BANKING TEST

BANKING TEST What are the three main responsibilities of the Federal Reserve? 1. Provide and Maintain an effective payment system 2. Supervise and regulate banking operations 3. Conduct monetary policy Which type of financial institution typically has some sort of requirement to be a member? - Credit Union Which type of bank account is typically the most liquid? - Checking Account Compare/ contrast a checking account and savings account. Which offers more interest? Which is easier to get money out of? - Savings account offers more interest. Checking accounts are more easier to get your money out of. Between checking, savings, money market, and certificate of deposit, which typically has the highest interest rate? Which has the lowest liquidity? - Certificate of Deposit (CD) What are the three parts of the Federal Reserve System? 1.Reserve Banks 2.Federal Open Market Committee 3.Board of Governors. List four possible fees associate with a checking account. Which is likely to be the highest - Overdraft fee, Account transfer fee, Monthly service fee, ATM fee. ATM fee is highest. What are some unique features of a credit union? – 1.Credit Unions are typically owned and run by their members. 2.Credit Unions offer a wide variety of banking services What three things do the numbers on the bottom of a typical check represent? – 1. Routing Number 2. Account Number 3. Check Number Which part of the check is the least important? - Memo line How often should you typically monitor your checking account? - Monthly What is a payday lender? Why should you avoid them? - They're not a type of bank, but a type of loan. They're very xpenisce and your debt will grow fast. How do you avoid paying ATM fees? - Only use ATM's in your banks network What is the purpose of of balancing or monitoring your checking account? - Helps you calculate how much money you have in your account. What is the best way to ensure the accuracy and safety of your accounts? - Monitor your accounts regularly. What is a required balance? Your account balance is the amount of money you have in your account. Some accounts require that you have a minimum amount in there at all times. If you don't have the minimum required balance, you could be charged to fee. What's the purpose of balancing or monitoring your checking account? - To help you calculate how much money you have in your account What's the best strategy for avoiding ATM fees? - Only use ATMs in your bank's network Which type of account is typically the MOST liquid? - Checking Account How often should you typically monitor your checking account? - Monthly The best way to ensure the accuracy and safety of your accounts is to? Monitor your online accounts regularly Which of the following fees would likely be the highest? A Overdraft fee B Account transfer fee C Monthly service fee D ATM fee - Ans A Which type of financial institution typically has membership requirements? - Online Commercial Bank To earn as much interest as possible, you should open a savings account that earns _______ interest and has the ______ interest rate. a) compound; lowest b) compound; highest c) simple; lowest d) simple; highest -Ans A John just opened a savings account and wants to maximize the amount of interest he earns. Which of the following actions would enable him to earn MORE interest a) Selecting an account with a high interest rate b) Leaving his money in the account for long period of time c) Transferring money into his checking account each month d) Both A B - Ans D You are opening a savings account that earns compound interest. Which compounding frequency will earn you the MOST money? a) Compounding 1 time a year b) Compounding 4 times a year c) Compounding monthly d) Compounding daily – Ans D Which of the following is a type of savings vehicle? a) Certificate of Deposit b) Money Market Account c) Checking Account d) Both A B - Ans A Which of the following is generally true about savings vehicles? a) Savings vehicles are only useful for long-‐term investments b) People should evaluate different forms of savings vehicles based on their needs c) Savings vehicles are never insured d) All of the above - Ans B Which of the following savings vehicles usually requires a high minimum balance? a) Simple savings account b) Certificate of Deposit (CD) c) Checking account d) All of the above - Ans B Which of the following accounts will give you the LEAST access to your money a) Simple savings account b) Certificate of Deposit (CD) c) Checking account d) cash - Ans B The purpose of a budget is to: a) help you plan how you will spend the money you earn or receive b) stop you from spending too much money c) increase the balance of your savings account d) tell you how much you owe the government in taxes - Ans A When it comes to saving money, what is a good rule of thumb. a) Keep most of your savings in your checking account b) Put aside money for savings each month c) Choose the savings account with the lowest interest rate d) Putting anything you can't afford on your credit card - Ans B The three parts of the Federal Reserve System are the Reserve Banks, the Federal Open Market Committee (FOMC), and the a) Board of Governors b) United States Mint c) Department of the Treasury d) Secretary of State - Ans A Which of the following is NOT one of the responsibilities of the Federal Reserve a) Supervising the Reserve banks b) Setting the nation's monetary policy c) Establishing the federal budget d) Maintaining a stable banking system - Ans D Which of the following is a unique feature of credit unions? a)Credit unions are typically owned and run by their members b)Credit unions limit membership to certain people or groups c) Credit unions offer a wide variety of banking services d) Both A & B - Ans D Which type of account is typically the MOST liquid? a) Checking account b) Savings account c) Certificate of Deposit d) Exchanged Traded Fund - Ans A Which of the following payment types requires you to pay upfront? a) Money order b) Cashier's check c) Pre-paid card d) All of the above - Ans D