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45. The _____ department of a bank provides investment and estate planning advice.
a. safe-deposit
b. electronic funds transfer
c. debit card
d. NOW account
e. trust services
46. A safe-deposit box in a bank can be opened only when the:
a. banker’s key is used.
b. account holder’s key is used.
c. keys of both the banker and the account holder are used.
d. key issued to the insurance company is used.
e. keys of both the banker and the insurance company are used.
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47. Jane is a college student who withdraws cash at least five times a week to meet her everyday expenses. Jane should
have a checking account with good:
a. asset management facilities.
b. automated teller machine facilities.
c. money market deposit facilities.
d. trust services.
e. mutual fund management facilities.
48. Factors that typically influence the choice of where to maintain a checking account are:
a. inflation, tax rates, and cost.
b. convenience, inflation, and services.
c. cost, inflation, and tax rates.
d. convenience, services, and cost.
e. services, insurance, and cost.
49. Whenever you write a check or make a deposit, an entry should be made in your:
a. deposit slip.
b. checkbook ledger.
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c. overdraft booklet.
d. balance sheet.
e. personal check.
50. A check you issued last week has been stolen. You can prevent the amount on the check from being withdrawn from
your account by an unauthorized person by:
a. writing a new check.
b. depositing the correct amount of money.
c. requesting a stop payment.
d. tearing up the check.
e. properly endorsing the check.
51. When doing an account reconciliation, interest earned on your account should be:
a. deducted from your checkbook ledger.
b. added to your checkbook ledger.
c. ignored because the bank has already recorded it.
d. listed as outstanding.
e. treated like a loan.
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52. A check you wrote to buy shoes last week has not yet been approved by the bank. It is said to be:
a. outstanding.
b. credited.
c. endorsed.
d. certified.
e. deposited.
53. You are going on an overseas trip, and you want to carry checks. You should purchase:
a. cashier’s checks.
b. certified checks.
c. conditional checks.
d. traveler’s checks.
e. guaranteed checks.
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54. Mary has calculated her adjusted balance as $500. She notices that her bank’s service charges are $20 for this period.
Mary’s ending balance in her bank account is:
a. $520.
b. $480.
c. $600.
d. $500.
e. $510.
55. The more frequently a bank compounds interest, _____ for a given nominal rate will be.
a. the higher the stated interest rate
b. the lower the inflation rate
c. the higher the effective rate
d. the lower the yield rate
e. the higher the normal rate
56. A lump-sum deposit of $8,000 left in a bank for 12 years at 9%, compounded annually, will result in an ending
balance of: (Select the closest answer.)
a. $11,600.
b. $16,640.
c. $22,504.
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d. $52,938.
e. $96,000.
57. Harry received a scholarship of $2,000. He plans to invest this money for 5 years at 8%, compounded annually. If he
accomplishes this, Harry will have an ending balance of: (Use time value tables or a financial calculator. Select the closest
answer.)
a. $2,160.
b. $2,520.
c. $2,608.
d. $2,938.
e. $3,162.
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58. At maturity, a deposit of $6,000 in a certificate of deposit (CD) for 10 years at 3% will be worth: (Select the closest
answer.)
a. $7,340.
b. $7,800.
c. $8,064.
d. $8,678.
e. $9,005.
59. John Anderson deposited $10,000 in a certificate of deposit (CD) for 3 years at 5%. At maturity, it will be worth: (Use
time value tables or a financial calculator. Select the closest answer.)
a. $10,500.
b. $10,725.
c. $11,400.
d. $11,580.
e. $12,400.
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60. The minimum denomination of T-bills is:
a. $25.
b. $50.
c. $100.
d. $500.
e. $1,000.
61. Funds invested in a _____ should not be withdrawn for a stated period in order to avoid an interest penalty.
a. savings account
b. U.S. Treasury bill
c. checking account
d. negotiable order of withdrawal (NOW) account
e. certificate of deposit
62. The interest earned on an individual’s _____ is free of state and local income taxes.
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c. term deposits
d. money market deposit accounts
e. time deposits
63. Which of the following savings vehicles is free of state and local income taxes?
a. Certificates of deposit
b. Money market mutual funds
c. Time deposits
d. Money market deposit accounts
e. I savings bonds
64. The financial crisis of 2008–2009 followed by low interest rates has been beneficial to:
a. borrowers.
b. retirees.
c. shareholders.
d. investors.
e. savers.
