U.E.T Taxila

COURSE TITLE : FREE 101

TRUE/FALSE QUESTIONS 1 TO 28

Chapter 04

1)When Flo says she's going to "the bank," she may be implying that she is visiting a credit union or stopping at an ATM.

2. When Ted needs cash, his choices include liquidating savings and borrowing.
3. A savings account is also known as a demand deposit.
4. If a bank allows online transactions, it must also allow face-to-face transactions at the bank.

5. Making transactions using a credit card will immediately reduce your bank balance.

6. The only question you should ask yourself when selecting a financial service provider is "Where can I get the best return on my savings?"                                         
7. A commercial bank is the same thing as a credit union.
8. A loan from a pawnshop will be more expensive than one from a bank.
9. The best option for borrowing money at a low rate is to use a payday loan organization.

10. If you get a big-screen television from a rent-to-own center, you will be certain to own it after a period of time
11. A benefit of investing in a certificate of deposit is the penalty for early withdrawal.
12. A bump-up CD allows an investor to increase the amount invested.
13. A callable CD allows investors to 'cash in' their investment early.
14. If you think that rates will fall, you should buy a long-term CD to lock in your rate now.

15. All money market funds are not covered by federal deposit insurance.                                   
16. I bonds earn interest based on a fixed rate plus inflation.
17. HH bonds are also known as Patriot Bonds.
18. The Truth in Savings Act requires financial institutions to disclose the interest rate on loans.

19. As inflation rates increase, the interest rates offered to savers usually increases.

20. Liquidity and rate of return refer to the same thing.                           
21. The 'safety' concern with banks and credit unions refers to the potential loss of money due to investors' bad spending habits.

Insurance prevents a loss of money due to the failure of an insured institution.

22. In October 2008, the FDIC announced the temporary Transaction Account Guarantee Program and increased coverage for accounts at insured institutions to $200,000 per depositor. .
23. Two years ago, Sean deposited money into a certificate of deposit and received a toaster. The value of the toaster reduced the amount of interest he earned for the first year.

24. Each year, fewer and fewer checks are being written.
25. A college ID that includes prepaid amounts for meals is called a debit card.                                          
26. Due to Check 21, the processing time for checks has increased.

Check 21 shortened the processing time.

27. Lydia found a check that she was given for her birthday 9 months earlier. Her bank should refuse to cash the check.

28. Reconciling a checking account is not really necessary since the bank statement includes all activity from the bank's perspective.

29. Common payment choices for everyday activities include all except

30. Many people make mistakes when managing current cash needs. Which of these is NOT a frequently made mistake?
31. A time deposit is also known as
32. A demand deposit is also known as
33. A credit card is a type of
34. A legal agreement that provides for the management and control of assets is known as
35. Claudette's grandchildren are 7 and 9 years old. When Claudette passed away, her grandchildren inherited her money. However, the will stipulated that they should not get control of the money until age 25. Which of the following should be set up to provide for the management and control of the funds?
36. Franklin is planning for a purchase of a vehicle in two years. Since he wants to be certain that his funds

are safe, which of the following should he use?

37. Investments and tax assistance, both tools for financial planning, are also known as

38. An account that provides a complete financial services program for a single fee is known as
39. Brenda lost her debit card. When she realized it was gone, her account had $173 in unauthorized charges. She notified her financial institution within two days. How much is she potentially liable for?
40. Brandon lost his debit card. When he realized it was gone, his account had $238 in unauthorized charges. Since he was embarrassed about his loss, he didn't contact his financial institution for 45 days. What is the most that he liable for?
41. ATM stands for
42. Which of the following is NOT a financial publication that can provide information about financial services and economic conditions?
43. When you select a financial service provider, you should ask all of the questions except

44. When you select a financial service provider, you may find all of the following to be major factors except
45. All of the following are deposit institutions except

46. All of the following are non-deposit institutions except

47. Which of the following usually offers mutual funds?

48. Which of the following primarily provides loans for home purchases?

49. When Angela wanted to provide financial security for her dependents, she considered purchasing a specific type of account at a                                         
50. Billy accepted a job at a company that specializes in providing money for short-term retail lending. Where did he go to work?
51. Which of the following will likely provide the most expensive access to funds?

52 Cathy wanted to buy some investments. To which of the following should she go?

53. Which of the following offers checking, savings, lending, and other services?
54. In which of the following are most of the investments insured?
55. Harvey needed some cash quickly, so he received a short-term loan based on the value of an old ring. Where did he go?
56. When Imogene brought a necklace to a                                         , she received a loan based on its value.
57. When Jack picked up a personal computer from the                                         , he really was leasing it.
58. Louise got caught in a cash flow trap and needed money quickly. Unfortunately, she didn't shop around and she went to a                                        . As a result, her annual percentage rate was higher than 375%!
59. Why are some financial service operations referred to as financial supermarkets?

