Exam 6: Managing Your Money

The $500 minimum balance you are required to keep in your NOW checking account represents an opportunity cost.

Use the following two columns of items to answer the matching questions below: -overdraft protection A)a financial institution's notice that it will not honor a check B)an account that combines deposit accounts and a brokerage account C)the risk that the borrower may not repay on a timely basis D)a market where existing securities are bought and sold E)a short-term loan from the bank to cover a cash deficiency in a checking account F)a type of deposit that provides checking services and pays interest G)Treasury securities with maturities of one year or less

Money market funds (MMF) have all of the following characteristics, except

Which of the following is not a characteristic of money market funds (MMFs)?

A(n) ________ account acts as a traditional checking account except that it pays interest.

Maintaining liquid assets that you can easily access when you need funds allows you to avoid using credit and paying finance charges.

________ risk is the risk that a borrower may not repay on a timely basis.

Which of the following accounts would tend to give you the higher interest combined with ease of access to your funds on a limited basis?

To calculate interest earned, multiply the deposit amount by the annual interest rate times the adjustment for the investment period.

A 180-day CD offers an annualized interest rate of 1.10% and requires a minimum deposit of $25,000. The amount of interest that will be earned on this investment is

Good cash management requires some liquidity, but excessive liquidity has an opportunity cost.

If you buy a $10,000 par value T-bill with a 180-day maturity date for $9,750, what will be your annualized return?