Personal Finance 13th Edition Garman Test Bank 1

Chapter 05—Managing Checking and Savings Accounts
PERSONAL FINANCE 13TH EDITION GARMAN

TEST BANK
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1. The goal of monetary asset management is to maximize interest earnings and minimizing fees while keeping funds safe
and readily available.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Identify the goals of monetary asset management and the sources of such financial
services
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 5.1
DATE CREATED: 1/20/2017 12:20 AM
DATE MODIFIED: 1/20/2017 12:24 AM
2. In monetary assert management, safety means the speed and ease with which an asset can be converted to cash.
a. True
b. False
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
services
KEYWORDS: Bloom’s: Remembering
OTHER: Analytic
Copyright Cengage Learning. Powered by Cognero. Page 1
NOTES: 5.1 safety is freedom from financial risk.

3. Monetary asset management includes setting money aside in a savings account for use later when spending or
investing.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
services
OTHER: Analytic
NOTES: 5.1
4. Monetary asset management focuses primarily on funds kept readily available for investments.
a. True
b. False
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
services
OTHER: Analytic
NOTES: 5.1 monetary asset management focuses on funds kept for day-to-day living expenses,
emergencies, and savings and investment opportunities.
5. Liquidity is the speed and ease with which an asset can be converted to cash.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy

services
OTHER: Analytic
NOTES: 5.1
6. Unlike other providers of financial services, depository institutions can both take deposits and make loans to
consumers.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
services
NATIONAL STANDARDS: United States - United States - BB_3 - Critical Thinking
OTHER: Analytic
NOTES: 5.1
7. Today, even stock brokerages and insurance companies provide certain products for use in monetary asset management.
a. True
b. False
ANSWER: a
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1
8. Credit unions typically offer the widest variety of financial services.

a. True
b. False
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
services
OTHER: Analytic
NOTES: 5.1 commercial banks offer the widest variety.
9. Commercial banks typically offer the widest variety of financial services.

a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
services
OTHER: Analytic
NOTES: 5.1
10. The primary focus of mutual savings banks is to accept deposits from consumers and provide mortgage and consumer
loans.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
services

OTHER: Analytic
NOTES: 5.1
11. Deposits in credit unions with federal charters are insured through the National Credit Union Share Insurance Fund
(NCUSIF).
a. True
b. False
ANSWER: a
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1
12. Mutual savings banks are called "mutual" because the depositors own the institution and share in the earnings.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
services
OTHER: Analytic
NOTES: 5.1
13. Credit unions with federal charters have their accounts insured through the FDIC.
a. True
b. False
ANSWER: b
POINTS: 1
DIFFICULTY: Easy

services
OTHER: Analytic
NOTES: 5.1 they are insured through the National Credit Union Share Insurance Fund (NCUSIF).
14. The total protection an individual might have with any institution, including all its branches, is $250,000 with no more
than $125,000 each on single-ownership and joint accounts.
a. True
b. False
ANSWER: b
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1 the total protection can be $250,000 on individual and joint accounts.
15. A mutual fund is an investment company that raises money by selling shares to the public and then invests that money
in a diversified portfolio of investments.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
services
OTHER: Analytic
NOTES: 5.1

16. One can increase the amount of money covered by FDIC insurance by dividing his or her money among different
branch offices of the same depository institution.
a. True
b. False
ANSWER: b
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1 you must spread funds across several institutions in order to expand your
insurance coverage.
17. Money deposited in mutual funds is insured by the federal government.

a. True
b. False
ANSWER: b
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1 the federal deposit insurance programs only cover funds in accounts at depository
institutions.
18. A stock brokerage firm is a licensed financial institution that specializes in selling and buying stocks, bonds, and other
investment alternatives.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
services


OTHER: Analytic
NOTES: 5.1
19. Stock brokerage firms are federally insured institutions.

a. True
b. False
ANSWER: b
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1 the federal deposit insurance programs only cover funds in accounts at depository
institutions.
20. Stock brokerage firms earn commissions on clients' stock transactions.

a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
services
OTHER: Analytic
NOTES: 5.1
21. Checks allow you to transfer funds from your account to other people and organizations.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Understand and employ the various types of accounts available to meet the goals of
monetary asset management
OTHER: Analytic
NOTES: 5.2
22. The only reason to have a checking account is so that one has an account for writing checks.
a. True
b. False
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2 checking accounts may earn interest.
23. When you use a debit card, funds are instantaneously removed from your account.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
24. Checking accounts that pay no interest are called NOW accounts.
a. True
b. False
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2 they are called demand-deposit accounts.
25. The interest rate you earn on your checking and savings account can vary with the amount you have in the accounts.
a. True
b. False
ANSWER: a
POINTS: 1
REFERENCES: Understand and employ the various types of accounts available to meet the goals
of monetary asset management
OTHER: Analytic
NOTES: 5.2
26. A checking account is sometimes called a transaction account.

a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic

NOTES: 5.2
27. A share draft account is the credit union version of a NOW account.
a. True
b. False
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2
28. Share draft accounts at credit unions are generally more expensive than NOW accounts at commercial banks.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 credit unions generally charge the lowest fees of all depository institutions.
29. NOW accounts may pay slightly higher interest rates on larger balances.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy

OTHER: Analytic
NOTES: 5.2
30. NOW accounts get their name because they are considered demand deposits.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 NOW stands for negotiable order of withdrawal and is the type of checking account
that pays interest.
31. College students who are independent of their parents may qualify for very low-cost lifeline banking accounts.
a. True
b. False
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2
32. NOW accounts and share draft accounts with tiered interest will pay higher interest rates on larger balances.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom's: Understanding
OTHER: Analytic
NOTES: 5.2
33. Acceptance for a lifeline banking account is dependent on one's income and net worth.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
34. A stop-payment order works only if the check has not yet cleared your financial institution.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
35. There are no fees charged for a stop-payment order.

a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 such orders expire after six months unless renewed.
36. A cashier’s check is drawn on the account of the financial institution itself.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: 5.2
NOTES: Analytic
37. Fees of no more $10 are generally charged for money orders, certified checks and cashier's checks.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 fees are based on the amount of the instrument and can be much higher.