60. A drawback of a savings account is
61. A drawback of a regular savings account is
62. Another name for a regular savings account is a
63. A certificate of deposit that has different interest levels based on market performance is called a
64. Karen wanted a certificate of deposit that would definitely be available until the maturity date. She would NOT want to consider a
65. Wanda bought a certificate of deposit and automatically received a free bike. She purchased
66. Xavier bought a certificate of deposit whose interest rate changes. In fact, he might even earn 0% interest on his investment for a time. He purchased a
67. Zach wants to open up an account, but he doesn't know which kind is appropriate. He is interested in earning a higher interest rate and knows that he might not be able to write many checks from his account. In addition, he plans to keep at least $1,000 in his account so he can avoid paying a fee. He definitely wants to have federal deposit insurance. What kind of account should he open?
68. Amber wants to open up an account, but she doesn't know which kind is appropriate. She is interested in earning a higher interest rate and plans to keep at least $1,000 in her account so she can avoid paying a fee. Amber wants to open her account at an investment company. What kind of account should she open?
69. Will wants to open up an account that will allow him easy access to his funds from many locations and would pay at least a low interest rate. What kind of account should he open?

70. The text discusses several types of bonds. Which bond is also called a Patriot Bond?
71. The text discusses several types of bonds. Which bond pays interest for 30 years that is exempt from state and local taxes?
72. The text discusses several types of bonds. Which bond electronically deposits interest into your bank account?
73. The text discusses several types of bonds. Which bond is purchased at face value and has two components to the rate of interest earned - a fixed rate as well as a rate that adjusts twice a year?
74. Justin needs to have access to his money in 5 months. The best option for his savings is
75. If you want to buy U.S. savings bonds, you may purchase them at
76. Earnings on savings can be measured by the
77. Earning interest on interest is called
78. The Truth in Savings Act requires financial institutions to disclose         on savings accounts.
79. Which of the following is correct about inflation?
80. Which of the following refers to the opportunity to withdraw money on short notice without incurring a loss in value?

81. Which of the following provides deposit insurance for credit unions?
82. The FDIC temporarily increased its coverage in October 2008 to                                                              per depositor.

This question may need to be modified as the FDIC changes its coverage levels.

83. Which of the following is a type of electronic payment?
84. Jennifer received a $50 gift card for her favorite retailer. What kind of card did she receive?
85. Aidan wants to be able to complete his payment transactions electronically. Which of the following tools should he use?
86. Quentin wants his retail purchases to be deducted directly from his checking account. Which of the following tools should he use?
87. Patrick is interested in opening a different account that will allow him to write checks, but he doesn't want to maintain a minimum balance. He should open a(n)                                                                 
88. Preston never opened his bank statements, so he was surprised to see that he received a service charge that exceeded the interest he earned for the month. What kind of account does Preston have?
89. Ursula has an account that will allow her to waive the minimum balance if she keeps a certain amount in savings. What kind of account does she have?
90. Which of the following is NOT correct?
91. In general, which fees have recently decreased for checking accounts?

92. Which of the following is correct?

93. Nora bought a used car and was told that she needed a check with guaranteed payment. She obtained a

94. Kylie went to a post office to obtain a                                                       
95. Logan paid a bill with a special form. He received this form at his financial institution and had to pay a fee. He used a                                                       
96. Anders went to Norway and went shopping. He had to sign his name a second time on this document at the store. Anders used a                                       
97. A joint account with Sara and Ean allows
98. Chloe signed the back of her check with nothing else by it. She used a(n)
99. Zoe signed the back of her check with the words "for deposit only." She used a(n)
100. Margaret signed the back of her check with the words "pay to the order of Penelope." She used a(n)
101. Which of the following is NOT required when writing a check?
102. If a check is lost or stolen, you should use a

103. Nancy invested $10,000 in a certificate of deposit earning 6 % per year. Unfortunately, she needed to withdraw it before the maturity date. If the penalty involved two months of interest, what was her total penalty?
104. Neil invested $10,000 in a certificate of deposit earning 12% per year. Unfortunately, he needed to withdraw it before the maturity date. If the penalty involved two months of interest, what was his total penalty?

105. What is the APY for a savings account with a $500 balance that receives $24 interest for the year?

106. What is the APY for a one-year $8,000 Certificate of Deposit with $1,120 interest?

107. Nicholas earned 10% in his savings account. If he is in the 25% tax bracket, what is his after-tax savings rate of return?
108. Opal earned 8% in her savings account. If she is in the 25% tax bracket, what is her after- tax savings rate of return?
109. Evan had three accounts as listed below. In 2009, how much was his total coverage by the FDIC?