FINC298 Chap 004

Chapter 04 - Savings and Payment Services
Chapter 04
Savings and Payment Services

True / False Questions

1. (p. 108) When Flo says she's going to "the ban!" she may be implying that she is visiting a
credit "nion or stopping at an #$%.
TRUE

Bloom's: Comprehension
Difficulty: Easy
Learning !"ecti#e: 1
$opic: %inancial ser#ices

&. (p. 110) When $ed needs cash! his choices incl"de li'"idating savings and borro(ing.
TRUE

Difficulty: Easy

). (p. 110) # savings acco"nt is also no(n as a demand deposit.
F!SE
# savings acco"nt is a time deposit. # checing acco"nt is a demand deposit.

Bloom's: &no'le(ge
Difficulty: )e(ium

4-1
4. (p. 111) *+ a ban allo(s online transactions! it m"st also allo( +ace-to-+ace transactions at the
ban.
F!SE
$here is no re'"irement to have a speci+ic location. Some bans are no(n as "e-bans."

Difficulty: )e(ium

,. (p. 111) %aing transactions "sing a credit card (ill immediately red"ce yo"r ban balance.
F!SE
-ebit cards a++ect ban balances. Credit cards are separate +rom ban acco"nts.

Difficulty: )e(ium

.. (p. 11*) $he only '"estion yo" sho"ld as yo"rsel+ (hen selecting a +inancial service provider
is "Where can * get the best ret"rn on my savings/"
F!SE
$his is only one o+ the basic '"estions to be ased.

Difficulty: Easy
Learning !"ecti#e: +
$opic: %inancial institutions

4-&
0. (p. 11*) # commercial ban is the same thing as a credit "nion.
F!SE
1oth are +inancial instit"tions2 ho(ever! they are di++erent types o+ organi3ations.

Bloom's: &no'le(ge
Difficulty: Easy

4. (p. 11,) # loan +rom a pa(nshop (ill be more e5pensive than one +rom a ban.
TRUE

Difficulty: Easy

6. (p. 11,) $he best option +or borro(ing money at a lo( rate is to "se a payday loan
organi3ation.
F!SE
Payday loans have e5orbitant interest rates.

Bloom's: &no'le(ge
Difficulty: )e(ium

10. (p. 11,) *+ yo" get a big-screen television +rom a rent-to-o(n center! yo" (ill be certain to
o(n it a+ter a period o+ time.
F!SE
7o" m"st complete a certain n"mber o+ monthly or (eely payments in order to o(n the
item.

Difficulty: )e(ium

4-)
11. (p. 118) # bene+it o+ investing in a certi+icate o+ deposit is the penalty +or early (ithdra(al.
F!SE
$his is a disadvantage o+ C-s.

Bloom's: &no'le(ge
Difficulty: Easy
Learning !"ecti#e: -
$opic: .a#ings plans

1&. (p. 118) # b"mp-"p C- allo(s an investor to increase the amo"nt invested.
F!SE
# b"mp-"p C- has higher rates at vario"s intervals.

Difficulty: )e(ium

1). (p. 11/) # callable C- allo(s investors to 8cash in' their investment early.
F!SE
$he ban may call in the C- a+ter a period o+ time.

Difficulty: )e(ium

14. (p. 11/) *+ yo" thin that rates (ill +all! yo" sho"ld b"y a long-term C- to loc in yo"r rate
no(.
TRUE

Difficulty: )e(ium

4-4
1,. (p. 11/) #ll money maret +"nds are not covered by +ederal deposit ins"rance.
TRUE
*n &004! money maret +"nds that paid a +ee (ere covered by +ederal deposit ins"rance as a
temporary move to restore con+idence in money maret +"nds. Prior to this time! money
maret +"nds (ere not covered.

Difficulty: )e(ium

1.. (p. 1+1) * bonds earn interest based on a +i5ed rate pl"s in+lation.
TRUE

Difficulty: )e(ium
$opic: .a#ings !on(s

10. (p. 1+1) 99 bonds are also no(n as Patriot 1onds.
F!SE
:: bonds are called Patriot 1onds a+ter the September 11! &001 terrorist attacs.

Difficulty: 0ar(

14. (p. 1+-) $he $ruth in .a#ings 1ct re'"ires +inancial instit"tions to disclose the interest rate on
loans.
F!SE
$his act re'"ires disclos"re on savings acco"nts.

