Exam 5: Banking Services and Managing Your Money

A mutual fund is a means by which investors with only a small amount of money can invest in a portfolio of securities.

The one-year loan rate for individuals is usually about the same as the one-year GIC rate.

An out-of-network ABM means

The key feature that makes Canada Savings Bonds better than Canada Premium Bonds is

The average term of debt held in a money market fund (MMF)is 90 days, making an MMF a safe place to invest short-term funds.

The Canada Deposit Insurance Corporation (CDIC)insures deposits at chartered banks up to

Bank ABM charges may be substantial if you make many transactions monthly at an ABM machine that is not sponsored by your bank.

In planning a money management strategy, which of the following is most important?

A financial conglomerate offers a diverse set of products and services that include which of the following?

Lorenzo is considering two banks for his chequing account. Thrift Bank requires a minimum deposit of $100, charges a monthly fee of eight dollars, plus $0.50 per cheque. Merchants Bank also requires a minimum deposit of $100, charges no monthly fee, but charges one dollar per cheque. How many cheques would Lorenzo need to write each month to make Thrift Bank less expensive to use than Merchants Bank?

Compare and contrast the following investments: GIC, Canada Savings Bond, Canada Premium Bond, and money market fund. State the important investment features of each investment product, how they are likely to be used in managing your cash, and what financial institution you would purchase them from.

Wanda Clark expects interest rates to decline in the next few months. Which of the following options would most likely give her the best return?

Credit unions are non-profit depository institutions that serve members who have a common affiliation (such as the same employer or same community).

You have $3,000 that you may need any day to replace the furnace in your house. Which of the following would be the best place to put the $3000?

Some banks require a minimum deposit of $1000 or more before they pay any interest.

A guaranteed investment certificate guarantees or locks in an interest rate for a specified time and rate.

Jeff put $50 into a chequing account with a balance of $600. He then withdrew funds using the ABM machine 14 times that month at a cost of $1.50 per withdrawal and wrote 12 cheques at a cost of $0.50 each. The account also has a monthly charge of $5. What are the total bank charges for the month?

Canada Deposit Insurance Corporation insures money on deposit at

Use of Financial Calculator TI BA II Plus required. Angela knows that the bank rate is 4.5 percent but is willing to accept twice the risk on a long-term investment for her retirement. How much more will she earn on a 22-year deposit of $5000 if she is willing to tolerate the higher risk over the guaranteed bank rate? (round your answer)

Investments with a higher risk of default pay higher rates of interest than those that are less risky.