38. If your checking account balance drops to less than perhaps $50 at any point during a month you would likely be
better off with a minimum deposit account in order to avoid fees.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 an average-balance account would be better in this situation as your average will be
higher than your lowest balance.
39. A money order is a checking instrument bought for a particular amount.

a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
40. When a bank offers a "free" checking account, that means there are no fees for writing bad checks or using another
bank's ATM.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 "free" only relates to the assessment of monthly service charges.
41. Funds on deposit in a savings account are considered time deposits rather than demand deposits.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
42. Funds on deposit in a savings account are considered demand deposits.

a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 they are considered time deposits.
43. Time deposits are savings that are expected to remain on deposit in a financial institution for an extended period.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
44. Demand deposits are savings that are expected to remain on deposit in a financial institution for an extended period.
a. True
b. False
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2 time deposits are expected to remain on deposit for an extended period of time.
45. Institutions usually have a rule requiring that time deposit account holders give 30 to 60 days notice for withdrawals,
although this restriction is seldom enforced.
a. True
b. False
ANSWER: a
POINTS: 1
LEARNING OBJECTIVES: United States - BB_3 - Critical Thinking
OTHER: Analytic
NOTES: 5.2


46. Time deposits specify a period that the savings must be left on deposit, such as six months or three years.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 only fixed-time deposits such as CDs have this requirement.
47. Fixed-time deposits specify a period of time that the savings must be left on deposit.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
48. Institutions have a rule requiring that savings account holders give 30 to 60 days' notice for withdrawals.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy

OTHER: Analytic
NOTES: 5.2
49. A long-term, fixed-rate certificate of deposit would be most appropriate when interest rates are moving up.
a. True
b. False
ANSWER: b
POINTS: 1
KEYWORDS: Bloom’s: Applying
OTHER: Analytic
NOTES: 5.2 fixed-rates in a market where rates are rising result in locking-in the lower initial rate.
50. In general, the shorter the maturity time on a certificate of deposit, the higher the rate of interest that will be paid.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 the opposite is true as long-term CDs have higher rates.
51. If one believes interests rates will move lower in the months ahead, he or she should invest in long-term, fixed-rate
savings investments.
a. True
b. False
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2
52. It is highly recommended that CD investments be made at local institutions, even though some yield may be
sacrificed.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 there is no need to have a local institution for CDs as you will not have access to the
funds.
53. The interest rate in force when a CD is purchased typically remains fixed for the entire term of the deposit.
a. True
b. False
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2
54. Interest rates on longer-term CDs are usually higher than the comparable rates on shorter-term instruments.
a. True
b. False
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2
55. Bump-up CDs allow savers to bump up the interest rate once to a higher market rate.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
56. Money withdrawn from a CD before the end of the specified time period is subject to interest penalties.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2


57. While the majority of certificates of deposit pay a fixed rate of interest, variable-rate certificates of deposit are
available.
a. True
b. False
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2
58. It is possible to lose money on a certificate of deposit if the early withdrawal penalty is greater than the interest
earned.
a. True
b. False
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2
59. CD laddering is a technique that smoothes out the fluctuations in interest rates and lowers inflation rate risk.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy

OTHER: Analytic
NOTES: 5.2
60. The safest type of endorsement on a check is a blank endorsement.

a. True
b. False
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2 the safest type of endorsement is a restrictive endorsement, blank endorsements are
the least safe.
61. Checks mailed to the bank for deposit should always be endorsed with a restrictive endorsement.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
62. A check with a blank endorsement contains only the payee's signature on the back.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
63. Writing a "bad check" can be very expensive because of fees assessed by both the bank and the payee.
a. True
b. False
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2
64. If you have an automatic overdraft loan agreement with your bank, money will be borrowed from your MasterCard or
Visa as a cash advance when you write a bad check.
a. True
b. False
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2

65. An automatic funds transfer agreement is usually the most expensive way to avoid bad check fees.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 “opt-in” overdraft/bounce protection can be the most expensive.
66. ”Opt-in” overdraft/bounce protection can be very helpful if the institution will honor your debit card even if you have
insufficient funds.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 if the institution honors your card you may have to pay a fee for every single overdraft
as you are unaware of the lack of sufficient funds.
67. Periodically, you should conduct an account reconciliation in which you compare your records with your bank's
records.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy

OTHER: Analytic
NOTES: 5.2
68. A person whose income is dependent on commissions generally needs more readily available emergency funds than a
salaried employee.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
69. The more frequent the compounding, the greater the effective return for the saver.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
70. One should accumulate enough savings to cover living expenses for six to nine months.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 experts recommend an emergency fund of from three to six months of expenses.
71. Brokered certificates of deposit are available through stockbrokers.

a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
72. A grace period is the time period in days during which deposits or withdrawals can be made and still earn the same
interest as other savings from a given day of the interest period.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2