Difficulty: Easy
$opic: E#aluating sa#ings plans

4-,
16. (p. 1+-) #s in+lation rates increase! the interest rates o++ered to savers "s"ally increases.
TRUE

Difficulty: Easy

&0. (p. 1+-) ;i'"idity and rate o+ ret"rn re+er to the same thing.
F!SE
;i'"idity and rates are tradeo++s. ;i'"idity allo(s one to (ithdra( money '"icly (itho"t
signi+icant +ees or loss o+ val"e. %any people trade o++ li'"idity +or a higher ret"rn.

Difficulty: )e(ium

&1. (p. 1+-) $he 8sa+ety' concern (ith bans and credit "nions re+ers to the potential loss o+
money d"e to investors' bad spending habits.
F!SE
*ns"rance prevents a loss o+ money d"e to the +ail"re o+ an ins"red instit"tion.

Difficulty: )e(ium

4-.
&&. (p. 1+*) *n <ctober &004! the F-*C anno"nced the temporary $ransaction #cco"nt
="arantee Program and increased coverage +or acco"nts at ins"red instit"tions to >&00!000
per depositor.
F!SE
$he limit is >&,0!000 "ntil -ecember )1! &006. $his 2uestion may !e mo(ifie( as the %D3C
changes its co#erage.

Bloom's: &no'le(ge
Difficulty: Easy

&). (p. 1+-) $(o years ago! Sean deposited money into a certi+icate o+ deposit and received a
toaster. $he val"e o+ the toaster red"ced the amo"nt o+ interest he earned +or the +irst year.
F!SE
*+ Sean (o"ld have (ithdra(n his money be+ore a certain time period! then some o+ the
earnings may have been "sed to cover the cost o+ the toaster.

Difficulty: )e(ium

&4. (p. 1+,) :ach year! +e(er and +e(er checs are being (ritten.
F!SE
#ltho"gh paper checs acco"nt +or a smaller portion o+ payments each year! they are still the
common so"rce +or most debit card transactions and online payments.

Bloom's: &no'le(ge
Difficulty: )e(ium
Learning !"ecti#e: *
$opic: 4ayment metho(s

4-0
&,. (p. 1+,) # college *- that incl"des prepaid amo"nts +or meals is called a debit card.
F!SE
# college *- that stores prepaid amo"nts as (ell as other in+ormation is a smart card.

Difficulty: Easy

&.. (p. 1+8) -"e to Chec &1! the processing time +or checs has increased.
F!SE
Chec &1 shortened the processing time.

Difficulty: Easy
$opic: E#aluating accounts

&0. (p. 1+/) ;ydia +o"nd a chec that she (as given +or her birthday 6 months earlier. 9er ban
shoul( re+"se to cash the chec.
TRUE
1ans "s"ally do not honor checs (ith "stale" dates! "s"ally . months old or more.

Difficulty: )e(ium

4-4
&4. (p. 1+/) ?econciling a checing acco"nt is not really necessary since the ban statement
incl"des all activity +rom the ban's perspective.
F!SE
1ans sometimes mae errors! so a ban reconciliation sho"ld be done each month.

Difficulty: )e(ium

"ultiple Choice Questions

&6. (p. 10/) Common payment choices +or everyday activities incl"de all e5cept
#. Cash
1. Chec
C. Credit card
#$ Short-term loan
:. -ebit card

Difficulty: Easy

)0. (p. 10/) %any people mae mistaes (hen managing c"rrent cash needs. Which o+ these is
@<$ a +re'"ently made mistae/
#. 1orro(ing +or c"rrent e5penses
%$ 1"dgeting spending
C. Failing to p"t e5tra +"nds in an investment plan
-. 9aving ins"++icient li'"id assets to pay bills
:. <verspending d"e to imp"lse b"ying on credit

Difficulty: )e(ium

4-6
)1. (p. 110) # time deposit is also no(n as
#. # checing acco"nt
1. # tr"st
C. # loan
#$ # savings acco"nt
:. #ll o+ these are time deposits

Difficulty: )e(ium

)&. (p. 110) # demand deposit is also no(n as
$ # checing acco"nt
1. # tr"st
C. # loan
-. # savings acco"nt
:. #ll o+ these are demand deposits

Difficulty: )e(ium

)). (p. 110) # credit card is a type o+
#. Checing acco"nt
1. $r"st
C$ ;oan
-. Savings acco"nt
:. Cash acco"nt

Difficulty: )e(ium

4-10
)4. (p. 110) # legal agreement that provides +or the management and control o+ assets is no(n
as
%$ # tr"st
C. # loan
:. @one o+ the above

