Exam 6: Managing Your Money

Stopping payment on a check should be used if you paid to have your bathroom remodeled and the job was not completed.

If you are considering a NOW account that requires a $500 minimum balance and pays 2 percent interest,what would be the opportunity cost if you would need to withdraw the required minimum balance from a savings account paying 5 percent interest? Compute the opportunity cost for one year. (a)$10 (b)$15 (c)$25 (d)$35

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

Money market funds (MMFs)which invest in commercial paper are insured by the FDIC.

Which of the following is not a money market investment?

Because of the active bond market in Chicago,one risk that a corporate bond is less likely to expose you to is the

A one-year CD has a ________ return and ________ liquidity than a checking account.

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

Overdraft protection for a checking account is a low-cost short-term loan.

Generally,yields are ________ for securities that are exposed to ________ liquidity risk.

Treasury bills (T-bills)may be purchased by individuals,but require a minimum investment of $10,000 par value.

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

An advantage of a NOW account over a traditional checking account is that your money is more readily available to you.

The secondary market for T-bills means that

A money market deposit account (MMDA)requires a minimum balance,pays interest,and allows a limited number of checks to be written each month.

Describe the relationship between return and liquidity using a one-year CD and a checking account to illustrate.

Debt securities issued by the U.S.Treasury that are due in one year or less are called ________.

Which of the following items will give you the greatest liquidity?

A disadvantage of using credit as a source of liquidity is the

Kelly deposits $1,000 in her savings account earning 4% per year.How much interest would she earn in a year?