73. The Truth in Savings Act requires depository institutions to disclose a standardized rate of interest so that depositors
can easily compare various savings options.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - United States - BB_1 - Legal
OTHER: Analytic
NOTES: 5.2
74. The term money market account describes a variety of high-interest earning accounts that normally have unlimited
check-writing privileges.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 check-writing privileges are generally limited per month.
75. If the balance on either a super NOW account or a money market deposit account falls below a specified level, the
account generally earns interest at the lower rate paid on a regular NOW account.
a. True
b. False
ANSWER: a
POINTS: 1

OTHER: Analytic
NOTES: 5.2
76. Completing a signature card is part of the process when opening a checking account.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Establish ownership of assets wisely
OTHER: Analytic
NOTES: 5.3
77. A joint account that gives each owner access to the account (without the other's signature) is called a joint tenancy
account with right of survivorship.
a. True
b. False
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.3
78. A payable-on-death designation can be used to set up an individual account that automatically goes to another person
when you die.
a. True
b. False
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.3
79. In community property states, the rights of the husbands and wives are unequally protected.
a. True
b. False
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.3 the rights of spouses are equal in these states.
80. A tenancy by the entirety account may be opened only by spouses.

a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.3

81. Money market deposit accounts are normally federally insured whereas money market mutual funds are not federally
insured.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
82. Money market mutual funds that buy only U.S. government securities are virtually risk-free.
a. True
b. False
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2
83. An asset management account is a multiple-purpose, coordinated package that provides a wide variety of financial
services.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2
84. Everyone should use an asset management account to simplify their monetary asset management.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 these accounts are most appropriate for those who typically have $10,000 or more in
monetary assets
85. Everything else being the same, an investor would prefer an asset management account that "sweeps" weekly rather
than daily.
a. True
b. False
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 more frequent sweeps make the most of the benefits of these accounts.
86. Electronic funds transfers (EFTs) move money electronically between accounts rather than by check or cash.
a. True
b. False
ANSWER: a
POINTS: 1
REFERENCES: Describe your legal protections when conducting monetary asset management
electronically
OTHER: Analytic
NOTES: 5.4
87. The best banking account PIN numbers and passwords are those that are easy to remember.
a. True
b. False
ANSWER: b
POINTS: 1
electronically
OTHER: Analytic
NOTES: 5.4 the best PIN numbers and passwords are as complicated as allowable by your banking
institutions.
88. ATM transaction fees can be assessed when you make a purchase via a point-of-sale terminal at a retail store.
a. True
b. False
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4 ATM fees are assessed when you use an automated teller machine to conduct a
withdrawal transaction.
89. Retail transaction fees can be assessed when you make a purchase via a point-of-sale terminal at a retail store.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4
90. When a customer uses a debit card to pay for a purchase, funds must be paid as of the next due date on the account.
a. True
b. False
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4 debit card usage is covered immediately by a transfer out of the user's checking
account.
91. ATMs can be used to withdraw funds from a money market mutual fund.
a. True
b. False
ANSWER: b
POINTS: 1
electronically
OTHER: Analytic

NOTES: 5.4 ATMs are only available in conjunction with accounts at depository institutions.
92. Your first line of defense against unauthorized use of your banking accounts is prompt examination of your periodic
statement provided by your banking institution.
a. True
b. False
ANSWER: a
POINTS: 1
electronically
OTHER: Analytic
NOTES: 5.4
93. Some stored value cards can be "reloaded" with additional funds.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4
94. Electronic benefits transfer (EBT) cards are used by the government to pay military personnel and provide Social
Security and other government benefits.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4
95. When you sign up for electronic banking services, the depository institution must inform you of your rights and
responsibilities in a written disclosure statement.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4
96. It is not required for an ATM or a POS terminal to provide a written receipt.
a. True
b. False
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4 receipts are required although many people ignore or toss them.
97. Your losses from a stolen ATM card are unlimited if you fail to report unauthorized use within 30 days after your
statement is mailed to you.
a. True
b. False
ANSWER: b
POINTS: 1
electronically
OTHER: Analytic
NOTES: 5.4 you have 60 days to notify your bank however your losses can be as high as $500 if
you wait more than two days.
98. Most homeowner's and renter's insurance policies cover your liability for theft of debit cards but not credit cards.
a. True
b. False
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4 theft from both types of cards is typically covered.
99. To be legally responsible for only the first $50 of unauthorized use, one must report an ATM card missing within two
days after the loss or theft of the card.
a. True
b. False
ANSWER: a
POINTS: 1
electronically
OTHER: Analytic
NOTES: 5.4
100. Most homeowner's and renter's insurance policies partially cover the liability for theft of both debit and credit cards.
a. True
b. False
ANSWER: a
POINTS: 1
electronically
OTHER: Analytic
NOTES: 5.4
101. ATM cardholders are liable for only the first $50 of unauthorized use if they notify the issuing company within five
business days after the loss or theft of their card or PIN.
a. True
b. False
ANSWER: b
POINTS: 1
electronically
OTHER: Analytic
NOTES: 5.4 they must make the notification within two days to be afforded this protection.
102. Because the focus is on building a relationship you can wait until after “popping the question” to discuss financial
issues.
a. True
b. False
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Discuss your money and personal finances effectively with loved ones
OTHER: Analytic
NOTES: 5.5 you should get to know a potential partner financially as well as emotionally before
becoming engaged or deciding to cohabitate.
103. Management of ____ is not included in monetary asset management.

a. tangible assets
b. savings accounts
c. money market accounts
d. checking accounts
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
services
OTHER: Analytic
NOTES: 5.1 tangible asset are not liquid and easily converted to cash.
104. Which of the following are examples of monetary assets?

a. Cash on hand, corporate stock, and insurance
b. Money market accounts, cash on hand, and certificates of deposit
c. Savings accounts, interest-earning checking accounts, and corporate stock
d. Real estate, money market accounts, interest-earning checking accounts
ANSWER: b
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1 the other three options include assets that are not liquid and easily converted to cash.