Difficulty: )e(ium

),. (p. 110) Cla"dette's grandchildren are 0 and 6 years old. When Cla"dette passed a(ay! her
grandchildren inherited her money. 9o(ever! the (ill stip"lated that they sho"ld not get
control o+ the money "ntil age &,. Which o+ the +ollo(ing sho"ld be set "p to provide +or the
management and control o+ the +"nds/
%$ # tr"st
C. # loan
:. # certi+icate o+ deposit

Bloom's: 1nalysis
Difficulty: 0ar(

).. (p. 110) Franlin is planning +or a p"rchase o+ a vehicle in t(o years. Since he (ants to be
certain that his +"nds are sa+e! (hich o+ the +ollo(ing sho"ld he "se/
1. # tr"st
C. # loan
#$ # savings acco"nt
:. 9ome mortgage

Difficulty: )e(ium

4-11
)0. (p. 110) *nvestments and ta5 assistance! both tools +or +inancial planning! are also no(n as
#. Checing acco"nts
1. $r"sts
C. ;oans
-. Savings acco"nts
E$ Financial services

Difficulty: )e(ium

)4. (p. 111) #n acco"nt that provides a complete +inancial services program +or a single +ee is
no(n as
$ # cash management acco"nt
1. # checing acco"nt
C. # tr"st
-. # loan
:. # savings acco"nt

Difficulty: )e(ium

)6. (p. 111) 1renda lost her debit card. When she reali3ed it (as gone! her acco"nt had >10) in
"na"thori3ed charges. She noti+ied her +inancial instit"tion (ithin t(o days. 9o( m"ch is she
potentially liable +or/
#. >0
1. >&,
C$ >,0
-. >10)
:. Cannot be determined (ith the in+ormation provided

Difficulty: )e(ium

4-1&
40. (p. 111) 1randon lost his debit card. When he reali3ed it (as gone! his acco"nt had >&)4 in
"na"thori3ed charges. Since he (as embarrassed abo"t his loss! he didn't contact his +inancial
instit"tion +or 4, days. What is the most that he liable +or/
#. >0
1. >,0
C. >144
#$ >&)4
:. >,00

Difficulty: 0ar(

41. (p. 111) #$% stands +or
#. #"tomatic taing machine
1. #vailable teller machine
C$ #"tomatic teller machine
-. #vailable toen machine
:. #"tomatic toen machine

Bloom's: &no'le(ge
Difficulty: )e(ium

4&. (p. 11+) Which o+ the +ollo(ing is @<$ a +inancial p"blication that can provide in+ormation
abo"t +inancial services and economic conditions/
#. $he 5all .treet 6ournal
1. $he %inancial $imes
C$ $he Daily )ar7et
-. Business 5ee7
:. %or!es

Bloom's: &no'le(ge
Difficulty: )e(ium

4-1)
4). (p. 11*) When yo" select a +inancial service provider! yo" sho"ld as all o+ the '"estions
e8cept
#. Will * be able to borro( money i+ * need it/
1. 9o( can * minimi3e the cost o+ checing and payment services/
C. Where can * get the best ret"rn on my savings/
#$ #ll o+ the '"estions above sho"ld be ased.
:. @one o+ these '"estions are needed.

Difficulty: )e(ium

44. (p. 11*) When yo" select a +inancial service provider! yo" may +ind all o+ the +ollo(ing to be
maAor +actors e8cept
$ Company logo
1. Convenience
C. Fee str"ct"re and other charges
-. Personal service
:. ?ates +or savings and borro(ed +"nds

Difficulty: Easy

4,. (p. 11*) #ll o+ the +ollo(ing are deposit instit"tions e8cept
#. Commercial ban
1. Credit "nion
C$ Finance company
-. %"t"al savings ban
:. Savings and loan association

Difficulty: )e(ium

4-14
4.. (p. 11*) #ll o+ the +ollo(ing are non-deposit instit"tions e8cept
#. Credit card company
1. *nvestment company
C. ;i+e ins"rance company
-. %ortgage company
E$ Payday loan company

Difficulty: )e(ium

40. (p. 11*) Which o+ the +ollo(ing "s"ally o++ers m"t"al +"nds/
%$ *nvestment company
-. %ortgage company
:. Payday loan company

Difficulty: )e(ium

44. (p. 11*) Which o+ the +ollo(ing primarily provides loans +or home p"rchases/
#$ %ortgage company

Difficulty: Easy

4-1,
46. (p. 11*) When #ngela (anted to provide +inancial sec"rity +or her dependents! she
considered p"rchasing a speci+ic type o+ acco"nt at a BBBBBB
C$ ;i+e ins"rance company
-. %ortgage company

