Banking Wise Practice Test Study Guide Graded
A+
1). If a person makes a deposit of $10,000 or more into a bank account, the bank must notify
the
Ans: US Treasury Department- In order to track large deposits, the federal government
requires that deposits of $10,000 or more be reported to the Treasury Department. Some
concerns may be that a person might be trying to avoid paying taxes on game winnings or
perhaps illegal gains
2). The national credit union administration (ncua) insures accounts in:
Ans: Credit unions - The National Credit Union Association (NCUA) insures each
depositor's accounts up to $100,000 in one credit union. For example, if a customer has a
checking account of $1,000 and a savings account of $8,000 in the same credit union, the
customer will have total insurance coverage of $9,000
3). 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?
Ans: They typically charge high fees - Check-cashing stores usually charge high fees to
cash checks and sometimes encourage consumers to take out high interest rate payday
loans
4). The term used to describe the ease and speed with which you can convert savings or an
investment to cash is:
Ans: Liquidity - The ease and speed with which you can convert savings or an
investment to cash is called liquidity. Checking and statement savings accounts are
highly liquid because deposits and withdrawals can be made at any time. A certificate of
deposit has less liquidity because it has a fixed term - a period during which money must
be kept on deposit. There can be substantial penalties for cashing in a certificate of
deposit before the end of its term, perhaps losing up to three to six months' interest
5). Banks use savings account deposits to
Ans: Give loans to consumers and businesses - The basic functions of banks and
credit unions are to be an intermediary between savers and borrowers. Banks and credit
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, unions pay interest on customers' savings accounts and hold customers' money through
checking accounts and then lend most of that money to other consumers and businesses
for a fee (interest).
6). Troy has $50 a month transferred electronically from his checking account to his savings
account. this is an example of:
Ans: A savings plan - When a consumer requests that his or her bank or credit union
electronically transfer money from a checking account to a savings account every month,
it is a (forced) savings plan. If you manage your checking account so there are always
enough funds to cover the transfer, a forced savings plan is a good option because you
avoid the problem of not making regular deposits in your savings account and spending
the money instead. Starting a (forced) savings plan with automatic deposits is one way to
do what is known as "paying yourself first."
7). 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?
Ans: Credit union - Credit unions are not-for-profit savings and lending financial
institutions. Membership in a credit union is made up of individuals who have something
in common, such as a place of employment, membership in a professional organization,
or residence in the same geographic area. Loans are made to its members from the
savings of other members. Loan costs tend to be lower and savings interest rates higher
at credit unions than at other types of financial institutions
8). Money orders are
Ans: A purchased certificate to pay a specified amount to a specific payee - A money
order is a purchased certificate used to pay a specified amount to a specific payee. They
are a safe, convenient way to send payment through the mail as an alternative to personal
checks or cash. Money orders sold and backed by the U.S. Postal Service are called
postal money orders. Private companies, such as banks, credit unions, supermarkets,
convenience stores, and drug stores, also sell money orders for a fee.
9). Which financial product can you buy for $25, is safe, and will be worth $50 at a future date?
Ans: Series EE savings bond - Series EE savings bonds, which are issued and backed
by the U.S. Treasury, are purchased for one-half of their face value. These bonds earn
interest monthly, and a $50 Series EE bond, which is purchased for $25, is guaranteed to
reach face value within 17 years, and may reach face value sooner.
10). A bank certificate of deposit is a:
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A+
1). If a person makes a deposit of $10,000 or more into a bank account, the bank must notify
the
Ans: US Treasury Department- In order to track large deposits, the federal government
requires that deposits of $10,000 or more be reported to the Treasury Department. Some
concerns may be that a person might be trying to avoid paying taxes on game winnings or
perhaps illegal gains
2). The national credit union administration (ncua) insures accounts in:
Ans: Credit unions - The National Credit Union Association (NCUA) insures each
depositor's accounts up to $100,000 in one credit union. For example, if a customer has a
checking account of $1,000 and a savings account of $8,000 in the same credit union, the
customer will have total insurance coverage of $9,000
3). 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?
Ans: They typically charge high fees - Check-cashing stores usually charge high fees to
cash checks and sometimes encourage consumers to take out high interest rate payday
loans
4). The term used to describe the ease and speed with which you can convert savings or an
investment to cash is:
Ans: Liquidity - The ease and speed with which you can convert savings or an
investment to cash is called liquidity. Checking and statement savings accounts are
highly liquid because deposits and withdrawals can be made at any time. A certificate of
deposit has less liquidity because it has a fixed term - a period during which money must
be kept on deposit. There can be substantial penalties for cashing in a certificate of
deposit before the end of its term, perhaps losing up to three to six months' interest
5). Banks use savings account deposits to
Ans: Give loans to consumers and businesses - The basic functions of banks and
credit unions are to be an intermediary between savers and borrowers. Banks and credit
PaperStoc.com Page 1 of 8
, unions pay interest on customers' savings accounts and hold customers' money through
checking accounts and then lend most of that money to other consumers and businesses
for a fee (interest).
6). Troy has $50 a month transferred electronically from his checking account to his savings
account. this is an example of:
Ans: A savings plan - When a consumer requests that his or her bank or credit union
electronically transfer money from a checking account to a savings account every month,
it is a (forced) savings plan. If you manage your checking account so there are always
enough funds to cover the transfer, a forced savings plan is a good option because you
avoid the problem of not making regular deposits in your savings account and spending
the money instead. Starting a (forced) savings plan with automatic deposits is one way to
do what is known as "paying yourself first."
7). 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?
Ans: Credit union - Credit unions are not-for-profit savings and lending financial
institutions. Membership in a credit union is made up of individuals who have something
in common, such as a place of employment, membership in a professional organization,
or residence in the same geographic area. Loans are made to its members from the
savings of other members. Loan costs tend to be lower and savings interest rates higher
at credit unions than at other types of financial institutions
8). Money orders are
Ans: A purchased certificate to pay a specified amount to a specific payee - A money
order is a purchased certificate used to pay a specified amount to a specific payee. They
are a safe, convenient way to send payment through the mail as an alternative to personal
checks or cash. Money orders sold and backed by the U.S. Postal Service are called
postal money orders. Private companies, such as banks, credit unions, supermarkets,
convenience stores, and drug stores, also sell money orders for a fee.
9). Which financial product can you buy for $25, is safe, and will be worth $50 at a future date?
Ans: Series EE savings bond - Series EE savings bonds, which are issued and backed
by the U.S. Treasury, are purchased for one-half of their face value. These bonds earn
interest monthly, and a $50 Series EE bond, which is purchased for $25, is guaranteed to
reach face value within 17 years, and may reach face value sooner.
10). A bank certificate of deposit is a:
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