unit 4 financing

Question 1

verifying the accuracy of your checking account balance in relation to the bank’s records as reflected in the bank statement, which is an itemized listing of all transactions in the checking account

Answer 1

account reconciliation

Question 2

a remote computer terminal that customers of depository institutions can use to make basic transactiona 24/7

Answer 2

automated teller machine (ATM)

Question 3

A comprehensive deposit account, offered primarily by brokerage houses and mutual funds

Answer 3

Asset management account (AMA)

Question 4

the routine, day to day administration of cash and near-cash resources (liquid assets) by an individual/family

Answer 4

cash management

Question 5

a check payable to a third party that is drawn by a bank on itself in exchange for the amount specified plus (often) a service fee of 5-10 dollars

Answer 5

cashier’s check

Question 6

a type of savings instrument issued by certain financial institutions in exchange for a deposit, which typically requires a minimum deposit and has a maturity ranging from 7 days-7+ years

Answer 6

certificate of deposit

Question 7

a personal check that is guaranteed (for a fee of $10-15 or more) by the bank on which it is drawn

Answer 7

certified check

Question 8

a booklet, provided with a supply of checks, used to maintain accurate records of all checking account transactions

Answer 8

checkbook ledger

Question 9

when interest earned in each subsequent period is determinde by applying the nominal (stated) rate of interest to the sum of the initial deposit and the interest earned in each prior period

Answer 9

compound interest

Question 10

specially coded plastic cards used to transfer funds from a customer’s bank account to the recipient’s account to pay for goods/services

Answer 10

debit cards

Question 11

an account held at a financial institution from which funds can be withdrawn on demand by the account holder, same as a checking account

Answer 11

demand deposit

Question 12

a type of insurane that protects funds on deposit against failure of the institution; can be insured by the FDIC & NCUA

Answer 12

deposit insurance

Question 13

the annual rate of return that is actually earned (or charged) durin the period the funds are held/borrowed

Answer 13

effective rate of interest

Question 14

systems used the latest telecommunications and computer technology to electronically transfer funds into and out of customers’ accounts

Answer 14

electronic funds transfer system (EFTSs)

Question 15

savings bond issued at face value by the US treasury, whose partially fixed rate provides some inflation protection

Answer 15

I Savings Bond

Question 16

online commercial bank

Answer 16

internet bank

Question 17

A federally insured savings account, offered by banks and other depository institutions that competes with money market mutual funds

Answer 17

money market deposit account (MMDA)

Question 18

a mutual fund that pools the funds of many small investors and purchases high-return, short-term marketable securities

Answer 18

money market mutual fund (MMMF)

Question 19

a checking account on which the financial institution pays interest; no legal minimum balance

Answer 19

negotiable order of withdrawal (NOW) account

Question 20

the promised rate of interest paid on a savings deposit or charged on a loan

Answer 20

nominal (stated) rate of interest

Question 21

the result of writing a check for an amount greater than the current account balance

Answer 21

overdraft

Question 22

an arrangement between the account holder and the depositoryinstitution whererein the institution automatically pays a check that overdraws the account

Answer 22

overdraft protection

Question 23

a savings bond issued in various denominnations by the US treasury

Answer 23

series EE bond

Question 24

an account ofered by credit unions that is similar to interest-paying checking accounts offered by other financial institutions

Answer 24

share draft account
Share-draft accounts do not have minimum balance requirements or charge account maintenance fees. They also earn interest, compounded on a quarterly basis.

Question 25

interest that is paid only on the initial amount of the deposit

Answer 25

simple interest

Question 26

an order made by an account holder instructing the depository institution to refuse payment on an already-issued check

Answer 26

stop payment

Question 27

a savings deposit at a financial institution, remains on deposit for a longer time than a demand deposit

Answer 27

time deposit

Question 28

a short-term (3-6 month maturity) debt instrument issued at a discount by the US treasury in the ongoing process of funding the national debt

Answer 28

US treasury bill (t-bill)

Question 29

a check sold (for a fee of 1-2%) by many large financial instituions, typically in denominations ranging from $20-100, that can be used for making purchases and exchanged for local currencies in most parts of the world

Answer 29

traveler's check

Question 30

either held in cash or can be readily convereted tinto cash with little-no loss in value

Answer 30

liquid assets

Question 31

- reduced costs of financing the massive federal budget deficit - help support the "too big to fail" banks

Answer 31

benefits of lower interest rates

Question 32

- reduce income to retirees and pension funds

Answer 32

costs of lower interest rates

Question 33

a substitute for cash, offered by commercial banks and other financial instituions such as savings, loans, and credit unions

