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Exam 5: Financial Services: Savings Plans and Payment Accounts

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Question 21

Multiple Choice

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Nick Martin writes a check to pay for day care for his son.What type of financial service is Nick using?

A) Payment service
B) Savings service
C) Credit service
D) Trust service
E) Investment service

F) C) and D)
G) A) and D)

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Question 22

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A person borrows $100 from a payday loan company,and pays $10 interest for two weeks.This would result in an annual interest rate of approximately ________ percent.Ignore compounding.

A) 110
B) 260
C) 10
D) 20
E) 5

F) C) and D)
G) B) and D)

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Question 23

Multiple Choice

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A saver will usually receive higher earnings with which one of the following types of savings plans?

What is the term used to refer to the yield on a long-term (20-year) debt obligation issued by the U.S.government?

Brad Kellogg maintains a monthly balance in his checking account of approximately $150,writes about 25 checks a month,and makes three deposits each month.How would Brad decide which one of the following checking accounts he should use? Bank A: regular checking account with a monthly fee of $4.50 for an unlimited number of checks,no monthly balance requirement,and no interest earnings. Bank B: interest-bearing checking account paying 4 percent interest on balances over $300 and a monthly service charge of $6 if the balance falls below $300. Bank C: special checking account that charges 35 cents a check and 20 cents for each deposit,no interest earnings. Bank D: minimum-balance account that requires a $200 minimum balance to avoid the $10 monthly fee,two percent interest paid if the balance remains above $400.

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?

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

This type of savings plan is usually considered to be very liquid:

Savers should do which of the following in times of falling interest rates?

When preparing a bank reconciliation,interest earned on your checking account is added to the bank statement balance.

Series EE U.S.Savings Bonds can be purchased:

The purpose of a "special endorsement" is to:

The storage of funds for future use is a purpose of ________,which include savings accounts and certificates of deposit.

Evan Nolan is a college graduate who has just landed a great job.He feels it is time for him to start saving a portion of his earnings.What factors would you recommend he consider when evaluating and comparing different savings plans?

What is the rate an individual will pay to borrow for the purchase of a new home called?

Which type of organization does not provide home mortgages?

David Wynn gets an auto loan from his credit union for $11,500.David will make monthly payments over the next five years to repay the loan.What type of financial service is David using?

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

An estimated ________ people in the U.S.are "unbanked," using a variety of alternative services rather than having a bank account.

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