105. The speed and ease by which an asset can be converted into cash is referred to as its
a. risk.
b. liquidity.
c. diversity.
d. safety.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
services
OTHER: Analytic
NOTES: 5.1 liquid assets are the focus of monetary asset management.
106. Which of the following does not apply to monetary assets?

a. Low risk
b. High liquidity
c. High return
d. All of these
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
services
OTHER: Analytic
NOTES: 5.1 low risk and highly liquid assets pay low returns.
107. Common financial services offered by depository institutions include

a. checking, lending, and savings.
b. checking, real estate sales, and savings.
c. credit cards, stock brokerage, and tax preparation.
d. legal advice, savings, and life insurance.

ANSWER: a
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1 only banks provide all three of these.
108. The Federal Deposit Insurance Corporation (FDIC) insures accounts in

a. commercial banks.
b. credit unions.
c. brokerage companies.
d. commercial banks and credit unions.
ANSWER: a
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1 credit union accounts and funds on deposit, but not invested, with brokerage
companies are insured by other organizations.
109. Both commercial bank and savings bank accounts are insured by the FDIC through a fund called the
a. bank insurance fund.
b. deposit insurance fund.
c. savings bank insurance fund.
d. fiduciary trust fund.
ANSWER: b
POINTS: 1
services


OTHER: Analytic
NOTES: 5.1 the deposit insurance fund is a part of the FDIC.
110. The regulator of commercial banks and saving banks is the

a. Federal Deposit Insurance Corporation.
b. Securities and Exchange Commission.
c. Home Loan Bank Board.
d. Comptroller of the Currency.
ANSWER: d
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1
111. Which of the following statements is true regarding mutual savings banks?
a. Mutual savings banks provide financial services nationwide.
b. Accounts in mutual savings banks are not federally insured.
c. Mutual savings banks are quite similar to savings banks.
d. Holding savings is the only financial service provided by mutual savings banks.
ANSWER: c
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1 but they are chartered in only 17 states and are owned by their depositors.
112. Which of the following is not true about commercial banks?

a. Commercial banks are corporations chartered under federal and state regulations.

b. Accounts in federally chartered commercial banks are insured against loss by the Bank Insurance Fund of the
Federal Deposit Insurance Corporation.
c. Commercial banks offer numerous consumer services.
d. Commercial banks generally pay depositors an interest rate about 0.10 to 0.20 percentage points higher than
the rate found at savings banks.
ANSWER: d
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1 commercial banks pay slightly lower rates of interest but offer a broader range of
services.
113. Depositors are the owners of

a. credit unions.
b. mutual savings banks.
c. savings banks.
d. credit unions and mutual savings banks.
ANSWER: d
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1 savings banks are owned by stockholders like other for-profit corporations.
114. Not-for-profit, common-bond financial institutions that are owned by their members are called
a. credit unions.
b. mutual savings banks.
c. credit bureaus.
d. savings banks.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
services
OTHER: Analytic
NOTES: 5.1 common bonds can include being employees of a company, members of a trade
union, or residents of a city among other types of groups.
115. ____ typically pay the highest rates of interest on savings.

a. Commercial banks
b. Credit unions
c. Savings banks
d. Mutual savings banks
ANSWER: b
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1 partly because they operate on a not-for-profit basis.
116. Tom and Mindy want to keep $420,000 in cash equivalents that are federally insured. They could accomplish this by
a. investing $170,000 in a money market mutual fund and $250,000 in a federally insured credit union.
b. dividing it equally into three different joint accounts in the same federally insured bank.
c. dividing it equally into two different joint accounts in two different federally insured savings banks.
d. putting $75,000 in two joint accounts in different branches of the same bank.
ANSWER: c
POINTS: 1
DIFFICULTY: Challenging
services
OTHER: Analytic

NOTES: 5.1 since the funds are in two different institutions they will be protected up to
$250,000 in each.
117. The Federal Deposit Insurance Corporation (FDIC) currently insures against loss of up to ____ per person in an
individual account at any one institution.
a. $50,000
b. $100,000
c. $250,000
d. $500,000
ANSWER: c
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1 having another joint account at the same institution or depositing with another
institution results in another account insured for up to $250,000.
118. State-chartered credit unions are often insured by

a. NCUSIF.
b. FDIC.
c. SAIF.
d. MSB.
ANSWER: a
POINTS: 1
DIFFICULTY: moderate
services
OTHER: Analytic
NOTES: 5.1 or they have purchased insurance privately.
119. A stock brokerage firm is a licensed financial institution that

a. buys and sells stocks and bonds.
b. provides investment alternatives.

c. offers money market mutual fund accounts.
d. all of these.
ANSWER: d
POINTS: 1
services
NATIONAL STANDARDS: United States - BB_2 - Industry
OTHER: Analytic
NOTES: 5.1 the primary goal of have a stock brokerage account is making investments.
120. The monetary asset management service provided by a mutual fund is a

a. money market mutual fund accounts.
b. money market mutual fund accounts.
c. savings accounts.
d. All of these.
ANSWER: a
POINTS: 1
services
OTHER: Analytic
NOTES: 5.1 mutual funds do not offer checking or savings accounts.
121. A lifeline checking account is accurately described as an account that

a. always pays interest.
b. assesses monthly fees depending on the maximum balance in the account.
c. assesses no charges for ATM transactions.
d. can be accessed using a debit card.
ANSWER: d
POINTS: 1

OTHER: Analytic
NOTES: 5.2 lifeline checking provides basic service at low cost.
122. Which of the following sets NOW accounts apart from other checking accounts?
a. They are safer.
b. They are time deposits.
c. They can be accessed by a debit card.
d. They pay interest.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2 demand-deposit checking accounts pay no interest.
123. How can a person transfer money out of his or her checking account?
a. Write a check.
b. Use a debit card.
c. Make electronic funds transfers.
d. All of these.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2 checking accounts are very flexible ways to make payments.