Difficulty: )e(ium

,0. (p. 119) 1illy accepted a Aob at a company that speciali3es in providing money +or short-term
retail lending. Where did he go to (or/
$ Credit card company
-. %ortgage company

Difficulty: )e(ium

,1. (p. 11,) Which o+ the +ollo(ing (ill liely provide the most e8pensi#e access to +"nds/
-. %ortgage company
E$ Payday loan company

Difficulty: )e(ium

4-1.
,&. (p. 11*) Cathy (anted to b"y some investments. $o (hich o+ the +ollo(ing sho"ld she go/
$ Commercial ban
1. Chec-cashing o"tlet
C. Pa(nshop
-. Payday loan +acility
:. ?ent-to-o(n center

Difficulty: )e(ium

,). (p. 11*) Which o+ the +ollo(ing o++ers checing! savings! lending! and other services/
$ Commercial ban
C. Pa(nshop

Difficulty: )e(ium

,4. (p. 118) *n (hich o+ the +ollo(ing are most o+ the investments ins"red/
$ Commercial ban
C. Pa(nshop

Difficulty: )e(ium

4-10
,,. (p. 11,) 9arvey needed some cash '"icly! so he received a short-term loan based on the
val"e o+ an old ring. Where did he go/
#. Commercial ban
C$ Pa(nshop

Difficulty: )e(ium

,.. (p. 11,) When *mogene bro"ght a neclace to a BBBBBBB! she received a loan based on its
val"e.
#. Commercial ban
C$ Pa(nshop

Difficulty: )e(ium

,0. (p. 11,) When Cac piced "p a personal comp"ter +rom the BBBBB! he really (as leasing it.
#. Commercial ban
C. Pa(nshop
E$ ?ent-to-o(n center

Difficulty: )e(ium

4-14
,4. (p. 11,) ;o"ise got ca"ght in a cash +lo( trap and needed money '"icly. Dn+ort"nately! she
didn't shop aro"nd and she (ent to a BBBBB. #s a res"lt! her ann"al percentage rate (as higher
than )0,EF
#. Commercial ban
C. Pa(nshop
#$ Payday loan +acility

Difficulty: )e(ium

,6. (p. 11,) Why are some +inancial service operations re+erred to as +inancial s"permarets/
$ $hey o++er a combination o+ services +rom one so"rce
1. C"stomers can receive cash and a receipt
C. $hey have many locations! lie s"permarets
-. $hey are o+ten located in s"permarets or convenience stores
:. $heir prices are similar to those in a s"permaret

Difficulty: )e(ium

.0. (p. 11:) # dra(bac o+ a savings acco"nt is
#. :asy access to deposits
1. *ns"red
C. ;o( minim"m balance
#$ ;o( rate o+ ret"rn
:. @o penalty +or early (ithdra(al

Difficulty: )e(ium

4-16
.1. (p. 11:) # dra(bac o+ a regular sa#ings account is
$ ;o( rate o+ ret"rn
1. %inim"m deposit
C. @ot ins"red
-. Possible penalty +or early (ithdra(al
:. #ll o+ these are dra(bac o+ a reg"lar savings acco"nt
-ra(bacs o+ money maret +"nds - 1! C2 certi+icates o+ deposit - 1! -

Difficulty: )e(ium

.&. (p. 11:) #nother name +or a reg"lar savings acco"nt is a
#. Certi+icate o+ deposit
1. Checing acco"nt
C. %oney maret acco"nt
-. %oney maret +"nd
E$ Statement acco"nt

Difficulty: )e(ium

.). (p. 11/) # certi+icate o+ deposit that has di++erent interest levels based on maret per+ormance
is called a
#. 1"mp-"p C-
1. Callable C-
C. Port+olio C-
-. Promotional C-
E$ Stoc-inde5ed C-

Difficulty: )e(ium

4-&0
.4. (p. 11/) Garen (anted a certi+icate o+ deposit that (o"ld (efinitely be available "ntil the
mat"rity date. She (o"ld @<$ (ant to consider a
#. 1"mp-"p C-
%$ Callable C-
C. Port+olio C-
-. Promotional C-
:. Stoc-inde5ed C-

Bloom's: 1nalysis
Difficulty: )e(ium

.,. (p. 11/) Wanda bo"ght a certi+icate o+ deposit and a"tomatically received a +ree bie. She
p"rchased a
#. 1"mp-"p C-
1. Callable C-
C. Port+olio C-
#$ Promotional C-
:. Stoc-inde5ed C-

