Personal Finance 13th Edition By Garman - Test Bank Instant Download - Complete Test Bank With Answers Sample Questions Are Posted Below 1. The goal of monetary asset management is to maximize interest earnings and minimizing fees while keeping funds safe and readily available. a. True b. False ANSWER: …
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Personal Finance 13th Edition By Garman – Test Bank
Instant Download – Complete Test Bank With Answers
Sample Questions Are Posted Below
1. The goal of monetary asset management is to maximize interest earnings and minimizing fees while keeping funds safe and readily available.
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2. In monetary assert management, safety means the speed and ease with which an asset can be converted to cash.
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3. Monetary asset management includes setting money aside in a savings account for use later when spending or investing.
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4. Monetary asset management focuses primarily on funds kept readily available for investments.
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5. Liquidity is the speed and ease with which an asset can be converted to cash.
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6. Unlike other providers of financial services, depository institutions can both take deposits and make loans to consumers.
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7. Today, even stock brokerages and insurance companies provide certain products for use in monetary asset management.
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8. Credit unions typically offer the widest variety of financial services.
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9. Commercial banks typically offer the widest variety of financial services.
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10. The primary focus of mutual savings banks is to accept deposits from consumers and provide mortgage and consumer loans.
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11. Deposits in credit unions with federal charters are insured through the National Credit Union Share Insurance Fund (NCUSIF).
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12. Mutual savings banks are called “mutual” because the depositors own the institution and share in the earnings.
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13. Credit unions with federal charters have their accounts insured through the FDIC.
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14. The total protection an individual might have with any institution, including all its branches, is $250,000 with no more than $125,000 each on single-ownership and joint accounts.
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15. A mutual fund is an investment company that raises money by selling shares to the public and then invests that money in a diversified portfolio of investments.
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16. One can increase the amount of money covered by FDIC insurance by dividing his or her money among different branch offices of the same depository institution.
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17. Money deposited in mutual funds is insured by the federal government.
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18. A stock brokerage firm is a licensed financial institution that specializes in selling and buying stocks, bonds, and other investment alternatives.
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19. Stock brokerage firms are federally insured institutions.
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20. Stock brokerage firms earn commissions on clients’ stock transactions.
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21. Checks allow you to transfer funds from your account to other people and organizations.
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22. The only reason to have a checking account is so that one has an account for writing checks.
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23. When you use a debit card, funds are instantaneously removed from your account.
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24. Checking accounts that pay no interest are called NOW accounts.
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25. The interest rate you earn on your checking and savings account can vary with the amount you have in the accounts.
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26. A checking account is sometimes called a transaction account.
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27. A share draft account is the credit union version of a NOW account.
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28. Share draft accounts at credit unions are generally more expensive than NOW accounts at commercial banks.
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29. NOW accounts may pay slightly higher interest rates on larger balances.
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30. NOW accounts get their name because they are considered demand deposits.
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31. College students who are independent of their parents may qualify for very low-cost lifeline banking accounts.
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32. NOW accounts and share draft accounts with tiered interest will pay higher interest rates on larger balances.
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33. Acceptance for a lifeline banking account is dependent on one’s income and net worth.
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34. A stop-payment order works only if the check has not yet cleared your financial institution.
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35. There are no fees charged for a stop-payment order.
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36. A cashier’s check is drawn on the account of the financial institution itself.
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37. Fees of no more $10 are generally charged for money orders, certified checks and cashier’s checks.
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38. If your checking account balance drops to less than perhaps $50 at any point during a month you would likely be better off with a minimum deposit account in order to avoid fees.
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39. A money order is a checking instrument bought for a particular amount.
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40. When a bank offers a “free” checking account, that means there are no fees for writing bad checks or using another bank’s ATM.
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41. Funds on deposit in a savings account are considered time deposits rather than demand deposits.
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42. Funds on deposit in a savings account are considered demand deposits.
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43. Time deposits are savings that are expected to remain on deposit in a financial institution for an extended period.
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44. Demand deposits are savings that are expected to remain on deposit in a financial institution for an extended period.
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45. Institutions usually have a rule requiring that time deposit account holders give 30 to 60 days notice for withdrawals, although this restriction is seldom enforced.