124. When an account pays one rate of interest on a minimum amount on deposit and a higher rate of interest on
additional deposits, this is called ____ interest.
a. compound
b. variable
c. tiered
d. none of these
ANSWER: c
POINTS: 1
OTHER: Analytic
NOTES: 5.2 tiered interest is a feature of many interest paying checking and savings accounts.
125. Checks you write and present for payment can clear your bank in as little as
a. minutes.
b. hours.
c. one day.
d. three days.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2 with electronic scanning, a check can clear immediately.
126. Molly went to her bank, gave the teller $200 plus a small fee, and received a check drawn on the financial institution
itself. What kind of checks were these?
a. Certified checks
b. Money orders
c. Cashier's checks
d. Traveler's checks
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2 one buys the other three options to make a single specified payment to an specified
individual.
127. Which of the following types of payment instruments could you get at your local post office?
a. Certified check
b. Money order
c. Cashier's check
d. Traveler's check
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2 other sources are also sell money order’s.
128. A check drawn on a financial institution, backed by the financial institution's finances, and made out to a specific
payee is called a
a. certified check.
b. money order.
c. cashier's check.
d. traveler's check.
ANSWER: c
POINTS: 1

OTHER: Analytic
NOTES: 5.2 the funds used to buy a cashier’s check is immediately removed from your account.
129. A checking account that does not pay interest is called a

a. savings account.
b. money-market deposit account.
c. NOW account.
d. demand-deposit account.
ANSWER: d
POINTS: 1
OTHER: Analytic
NOTES: 5.2 this is the most basic type of checking account.
130. Which of the following could incur fees and penalties on a checking account?
a. The account holder uses an ATM not owned by the financial institution.
b. A customer asks the financial institution to not honor a particular check.
c. The account balance falls below a set minimum amount.
d. All of these.
ANSWER: d
POINTS: 1
NATIONAL STANDARDS: United States - BB_3 - Critical Thinking
OTHER: Analytic
NOTES: 5.2 fees are major source of income for institutions that offer checking accounts.
131. The fairest method for calculating interest on an account used ____ method for determining the balance to which the
interest rate is applied.
a. minimum-balance
b. quarterly compounding
c. APY
d. average daily balance
ANSWER: d
POINTS: 1
OTHER: Analytic
NOTES: 5.2 only open accounts that use this method.
132. Which of the following is not a benefit of a savings account?

a. Account holders must give 30 to 60 days' notice for withdrawals.
b. Account holders are provided with printed receipts to document their account transactions.
c. Account holders are provided with printed receipts to document their account transactions.
d. No fees are assessed as long as a low minimum balance is maintained.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2 this notice is rarely enforced but is part of the standard savings account
contract agreement.
133. Characteristics of a savings account include that

a. no fees are assessed as long as a low minimum balance ($50 to $250) is maintained.
b. account transactions are not accessible through ATMs.
c. no printed receipts are provided to document account transactions.
d. it permits the frequent deposit or withdrawal of funds.
ANSWER: d
POINTS: 1

OTHER: Analytic
NOTES: 5.2 this makes savings accounts extremely easy ways to accumulate funds for
future use.
134. Certificates of deposit (CDs) tend to pay higher rates of interest than money market accounts because
a. CDs are not government insured and therefore are riskier investments than money market accounts.
b. the required minimum investment for CDs is higher than for money market accounts.
c. there are higher annual fees charged for CDs than for money market accounts.
d. the investor agrees to leave his or her money in the CD for a specified period of time while he or she has free
access to the funds in a money market account.
ANSWER: d
POINTS: 1
OTHER: Analytic
NOTES: 5.2 the guarantee that the money will remain in the account makes CDs more
attractive to the institution accepting the funds.
135. Which of the following certificates of deposit is not covered by bank deposit insurance offered by the FDIC?
a. investment certificate
b. variable-rate certificate of deposit
c. bump-up certificate of deposit
d. brokered certificate of deposit
ANSWER: a
POINTS: 1

OTHER: Analytic
NOTES: 5.2 be sure to ask if a certificate you wish to purchase is actually an investment certificate.
136. If Gus believes interest rates are going to fall in the near future and remain low for several years, Gus should now
a. invest in a variable-rate certificate of deposit.
b. invest in a long-term, fixed-rate certificate of deposit.
c. invest in a short-term, fixed-rate certificate of deposit.
d. bury his money in fruit jars in the back yard.
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 by investing long-term he can lock-in the current higher rates.
137. In general, you will receive higher rates of interest on your certificate of deposit the ____ the maturity and the ____
the dollar amount invested.
a. shorter; smaller
b. longer; smaller
c. longer; larger
d. shorter; larger
ANSWER: c
POINTS: 1
OTHER: Analytic
NOTES: 5.2 but you must consider if the higher rates is worth tying up your considerable
funds for a long time.


