Unit 4

Question 0

A type of financial institution that has LOANS as the primary financial assets is a _________.

Answer 0

Bank

Question 1

What is a financial institution?

Answer 1

Any institution (public or private) that collects funds and invests them in financial assets

Question 2

A type of financial institution that is a FOR PROFIT organization is a ______.

Answer 2

Bank

Question 3

A type of financial institution that is owned by INVESTORS but can be either STATE or FEDERAL is a _________.

Answer 3

Bank

Question 4

A type of financial institution that has members with a COMMON THEME and focuses more on MEMBERS’ SERVICES is a __________.

Answer 4

Credit Union

Question 5

A type of NON-PROFIT financial institution that has a focus on CONSUMER (individual) LOANS is a __________.

Answer 5

Credit Union

Question 6

A type of financial institution that was originally ONLY REAL ESTATE is a __________.

Answer 6

Savings & Loans

Question 7

Only ____% now can be car/commercial loans in Savings & Loans.

Answer 7

20%

Question 8

A type of financial institution that has federal insurance for bank deposit accounts is __________.

Answer 8

FDIC

Federal Deposit Insurance Corporation

Question 9

FDIC insures up to $________ at each bank.

Answer 9

$250,000

Question 10

Financial institutions insure/COVER:

Answer 10

Deposit accounts

Checking, certificate of deposit, saving, money market, etc

Question 11

Financial institutions do NOT insure/COVER:

Answer 11

Any type of investment
Any type of money market FUND
Theft
Anything in safety deposit box

Question 12

A type of financial institution that has federal insurance for credit unions is __________.

Answer 12

NCUA

National Credit Union Administration

Question 13

A PASSBOOK is also known as a __________ and is a:

Answer 13

Savings account

Booklet with transactions

Question 14

What is a DEPOSIT SLIP?

Answer 14

Paper filled out to put money INTO account

Question 15

What is STOP PAYMENT?

Answer 15

When you DON’T want to honor a check

Question 16

What is a BANK STATEMENT?

Answer 16

A monthly form with records for the activity in your deposit account

Question 17

What is a CANCELLED CHECK vs an OUTSTANDING CHECK?

Answer 17

Cancelled: A check that HAS BEEN PAID by the bank
Outstanding: a check that has not yet gone through the bank as a transaction

Question 18

What is KITING?

Answer 18

The process of TRANSFERRING MONEY to MORE THAN ONE BANK to make it look like you have more money than you really do

Question 19

What is RECONCILIATION?

Answer 19

The process of making sure your records MATCH the bank’s

Question 20

What is a SIGNATURE CARD?

Answer 20

A paper with a list of people authorized to SIGN CHECKS for your account

Question 21

What is an NSF Check?

Answer 21

Insufficient funds to cover check

Question 22

What is OVERDRAFT?

Answer 22

Taking more money out of your account than WHAT IS AVAILABLE

Question 23

What is ELECTRONIC BANKING?

Answer 23

Online banking service offered (EFT)

Question 24

What is a SAFE DEPOSIT BOX?

Answer 24

A box with valuable things locked inside

Question 25

What is an INSTALLMENT LOAN?

Answer 25

(Typically monthly) set payment over a certain amount of time (Ex. 3 yr payment over 36 installments)

Question 26

What is a MORTGAGE LOAN?

Answer 26

Loan to buy real estate (typically longer) | Most common ex.s 15 yrs & 30 yrs

Question 27

What is LINE OF CREDIT?

Answer 27

A revolving loan

Question 28

What is ANNUAL PERCENTAGE RATE (APR)?

Answer 28

The percentage you are laying on the loan

Question 29

What are SECURED LOANS vs UNSECURED LOANS?

Answer 29

Secured: lowest interest rate; if a property can be taken until it's paid off Unsecured: highest IR; can't take property as result of loan (ex. credit card)

Question 30

What is COLLATERAL?

Answer 30

Whatever thing(s) they can come take from you if a loan doesn't get paid

Question 31

What are FIXED RATES?

Answer 31

Where the interest rate stays the same for the entire life of the loan; prime lending rate & is reserved for best customers

Question 32

What are ADJUSTABLE RATES?

Answer 32

(Mortgage) | ARM; will typically adjust with federal loan rates

Question 33

What are BALLOONS?

Answer 33

Large payments due at the end of the loan

Question 34

What is an AMORTIZATION SCHEDULE?

Answer 34

A schedule that shows your remaining balance by payment

Question 35

What is a CHECK?

Answer 35

(Legal tender) | A form that transfers ownership of money

Question 36

What are MONEY ORDERS?

Answer 36

Certified payments ( = guarantee)

Question 37

What is a CASHIER'S CHECK?

Answer 37

A check written on the BANK'S FUNDS not your funds

Question 38

What are two forms of EFTs?

Answer 38

ACH (Automated Clearing House): 3rd party service that handles the actual transaction Wire Transfer: same as ^^^^ but happens through federal reserve bank itself

Question 39

What is an ENDORSEMENT?

Answer 39

A transfer of ownership

Question 40

What are the 3 types of endorsements we learned about?

Answer 40

``` Blank Endorsement: name only Special Endorsement: sign rights over to specifically someone else Restrictive Endorsement: restrict what can happen with the money ```

Question 41

What do you do for a BLANK ENDORSEMENT?

Answer 41

Just write your signature on the back of the check

Question 42

What do you do for a SPECIAL ENDORSEMENT?

Answer 42

Write your signature on the back of the check AFTER writing "Pay to Person's Name"

Question 43

What do you do for a RESTRICTIVE ENDORSEMENT?

Answer 43

Write your signature on the back of the check AFTER writing/specifying destination (ex. "For Deposit Only")