Question 1

Which of the following is classified as a nondepository institution?

Accepted Answer

A)  Credit union 
B)  Insurance company 
C)  Commercial bank 
D)  Savings institution 
A)  Credit union 
B)  Insurance company 
C)  Commercial bank 
D)  Savings institution

Question 2

Lucky Louie has $10,000 that he wants to invest for 3 years but wants to take no risk on the investment.His best course of action would be to

Accepted Answer

A)  invest in a 3 year Treasury note. 
B)  invest in a blue chip stock portfolio. 
C)  put his money in a 3 year CD at his bank. 
D)  Both A and C are correct. 
A)  invest in a 3 year Treasury note. 
B)  invest in a blue chip stock portfolio. 
C)  put his money in a 3 year CD at his bank. 
D)  Both A and C are correct.

Question 3

A nondepository institution facilitating transactions in stocks or bonds is a(n)________.

Accepted Answer

The answer of A nondepository institution facilitating transactions in stocks...

Question 4

During the financial crisis that began in 2008,what was the key aspect in banks that made savers comfortable that their money was safe?

Accepted Answer

A)  Congress was watching over the banks 
B)  The Federal Reserve did not let any banks fail 
C)  Deposits were insured up to $250,000 by FDIC 
D)  Bailouts protected the savers 
A)  Congress was watching over the banks 
B)  The Federal Reserve did not let any banks fail 
C)  Deposits were insured up to $250,000 by FDIC 
D)  Bailouts protected the savers

Question 5

Savings institutions accept deposits and provide mortgage and personal loans to individuals.Another name for these financial institutions is

Accepted Answer

A)  trust institutions. 
B)  economy institutions. 
C)  insured institutions. 
D)  thrift institutions. 
A)  trust institutions. 
B)  economy institutions. 
C)  insured institutions. 
D)  thrift institutions.

Question 6

Finance companies are more selective in choosing the borrowers they serve,and therefore they usually charge lower interest rates than banks or credit unions.

Accepted Answer

A) True 
 B)False

Question 7

Juan has $1,000 that he would like to invest in a CD.His bank offers two alternatives,a one-year CD paying 6% or a two-year CD paying 9%per annum.Juan has been reading that interest rates are rising,and,based on his research,he estimates that by year-end the rate on one-year CDs will increase to 10%.What alternative would give Juan the most interest and what would the total interest be?

Accepted Answer

A)  Two one-year CDs returning $120 interest 
B)  Two one-year CDs returning $160 interest 
C)  One two-year CD returning $180 interest 
D)  One two-year CD returning $1,900 interest 
A)  Two one-year CDs returning $120 interest 
B)  Two one-year CDs returning $160 interest 
C)  One two-year CD returning $180 interest 
D)  One two-year CD returning $1,900 interest

Question 8

Use the following two columns of items to answer the matching questions below:
-securities firm

Accepted Answer

A) financial institutions that accept deposits and provide loans 
B) a nondepository institution that sells shares to individuals and uses the proceeds to invest in securities and create a mutual fund 
C) a nondepositary institution that provides insurance to protect against adverse events 
D) a nondepository institution that specializes in providing personal loans 
E) nondepository institutions that facilitate the purchase and sale of securities by firm or individuals
F)financial institutions that offer a diverse set of services 
A) financial institutions that accept deposits and provide loans 
B) a nondepository institution that sells shares to individuals and uses the proceeds to invest in securities and create a mutual fund 
C) a nondepositary institution that provides insurance to protect against adverse events 
D) a nondepository institution that specializes in providing personal loans 
E) nondepository institutions that facilitate the purchase and sale of securities by firm or individuals
F)financial institutions that offer a diverse set of services

Question 9

The risk-free rate on borrowed funds is determined by the ________ and ________ of funds.

Accepted Answer

The answer of The risk-free rate on borrowed funds is...

Question 10

Which of the following characteristics is common to both commercial banks and credit unions?

Accepted Answer

A)  Lower fees 
B)  Lower credit card rates 
C)  Insurance up to $250,000 
D)  Nonprofit 
A)  Lower fees 
B)  Lower credit card rates 
C)  Insurance up to $250,000 
D)  Nonprofit

Question 11

In saving or investing,the ________ the risk,the ________ the potential return.

Accepted Answer

A)  higher; higher 
B)  lower; lower 
C)  higher; lower 
D)  Both A and B are correct 
A)  higher; higher 
B)  lower; lower 
C)  higher; lower 
D)  Both A and B are correct

Question 12

A risk-free rate is a return on an investment that is guaranteed for a specified period.

Accepted Answer

A) True 
 B)False

Question 13

Banks do not charge fees for safety deposit boxes.

Accepted Answer

A) True 
 B)False

Question 14

List four types of financial institutions that you have made use of or might deal with in the future.

Accepted Answer

Finance companies,securities f

Question 15

Describe four factors you should consider when choosing a financial institution.

