Exam 5: Banking Services and Managing Your Money

Bank fees for the use of an automatic banking machine (ABM)are not usually a large consideration in choosing a bank with which to do business.

Which would be the least effective way to manage expenses when travelling internationally?

Use of Financial Calculator TI BA II Plus required. A bank chequing account charges a service fee of $12 per month. What would be the rate of interest you would need to earn from the bank on a $1000 deposit annually to cover the service charges?

Depository institutions are financial institutions that accept deposits (that are insured up to a maximum level)from individuals or firms and provide loans.

Web-based banks may charge less in fees but also pay less interest on deposits because they have no branch expenses.

Guaranteed investment certificates (GICs)with shorter maturity dates tend to pay higher interest rates than those with longer maturity dates.

Your ability to cover any short-term cash deficiencies is called

Debit cards allow you to pay for a purchase later when the bill arrives.

You can be assured that if your ABM query shows you have a certain balance in your chequing account, that figure is more accurate than the amount in your cheque register.

Jack has $1000 that he wishes to invest for the next two years. One-year GICs are currently paying eight percent while two-year GICs are paying 12 percent. Economists are predicting that interest rates will rise by the end of the year. What is the minimum interest rate Jack would need in year two, to make the one-year GIC better than the two-year GIC?

Non-depository institutions are financial institutions that provide various financial services, but their deposits are not CDIC insured.

A series of decisions made over a short-term period regarding cash inflows and outflows is called

Your chartered bank is offering a one-year GIC with an interest rate of two percent, and a one-year cashable GIC for one and a half percent. Canada Savings Bonds (CSB)are paying one percent. You have $10 000 to invest of which you feel $5 000 is ample for emergency fund purposes. How should you invest your funds given the options above?

Stopping payment on a cheque

The difference between a bank and a trust company is that the trust company can provide estate planning and administrative services.

Since rates and fees differ only slightly between all national banks, there is little need to consider these when choosing your financial institution.

Which of the following is a depository institution?

Banks always pay more interest on chequing deposits than they do on savings accounts deposits.

An example of a depository financial institution is an insurance company.

A good reason my cheque register may not be in balance with my bank statement is that I did not account for bank charges.