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65. Low interest rates:
a. increase the number of financial institutions.
b. do not impact the supply of credit.
c. increase the demand for lower-grade, riskier bonds.
d. decrease employment opportunities.
e. reduce asset prices in financial markets.
66. _____ is the routine, day-to-day administration of liquid assets by an individual or family.
a. Depository management
b. Resource management
c. Cash management
d. Bond management
e. Treasury management
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67. Individuals prefer to invest their savings in stocks rather than traditional instruments like Treasury bonds because
bonds have:
a. low interest rates.
b. high tax rates.
c. low GDP rates.
d. high effective rates.
e. high risk.
68. The percentage of _____ out of disposable income has decreased due to low interest rates.
a. savings
b. expenditure
c. taxable income
d. insurance
e. retirement funds created
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69. The Federal Deposit Insurance Corporation (FDIC) insures each _____ up to a stated maximum dollar amount at any
given financial institution.
a. depositor
b. account
c. shareholder
d. bank
e. financial transaction
70. ______ offer banking services but do not accept deposits like traditional banks.
a. Nondepository institutions
b. Stock brokerage firms
c. Nonprofit organizations
d. Credit bureaus
e. Mutual funds
71. Interest rates are the lowest on:
a. savings accounts.
b. regular checking accounts.
c. money market deposit accounts.
d. certificates of deposit.
e. money market mutual funds.
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72. Liquid assets include your:
a. money market deposit account.
b. 10-year Treasury bond.
c. 3-year certificate of deposit purchased in the current financial year.
d. Series EE U.S. savings bond.
e. I bonds.
73. A(n) _____ account is called a demand deposit.
a. checking
b. savings
c. asset management
d. time deposit
e. certificate of deposit
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74. Banks must notify customers ______ days before lowering rates on deposit accounts or certificates of deposit.
a. 30
b. 60
c. 15
d. 45
e. 10
75. It costs financial institutions more if their customers perform:
a. ATM transactions.
b. Internet transactions.
c. teller transactions.
d. check transactions.
e. electronic bill pay.
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76. Kate tends to issue checks quite often without having a sufficient balance in her account. She should look for an
account with a(n) _____ facility.
a. ATM
b. overdraft protection
c. trust services
d. mutual fund management
e. balance tracking
77. You are buying a large amount of merchandise through the mail from a dealer several hundred miles from you with
whom you have never dealt before. The dealer will probably require that you pay him with:
a. a certified check.
b. a credit card.
c. overdraft protection.
d. cash.
e. traveler’s checks.
78. People who do not have checking accounts often use:
a. cashier’s checks.
b. overdraft protection.
c. certified checks.
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d. demand deposits.
e. preauthorized deposits.
79. In account reconciliation, one of the steps in calculating the adjusted bank balance is:
a. deducting total withdrawals still outstanding from the bank balance.
b. deducting total deposits still outstanding from the bank balance.
c. adding the total credit card outstanding balance to the bank balance.
d. adding bank service charges to the bank balance.
e. subtracting interest paid on the account’s balance for the period.
80. Maggie wants to open a checking account that will be the least expensive, given her normal financial transactions. She
typically writes 15 checks a month and uses an ATM 35 times a month. Her monthly minimum checking balance falls to
about $350 on an average. Which of the following accounts would be least expensive for Maggie? (Show all your work.)
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81. Your checkbook balance shows $706.50. The bank statement shows $772.77. The bank paid $2.50 interest. Checks
1501 ($85.00), 1507 ($50.16), and 1511 ($20.50) are not shown on the statement. A service charge of $5.00 was levied by
the bank. You made an $85.00 deposit yesterday that is not on the statement. What is the reconciled balance? (Show all
work.)