138. Diana and Kim are roommates in college and Diana owes Kim for last month's rent. When Diana receives a check
from her mother for the rent, what type of endorsement should Diana use to sign this check over to Kim?
a. Blank endorsement
b. Restrictive endorsement
c. Special endorsement
d. Trailing endorsement
ANSWER: c
POINTS: 1
OTHER: Analytic
NOTES: 5.2 this makes the check only cashable by Kim.
139. Which of the following is the least expensive way of protecting yourself from fees should you overdraft your
checking account.
a. An automatic funds transfer agreement
b. An automatic overdraft loan agreement
c. Opt-in overdraft/bounce protection
d. Paying the overdraft/bounced check fee
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2 in this way funds are moved from your savings account to your checking account for a
nominal fee.
140. Which of the following could be the most expensive way of protecting yourself from fees should you overdraft your
checking account?
a. An automatic funds transfer agreement

b. An automatic overdraft loan agreement

c. Opt-in overdraft/bounce protection
d. Paying the overdraft/bounced check fee
ANSWER: c
POINTS: 1
OTHER: Analytic
NOTES: 5.2 because your bank will continue to honor your debit card you can rack up multiple fees
without realizing that you are in an overdraft situation.
141. Which type of bank agreement will result in the lowest fees?
a. an automatic funds transfer agreement.
b. an automatic overdraft loan agreement.
c. An "opt-in" overdraft/bounce protection agreement.
d. pay the bounced check fee itself.
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2 in this way funds are moved from your savings account to your checking account for a
nominal fee.
142. Jack and Jill have trouble keeping their checking account balanced. Because they never know how much is really in
their account, they have an automatic funds transfer agreement with their bank. When Jack or Jill writes a bad check, what
will happen?
a. The needed funds will automatically be borrowed from their Visa account.
b. The needed funds will automatically be transferred from their savings account.
c. The bank will honor the check and then call Jack and Jill and ask that they deposit the needed funds into
checking as soon as possible.
d. The bank will stamp the check "insufficient funds" and return it to the payee.
ANSWER: b
POINTS: 1
KEYWORDS: Bloom’s: Analyzing
OTHER: Analytic
NOTES: 5.2 in this way funds are moved from your savings account to their checking
account for a nominal fee.
143. Which of the following is a reason why you should reconcile your bank accounts regularly?
a. You or your bank may have made a computational error.
b. Checks you have written may not have cleared your account.
c. Fees may have been assessed lowering your balance below what you think you have on deposit.
d. All of these
ANSWER: d
POINTS: 1
OTHER: Analytic
NOTES: 5.2 monthly account reconciliation is an important aspect of monetary asset
management.
144. Which of the following is the best advice for people who want to start saving regularly?
a. Fools and their money are soon parted.
b. Pay yourself first.
c. Marry in haste, respect at leisure.
d. There's no fool like an old fool.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy

OTHER: Analytic
NOTES: 5.2 funds are deposited into your savings account before you ever see and have a chance
to spend them.
145. Which of the following is not a benefit of a savings account?

a. A way to save for your child's education
b. Builds funds for large, irregular expenses
c. Protection against inflation
d. A way to achieve short-term savings goals
ANSWER: c
POINTS: 1
OTHER: Analytic
NOTES: 5.2 all deposit accounts are likely to pay a lower rate of interest than that needed to keep
up with inflation.
146. Ronald's gross income is $60,000, and his living expenses consume 75 percent of his gross income. According to
financial experts, Ronald should set aside ____ to cover emergencies.
a. $22,500 to $45,000
b. $5,000 to $10,000
c. $15,000 to $30,000
d. $11,250 to $22,500
ANSWER: d
POINTS: 1
OTHER: Analytic
NOTES: 5.2 ($60,000 x 0.75 / 12) x 3 and ($60,000 x 0.75 / 12) x 6
147. According to financial advisers, a person with monthly living expenses of $2,500 should maintain readily accessible
savings of at least
a. $2,500.
b. $5,000.
c. $7,500.
d. $10,000.
ANSWER: c
POINTS: 1
OTHER: Analytic
NOTES: 5.2 3 x $2,500
148. Which of these is a reason many people say they cannot save?
a. Their belief that spending is better when inflation is low
b. Not having a credit card precludes them from purchasing essentials
c. The high annual percentage yields (APYs) for savings accounts
d. Their belief that they have no money left over at the end of the month
ANSWER: d
POINTS: 1
OTHER: Analytic
NOTES: 5.2 using a pay yourself first approach solves this problem.
149. Interest paid on deposits in financial institutions is based on how much money is on deposit and
a. how the balance is determined.
b. the interest rate applied.
c. the frequency of compounding.
d. all of these.
ANSWER: d
POINTS: 1
OTHER: Analytic
NOTES: 5.2 daily compounding is the best approach for depositors.
150. Savers should select an institution that calculates interest

a. daily.
b. annually.
c. monthly.
d. quarterly.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2 the more frequent the compounding period the better.
151. Wise money managers should select the savings option that
a. pays the highest annual percentage yield (APY).
b. avoids excessive fees.
c. avoids excessive penalties.
d. all of these.
ANSWER: d
POINTS: 1
OTHER: Analytic

NOTES: 5.2 low cost, high yield accounts are best.