Bloom's: 1nalysis
Difficulty: )e(ium

... (p. 11/) Havier bo"ght a certi+icate o+ deposit (hose interest rate changes. *n +act! he might
even earn 0E interest on his investment +or a time. 9e p"rchased a
#. 1"mp-"p C-
1. Callable C-
C. Port+olio C-
-. Promotional C-
E$ Stoc-inde5ed C-

Bloom's: 1nalysis
Difficulty: )e(ium

4-&1
.0. (p. 11/) Iach (ants to open "p an acco"nt! b"t he doesn't no( (hich ind is appropriate.
9e is interested in earning a higher interest rate and no(s that he might not be able to (rite
many checs +rom his acco"nt. *n addition! he plans to eep at least >1!000 in his acco"nt so
he can avoid paying a +ee. 9e de+initely (ants to have +ederal deposit ins"rance. What ind o+
acco"nt sho"ld he open/
1. *nterest-earning checing acco"nt
C$ %oney maret acco"nt
-. %oney maret +"nd
:. ?eg"lar savings acco"nt

Bloom's: 1nalysis
Difficulty: )e(ium

.4. (p. 11/) #mber (ants to open "p an acco"nt! b"t she doesn't no( (hich ind is appropriate.
She is interested in earning a higher interest rate and plans to eep at least >1!000 in her
acco"nt so she can avoid paying a +ee. #mber (ants to open her acco"nt at an investment
company. What ind o+ acco"nt sho"ld she open/
#$ %oney maret +"nd

Bloom's: 1nalysis
Difficulty: )e(ium

4-&&
.6. (p. 11/) Will (ants to open "p an acco"nt that (ill allo( him easy access to his +"nds +rom
many locations and (o"ld pay at least a lo( interest rate. What ind o+ acco"nt sho"ld he
open/
%$ *nterest-earning checing acco"nt
-. %oney maret +"nd
# checing acco"nt (o"ld provide easy access via checs! #$%s or debit card "sage.

Bloom's: 1nalysis
Difficulty: )e(ium

00. (p. 11/) $he te5t disc"sses several types o+ bonds. Which bond is also called a Patriot 1ond/
#. Series :
%$ Series ::
C. Series 99
-. Series *
:. Series J

Difficulty: )e(ium

01. (p. 1+1) $he te5t disc"sses several types o+ bonds. Which bond pays interest +or )0 years that
is e5empt +rom state and local ta5es/
#. Series :
%$ Series ::
C. Series 99
-. Series *
:. Series J

Difficulty: 0ar(

4-&)
0&. (p. 1+1) $he te5t disc"sses several types o+ bonds. Which bond electronically deposits
interest into yo"r ban acco"nt/
#. Series :
1. Series ::
C$ Series 99
-. Series *
:. Series J

Difficulty: 0ar(

0). (p. 1+1) $he te5t disc"sses several types o+ bonds. Which bond is p"rchased at +ace val"e
and has t(o components to the rate o+ interest earned - a +i5ed rate as (ell as a rate that
adA"sts t(ice a year/
#. Series :
1. Series ::
C. Series 99
#$ Series *
:. Series J

Difficulty: 0ar(

04. (p. 11/) C"stin needs to have access to his money in , months. $he best option +or his savings
is
#. Series :: bond
%$ %oney maret acco"nt
C. ,-year certi+icate o+ deposit
-. Series * bond
:. .-month certi+icate o+ deposit

Difficulty: )e(ium

4-&4
0,. (p. 11/) *+ yo" (ant to b"y D.S. savings bonds! yo" may p"rchase them at
#. 1ans
1. Financial instit"tions
C. <nline
#$ #ll o+ the above

Difficulty: )e(ium

0.. (p. 1+1) :arnings on savings can be meas"red by the
#. Compo"nding
1. ;i'"idity
C. %inim"m deposit
#$ ?ate o+ ret"rn
:. Sa+ety

Difficulty: )e(ium
Learning !"ecti#e: 11/

00. (p. 1+1) :arning interest on interest is called
$ Compo"nding
1. ;i'"idity
C. %inim"m deposit
-. ?ate o+ ret"rn
:. Sa+ety

Difficulty: )e(ium

4-&,
04. (p. 1+-) $he $ruth in .a#ings 1ct re'"ires +inancial instit"tions to disclose BBBBB on savings
acco"nts.
$ #nn"al percentage yield K#P7L
1. Compo"nding
C. ;i'"idity
-. $a5 rate
:. Sa+ety certi+ication

