BUSI 223 Quiz 7 solutions complete answers

BUSI 223 Quiz 7 solutions complete answers 

 

A certificate of deposit usually has:

 

When preparing a bank reconciliation, outstanding checks should be:

 

Which one of the following savings plans is not covered by federal deposit insurance?

 

What is the rate that banks charge large corporations for loans called?

 

An advantage credit unions may have over other financial institutions is:

 

The business hours and ATM locations of a financial institution refer to the ____________ feature when selecting a financial institution.

 

Hugh Jackson is thinking about buying an investment. The investment option that he is thinking about buying is an investment where investors pool their money. One of the key features is that it is managed by professional managers. What investment is Hugh thinking about purchasing?

 

The maturity dates for most bonds range between ____________ years.

 

If you need to withdraw your investment money in two years, you should probably invest in:

 

Which of the following is a true statement regarding stock investments?

 

Because of the age factor, older investors tend to be more conservative and invest in:

 

An intermediate-term investment goal is defined as one that will be accomplished within a period of:

 

Twenty years ago, you began investing $200 a month. Because your investments earned an average of 8 percent a year, your investment portfolio has a current dollar value of $128,000. How much did you earn on your investments over the 20-year period of time?

 

Determine the rate of return on a savings account in which you deposited $200.00 and earned $5.00 in interest after one year.

 

Your bank statement shows a balance of $688. Your checkbook register shows a balance of $461. You earned interest of $3 and had a service charge of $17. There are no outstanding deposits. What is the amount of outstanding checks?

 

Jack Carson earns $40,000 a year. His monthly expenses total $2,500. What is the minimum amount of money that he should set aside in an emergency fund?

 

Sue deposited $1,000 in an account paying 2 percent interest. The inflation rate is 5 percent. What is the buying power of the account after one year?

 

Based on the following information, what amount would be subtracted from the bank statement side of the bank reconciliation? ATM withdrawal $15; Outstanding checks $155; Interest $4; Deposit in transit $83.

 

If you invest $2,000 in a stock and the stock pays you $35 in dividends each year and is worth $2,150 at the end of one year, then what is your rate of return?

 

A $200 savings account that earns $8.50 interest in a year has a yield of _______ percent.

 

A " no-fee" checking account that requires a non-interest-earning minimum balance of $500 has an opportunity cost of lost interest earnings.

 

An asset management account combines a complete financial services program for a single fee.

 

Using a "debit card" to make purchases means you are spending your own funds.

 

Demand deposits are another term for checking accounts.

 

A regular savings account usually offers a higher rate of return to savers than other savings plans.

 

A certificate of deposit is also known as a demand deposit.

 

The more frequent the compounding, the less a person will earn on a savings account.

 

A restrictive endorsement consists of the words "for deposit only."

 

When preparing a bank reconciliation, interest earned on your checking account is added to the bank statement balance.

 

The most frequent users of payday loans are workers who have become trapped by debts or poor financial decisions.

 

A trust has the purpose of:

 

The storage of funds for future use is a purpose of ____________, which include savings accounts and certificates of deposit.

 

An all-purpose account offered by investment brokers that provides several services is a:

 

Joan Zemke expects interest rates to decline over the next few months. To maximize her long-term earnings she should use a:

 

A debit card deducts the amount of purchases from your checking account by:

 

When interest rates are rising, a person would be best served by:

 

Checking accounts are frequently referred to as ____________ deposits.

 

Time deposits are another name for:

 

Which of the following statements regarding debit and credit card liability is correct?

 

Which of the following is organized as a corporation and owned by stockholders?

 

To avoid high fees for cash loans, a person should avoid borrowing from a:

 

The profits from a mutual savings bank go to the:

 

In recent years, membership in credit unions has:

 

A common service offered by investment companies is:

 

The business hours and location of a financial institution refer to the ____________ factor of selecting a financial institution.

 

A savings account at a credit union is called a ____________ account.

 

A saver will usually receive the highest earnings with which one of the following types of savings plans?

 

Which is an advantage of investing in Series EE U.S. Savings Bonds?

 

The rate of return on a savings account is also referred to as:

 

A $200 savings account that earns $13 interest in a year has a yield of _______ percent.

 

Savings compounded ____________ would have the highest effective yield.

 

The Truth in Savings law requires that financial institutions:

 

Comparison of earnings for different savings plans can best be accomplished using the:

 

The Federal Deposit Insurance Corporation provides deposit insurance for:

 

Which of the following is an effective strategy in times of falling interest rates?