152. The Truth in Savings Act requires depository institutions to

a. offer life-line banking.
b. use the annual percentage yield (APY) in advertising.
c. provide federal deposit insurance on savings accounts.
d. pay at least 3.5 percent interest on savings.
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.2 the APY allows savers to compare account yields easily from institution to institution.
153. Which of the following forms is used to notify you of the taxable interest you have earned in a given year from a
checking or savings account?
a. 1099 Form
b. W-2 Form
c. 1040 Form
d. W-4 Form
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2 this form is also sent to the IRS so it knows your interest earnings each year.
154. Bob and Tina Cisneros want to build a $10,000 emergency fund. Which of the following would be the most
appropriate choice for the emergency fund?
a. Money market deposit account
b. Two-year certificate of deposit
c. Series EE U.S. savings bonds

d. NOW account
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2 this account allows easy access but pays higher interest.
155. Which of the following accounts could accurately be called a money market account?
a. Share draft account
b. Asset management account
c. NOW account
d. Series EE savings bond
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2 the money market account is the central feature of asset management accounts.
156. List the money market accounts according to the interest rate generally paid on each account (from highest to
lowest).
a. Super NOW account, money market deposit account, and money market mutual fund
b. Money market deposit account, money market mutual fund, and super NOW account
c. Money market mutual fund, money market deposit account, and super NOW account
d. Money market deposit account, super NOW account, and money market mutual fund
ANSWER: c
POINTS: 1

OTHER: Analytic
NOTES: 5.2 people with significant liquid funds over $10,000 should strongly consider a money
market mutual fund.
157. An individual checking or savings account can be set up to go automatically to another person when the depositor
dies if it is set up as a(n)
a. payable at death account.
b. obituarial account.
c. estate account.
d. joint tenancy account.
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.3 but prior to death the individual is the sole owner of the account.
158. A person who is a joint owner of an ____ account should understand that his/her share of the assets in the account are
distributed to the heirs of the deceased according to the terms of his/her will.
a. joint tenancy with right of survivorship
b. tenancy in common
c. tenancy by the entirety
d. tenancy in common and tenancy by the entirety
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 5.3 the funds will not go to the joint owner of the account.


159. Husbands and wives who own a checking or savings account together would most likely want to set up the account
with
a. tenancy in common.
b. a payable on death designation.
c. joint tenancy.
d. periodic tenancy.
ANSWER: c
POINTS: 1
OTHER: Analytic
NOTES: 5.3 in this way each can have complete access to the funds at any time.
160. In community property states, most of the money and property acquired during a marriage are legally considered the
property of
a. both spouses.
b. the husband.
c. the wife.
d. the individual who bought it.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.3 regardless of how ownership of the asset is titled.
161. Because certificates of deposit require that the deposited funds remain on deposit for a specified period of time they
are subject to
a. interest rate risk.
b. fixed withdrawal risk.
c. market risk.
d. systemic risk.
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2 if rates increase in the economy, the CD funds will still pay the earlier, lower rate.
162. To reduce interest rate risk and smooth out interest rate fluctuations when purchasing certificates of deposit (CDs)
you can engage in
a. CD laddering.
b. CD layering.
c. grace period management.
d. money-market arbitrage.
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2 CD laddering involves buying several CDs with different maturity terms rather
than just one CD with available funds.
163. Amy and Lance are newlyweds. This is Lance's second marriage. Because of problems that occurred before his
divorce (his ex-wife took all the money out of their joint accounts), he is more cautious than most about setting up joint
accounts. Which type of account would you recommend for Amy and Lance?
a. Tenancy by the entirety
b. Tenancy in common
c. Trustee account
d. Joint tenancy account with right of survivorship
ANSWER: a
POINTS: 1

OTHER: Analytic
NOTES: 5.3 both spouses would need to give permission for transfers out of this type of
account
164. Andy and Marjorie have very little will power when it comes to spending. They want to put their savings in an
instrument that cannot be accessed by their ATM card. Which instrument would meet this criterion?
a. Savings account
b. Super NOW account
c. Money market mutual fund
d. NOW account
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5.2 of these options, only money market mutual fund accounts cannot be accessed via
ATMs.
165. Absent-minded Alfred lost his debit card on May 1. He reported it missing the next day; however, $600 had been
already purchased with the card without the use of his PIN number. According to the Electronic Funds Transfer Act, how
much of this $600 loss is Alfred responsible for?
a. $0
b. $50
c. $500
d. $600
ANSWER: b
POINTS: 1
electronically

OTHER: Analytic
NOTES: 5.4 because he notified the bank within two business days this is the maximum he
will lose.
166. A personal identification number is not needed for which of the following forms of electronic funds transfers?
a. ATM transactions
b. Direct deposits
c. Debit cards
d. Point-of-sale transactions
ANSWER: b
POINTS: 1
DIFFICULTY: Point-of-sale transactions
electronically
OTHER: Analytic
NOTES: 5.4 always protect your PIN from others and use as complicated a number as allowed by
your institution.
167. A customer who wanted to directly transfer funds from his or her bank account to a retailer's bank account would use
a(n)
a. automated teller machine.
b. electronic funds transfer.
c. check.
d. credit card.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4 typically this occurs by using a debit card.

168. Which of the following might be used by an employer to pay an employee?
a. ATM card
b. stored-value card
c. preloaded debit card
d. prepaid card
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4
169. Electronic funds transfers (EFTs)

a. can transfer funds electronically.
b. can be used in place of checks.
c. are paperless.
d. all of these.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4 for these reasons, EFTs are becoming the predominate method of payment.
170. Your bank will regularly (usually monthly) provide a compilation of your recent account activity, which is called
a(n)
a. receipt.
b. periodic statement.
c. reconciliation.
d. account ledger.
ANSWER: b
POINTS: 1

DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.2 always examine your statement upon receipt for errors and omissions.
171. Having your pay sent directly to your bank rather than receiving a written check is a type of
a. shared accounting.
b. direct deposit.
c. check cancellation.
d. NOW account.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4 many institutions waive monthly fees if this method is used.
172. Which of the following is (are) required to withdraw money from an automated teller machine (ATM)?
a. Debit card
b. Credit card
c. Personal identification number
d. ATM card and personal identification number
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4 debit and credit cards can be used without PIN numbers.