Difficulty: )e(ium

06. (p. 1+-) Which o+ the +ollo(ing is correct abo"t in+lation/
#. *+ in+lation is 0E! and yo"r rate o+ ret"rn in yo"r savings acco"nt is 4E! yo" (ill
e5perience an overall gain in b"ying po(er
1. #s in+lation rates increase! interest rates o++ered to savers decreases
C. *n+lation does not a++ect interest rates +or savings acco"nts
#$ *n order to increase b"ying po(er! yo" need to earn a rate higher than the rate o+ in+lation
:. *+ yo" earn ,E and in+lation is 10E! yo"r b"ying po(er (ill increase

Difficulty: 0ar(

40. (p. 1+-) Which o+ the +ollo(ing re+ers to the opport"nity to (ithdra( money on short notice
(itho"t inc"rring a loss in val"e/
#. Compo"nding
%$ ;i'"idity
C. %inim"m deposit
-. ?ate o+ ret"rn
:. Sa+ety

Difficulty: )e(ium

4-&.
41. (p. 1+-) Which o+ the +ollo(ing provides deposit ins"rance +or credit "nions/
#. F-CD
1. F-*C
C$ @CD#
-. S#*F

Difficulty: )e(ium

4&. (p. 1+*) $he F-*C temporarily increased its coverage in <ctober &004 to BBBBBBBB per
depositor.
#. >,0!000
1. >100!000
C. >1,0!000
#$ >&,0!000
:. >,00!000
$his '"estion may need to be modi+ied as the F-*C changes its coverage levels.

Difficulty: )e(ium

4). (p. 1+,) Which o+ the +ollo(ing is a type o+ electronic payment/
#. Certi+ied chec
C. %oney order
#$ Smart card
:. $raveler's chec

Difficulty: )e(ium

4-&0
44. (p. 1+,) Cenni+er received a >,0 gi+t card +or her +avorite retailer. What ind o+ card did she
receive/
#. -ebit card
1. <nline payment
C$ Stored-val"e card
-. Smart card
:. #ll o+ the above

Difficulty: )e(ium

4,. (p. 1+,) #idan (ants to be able to complete his payment transactions electronically. Which
o+ the +ollo(ing tools sho"ld he "se/
#. -ebit card
1. <nline payment
C. Stored-val"e card
-. Smart card
E$ #ll o+ the above

Difficulty: )e(ium

4.. (p. 1+,) J"entin (ants his retail p"rchases to be ded"cted directly +rom his checing
acco"nt. Which o+ the +ollo(ing tools sho"ld he "se/
$ -ebit card
1. <nline payment
C. Stored-val"e card
-. Smart card
:. #ll o+ the above

Difficulty: )e(ium

4-&4
40. (p. 1+,) Patric is interested in opening a di++erent acco"nt that (ill allo( him to (rite
checs! b"t he doesn't (ant to maintain a minim"m balance. 9e sho"ld open aKnL BBBBBBBB
#. ?eg"lar checing acco"nt
%$ #ctivity acco"nt
C. *nterest-earning checing acco"nt
-. #ll o+ the above are correct
:. @one o+ the above is correct

Difficulty: 0ar(

44. (p. 1+,) Preston never opened his ban statements! so he (as s"rprised to see that he
received a service charge that e5ceeded the interest he earned +or the month. What ind o+
acco"nt does Preston have/
#. ?eg"lar checing acco"nt
1. #ctivity acco"nt
C$ *nterest-earning checing acco"nt

Difficulty: 0ar(

46. (p. 1+,) Drs"la has an acco"nt that (ill allo( her to (aive the minim"m balance i+ she eeps
a certain amo"nt in savings. What ind o+ acco"nt does she have/
$ ?eg"lar checing acco"nt
1. #ctivity acco"nt
C. *nterest-earning checing acco"nt

Difficulty: 0ar(

4-&6
60. (p. 1+8) Which o+ the +ollo(ing is @<$ correct/
#. Chec &1 decreases the processing time +or checs.
1. Chec &1 allo(s a s"bstit"te chec to be an e'"ivalent o+ the original chec.
C. # s"bstit"te chec is a digital reprod"ction o+ the original paper chec.
#$ Chec &1 increases the +ees bans can charge +or checing acco"nts.
:. #ll o+ the above are correct.