 

The Expedited Funds Availability Act requires that funds be available to depositors:

 

A limit on the amount you must keep on deposit in order to earn interest or avoid a service charge is an example of a:

 

The purpose of a "special endorsement" is to:

 

A ____________ endorsement would be used if a person is presenting a check in order to obtain cash.

 

A _______ endorsement is especially useful when you are depositing checks.

 

In the bank reconciliation process, total fees should be:

 

Based on the following information, what amount would be subtracted from the bank statement side of the checking account reconciliation? Service charge $12; Outstanding checks $145; Interest $3.50; Deposit in transit $80.

 

A personal check with guaranteed payment is called a:

 

Neil Guest writes a check to pay for day care for his son. What type of financial service is Neil using?

 

Nate Rogers deposited $5,000 in a 3-year bank certificate of deposit which pays six percent interest. What type of financial service is Nate using?

 

David Wynn gets an auto loan from his credit union for $10,000. David will make monthly payments over the next four years to repay the loan. What type of financial service is David using?

 

Tim Gleason has set up a legal agreement that allows the First State Bank of Orlando to manage funds set aside for his daughter's college education. What type of financial service is Tim using?

 

What is the rate that the Federal Reserve banks charge financial institutions for loans called?

 

What is the rate an individual will pay to borrow for the purchase of a new home called?

 

What is the term used to refer to the yield on a long term bond issued by the U.S. government?

 

Which of the following is a user-owned, nonprofit, cooperative financial institution?

 

Which of the following doesnot offer deposit services?

 

Which of the following institutions is organized primarily to provide loans to purchase homes?

 

Which of the following institutions makes loans based on the value of tangibles possessions, such as jewelry and other valuables?

 

Which of the following is a drawback of a money market fund from an investment company?

 

Which CD attempts to attract savers with gifts or special rates?

 

Which is a CD that offers a higher rate for every six months you are invested?

 

Which CD pays earnings based on the stock market?

 

Which CD starts with a higher rate, has a long time to maturity, and can be retired by the bank after a set time period?

 

Purchasing a new CD upon maturity of the current CD is commonly referred to as:

 

Which law requires banks and other financial institutions to disclose fees, the interest rate, the annual percentage yield, and the other terms and conditions on savings account plans?

 

Which type of organization does not provide home mortgages?

 

What type of account would you expect to provide the poorest yield?

 

What type of account would be considered the most liquid?

 

A pawnshop with a monthly interest rate of 2.75 percent would have an annual interest rate of ____ percent. Ignore compounding.

 

A person borrows $200 from a payday loan company, and pays $10 interest for two weeks. This would result in an annual interest rate of approximately ___ percent. Ignore compounding.

 

A savings account earns 4 percent. If the saver is in a 28 percent tax bracket, the after-tax savings rate of return would be ____percent.

 

The Federal Deposit Insurance Corporation insures deposits up to $250,000 per person per financial institution. Suzanne has $200,000 in an individual account and $424,000 in a joint account with her husband, Ted. How much of Suzanne's money is notcovered by FDIC insurance?

 

Sue deposited $1,000 in an account paying 3 percent interest. The inflation rate is 5 percent. What is the buying power of the account after one year?

 

Your bank statement shows a balance of $670. Your checkbook register shows a balance of $462. You earned interest of $2 and had a service charge of $4. There are no outstanding deposits. What is the amount of outstanding checks?

 

Which of the following types of financial institutions provide Federal Deposit Insurance coverage?

 

Which of the following represent the use of credit?

 

Which of the following is a way to reduce ATM surcharges?

 

Series EE U.S. Savings Bonds can be purchased:

 

Determine the rate of return on a savings account in which you deposited $300.00 and earned $6.00 in interest after one year.

 

What is the term used to refer to the cost of borrowing for large U.S. corporations?

 

An estimated _____ people in the U.S. are "unbanked", using a variety of alternative services rather than having a bank account.

 

Which one of the following financial service providers should be avoided, because the interest rates charged on loans can be over 100% a year?

 

Series EE bonds continue to earn interest for how many years?

 

A higher rate of return would result from a savings account that had which of the following compounding frequencies?

 

An asset management account typically offers the following service:

 

This type of financial institution is known to frequently offer lower fees and lower loan rates:

 

This type of savings plan is usually considered to be very liquid:

 

Demand deposits are another term for:

 

Which one of the following is not true for PayNearMe transactions?

