Question 1

The more frequent the compounding,the less a person will earn on a savings account.

Accepted Answer

A) True 
 B)False

Question 2

A "free" checking account with a minimum balance of $500 has an opportunity cost of lost interest.

Accepted Answer

A) True 
 B)False

Question 3

What is the rate that commercial banks charge large corporations for loans called?

Accepted Answer

A)  prime
B)  discount
C)  mortgage
D)  treasury bond
E)  corporate bondF) B) and E)
G) C) and E)

Question 4

Which of the following statements regarding debit and credit card liability is correct?

Accepted Answer

A)  A credit card carries more risk of loss to the cardholder.
B)  A debit card carries more risk of loss to the cardholder.
C)  There is no cardholder liability if either type of card is lost.
D)  The Federal Government insures losses on credit but not debit cards.
E)  The Federal Government insures losses on debit but not credit cards.F) None of the above
G) B) and E)

Question 5

Which is an advantage of investing in Series EE U.S.Savings Bonds?

Accepted Answer

A)  When a bond is cashed,the earned interest is exempt from federal income taxes.
B)  Interest is not taxed by the federal government until the bond is cashed.
C)  The interest rate on the bond is adjusted to keep up with inflation.
D)  Series EE Bonds can be sold at a profit on the open bond market.
E)  The rates on Series EE Bonds are usually higher than the rates offered on stocks or corporate bonds.F) All of the above
G) C) and D)

Question 6

An advantage credit unions may have over other financial institutions is:

Accepted Answer

A)  interest-bearing checking accounts.
B)  low-cost personal loans.
C)  flexible-rate loans.
D)  credit cards.
E)  variable-rate savings plans.F) C) and D)
G) A) and D)

Question 7

The major service offered by investment companies is:

Accepted Answer

A)  interest-bearing checking accounts.
B)  variable-rate loans.
C)  credit card accounts.
D)  savings bonds.
E)  mutual funds.F) B) and C)
G) A) and B)

Question 8

Which of the following institutions is organized primarily to provide loans to purchase homes?

Accepted Answer

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

Question 9

What are the main types of financial institutions used by consumers?

Accepted Answer

The answer of What are the main types of financial...

Question 10

An all-purpose account that provides several services is a(n) :

Accepted Answer

A)  NOW account.
B)  asset management account.
C)  EFT account.
D)  mutual funD.
E)  money market account.F) None of the above
G) A) and B)

Question 11

A certificate of deposit usually has:

Accepted Answer

A)  high interest-rate risk.
B)  low safety for savers.
C)  limited liquidity.
D)  a variable rate of return.
E)  no minimum deposit amount.F) A) and E)
G) C) and D)

Question 12

In the bank reconciliation process,service fees 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.F) C) and D)
G) A) and C)

Question 13

What type of account would you expect to provide the poorest yield?

Accepted Answer

A)  Certificate of deposit.
B)  Passbook savings account.
C)  Money market account.
D)  Money market funD.
E)  CD.F) All of the above
G) B) and E)

Question 14

Tim Gleason has set up a legal agreement that allows the First State Bank of Orlando to manage funds set aside for his daughter's college education.What type of financial service is Tim using?

Accepted Answer

A)  payment service
B)  savings service
C)  borrowing service
D)  trust service
E)  asset managementF) B) and E)
G) None of the above

Question 15

A $200 savings account that earns $13 interest in a year has a yield of ____________ percent.

Accepted Answer

A)  6.00
B)  13.00
C)  7.00
D)  11.25
E)  6.50F) A) and E)
G) D) and E)

Question 16

Which of the following is a deposit institution?

Accepted Answer

A)  life insurance company
B)  investment company
C)  mortgage company
D)  pawnshop
E)  credit unionF) D) and E)
G) C) and D)

Question 17

Nate Rogers deposited $5,000 in a 3-year bank CD which pays six percent interest.What type of financial service is Nate using?

Accepted Answer

A)  payment service
B)  savings service
C)  borrowing service
D)  trust service
E)  asset managementF) A) and E)
G) C) and D)

Question 18

Sue deposited $1,000 in an account paying 3 percent interest.The inflation rate is 5 percent.What is the buying power of the account after one year?

Accepted Answer

A)  $1,050
B)  $1,030
C)  $1,000
D)  $980
E)  $950F) B) and C)
G) A) and E)

Question 19

Comparison of earnings for different savings plans can best be accomplished using the:

Accepted Answer

A)  discounted present value.
B)  compounded rate of return.
C)  net present value.
D)  annual percentage yielD.
E)  after-tax rate of return.F) C) and E)
G) None of the above

Question 20

A trust has the purpose of:

Accepted Answer

A)  solving a person's financial problems
B)  obtaining low-interest loans
C)  handling daily money management activities
D)  managing the assets of a person
E)  improving a person's budgeting skillsF) A) and C)
G) A) and B)

Exam 5: Financial Services: Savings Plans and Payment Accounts

Comparison of earnings for different savings plans can best be accomplished using the:

Correct AnswerverifiedShow Answer

A "free" checking account with a minimum balance of $500 has an opportunity cost of lost interest.

Correct AnswerverifiedShow Answer

Which is an advantage of investing in Series EE U.S.Savings Bonds?

Correct AnswerverifiedShow Answer

An all-purpose account that provides several services is a(n) :

Correct AnswerverifiedShow Answer

Which of the following institutions is organized primarily to provide loans to purchase homes?

Correct AnswerverifiedShow Answer

A certificate of deposit usually has:

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A trust has the purpose of:

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What are the main types of financial institutions used by consumers?

Correct AnswerverifiedShow Answer

What is the rate that commercial banks charge large corporations for loans called?

Correct AnswerverifiedShow Answer

The more frequent the compounding,the less a person will earn on a savings account.

Correct AnswerverifiedShow Answer

Sue deposited $1,000 in an account paying 3 percent interest.The inflation rate is 5 percent.What is the buying power of the account after one year?

Correct AnswerverifiedShow Answer

An advantage credit unions may have over other financial institutions is:

Correct AnswerverifiedShow Answer

Which of the following statements regarding debit and credit card liability is correct?

Correct AnswerverifiedShow Answer

Nate Rogers deposited $5,000 in a 3-year bank CD which pays six percent interest.What type of financial service is Nate using?

Correct AnswerverifiedShow Answer

What type of account would you expect to provide the poorest yield?

Correct AnswerverifiedShow Answer

Tim Gleason has set up a legal agreement that allows the First State Bank of Orlando to manage funds set aside for his daughter's college education.What type of financial service is Tim using?

Correct AnswerverifiedShow Answer

Which of the following is a deposit institution?

Correct AnswerverifiedShow Answer

The major service offered by investment companies is:

Correct AnswerverifiedShow Answer

In the bank reconciliation process,service fees should be:

Correct AnswerverifiedShow Answer

A $200 savings account that earns $13 interest in a year has a yield of ____________ percent.

Correct AnswerverifiedShow Answer

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