Answer 33

interest checking account

Question 34

savings accounts are available at any time, but funds cannot be withdrawn by check, MMDAs require a fairly large minimum deposit ($1000+) and offer check writing privileges

Answer 34

savings account/money market deposit

Question 35

a savings instrument where funs are left on deposit for a stipulated period (one week-a year+,) imposes a penalty for withdrawing funds early, they vary by size and maturity and have no check-writing privileges

Answer 35

certificate of deposit

Question 36

short-term, highly marketable security issued by the US treasury (originally issued with maturies of 13-26 weeks)

Answer 36

US treasury bill

Question 37

the face value of a banknote, coin, or postage stamp

Answer 37

denominations

Question 38

long term security issued by the US treasury

Answer 38

US treasury note (T-bond)

Question 39

issued at a discount from face value by the US treasury, rate of interest is tied to US treasury securities, long a popular savings vehicle and matures to face value in approximately 5 years, sold in denominations of $25 or more

Answer 39

US Savings bond EE

Question 40

comprises all institutions that market various kinds of financial products (such as checking and savings accounts, credit cards, loans and mortgages, insurance, and mutual funds) and financial services (such as financial planning, securities brokerage, tax filing and planning,, estate planning, real estate, trusts, and retirement)

Answer 40

financial services industry

Question 41

- vast majority of financial transactions take place at depositorry financial institutions- - commercial banks (both physical and online), savings and loans associations, savings banks, and credit unions

Answer 41

depository financial institutions

Question 42

financial institutions that don't accept deposits like traditional banks

Answer 42

nondepository financial institutions

Question 43

provided to the depositor per insured bank rather than a deposit account, so the checking and savings accounts are insured as long as the maximum insurable amount per bank is not exceeded

Answer 43

deposit insurance

Question 44

as a depositor, it's possible to increase traditional $250,000 of traditional deposit insurance by opening accounts in different insurance by opening accounts in different depositor names at the same institution ex. a married couple can over on emillion by setting up several accounts: - one in the name of each spouse - joint account - separate trust or self directed retirement

Question 45

channels the savings of depositors primarily into mortgage loans for purchasing and improving homes, also offers many of the same checking, saving, and lending products as commercial banks & often pays slightly higher interest on savings as do commercial banks

Answer 45

savings and loan association

Question 46

offers checking and savings accounts and a full range of financial products and services; the only institution that can offer noninterest-paying checking accounts (demand deposits) and is also the most popular of the depository financial institutions

Answer 46

commercial bank

Question 47

most are mutual associations (their depositors are their owners and thus recieve a portion of the profits in the form of interest on their savings)

Answer 47

savings bank

Question 48

a nonprofit, member-owned financial cooperative that procides a full range of financial prodcuts and services to its members, who must belong to a common occupation, religious, or fraternal order/residential area, they are generally small institutions when compared to saving & loan assocations and commercial banks, they also offer interest-paying checking accounrs ( draft accounts) and a variety of saving and lending programs, because they are tun to benefit their members, they paay higher interest on savings and charge lower rates on loands than other depository financial institutions

Answer 48

credit union

Question 49

national credit union administration = ncua fdic= federal deposit insurance cooperation

Question 50

allow you to recieve automatic deposits or make payments that occur regularly

Answer 50

preauthoritized deposits and payments from EFTS (electronic funds transfer systems)

Question 51

- watch out for scammers - don't use public wi-fi for private banking - keep computer and mobile anti-virus software up to date - use a bank that supports multifactir autheticaton

Answer 51

financial planning tips

Question 52

- rented drawer in bank's vault so bank gets one key and you get one key and it can only be opened with both kets, often used for jewwelery, contracts, stock certificates, etc.

Answer 52

safe deposit box

Question 53

provide investment and estate planning afvice, managing and administering investments in a trust account or from an estate

Answer 53

trust services

Question 54

common requirement to maintain a min. baance of $500-$1000or more to avoid service charges in checking accounts

Question 55

- monthly fees - limitations on the number or type of transactions - atm access fees - not having mobile and online access - overdraft protection prices

Answer 55

red flags in bank accounts

Question 56

- no federal deposit insurance - no liquidity - fees

Answer 56

savings accounts red flags

Question 57

always write checks in ink, include the name of the person being paid, date, and amount on the check, sign the check the same way as the signature card as you filled out when opening the account, and note the check's purpose on it

Answer 57

check guidelines

Question 58

bounced check= not enough in the bank for the check (rip)

Question 59

itemized listing of all transactions in checking account checks written

Answer 59

monthly statements include