Accepted Answer

Several answers are acceptable

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The risk-free rate on borrowed funds is determined by

Accepted Answer

A)  the Federal Reserve. 
B)  Congress. 
C)  supply and demand. 
D)  the banking system. 
A)  the Federal Reserve. 
B)  Congress. 
C)  supply and demand. 
D)  the banking system.

Question 18

Use the following two columns of items to answer the matching questions below:
-depository institutions

Accepted Answer

A) financial institutions that accept deposits and provide loans 
B) a nondepository institution that sells shares to individuals and uses the proceeds to invest in securities and create a mutual fund 
C) a nondepositary institution that provides insurance to protect against adverse events 
D) a nondepository institution that specializes in providing personal loans 
E) nondepository institutions that facilitate the purchase and sale of securities by firm or individuals
F)financial institutions that offer a diverse set of services 
A) financial institutions that accept deposits and provide loans 
B) a nondepository institution that sells shares to individuals and uses the proceeds to invest in securities and create a mutual fund 
C) a nondepositary institution that provides insurance to protect against adverse events 
D) a nondepository institution that specializes in providing personal loans 
E) nondepository institutions that facilitate the purchase and sale of securities by firm or individuals
F)financial institutions that offer a diverse set of services

Question 19

Which of the following is not a disadvantage of using ATM cards?

Accepted Answer

A)  Forgetting to record the transaction 
B)  Fees from your bank and other banks for using out-of-network machines 
C)  Increased fees if you make too many transactions per period 
D)  Difficulty of withdrawing funds 
A)  Forgetting to record the transaction 
B)  Fees from your bank and other banks for using out-of-network machines 
C)  Increased fees if you make too many transactions per period 
D)  Difficulty of withdrawing funds

Question 20

The term structure is often based on rates of return or yields offered by ________ which are ________ issued by the U.S.Treasury with different maturities.

Accepted Answer

A)  Treasury securities; mutual fund securities 
B)  Treasury securities; equity securities 
C)  Treasury securities; debt securities 
D)  None of the above. 
A)  Treasury securities; mutual fund securities 
B)  Treasury securities; equity securities 
C)  Treasury securities; debt securities 
D)  None of the above.

Which of the following is classified as a nondepository institution?

Lucky Louie has $10,000 that he wants to invest for 3 years but wants to take no risk on the investment.His best course of action would be to

A nondepository institution facilitating transactions in stocks or bonds is a(n)________.

During the financial crisis that began in 2008,what was the key aspect in banks that made savers comfortable that their money was safe?

Savings institutions accept deposits and provide mortgage and personal loans to individuals.Another name for these financial institutions is

Finance companies are more selective in choosing the borrowers they serve,and therefore they usually charge lower interest rates than banks or credit unions.

Use the following two columns of items to answer the matching questions below: -securities firm

The risk-free rate on borrowed funds is determined by the and of funds.

Which of the following characteristics is common to both commercial banks and credit unions?

In saving or investing,the the risk,the the potential return.

A risk-free rate is a return on an investment that is guaranteed for a specified period.

Banks do not charge fees for safety deposit boxes.

List four types of financial institutions that you have made use of or might deal with in the future.

Describe four factors you should consider when choosing a financial institution.

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

The risk-free rate on borrowed funds is determined by

Use the following two columns of items to answer the matching questions below: -depository institutions

Which of the following is not a disadvantage of using ATM cards?

The term structure is often based on rates of return or yields offered by which are issued by the U.S.Treasury with different maturities.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

Exam 5: Banking and Interest Rates

Which of the following is classified as a nondepository institution?

Lucky Louie has $10,000 that he wants to invest for 3 years but wants to take no risk on the investment.His best course of action would be to

A nondepository institution facilitating transactions in stocks or bonds is a(n)________.

During the financial crisis that began in 2008,what was the key aspect in banks that made savers comfortable that their money was safe?

Savings institutions accept deposits and provide mortgage and personal loans to individuals.Another name for these financial institutions is

Finance companies are more selective in choosing the borrowers they serve,and therefore they usually charge lower interest rates than banks or credit unions.

Use the following two columns of items to answer the matching questions below: -securities firm

The risk-free rate on borrowed funds is determined by the ________ and ________ of funds.

Which of the following characteristics is common to both commercial banks and credit unions?

In saving or investing,the ________ the risk,the ________ the potential return.

A risk-free rate is a return on an investment that is guaranteed for a specified period.

Banks do not charge fees for safety deposit boxes.

List four types of financial institutions that you have made use of or might deal with in the future.

Describe four factors you should consider when choosing a financial institution.

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

The risk-free rate on borrowed funds is determined by

Use the following two columns of items to answer the matching questions below: -depository institutions

Which of the following is not a disadvantage of using ATM cards?

The term structure is often based on rates of return or yields offered by ________ which are ________ issued by the U.S.Treasury with different maturities.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

The risk-free rate on borrowed funds is determined by the and of funds.

In saving or investing,the the risk,the the potential return.

The term structure is often based on rates of return or yields offered by which are issued by the U.S.Treasury with different maturities.