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46. Time deposits specify a period that the savings must be left on deposit, such as six months or three years.
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47. Fixed-time deposits specify a period of time that the savings must be left on deposit.
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48. Institutions have a rule requiring that savings account holders give 30 to 60 days’ notice for withdrawals.
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49. A long-term, fixed-rate certificate of deposit would be most appropriate when interest rates are moving up.
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50. In general, the shorter the maturity time on a certificate of deposit, the higher the rate of interest that will be paid.
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51. If one believes interests rates will move lower in the months ahead, he or she should invest in long-term, fixed-rate savings investments.
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52. It is highly recommended that CD investments be made at local institutions, even though some yield may be sacrificed.
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53. The interest rate in force when a CD is purchased typically remains fixed for the entire term of the deposit.
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54. Interest rates on longer-term CDs are usually higher than the comparable rates on shorter-term instruments.
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55. Bump-up CDs allow savers to bump up the interest rate once to a higher market rate.
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56. Money withdrawn from a CD before the end of the specified time period is subject to interest penalties.
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57. While the majority of certificates of deposit pay a fixed rate of interest, variable-rate certificates of deposit are available.
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58. It is possible to lose money on a certificate of deposit if the early withdrawal penalty is greater than the interest earned.
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59. CD laddering is a technique that smoothes out the fluctuations in interest rates and lowers inflation rate risk.
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60. The safest type of endorsement on a check is a blank endorsement.
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61. Checks mailed to the bank for deposit should always be endorsed with a restrictive endorsement.
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62. A check with a blank endorsement contains only the payee’s signature on the back.
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63. Writing a “bad check” can be very expensive because of fees assessed by both the bank and the payee.
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64. If you have an automatic overdraft loan agreement with your bank, money will be borrowed from your MasterCard or Visa as a cash advance when you write a bad check.
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65. An automatic funds transfer agreement is usually the most expensive way to avoid bad check fees.
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66. ”Opt-in” overdraft/bounce protection can be very helpful if the institution will honor your debit card even if you have insufficient funds.
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67. Periodically, you should conduct an account reconciliation in which you compare your records with your bank’s records.
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68. A person whose income is dependent on commissions generally needs more readily available emergency funds than a salaried employee.
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69. The more frequent the compounding, the greater the effective return for the saver.
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70. One should accumulate enough savings to cover living expenses for six to nine months.
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71. Brokered certificates of deposit are available through stockbrokers.
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72. A grace period is the time period in days during which deposits or withdrawals can be made and still earn the same interest as other savings from a given day of the interest period.
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73. The Truth in Savings Act requires depository institutions to disclose a standardized rate of interest so that depositors can easily compare various savings options.
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74. The term money market account describes a variety of high-interest earning accounts that normally have unlimited check-writing privileges.
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75. If the balance on either a super NOW account or a money market deposit account falls below a specified level, the account generally earns interest at the lower rate paid on a regular NOW account.
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76. Completing a signature card is part of the process when opening a checking account.
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77. A joint account that gives each owner access to the account (without the other’s signature) is called a joint tenancy account with right of survivorship.
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78. A payable-on-death designation can be used to set up an individual account that automatically goes to another person when you die.
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79. In community property states, the rights of the husbands and wives are unequally protected.
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80. A tenancy by the entirety account may be opened only by spouses.
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81. Money market deposit accounts are normally federally insured whereas money market mutual funds are not federally insured.
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82. Money market mutual funds that buy only U.S. government securities are virtually risk-free.
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83. An asset management account is a multiple-purpose, coordinated package that provides a wide variety of financial services.
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84. Everyone should use an asset management account to simplify their monetary asset management.
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85. Everything else being the same, an investor would prefer an asset management account that “sweeps” weekly rather than daily.
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86. Electronic funds transfers (EFTs) move money electronically between accounts rather than by check or cash.
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87. The best banking account PIN numbers and passwords are those that are easy to remember.
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88. ATM transaction fees can be assessed when you make a purchase via a point-of-sale terminal at a retail store.
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89. Retail transaction fees can be assessed when you make a purchase via a point-of-sale terminal at a retail store.
