
E)  reduce the charge for service fees.

Question 15

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

Accepted Answer

A)  regular savings account.
B)  interest-bearing checking account.
C)  five-year certificate of deposit.
D)  six-month certificate of deposit.
E)  money market fund. C

Question 16

Savings and loan associations offer mortgages.

Accepted Answer

A) True 
 B)False

Question 17

In recent years,membership in credit unions has:

Accepted Answer

A)  become more difficult due to higher taxes.
B)  continued to increase.
C)  been limited to government employees.
D)  declined due to poor credit union management.
E)  stayed at about the same level.

Question 18

Traditionally,the greatest variety of financial services is offered by:

Accepted Answer

A)  credit unions.
B)  investment companies.
C)  mutual savings banks.
D)  savings and loan associations.
E)  commercial banks.

Question 19

You are planning to purchase a house in five years and intend to save a fixed amount of money each month for a down payment.How will you invest your savings and what are important considerations in selecting an investment vehicle?

Accepted Answer

The answer of You are planning to purchase a house...

Question 20

Which of the following is a drawback of a money market fund from an investment company?

Accepted Answer

A)  penalty if money is withdrawn early
B)  lower rate of interest if redeemed within the first five years
C)  minimum required holding period
D)  lack of FDIC insurance
E)  taxed at a higher rate than other investments

Exam 5: Financial Services: Savings Plans and Payment Accounts

When preparing a bank reconciliation,outstanding checks should be:

Correct AnswerverifiedShow Answer

The Federal Deposit Insurance Corporation provides deposit insurance for:

Correct AnswerverifiedShow Answer

The rate of return on a savings account is also referred to as:

Correct AnswerverifiedC

Which of the following institutions makes loans based on the value of tangibles possessions,such as jewelry and collectibles?

Correct AnswerverifiedShow Answer

The purpose of a debit card is to:

Correct AnswerverifiedShow Answer

Higher returns on savings will usually result in less liquidity.

Correct AnswerverifiedShow Answer

Using a "debit" card is basically the same as writing a check.

Correct AnswerverifiedShow Answer

Time deposits consist of:

Correct AnswerverifiedShow Answer

A savings account earns 4 percent.If the saver is in a 28 percent tax bracket,the after-tax savings rate of return would be ____ percent.

Correct AnswerverifiedShow Answer

A saver will usually earn the highest rate with which one of the following types of savings plans?

Correct AnswerverifiedA

What type of account would be considered the most liquid?

Correct AnswerverifiedShow Answer

The business hours and location of a financial institution refer to the ____________ factor of selecting a financial institution.

Correct AnswerverifiedShow Answer

A limit on the amount you must keep on deposit in order to earn interest or avoid a service charge is an example of a (an) :

Correct AnswerverifiedShow Answer

The purpose of a "special" endorsement is to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

Savings and loan associations offer mortgages.

Correct AnswerverifiedShow Answer

In recent years,membership in credit unions has:

Correct AnswerverifiedShow Answer

Traditionally,the greatest variety of financial services is offered by:

Correct AnswerverifiedShow Answer

You are planning to purchase a house in five years and intend to save a fixed amount of money each month for a down payment.How will you invest your savings and what are important considerations in selecting an investment vehicle?

Correct AnswerverifiedShow Answer

Which of the following is a drawback of a money market fund from an investment company?

Correct AnswerverifiedShow Answer

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C

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A

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C

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