Exam 5: Banking and Interest Rates

Introductory high interest rates paid by financial institutions for new accounts are usually a good deal and you should therefore take advantage of them without question.

When the Fed loosens monetary policy,interest rates will ________ and money supply will go ________.

When the Federal Reserve buys or sells Treasury securities to affect the money supply,it uses

When the Federal Reserve wishes to ________ interest rates,it ________ the amount of funds at commercial banks.

Which of the following is not a service provided by a commercial bank?

A ________ is a check that is written on behalf of a person to a specific payee and will be charged against a financial institution's account.

To join a credit union,you need to

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

A certificate of deposit guarantees or locks in an interest rate for a specified time and rate.

Which of the following is not a service that a depository institution might offer?

Interest rate changes are affected by the relationship of the total supply of funds provided by all investors and the total demand for funds by all borrowers.

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

Use the following two columns of items to answer the matching questions below: -finance company

If you were taking out a personal loan,the highest rate would probably be charged by a

Which of the following is not an advantage of using ATM cards?

The relationship between risk and return

Securities firms primarily sell insurance to protect individuals from adverse events.

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

The opening balance in your checking account was $1000.During the month you had the following activity: wrote two checks for $45.00 and $75.00 but only the first one cleared; had two debit card transactions for $50 and $35.20; received a bank charge for the account of $6,deposited a check you received from a friend for $100 but it did not clear by month end.What is your month end account balance?

Describe how interest rates affect your personal budget,income statement,and balance sheet.What account groups do they affect? Give two specific examples.