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90. When a customer uses a debit card to pay for a purchase, funds must be paid as of the next due date on the account.
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91. ATMs can be used to withdraw funds from a money market mutual fund.
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92. Your first line of defense against unauthorized use of your banking accounts is prompt examination of your periodic statement provided by your banking institution.
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93. Some stored value cards can be “reloaded” with additional funds.
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94. Electronic benefits transfer (EBT) cards are used by the government to pay military personnel and provide Social Security and other government benefits.
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95. When you sign up for electronic banking services, the depository institution must inform you of your rights and responsibilities in a written disclosure statement.
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96. It is not required for an ATM or a POS terminal to provide a written receipt.
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97. Your losses from a stolen ATM card are unlimited if you fail to report unauthorized use within 30 days after your statement is mailed to you.
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98. Most homeowner’s and renter’s insurance policies cover your liability for theft of debit cards but not credit cards.
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99. To be legally responsible for only the first $50 of unauthorized use, one must report an ATM card missing within two days after the loss or theft of the card.
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100. Most homeowner’s and renter’s insurance policies partially cover the liability for theft of both debit and credit cards.
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101. ATM cardholders are liable for only the first $50 of unauthorized use if they notify the issuing company within five business days after the loss or theft of their card or PIN.
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102. Because the focus is on building a relationship you can wait until after “popping the question” to discuss financial issues.
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103. Management of ____ is not included in monetary asset management.
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104. Which of the following are examples of monetary assets?
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105. The speed and ease by which an asset can be converted into cash is referred to as its
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106. Which of the following does not apply to monetary assets?
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107. Common financial services offered by depository institutions include
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108. The Federal Deposit Insurance Corporation (FDIC) insures accounts in
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109. Both commercial bank and savings bank accounts are insured by the FDIC through a fund called the
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110. The regulator of commercial banks and saving banks is the
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111. Which of the following statements is true regarding mutual savings banks?
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112. Which of the following is not true about commercial banks?
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113. Depositors are the owners of
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114. Not-for-profit, common-bond financial institutions that are owned by their members are called
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115. ____ typically pay the highest rates of interest on savings.
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116. Tom and Mindy want to keep $420,000 in cash equivalents that are federally insured. They could accomplish this by
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117. The Federal Deposit Insurance Corporation (FDIC) currently insures against loss of up to ____ per person in an individual account at any one institution.
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118. State-chartered credit unions are often insured by
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119. A stock brokerage firm is a licensed financial institution that
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120. The monetary asset management service provided by a mutual fund is a
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121. A lifeline checking account is accurately described as an account that
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122. Which of the following sets NOW accounts apart from other checking accounts?
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123. How can a person transfer money out of his or her checking account?
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124. When an account pays one rate of interest on a minimum amount on deposit and a higher rate of interest on additional deposits, this is called ____ interest.
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125. Checks you write and present for payment can clear your bank in as little as
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126. Molly went to her bank, gave the teller $200 plus a small fee, and received a check drawn on the financial institution itself. What kind of checks were these?
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127. Which of the following types of payment instruments could you get at your local post office?
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128. A check drawn on a financial institution, backed by the financial institution’s finances, and made out to a specific payee is called a
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129. A checking account that does not pay interest is called a
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130. Which of the following could incur fees and penalties on a checking account?
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131. The fairest method for calculating interest on an account used ____ method for determining the balance to which the interest rate is applied.
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132. Which of the following is not a benefit of a savings account?
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133. Characteristics of a savings account include that
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134. Certificates of deposit (CDs) tend to pay higher rates of interest than money market accounts because
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135. Which of the following certificates of deposit is not covered by bank deposit insurance offered by the FDIC?
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136. If Gus believes interest rates are going to fall in the near future and remain low for several years, Gus should now
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137. In general, you will receive higher rates of interest on your certificate of deposit the ____ the maturity and the ____ the dollar amount invested.
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138. Diana and Kim are roommates in college and Diana owes Kim for last month’s rent. When Diana receives a check from her mother for the rent, what type of endorsement should Diana use to sign this check over to Kim?
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139. Which of the following is the least expensive way of protecting yourself from fees should you overdraft your checking account.
