261. (p. 557) Savings and loan associations are sometimes known as:
D. bankers’ banks.
262. (p. 557) __________ are nonprofit, member-owned financial cooperatives that offer a full variety of banking
services such as accepting deposits and making loans.
D. Mutual fund companies
263. (p. 557) While offering many of the services provided by commercial banks, _______ accept no deposits:
D. federally chartered banks
264. (p. 558) ____________ represent money set aside by corporations, nonprofit organizations, or unions to cover
part of the retirement needs of their members.
D. Term-life retirement funds
265. (p. 557) Savings and loans failures soared in the early 1980s because:
D. investors identified more profitable opportunities.
266. (p. 554-557) Commercial banks, savings and loan associations, and credit unions:
A. specialize solely in loaning money for home mortgages.
267. (p. 554-555) A comparison of a NOW account and a savings account reveals that:
A. while a NOW account pays interest, a savings account does not.
268. (p. 557) Originally, savings and loan associations:
D. handled the overflow of business from national and state banks.
269. (p. 558) Which of the following represents a nonbank?
D. thrift institutions
270. (p. 557) During the early 1980s, the federal government responded to the severe problems plaguing savings
and loan associations by:
D. declaring a moratorium on S & L debt payments, and limiting the amount of funds depositors could
withdraw from an S & L in any given 24-hour period.
271. (p. 554) Dorian has a checking account with the Progress National Bank that allows her to earn an attractive
rate of interest on the money in her account. The account offers free and unlimited checking, but requires
Dorian to maintain a high minimum balance. Dorian’s account represents a(n):
D. reserve fund.
272. (p. 555) Herb has $20,000 in an interest-bearing time deposit with the Applebottom Bank and Trust
Company. While earning a relatively attractive rate of interest, Herb had to agree to not withdraw any of the
funds until the end of a three year period. Herb’s investment represents a(n):
A. passbook savings account.
273. (p. 556, Spotlight on Small Business box) According to the boxed material entitled “Spotlight on Small Business” in
Chapter 20, when small businesses need to obtain a loan, they will find that:
A. large banks are actually more willing to provide them with funds than small banks, because big banks are
more diversified and thus more willing to accept risk.
274. (p. 558) Pleased with the service provided by a national brokerage house when he bought and sold stocks and
bonds, Ted would like to have this brokerage firm handle more of his financial needs. If Ted explores the
services offered by such firms in more depth, he will find that:
A. federal laws prohibit brokerage firms from competing with banks, savings and loan associations, and credit
unions.
275. (p. 558) Shana works as an investment specialist for the Teamsters Union Central States Pension Fund. Her
job involves deciding how to invest the contributions paid into the fund. Which of the following statements
about the Shana’s job are true?
D. The purpose of the investments Shana is making is to increase the current pay of union members.
276. (p. 559) Which of the following represent an independent agency of the U.S. government that insures bank
deposits?
D. Deposit Protection Fund
277. (p. 559) The FDIC insures individual accounts in member institutions up to a maximum of:
A. $10,000.
278. (p. 559) The ________ insures holders of accounts in savings and loan associations.
D. National Savings Deposit Insurance Cooperative
279. (p. 559) Designed to create more confidence in banking institutions, the FDIC and the FSLIC were
established:
A. soon after the Civil War.
280. (p. 559) The __________ insures deposits held in credit unions.
281. (p. 559) The Federal Deposit Insurance Corporation (FDIC) operates as a(n):
D. private nonprofit cooperative operated by member banks.
282. (p. 559) The purpose of creating the FDIC and the FSLIC was to:
D. help the Federal Reserve enforce reserve requirements.
283. (p. 559) Denise has $13,424 in a savings account with the District 113 Teacher’s Credit Union. While
economic conditions have caused the credit union to struggle financially, Denise need not worry because her
deposits are insured by the:
A. Federal Deposit Insurance Corporation (FDIC).
284. (p. 559) Alfredo banks at a commercial bank that advertises its membership in the FDIC. This means that:
D. the bank is a member of a larger consortium of banks that will enable Alfredo to cash checks and obtain
basic bank services in virtually any major city in the United States.
285. (p. 559) After Bill and Jillian deposited nearly $30,000 in a savings account at Farmers National Bank, the
bank failed and filed for bankruptcy. Because the Farmers National Bank participates in the FDIC, Bill and
Jillian:
D. will be eligible to recover 80 percent of the value of their deposit, less a $2,500 deductible.
286. (p. 559-560) Xavier deposited $75,000 in various individual accounts at his local credit union. He and his wife
also have a joint savings account worth $34,500. The total amount for which the National Credit Union
Administration (NCUA) would insure these deposits would be:
A. $0, because the NCUA does not insure individual credit union deposits.
287. (p. 560) Which federal law prohibited banks from owning brokerage firms?
D. Sherman Act
288. (p. 560) Which federal law allowed banks, insurance companies, and securities brokers to combine and sell
each other’s services?
D. Sherman Act
289. (p. 560, Legal Briefcase box) According to the “Legal Briefcase” box in Chapter 20, when a debit card is stolen, the
individual card holder:
C. is responsible for all of the purchases made with the card.
D. is responsible for the first $500 of purchases if the card is reported lost within two days.
290. (p. 561) Which of the following accurately presents a major difference between Internet banks and traditional
banks?
A. The government does not regulate Internet banks.
291. (p. 561) The dissatisfaction of Internet bank customers stems from:
D. their need for a convenient way to access their accounts.
292. (p. 561) A(n) __________ allows money to be exchanged electronically more quickly and more economically
than with paper checks.
D. telechecking system
293. (p. 561) __________ converts a traditional paper check into an electronic transaction at the cash register and
processes it through the Federal Reserve’s check clearing system.
D. Telecheck transmission
294. (p. 562) ___________ replace the typical magnetic strip on a credit or debit card with a microprocessor.
D. Check conversions
295. (p. 562) Which of the following can include an embedded radio-frequency antennae that allows the holder to
access secure areas in buildings or buy gas with the swipe of a card?
C. e-cards
D. check conversion cards
296. (p. 560) A likely result of legislation that allows banks, insurance companies, and securities brokers to
combine and compete with one another is:
A. deteriorating customer service.
297. (p. 562-563) On payday, some employers order their banks to electronically transfer funds from the business’
checking account to the employees’ checking account. This represents an example of a(n):
A. debit card system.
298. (p. 561) Retailers prefer the electronic check conversion system because:
299. (p. 561) Which of the following explains why Internet banks often offer their customers better interest rates
than traditional banks?
A. Internet banks provide their customers a greater sense of security.
300. (p. 560) Which of the statements best describes the types of business activities banks currently can enter?
A. Federal and state laws forbid banks from offering any type of services to customers that are not traditionally
associated with the banking industry.
301. (p. 562) When a customer purchases an item with a debit card:
A. they actually are taking out a short-term loan with 30 days to pay before any interest is charged.