Question 1

Since CDs are insured by the FDIC,the rates are usually the same from one institution to another.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) Pooled money provided by individuals to invest 
B) Short-term maturity 
C) High-risk investments 
D) A minimum investment amount 
A) Pooled money provided by individuals to invest 
B) Short-term maturity 
C) High-risk investments 
D) A minimum investment amount

Question 3

Checking accounts may offer all of the following except

Accepted Answer

A) account balance insurance in excess of $250,000. 
B) stop payment services. 
C) overdraft protection. 
D) ATM privileges. 
A) account balance insurance in excess of $250,000. 
B) stop payment services. 
C) overdraft protection. 
D) ATM privileges.

Question 4

Because most regular checking accounts do not pay interest,you should keep only enough funds in your account to cover anticipated expenses with a small reserve for unanticipated expenses.

Accepted Answer

A) True 
 B)False

Question 5

A money market account combines deposit accounts with a brokerage account,provides a single consolidated statement,and "sweeps" the unused balance from the checking account to a savings account daily.

Accepted Answer

A) True 
 B)False

Question 6

You should attempt to have a sufficient amount of funds in liquid assets to draw on when your cash outflows exceed your cash inflows.

Accepted Answer

A) True 
 B)False

Question 7

You have $3,000 that you may need to use to replace the furnace in your home.If you need the funds,it would be on no less than a week's notice.Into which type of account would it be best for you to deposit the $3,000?

Accepted Answer

A) Checking account 
B) Savings account 
C) NOW account 
D) All of the above would be equally acceptable. 
A) Checking account 
B) Savings account 
C) NOW account 
D) All of the above would be equally acceptable.

Question 8

An asset management account combines deposit accounts with a brokerage account and provides a single account statement.

Accepted Answer

A) True 
 B)False

Question 9

Money market funds (MMFs)offer all of the following except

Accepted Answer

A) short-term maturity securities. 
B) safe investments with higher rates than T-bills. 
C) insured savings. 
D) check writing privileges. 
A) short-term maturity securities. 
B) safe investments with higher rates than T-bills. 
C) insured savings. 
D) check writing privileges.

Question 10

Which of the following should not be considered when evaluating a checking account?

Accepted Answer

A) The overdraft protection available 
B) The stop payment feature and the cost of it 
C) The fees charged monthly 
D) The type of account insurance carried by the bank 
A) The overdraft protection available 
B) The stop payment feature and the cost of it 
C) The fees charged monthly 
D) The type of account insurance carried by the bank

Question 11

Which of the following is a feature of Treasury bills (T-bills)?

Accepted Answer

A) They have a maturity of more than one year. 
B) They are available with a minimum value at maturity of $100. 
C) They are purchased at a discount from par value. 
D) They must be held to maturity. 
A) They have a maturity of more than one year. 
B) They are available with a minimum value at maturity of $100. 
C) They are purchased at a discount from par value. 
D) They must be held to maturity.

Question 12

Money management is a series of decisions made over a short-term period regarding cash inflows and outflows.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

In general,the more liquid an investment is,the ________ the return you will receive.

Accepted Answer

A) lower 
B) higher 
C) less predictable 
D) There is no relationship between liquidity and return. 
A) lower 
B) higher 
C) less predictable 
D) There is no relationship between liquidity and return.

Question 15

________ risk is the risk that an investment could decline as a result of a change in interest rates.

Accepted Answer

A) Credit 
B) Interest rate 
C) Liquidity 
D) Asset 
A) Credit 
B) Interest rate 
C) Liquidity 
D) Asset

Question 16

Which of the following items will give you the highest return?

Accepted Answer

A) One year CD 
B) Savings account 
C) NOW account 
D) Checking account 
A) One year CD 
B) Savings account 
C) NOW account 
D) Checking account

Question 17

Generally,short-term debt securities issued by large corporations,also known as commercial paper,typically offer a slightly higher return than Treasury bills.

Accepted Answer

A) True 
 B)False

Question 18

In general,the more liquid an asset,the higher its return.

Accepted Answer

A) True 
 B)False

Question 19

If you purchase a bond that matures in 5 years but you may have to cash it in before that time,it exposes you to the

Accepted Answer

A) credit risk. 
B) default risk. 
C) interest rate risk. 
D) liquidity risk. 
A) credit risk. 
B) default risk. 
C) interest rate risk. 
D) liquidity risk.

Question 20

Some investments are subject to credit risk.This means that the borrowers may not repay on a timely basis.

Accepted Answer

A) True 
 B)False

Exam 6: Managing Your Money

Since CDs are insured by the FDIC,the rates are usually the same from one institution to another.

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

Checking accounts may offer all of the following except

Because most regular checking accounts do not pay interest,you should keep only enough funds in your account to cover anticipated expenses with a small reserve for unanticipated expenses.

A money market account combines deposit accounts with a brokerage account,provides a single consolidated statement,and "sweeps" the unused balance from the checking account to a savings account daily.

You should attempt to have a sufficient amount of funds in liquid assets to draw on when your cash outflows exceed your cash inflows.

You have $3,000 that you may need to use to replace the furnace in your home.If you need the funds,it would be on no less than a week's notice.Into which type of account would it be best for you to deposit the $3,000?

An asset management account combines deposit accounts with a brokerage account and provides a single account statement.

Money market funds (MMFs)offer all of the following except

Which of the following should not be considered when evaluating a checking account?

Which of the following is a feature of Treasury bills (T-bills)?

Money management is a series of decisions made over a short-term period regarding cash inflows and outflows.

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

In general,the more liquid an investment is,the ________ the return you will receive.

________ risk is the risk that an investment could decline as a result of a change in interest rates.

Which of the following items will give you the highest return?

Generally,short-term debt securities issued by large corporations,also known as commercial paper,typically offer a slightly higher return than Treasury bills.

In general,the more liquid an asset,the higher its return.

If you purchase a bond that matures in 5 years but you may have to cash it in before that time,it exposes you to the

Some investments are subject to credit risk.This means that the borrowers may not repay on a timely basis.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters