WISE: Banking Questions and Answers Rated A+

WISE: Banking Questions and Answers Rated A+ If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the... US Treasury Department. Joan wants to open a checking account and wonders if checking accounts pay interest. How would you answer her question? Some types of checking accounts pay interest. A bank Certificate of Deposit is a: Savings instrument that requires a deposit for a period of time during which there is a penalty for withdrawals. Pat has a savings account and a car loan from a not-for-profit financial institution owned by its members. She is probably a member of what type of financial institution? Credit union. The financial institution where Ms. Sanchez has her checking account will continue to pay out money for the checks she writes as long as: There is enough money in Ms. Sanchez account to cover the amount of the checks. Travelers checks, often used for vacations: Function as cash and are easily replaced if lost. Which financial product may pay a dividend? Common stock. Financial services and products generally offered by banks and credit unions include: Savings and loans. Frankie's savings account has earned a lot of interest. He wants to know if he must pay taxes on the interest earned. What would the IRS tell him? Savings account interest is taxable. Safe-deposit boxes are: Safe and can be accessed only by the owner of the box. Patty is selling her car through a newspaper advertisement. When she finds a buyer, she wants a form of payment which is guaranteed to be good. Which form of payment should she avoid? A check. The term used to describe the ease and speed with which you can convert savings or an investment to cash is: Liquidity. A blank endorsement on a check: Creates a check that can be cashed by anyone. A person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should... list the cash deposit separately from the check as well as the total of the deposit. Banks use savings account deposits to: Give loans to consumers and businesses. Which financial product has the most predictable income? A) Stock B) Real estate C) Certificate of deposit D) Option/future contract C) Certificate of deposit. Which financial product can you buy for $25, is safe, and will be worth $50 at a future date? Series EE savings bond. The most liquid type of investment is: A money market account. A teenage boy has opened a checking account. He is surprised to find that though he is getting a written bank statement each month he is not getting his canceled checks returned. The teenager should be aware that the reason canceled checks are NOT returned is to... save the bank money associated with returning copies of these checks. What action should a person take who must make a tuition payment at the end of August each year? Decide how much money will be needed and then place 1/12th of that amount in a separate account each month. When a person is reconciling a checking account and notices that the balance in the checkbook does not match the balance on the statement from the bank, which action is it appropriate for the person to take first? Determine that checks already written have cleared. Doug wants to buy a car in two months, but does not have enough money. What is the best way for Doug to get the money he needs? Take out a cash loan. Margaret wants to store a valuable coin collection and important papers. Generally, consumers should: Rent a safe deposit box for their valuables. When James received his paycheck, he planned to cash it at a check cashing store. You advise him to cash it at his own bank if possible. Why? They typically charge high fees. How can individuals be prepared for losing their job or having a large medical expense? Save at least three months of income. Money orders are: A purchased certificate to pay a specified amount to a specific payee. You have a checking account balance of $100 and you deposit a personal $200 check from your brother in your checking account. When will you be able to withdraw $150 in cash? 3 to 7 days later, depending on your bank's check clearance policy. The National Credit Union Administration (NCUA) insures accounts in: Credit unions. The best reason for depositing money in a bank or credit union savings account instead of keeping your money "under the mattress" is that: Money deposited in savings accounts are F.D.I.C. insured. "The Fed" is short for: The Federal Reserve System. Which is the best example of a way to reduce fees paid for ATM transactions? When making supermarket purchases with a debit card, a person adds $50 in cash to the transaction instead of using an ATM machine. Troy has $50 a month transferred electronically from his checking account to his savings account. This is an example of: A savings plan. Employees prefer direct deposits because: The money is generally deposited in their checking account sooner than it would be if they had to deposit it in person. Which documents should be stored in a safe-deposit box? Mortgage loan papers. Consumer finance companies, which are often advertised on TV, are also known as: Small loan companies. The phrase used for putting money into a savings account is: Making a deposit. Which financial product typically pays the highest rate of interest? Certificate of deposit. The best suggestion you gave a friend who is writing a check for the first time is: Use the checkbook stub or register to keep a record of the date you write the check.