Question 1

Which method of determining interest provides the largest interest amount?

Accepted Answer

A) LIFO 
B) FIFO 
C) Day-of-deposit-day-of-withdrawal 
D) Minimum balance 
A) LIFO 
B) FIFO 
C) Day-of-deposit-day-of-withdrawal 
D) Minimum balance

Question 2

Ian's records show a cash balance of $2,000 while the bank statement shows a balance of $1,800.The difference is most likely explained by

Accepted Answer

A) unrecorded interest earned on the account. 
B) deposits made after the statement period. 
C) checks not cleared during the statement period. 
D) a statement period less than one month. 
A) unrecorded interest earned on the account. 
B) deposits made after the statement period. 
C) checks not cleared during the statement period. 
D) a statement period less than one month.

Question 3

The safest endorsement of a check is a blank endorsement.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not a characteristic of certificate of deposit (CDs)?

Accepted Answer

A) You pay a penalty for early redemption. 
B) You "lock in" (are guaranteed)the stated interest if you hold the CD until maturity. 
C) They are preferred over money market deposits if you expect interest rates to fall. 
D) They have a minimum maturity of three years. 
A) You pay a penalty for early redemption. 
B) You "lock in" (are guaranteed)the stated interest if you hold the CD until maturity. 
C) They are preferred over money market deposits if you expect interest rates to fall. 
D) They have a minimum maturity of three years.

Question 5

A cash management strategy attempts to earn the most interest in choosing liquid deposits.

Accepted Answer

A) True 
 B)False

Question 6

Federal deposit insurance

Accepted Answer

A) protects each deposit account up to $100,000. 
B) protects each depositor up to $100,000. 
C) protects both the deposit and depositor up to $1,000,000. 
D) is available only by depositor choice and then a small fee must be paid. 
A) protects each deposit account up to $100,000. 
B) protects each depositor up to $100,000. 
C) protects both the deposit and depositor up to $1,000,000. 
D) is available only by depositor choice and then a small fee must be paid.

Question 7

A temporary parking place for cash means holding liquid assets until the investment environment for long-term assets improves.

Accepted Answer

A) True 
 B)False

Question 8

Lou had $1,000 in his savings account at the beginning of a period.He then deposited $1,000 and later withdrew $500.Under the minimum balance method,interest would be paid on $1,500 for the full period.

Accepted Answer

A) True 
 B)False

Question 9

Rates of interest on passbook savings are usually lower than rates available on other savings accounts.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a primary reason why many people hold cash?

Accepted Answer

A) To undertake transactions 
B) To avoid credit 
C) To have an emergency reserve 
D) To have a store of value 
A) To undertake transactions 
B) To avoid credit 
C) To have an emergency reserve 
D) To have a store of value

Question 11

An overdraft and "bounced check" mean the same thing.

Accepted Answer

A) True 
 B)False

Question 12

Which alternative below generally offers the highest potential yield and highest risk?

Accepted Answer

A) NOW accounts 
B) CDs 
C) MMDAs 
D) U.S.Series EE bonds 
A) NOW accounts 
B) CDs 
C) MMDAs 
D) U.S.Series EE bonds

Question 13

Many financial planners believe you should hold emergency reserves of no more than one month of after-tax income.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following assets is most liquid?

Accepted Answer

A) A checking account 
B) A savings account 
C) A certificate of deposit (C
D)  
D) The above three are equally liquid. 
A) A checking account 
B) A savings account 
C) A certificate of deposit (C
D)  
D) The above three are equally liquid.

Question 15

A NOW account is defined simply as a checking account that pays interest.

Accepted Answer

A) True 
 B)False

Question 16

A U.S.Series EE savings bond offers reasonably high rates and good liquidity.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is true concerning overdrafts?

Accepted Answer

A) An effective way to prevent them is to "overload" the account. 
B) They can be avoided by arranging an automatic transfer from a savings account. 
C) They are inexpensive nuisances because banks usually do not charge for overdrafts. 
D) They differ from "bounced checks" in that "bouncing" a check is a mistake while an overdraft is deliberate. 
A) An effective way to prevent them is to "overload" the account. 
B) They can be avoided by arranging an automatic transfer from a savings account. 
C) They are inexpensive nuisances because banks usually do not charge for overdrafts. 
D) They differ from "bounced checks" in that "bouncing" a check is a mistake while an overdraft is deliberate.

Question 18

One motive for holding cash is to undertake transactions.

Accepted Answer

A) True 
 B)False

Question 19

A "substitute check" is

Accepted Answer

A) a digital picture of your original check formated for bank processing. 
B) any photocopy of an original check. 
C) meant to replace an original check that has been lost or stolen. 
D) issued by a credit card company to cover previous purchases. 
A) a digital picture of your original check formated for bank processing. 
B) any photocopy of an original check. 
C) meant to replace an original check that has been lost or stolen. 
D) issued by a credit card company to cover previous purchases.