 

Prepaid debit cards are used for:

 

Which one of the following is true for a NOW account?

 

Which one of the following will help to avoid identity theft?

 

The first step to creating an investment plan is to establish investment goals.

 

Potential investors should not wait until their financial affairs are in good shape before starting an investment program.

 

An emergency fund is an amount of money that can be obtained quickly in case of immediate need.

 

A line of credit is a short-term loan that is approved before the money is actually needed.

 

A ceiling on a credit card is determined by the borrower and is the dollar amount that they want to borrow using the cash advance provision on their credit card.

 

The rate of return on an investment has no effect on a long-term investment program.

 

There is no relationship between risk and safety.

 

The potential return on any investment should be directly related to the risk that the investor assumes.

 

During periods of high inflation, there is a risk that the financial return on an investment will not keep pace with the rate of inflation.

 

With most investments, more information is available than you can read and comprehend.

 

The U.S. government is the world’s largest provider of investment information.

 

An investment that an investor expects will increase in value is known as a growth investment.

 

Liquidity is the ability to buy or sell an investment quickly without substantially affecting the investment’s value.

 

Asset allocation is the process of spreading your assets among several different types of investments to lessen risk.

 

The amount of time that your investments have to work for you is an important factor when managing your investment portfolio.

 

Younger investors tend to invest a large percentage of their nest egg in growth-oriented investments.

 

The most important priority an investor in preferred stock enjoys is receiving cash dividends before common stockholders are paid any cash dividends.

 

A speculative investment is a high-risk investment that is made in the hope of earning a relatively large profit over a long period of time.

 

Generally, options are conservative, long-term investments.

 

Once you have developed an asset allocation plan for your investments, you never need to adjust it.

 

Once you have developed an investment program, there is no need for continued evaluation of it.

 

Accurate record keeping can help you spot opportunities to maximize profits or reduce dollar losses when you sell your investments.

 

Although useful for many things, the Internet cannot be used to monitor the value of stock, bond, and mutual fund investments.

 

Brokerage firms, investment companies, banks, and most corporations have a home page where you can obtain valuable investment information.

 

Most large investors find many of the investor services to be too expensive for personal subscriptions.

 

A corporation must give each potential investor an annual report.

 

A prospectus discloses information about corporate earnings, assets and liabilities, products or services, and the qualifications of top management.

 

Which of the following is a true statement?

 

A short-term investment goal is one that will be accomplished within a period of:

 

All of the following statements are considered to be good advice for a potential investor starting an ogram except:

 

A good rule of thumb is to limit consumer credit payments to no more than ____________ percent of your net (after tax) income.

 

An emergency fund should be deposited in a:

 

Eric Peltz earns $80,000 a year. His monthly expenses total $4,300. What is the minimum amount of money that Mr. Peltz should set aside in an emergency fund?

 

Jack Masters earns $40,000 a year. His monthly expenses total $2,100. What is the minimum amount of money that Mr. Masters should set aside in an emergency fund?

 

Which of the following features does not accurately describe a line of credit?

 

All except which one of the following are good ways to acquire money for starting an investment program?

 

Allen Arnold earns $3,000 per month. He pays his mortgage, utilities, grocery and other bills and then he makes sure to set aside $150 for his savings and investment accounts before he spends money to go to movies and other personal expenses. Which suggestion for obtaining the money he needs for investing is he following?

 

Alice Cooper contributes ten percent of her monthly earnings to her 401k plan at work. The plan allows her to invest in several different types of mutual funds and her employer matches up to 5% of her salary. Which suggestion for obtaining the money she needs for investing is she following?

 

James Gripka has a mutual fund that automatically takes $50 out of his paycheck each month. Which suggestion for obtaining the money he needs for investing is he following?

 

After Christmas is over, Ted Riley works hard to control his expenses in February so that he can make an extra payment into a mutual fund. Which suggestion for obtaining the money needs for investing is he following?

 

Sam Waters just received $10,000 from his grandmother's estate. He has thought about buying himself a new Harley with the money but has decided instead to add the money to his mutual fund account. What is he doing to obtain the money for investing?

 

Twenty years ago, you began investing $2,000 a year. Because your investments earned an average of 8 percent a year, your investment portfolio has a current dollar value of $92,000. How much did you earn on your investments over the 20-year period of time?

