Unit 4 Flashcards
(50 cards)
You decide to open a savings account, and notice a sign in your bank that indicates deposits are FDIC insured. What protection does that give you?
If the bank fails, your deposits are protected up to $100,000
An example of blue chip stock might be…
A large, well-known company traded on the NYSE
Since bonds are considered amount the safest investments, you would expect that they would…
Have low interest rates
What condition is necessary for a fiat money system to work?
The government must control the money supply
Why is representative money more useful than commodity money?
Representative money is portable, durable, divisible, and acceptable. It can also be exchanged for something else of value
To finance the building of a new police station, a local government is most likely to issue a…
Municipal bond
In June, Leslie wins a cash prize of $2,000. She plans to use this money to pay her tuition bill in September. Leslie puts this money in a savings account because her main priority is…
Liquidity, since she’ll need to use he money in a short term
You are a financial advisor whose client is concerned about losing his investment if a company goes out of business. You advise him to buy…
Preferred stock
What did the Federalists believe about banking?
They believed that a centralized banking system was necessary
Near money includes…
Deposits in savings account and money market mutual funds
Erin borrowed $18,000 to buy a car. Her loan will be paid off in 5 years. By the time that she pays off the loan, she will have made $20,327 in payments. Why did she have to pay $2,327 in payments. Why did she have to pay $2,327 more than the price of the car?
She had to pay unrest of $2,327 for the privilege of borrowing the principal of $18,000
All of the following are low-risk investments EXCEPT…
Junk bonds
Your friend Jorge has just inherited $1,000 and would like to invest the money in the stock market. You suggest that he…
Contact a brokerage firm, who will put him in touch with a stockbroker
What happens when you make a purchase using a credit card?
The credit card issuer pays the store
American leaders in the early United States wanted to establish a stable banking system in order to…
Promote international trade and economic growth
Which of the following is NOT an example of liquid asset
A certificate of deposit
In the 1900s, which characteristic of money did the Russian currency lack?
Acceptability
Savings bonds differ from most other bonds in that…
The buyer does not receive periodic interest in payments in exchange for a Lowe purchase price
You borrow $500 form your parents to start a bagel delivery service. Your acting as…
An entrepreneur
You’re a financial advisor whose client wants a stock that pays regular dividends, you advise home to buy…
Income stock
Which of the following is an example of representative money
An IOU note
Which lender is most likely to charge you the highest interest rate on your loan
Finance company
The practice of restoring only a portion of deposits on hand is called
Fractional reserve banking
You do not have to pay state taxes in ingest earned on
Treasury bills