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140. Which of the following could be the most expensive way of protecting yourself from fees should you overdraft your checking account?
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141. Which type of bank agreement will result in the lowest fees?
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142. Jack and Jill have trouble keeping their checking account balanced. Because they never know how much is really in their account, they have an automatic funds transfer agreement with their bank. When Jack or Jill writes a bad check, what will happen?
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143. Which of the following is a reason why you should reconcile your bank accounts regularly?
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144. Which of the following is the best advice for people who want to start saving regularly?
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145. Which of the following is not a benefit of a savings account?
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146. Ronald’s gross income is $60,000, and his living expenses consume 75 percent of his gross income. According to financial experts, Ronald should set aside ____ to cover emergencies.
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147. According to financial advisers, a person with monthly living expenses of $2,500 should maintain readily accessible savings of at least
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148. Which of these is a reason many people say they cannot save?
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149. Interest paid on deposits in financial institutions is based on how much money is on deposit and
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150. Savers should select an institution that calculates interest
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151. Wise money managers should select the savings option that
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152. The Truth in Savings Act requires depository institutions to
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153. Which of the following forms is used to notify you of the taxable interest you have earned in a given year from a checking or savings account?
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154. Bob and Tina Cisneros want to build a $10,000 emergency fund. Which of the following would be the most appropriate choice for the emergency fund?
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155. Which of the following accounts could accurately be called a money market account?
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156. List the money market accounts according to the interest rate generally paid on each account (from highest to lowest).
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157. An individual checking or savings account can be set up to go automatically to another person when the depositor dies if it is set up as a(n)
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158. A person who is a joint owner of an ____ account should understand that his/her share of the assets in the account are distributed to the heirs of the deceased according to the terms of his/her will.
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159. Husbands and wives who own a checking or savings account together would most likely want to set up the account with
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160. In community property states, most of the money and property acquired during a marriage are legally considered the property of
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161. Because certificates of deposit require that the deposited funds remain on deposit for a specified period of time they are subject to
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162. To reduce interest rate risk and smooth out interest rate fluctuations when purchasing certificates of deposit (CDs) you can engage in
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163. Amy and Lance are newlyweds. This is Lance’s second marriage. Because of problems that occurred before his divorce (his ex-wife took all the money out of their joint accounts), he is more cautious than most about setting up joint accounts. Which type of account would you recommend for Amy and Lance?
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164. Andy and Marjorie have very little will power when it comes to spending. They want to put their savings in an instrument that cannot be accessed by their ATM card. Which instrument would meet this criterion?
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165. Absent-minded Alfred lost his debit card on May 1. He reported it missing the next day; however, $600 had been already purchased with the card without the use of his PIN number. According to the Electronic Funds Transfer Act, how much of this $600 loss is Alfred responsible for?
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166. A personal identification number is not needed for which of the following forms of electronic funds transfers?
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167. A customer who wanted to directly transfer funds from his or her bank account to a retailer’s bank account would use a(n)
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168. Which of the following might be used by an employer to pay an employee?
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169. Electronic funds transfers (EFTs)
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170. Your bank will regularly (usually monthly) provide a compilation of your recent account activity, which is called a(n)
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171. Having your pay sent directly to your bank rather than receiving a written check is a type of
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172. Which of the following is (are) required to withdraw money from an automated teller machine (ATM)?
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173. A personal identification number (PIN) is required when using a(n)
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174. A ______ is a firm that notifies all companies with which you have debit and credit cards in the event that the cards are lost.
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175. A POS terminal is an electronic computer terminal located at a store or other merchant location that allows the customer to
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176. Which type of cash management instrument could also be used by a college student to access his or her meal plan?
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177. Darla had $750 in her checking account when her debit card was stolen. Assuming the thief made $525 in purchases with the card, how much could she save by reporting the stolen ATM card immediately rather than waiting more than three months before reporting the theft?
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178. Which of the following is not a technique for reducing the risk whenever you conduct banking transactions on-line?
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179. Which of the following ideas will not help you discuss money with more confidence and candor?
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180. The primary reason for giving a child an allowance is to
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181. Special concerns for blended families include
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