Question 20

A bank reconciliation involves converting a checking account to a savings account.

Accepted Answer

A) True 
 B)False

Which method of determining interest provides the largest interest amount?

Ian's records show a cash balance of $2,000 while the bank statement shows a balance of $1,800.The difference is most likely explained by

The safest endorsement of a check is a blank endorsement.

Which of the following is not a characteristic of certificate of deposit (CDs)?

A cash management strategy attempts to earn the most interest in choosing liquid deposits.

Federal deposit insurance

A temporary parking place for cash means holding liquid assets until the investment environment for long-term assets improves.

Lou had $1,000 in his savings account at the beginning of a period.He then deposited $1,000 and later withdrew $500.Under the minimum balance method,interest would be paid on $1,500 for the full period.

Rates of interest on passbook savings are usually lower than rates available on other savings accounts.

Which of the following is not a primary reason why many people hold cash?

An overdraft and "bounced check" mean the same thing.

Which alternative below generally offers the highest potential yield and highest risk?

Many financial planners believe you should hold emergency reserves of no more than one month of after-tax income.

Which of the following assets is most liquid?

A NOW account is defined simply as a checking account that pays interest.

A U.S.Series EE savings bond offers reasonably high rates and good liquidity.

Which of the following statements is true concerning overdrafts?

One motive for holding cash is to undertake transactions.

A "substitute check" is

A bank reconciliation involves converting a checking account to a savings account.

Financial Planning: Why Its Important to You

The Time Value of Money: All Dollars Are Not Created Equal

Financial Statement and Budgets: Where Are You Now and Where Are You Going

Taxes: the Governments Share of Your Rewards

Short-Term Credit Management: Consumer Credit

Consumer Durables: the Personal Auto

Housing: the Cost of Shelter

Financial Markets and Instruments: Learning the Investment Environment

Investment Basics: Understanding Risk and Return

Stocks and Bonds: Your Most Common Investments

Mutual Fundsother Pooling Arrangements: Simplifying, Maybe Improving Investment Performance

Property and Liability Insurance: Protecting Your Lifestyle Assets

Health Care and Disability Insurance: Protecting Your Earning Capacity

Life Insurance and Estate Planning: Protecting Your Dependents

Retirement Planning: Planning for Your Long-Term Needs

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Exam 5: Liquidity Management: Managing Current Assets and Current Liabilities

Which method of determining interest provides the largest interest amount?

Ian's records show a cash balance of $2,000 while the bank statement shows a balance of $1,800.The difference is most likely explained by

The safest endorsement of a check is a blank endorsement.

Which of the following is not a characteristic of certificate of deposit (CDs)?

A cash management strategy attempts to earn the most interest in choosing liquid deposits.

Federal deposit insurance

A temporary parking place for cash means holding liquid assets until the investment environment for long-term assets improves.

Lou had $1,000 in his savings account at the beginning of a period.He then deposited $1,000 and later withdrew $500.Under the minimum balance method,interest would be paid on $1,500 for the full period.

Rates of interest on passbook savings are usually lower than rates available on other savings accounts.

Which of the following is not a primary reason why many people hold cash?

An overdraft and "bounced check" mean the same thing.

Which alternative below generally offers the highest potential yield and highest risk?

Many financial planners believe you should hold emergency reserves of no more than one month of after-tax income.

Which of the following assets is most liquid?

A NOW account is defined simply as a checking account that pays interest.

A U.S.Series EE savings bond offers reasonably high rates and good liquidity.

Which of the following statements is true concerning overdrafts?

One motive for holding cash is to undertake transactions.

A "substitute check" is

A bank reconciliation involves converting a checking account to a savings account.

Financial Planning: Why Its Important to You

The Time Value of Money: All Dollars Are Not Created Equal

Financial Statement and Budgets: Where Are You Now and Where Are You Going

Taxes: the Governments Share of Your Rewards

Short-Term Credit Management: Consumer Credit

Consumer Durables: the Personal Auto

Housing: the Cost of Shelter

Financial Markets and Instruments: Learning the Investment Environment

Investment Basics: Understanding Risk and Return

Stocks and Bonds: Your Most Common Investments

Mutual Fundsother Pooling Arrangements: Simplifying, Maybe Improving Investment Performance

Property and Liability Insurance: Protecting Your Lifestyle Assets

Health Care and Disability Insurance: Protecting Your Earning Capacity

Life Insurance and Estate Planning: Protecting Your Dependents

Retirement Planning: Planning for Your Long-Term Needs

Filters