Quiz 5

Question 1

What does the Federal Reserve Bank and D.O.T do ?

Answer 1

Back your money

Question 2

What does the bank protect ?

Answer 2

Theft
Us
Interest

Question 3

What are travel checks ?

Answer 3

The bank accept your checks

A replacement for cash so you don’t have to carry it

Question 4

Checking

Answer 4

M1 money 
Visa debt 
Checks 
Demand account 
Liquid asset

Question 5

Savings

Answer 5

M2 money
Higher interest
Take money out a minimum of 5 times month
Liquid asset (not as much, just thicker)

Question 6

Why do you only take money out of your saving 5 times a month ?

Answer 6

Helps you save
Helps banks
Reserves required

Question 7

Certification of Deposit (CD)

Answer 7

Pay higher rates
Frozen savings account
A savings account you can’t touch

Question 8

Can it be short or long term ?

Answer 8

Both

Question 9

If you were to take out money before the end of your time, what would you have to pay ?

Answer 9

Penalties

Question 10

What do most CD’s do ?

Answer 10

Lock in interest rate

Question 11

What is the number one way the bank make their money ?

Answer 11

Loans

Question 12

Paper money

Answer 12

Fiat

Question 13

Who issues the credit cards ?

Answer 13

The bank

Question 14

What is a credit ?

Answer 14

Payments per cardholder agreement with interest

Merchant fees: 2 1/2-3%

Question 15

What is a charge card ?

Answer 15

100% payed off each month
Annual fee: 4-5%
Example: Amex

Question 16

What is a debt card ?

Answer 16

A card used to withdraw money from a bank account

Question 17

What is a credit card ?

Answer 17

A card entitling its owner to buy goods and services based on the owner’s promise to pay for those goods and services

Question 18

Check fraud

Answer 18

Basically jail time

Question 19

What is repossession ?

Answer 19

Default on loans

Example: default on your car loan, the bank can take the car

Question 20

What is foreclosure ?

Answer 20

The seizure of property form the borrowers who repay their loans
Secure loans
Collateral

Question 21

What is a collateral ?

Answer 21

Anything you put up to secure a loan

Example: a collateral for a house loan is your house

Question 22

What would probably would qualify for loan/mortgage ?

Answer 22

Prequalified

Question 23

What is a appraisal ?

Answer 23

Estimation of value

Question 24

What is a principle ?

Answer 24

The amount of money borrowed

Question 25

What is an interest ?

Answer 25

The price paid for the use of borrowed money

Question 26

How much does the bank have of your money ?

Answer 26

Only a fraction of your money

Question 27

Why wouldn't a business decrease in a recession ?

Answer 27

They are always in a business cycle

Question 28

What is cash poor ?

Answer 28

Companies would become cash poor because of expansion

Question 29

(Example from class) | Record year for a new shoe store ...... what could happen ?

Answer 29

Expand- more $$$ - more product - more employees - more infrastructure

Question 30

Who is the #1 interest ?

Answer 30

Shareholders

Question 31

What are shareholders ?

Answer 31

People who own stock

Question 32

What happens if companies keep expanding ?

Answer 32

The greater the risk

Question 33

What is Cash is King ?

Answer 33

Expression sometimes used in analyzing businesses or investments portfolios Example: A house is selling at $300,000, someone offers to pay the full 300,00 next week but someone else has the a check ready but for $275,000 ..... you take the $275,000

Question 34

An institution for receiving, keeping, and lending money

Answer 34

Bank

Question 35

A widespread panic in which many people try to redeem their paper money at the same time

Answer 35

Bank run

Question 36

The direct exchange of one set of goods or services for another

Answer 36

Barter

Question 37

A bank that can lend to other banks in time of need

Answer 37

Central bank

Question 38

A person or institution to whom money is owed

Answer 38

Creditor

Question 39

Coins and paper bills used as money

Answer 39

Currency

Question 40

Failing to pay back loans

Answer 40

Default

Question 41

Money in a checking account that can be paid out "on demand" or at any time

Answer 41

Demand deposit

Question 42

Objects that have value because a government has decreased that they are an acceptable means to pay debts

Answer 42

Fiat money

Question 43

A banking system that keeps only a fraction of its funds on hand and lends out the remainder

Answer 43

Fractional reserve banking

Question 44

A monetary sytem in which paper money and coins had the value of certain amounts of gold

Answer 44

Gold standard

Question 45

A paper currency issued during the civil war | slag for cash

Answer 45

Greenback

Question 46

The ability to be used as, or directly converted into, cash

Answer 46

Liquidity

Question 47

A bank that belongs to the Federal Reserve System

Answer 47

Member bank

Question 48

Anything that serves as a medium of exchange, a unit of account, and a store of value

Answer 48

Money

Question 49

All the money available in the United States economy

Answer 49

Money supply

Question 50

A specific type of loan that is used to buy real estate

Answer 50

Mortgage

Question 51

A bank charted by the federal government

Answer 51

National Bank