Difficulty: )e(ium

61. (p. 1+8) *n general! (hich +ees have recently decreased +or checing acco"nts/
#. <verdra+t +ees
1. Stop-payment orders
C. Chec printing
-. #ll o+ the above have decreased
E$ #ll o+ the above have increased

Difficulty: )e(ium

6&. (p. 1+8) Which o+ the +ollo(ing is correct/
#. Canceled checs are typically ret"rned to c"stomers.
1. <verdra+t protection is a loan bans mae +or their checing c"stomers (hose balances are
positive.
C$ 1an c"stomers typically are provided (ith online access to vie( and print checs that
have been paid.
-. <verdra+t protection is "s"ally more costly than +ees charged +or checs (ith ins"++icient
+"nds.
:. Checing acco"nt pacages (ith many services incl"ded +or a single +ee "s"ally are a good
val"e even i+ yo" don't "se many o+ the services in the pacage.

Difficulty: )e(ium

4-)0
6). (p. 1+8) @ora bo"ght a "sed car and (as told that she needed a chec (ith g"aranteed
payment. She obtained a BBBBBBBBB
$ Certi+ied chec
1. Cashier's chec
C. %oney order
-. Personal chec
:. $raveler's chec

Difficulty: )e(ium

64. (p. 1+8) Gylie (ent to a post o++ice to obtain a BBBBBBBBBBB
#. Certi+ied chec
1. Cashier's chec
C$ %oney order
-. Personal chec
:. $raveler's chec

Difficulty: )e(ium

6,. (p. 1+8) ;ogan paid a bill (ith a special +orm. 9e received this +orm at his +inancial
instit"tion and had to pay a +ee. 9e "sed a BBBBB
#. Certi+ied chec
%$ Cashier's chec
C. %oney order
-. Personal chec
:. $raveler's chec

Difficulty: )e(ium

4-)1
6.. (p. 1+8) #nders (ent to @or(ay and (ent shopping. 9e had to sign his name a second time
on this doc"ment at the store. #nders "sed a BBBBBBB
#. Certi+ied chec
1. Cashier's chec
C. %oney order
-. Personal chec
E$ $raveler's chec

Difficulty: )e(ium

60. (p. 1+/) # Aoint acco"nt (ith Sara and :an allo(s
#. :an only to (rite checs
1. Sara only to deposit money into the acco"nt
C. Sara or :an to complete a signat"re card
#$ :an and Sara to both (rite checs on the acco"nt

Difficulty: 0ar(

64. (p. 1+/) Chloe signed the bac o+ her chec (ith nothing else by it. She "sed aKnL
$ 1lan endorsement
1. ?estrictive endorsement
C. -eposit ticet
-. Special endorsement
:. *ndivid"al acco"nt

Difficulty: )e(ium

4-)&
66. (p. 1+/) Ioe signed the bac o+ her chec (ith the (ords "+or deposit only." She "sed aKnL
#. 1lan endorsement
%$ ?estrictive endorsement
C. -eposit ticet
-. Special endorsement

Difficulty: )e(ium

100. (p. 1+/) %argaret signed the bac o+ her chec (ith the (ords "pay to the order o+
Penelope." She "sed aKnL
#. 1lan endorsement
1. ?estrictive endorsement
C. -eposit ticet
#$ Special endorsement

Difficulty: )e(ium

101. (p. 1+/) Which o+ the +ollo(ing is @<$ re'"ired (hen (riting a chec/
#. #mo"nt o+ chec (ritten in (ords
1. -ate (ritten
C$ -river's license n"mber
-. Person or organi3ation receiving payment
:. Signat"re

Difficulty: )e(ium

4-))
10&. (p. 1+/) *+ a chec is lost or stolen! yo" sho"ld "se a
$ Stop-payment order
1. Stale chec
C. 1an statement
-. 1lan endorsement
:. -eposit ticet

Difficulty: )e(ium

10). (p. 118) @ancy invested >10!000 in a certi+icate o+ deposit earning . E per year.
Dn+ort"nately! she needed to (ithdra( it be+ore the mat"rity date. *+ the penalty involved t(o
months o+ interest! (hat (as her total penalty/
#. >0
1. >.
C. >,0
#$ >100
:. >.00
Penalty M investment N interest rate N & monthsO1& months M >10!000 N .E N &O1& M >100

Bloom's: 1pplication
Difficulty: )e(ium

4-)4
104. (p. 118) @eil invested >10!000 in a certi+icate o+ deposit earning 1&E per year.
Dn+ort"nately! he needed to (ithdra( it be+ore the mat"rity date. *+ the penalty involved t(o
months o+ interest! (hat (as his total penalty/
#. >0
1. >1&
C. >100
#$ >&00
:. >1!&00
Penalty M investment N interest rate N & monthsO1& months M >10!000 N 1&E N &O1& M >&00