173. A personal identification number (PIN) is required when using a(n)

a. automated teller machine (ATM).
b. point-of-sale (POS) terminal.
c. stored-value card.
d. automated teller machine and point-of-sale terminal.
ANSWER: d
POINTS: 1
electronically
OTHER: Analytic
NOTES: 5.4 using a PIN adds additional safety.
174. A ______ is a firm that notifies all companies with which you have debit and credit cards in the event that the cards
are lost.
a. card registration service
b. truth-in-savings service
c. money-market fund.
d. account monitoring service.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4 people with many cards might consider using such a service.
175. A POS terminal is an electronic computer terminal located at a store or other merchant location that allows the
customer to
a. use a personal check.
b. make a cash withdrawal.
c. get a cash advance.
d. make purchases.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
electronically
OTHER: Analytic
NOTES: 5.4 a POS also requires a PIN number.
176. Which type of cash management instrument could also be used by a college student to access his or her meal plan?
a. Credit card
b. Debit card
c. Stored-value card
d. Stored-value card
ANSWER: c
POINTS: 1
electronically
OTHER: Analytic
NOTES: 5.4 such cards can possibly also “reloaded” with funds.
177. Darla had $750 in her checking account when her debit card was stolen. Assuming the thief made $525 in purchases
with the card, how much could she save by reporting the stolen ATM card immediately rather than waiting more than
three months before reporting the theft?
a. $50
b. $525
c. $475
d. $500
ANSWER: c
POINTS: 1
electronically

OTHER: Analytic
NOTES: 5.4 by reporting the card the most she would lose is $50 whereas waiting more
than three months makes her liability unlimited.
178. Which of the following is not a technique for reducing the risk whenever you conduct banking transactions on-line?
a. Avoid using someone else's computer to manage your account.
b. Regularly change your password and keep it to yourself.
c. When finished, always hit the log off button at the top of the page instead of just closing the browser window.
d. Leaving the browser window open when finished making transactions.
ANSWER: d
POINTS: 1
electronically
OTHER: Analytic
NOTES: 5.4 always close the browser window when finished making financial transactions on-line.
179. Which of the following ideas will not help you discuss money with more confidence and candor?
a. Get to know yourself.
b. Learn to manage financial disagreements.
c. Be honest and talk regularly.
d. Make it clear that your needs and wants are more important than your spouse's.
ANSWER: d
POINTS: 1
REFERENCES: Discuss your personal finances and money management more efficiently with loved one
OTHER: Analytic
NOTES: 5.5

180. The primary reason for giving a child an allowance is to
a. pay the child for work around the house.
b. teach the child about how to manage money.
c. encourage the child to get a job at an early age.
d. have a way to withhold a privilege in order to control the child’s behavior.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5.5 a small allowance starting as young as age 5 can provide a way to teach valuable
financial behaviors and attitudes.
181. Special concerns for blended families include

a. determining who assumes financial responsibility for biological offspring and stepchildren.
b. handling resentment over alimony and child-support payments.
c. managing unequal assets, incomes, responsibilities, and debts.
d. (all of these)
ANSWER: d
POINTS: 1
OTHER: Analytic
NOTES: 5.5 financial concerns are considerable for blended families.

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Chapter 05—Managing Checking and Savings Accounts

PERSONAL FINANCE 13TH EDITION GARMAN

Solution Manual: https://testbankpack.com/p/solution-manual-for-personal-finance-

NOTES: 5.1 safety is freedom from financial risk.

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8. Credit unions typically offer the widest variety of financial services.

9. Commercial banks typically offer the widest variety of financial services.

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17. Money deposited in mutual funds is insured by the federal government.

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QUESTION TYPE: Multiple Choice

19. Stock brokerage firms are federally insured institutions.

20. Stock brokerage firms earn commissions on clients' stock transactions.

26. A checking account is sometimes called a transaction account.

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HAS VARIABLES: False

35. There are no fees charged for a stop-payment order.

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DATE CREATED: 1/20/2017 1:56 AM

39. A money order is a checking instrument bought for a particular amount.

42. Funds on deposit in a savings account are considered demand deposits.

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DATE CREATED: 1/20/2017 2:08 AM

KEYWORDS: Bloom’s: Remembering

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DATE CREATED: 1/20/2017 3:21 AM

QUESTION TYPE: Multiple Choice

60. The safest type of endorsement on a check is a blank endorsement.

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DATE MODIFIED: 1/20/2017 3:35 AM

QUESTION TYPE: Multiple Choice

71. Brokered certificates of deposit are available through stockbrokers.

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DATE MODIFIED: 1/20/2017 3:48 AM

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80. A tenancy by the entirety account may be opened only by spouses.

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103. Management of ____ is not included in monetary asset management.

104. Which of the following are examples of monetary assets?

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DATE CREATED: 1/20/2017 6:56 AM

106. Which of the following does not apply to monetary assets?

107. Common financial services offered by depository institutions include

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108. The Federal Deposit Insurance Corporation (FDIC) insures accounts in

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KEYWORDS: Bloom’s: Remembering

110. The regulator of commercial banks and saving banks is the

112. Which of the following is not true about commercial banks?

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113. Depositors are the owners of

115. ____ typically pay the highest rates of interest on savings.

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118. State-chartered credit unions are often insured by

119. A stock brokerage firm is a licensed financial institution that

b. provides investment alternatives.

120. The monetary asset management service provided by a mutual fund is a

121. A lifeline checking account is accurately described as an account that

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DATE MODIFIED: 1/23/2017 12:35 AM