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BAF 101 Test 2
| Question | Answer |
|---|---|
| provides safe storage of funds for future use; referred to as time deposits | savings |
| offer an ability to transfer money to others for daily business activities; checking accounts are often called demand deposits | payment services |
| credit alternatives: credit cards and cash loans, long-term borrowing (home mortgage) | borrowing |
| legal agreement that provides for the management of assets by one party for the benefit of another | trust |
| cash management account; provides a complete financial services program for a single fee; offered by investment companies | asset management account |
| a computer terminal used to conduct banking transactions | ATM |
| a plastic access card used in computerized banking transactions; cash card; spending your own funds | debit card |
| What to consider when comparing financial Institutions? | safety and rates, convenience and service (the cost of both), earnings you will receive on accounts |
| serve as intermediaries between savers and users of funds; most common types: banks, credit unions, savings and loan | deposit institutions |
| Where do the profits of a mutual savings bank go? | to the depositors through higher rates on savings |
| offer various financial services such as life insurance companies, investment companies, brokerage firms, etc. | nondeposit institutions |
| a savings-investment plan offered by investment companies, with earnings based on investments | money market fund |
| make loans based on the value of tangible possessions, like jewelry; charge high fees | pawnshops |
| currency exchanges; offer services like electronic tax filing, money orders, private postal boxes, utility bill payment; charge 1-20% of face value of a check | check cashing outlets |
| cash advances, check advance loans, delayed deposit loans; users of these loans are workers in debt; borrowers pay annual interest rate 780% to obtain needed cash | payday loans |
| stores that lease products to consumers who can own the item if they complete a certain number of monthly payments | rent-to-own centers |
| involve a low or no minimum balance and allow you to withdraw money as needed; called share accounts at credit unions; offered at many financial institutions | regular savings accounts |
| a savings plan requiring that a certain amount be left on deposit for a states time period to earn a specified interest rate | certificate of deposit |
| usually pay a low interest rate; checking accounts having a savings feature | interest-earning checking accounts |
| savings account offered by banks, savings and loan, and credit unions that requires a minimum balance and has earnings based on market interest rates | money market account |
| purchased at face value; increase in value every month as interest accrues monthly and compounds semiannually | EE bonds |
| current income bonds; earn interest every six months, which is deposited electronically to bank account; taxed as current income; popular source of retirement income | HH Bonds |
| earns a combined rate consisting of a fixed rate for the life of the bond and an inflation rate that changes twice a year | I bonds |
| a process that calculates interest based on previously earned interest | compounding |
| as this rate increases, the interest rate offered to savers also increase; the rate of return you earn on your savings should be compared with this | inflation |
| reduce interest earned on savings | taxes |
| allows you to withdraw your money on short notice without a loss of value or fees | liquidity |
Created by:
cgb1993
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