Difficulty: )e(ium

10,. (p. 1++) What is the #P7 +or a savings acco"nt (ith a >,00 balance that receives >&4
interest +or the year/
#. &.4E
%$ 4.4E
C. ,E
-. 10.4E
:. &0.4E
#P7 M 100 N KinterestOprincipalL M 100 N K&4O,00L M 4.4E

Difficulty: )e(ium

4-),
10.. (p. 1++) What is the #P7 +or a one-year >4!000 Certi+icate o+ -eposit (ith >1!1&0 interest/
#. ,..E
1. 0E
C. 4E
-. 11.&E
E$ 14E
#P7 M 100 N KinterestOprincipalL M 100 N K11&0O4000L M 14E

Difficulty: )e(ium

100. (p. 1+-) @icholas earned 10E in his savings acco"nt. *+ he is in the &,E ta5 bracet! (hat is
his a+ter-ta5 savings rate o+ ret"rn/
#. &.,E
1. ,.4E
C$ 0.,E
-. 10E
:. 1).)E
#+ter-ta5 rate M ?et"rn N K1 - ta5 rateL M 10E N K1 - .&,L M .00, M 0.,E

Difficulty: )e(ium

4-).
104. (p. 1+-) <pal earned 4E in her savings acco"nt. *+ she is in the &,E ta5 bracet! (hat is her
a+ter-ta5 savings rate o+ ret"rn/
#. &E
1. &.,E
C$ .E
-. 4E
#+ter-ta5 rate M ?et"rn N K1 - ta5 rateL M 4E N K1 - .&,L M .0. M .E

Difficulty: )e(ium

106. (p. 1+*) :van had three acco"nts as listed belo(. *n &006! ho( m"ch (as his total coverage
by the F-*C/
1an #P >100!000
1an 1P >0,!000
1an CP >)00!000
#. >100!000
1. >&,0!000
C. >)0,!000
#$ >4&,!000
:. >40,!000
;ote: 1s the %D3C changes its ma8imum co#erage< the solution for this pro!lem may change.
*n &006! the ma5im"m coverage is >&,0!000 per ins"red instit"tion. $here+ore! he (ill receive
+"ll coverage +or 1ans # and 1 and coverage to >&,0!000 at 1an C. 9is total coverage
e'"alsP >100!000 Q >0,!000 Q >&,0!000 M >4&,!000

Difficulty: 0ar(

4-)0
110. (p. 1+*) =(en had three acco"nts as listed belo(. *n &006! ho( m"ch (as her total
coverage by the F-*C/
1an #P >&0,!000
1an 1P >&,!000
1an CP >),0!000
#. >100!000
1. >&,0!000
C$ >,&,!000
-. >,0,!000
:. >.,0!000
;ote: 1s the %D3C changes its ma8imum co#erage< the solution for this pro!lem may change.
$his calculation is the same as =110. 3t is inclu(e( to allo' the same type of pro!lem to !e
as7e( on t'o #ersions of an e8am.
$he ma5im"m coverage is >&,0!000 per ins"red instit"tion. $here+ore! she (ill receive +"ll
coverage +or 1an 1 and coverage to >&,0!000 at 1ans # and C. 9er total coverage e'"alsP
>&,0!000 Q >&,!000 Q >&,0!000 M >,&,!000

Difficulty: 0ar(

111. (p. 1+*) Rictor read the +ine print +or a checing acco"nt he (as thining abo"t "sing. $he
+ine print read "# minim"m balance o+ >,00 is re'"ired. *+ yo"r balance +alls belo( this level!
yo" (ill be assessed a monthly +ee o+ >4." Since Rictor (as planning to only eep a >100
balance in his acco"nt! ho( m"ch co"ld he be charged each year/
#. >0.00
1. >4.00
C. >16.&0
-. >40.00
E$ >6..00
%onthly +ee K>4L N 1& months M >6.

Difficulty: )e(ium

4-)4
11&. (p. 1-1) =iven the in+ormation belo(! (hat sho"ld Cason's adA"sted ban balance +or his
ban reconciliation be/
1an balanceP >&,0
<"tstanding checsP >06
-eposit in transitP >&,
#$% FeesP >.
*nterest earnedP >1
Checboo balanceP >&01
#. >140
1. >101
C$ >16.
-. >&0,
:. >160
#dA"sted ban balance M 1an balance - <"tstanding checs Q deposit in transit M >&,0 - 06 Q
&, M >16.

Difficulty: 0ar(
$opic: Ban7 reconciliation

4-)6

FINC298 Chap 004

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FINC298 Chap 004

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Chapter 04 - Savings and Payment Services

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