 

Twenty years ago, you began investing $250 a month. Because your investments earned an average of 8 percent a year, your investment portfolio has a current dollar value of $145,000. How much did you earn on your investments over the 20-year period of time?

 

Gina Davidson has received $50,000 in a divorce settlement and is trying to decide how to invest it. She has looked at stocks but is uncertain as some stocks have lost a lot of value for their owners recently. What aspect of investing is she most concerned about?

 

Which one of the following individuals should have a higher tolerance for risk?

 

Brenda Lee has received a $10,000 gift from her mother and is trying to decide how to invest it. She thinks she would like to invest it in stocks, because she knows that stocks have been appreciating by about 10% over the last several years. What aspect of investing interests Brenda?

 

Which one of the following is a true statement?

 

If interest rates in the overall economy decrease to 6 percent, which one of the following is most likely to be the approximate market value of a $1,000 corporate bond with a fixed interest rate of 7 percent? Round to the nearest hundred.

 

If interest rates in the overall economy increase to 8 percent, which one of the following is most likely to be the approximate market value of a $1,000 corporate bond with a fixed interest rate of 7 percent? Round to the nearest hundred.

 

After the death of her husband, Gina Baker, 35, received a check for $350,000 from a life insurance company. Gina has two small children and wants to make sure that both she and the children are taken care of in the future. Based on this information, which of the investment factors listed below would be the most important to Gina in her investment program?

 

If interest rates in the overall economy decrease, what will happen to the market value of a corporate bond with a fixed interest rate?

 

An example of ____________ risk occurs when the financial return on an investment does not keep up with prices that are increasing in the overall economy.

 

A $1,000 corporate bond pays 6.5 percent a year. What is the annual interest you will receive?

 

Unsuccessful products or poor corporate management may result in investors experiencing ______________ risk.

 

When a bondholder loses money because interest rates in the economy increase, it is an example of ____________ risk.

 

Lester McCann wants to invest but is worried about risk. In particular, he is worried that the money he invests today will not buy as much ten years from now. What type of risk concerns Lester?

 

Allison Peavy wants to invest but is worried about risk: In particular, she is worried that bad management and increased competition in the wireless phone market will make these companies less profitable than expected. What type of risk is Allison most concerned with?

 

Which one of the following statements is true?

 

John Hernandez is 24 years old and has saved enough money to fund an adequate emergency fund. In addition, he has saved $5,600 that can be used to fund an investment program. He is single, has no dependents, and would like to retire when he is 60 years old. Which one of the investment factors listed below would be most important for an investor like Mr. Hernandez?

 

A change in the value of stocks, bonds, or other investments due to political activity may cause investors to experience ____________ risk.

 

An investor concerned with a predictable source of income provided by an investment would choose:

 

Which one of the following investments offers the least amount of growth potential?

 

Which one of the following investments offers the greatest opportunity for growth?

 

Matt Jackson is single and 24 years old. He has just graduated from college and obtained a job making $26,400 a year. Which one of the following investments would you recommend for his long-term investment program?

 

The ability of an investment to be converted to cash without a substantial loss in dollar value is called:

 

Which one of the following investments offers the greatest liquidity?

 

Which one of the following investments offers the least liquidity?

 

Bill Teague has just gotten a gift of $20,000 from his parents and is trying to decide how to invest it. He is thinking about investing in a money market mutual fund because he knows he can withdraw the money whenever he needs it with little chance of a loss in value. What aspect of investing is Bill most concerned about?

 

Carl Reimer has just received an inheritance of $40,000 from his mother and is trying to decide how to invest it. Carl is young and earns a good salary. Carl wants to invest in a small cap mutual fund. While he won't receive much in the way of cash dividends, the companies are reinvesting significant amounts so the sales revenue and earnings in the future will be much larger. What aspect of investing is Carl most concerned about?

 

Based on historical performance, which one of the following investments is most likely to provide an average return of 10 percent a year between now and the year 2025?

 

Terry Hamilton has just received $30,000 from an uncle who died and is trying to decide how to invest it. She has done some research and has decided that about 30% of the money should go into large cap stocks, 20% into medium cap stocks, 15% into small cap stocks, 10% into bonds, 10% into foreign stock, and 15% into cash. She thinks that even if one area does not do that well, the rest will so that her overall return will be pretty good. What aspect of investing is Terry most concerned about?

 

What is the primary goal of asset allocation?

 

Which one of the following investments would rank the highest with regard to safety?

 

Equity capital is money:

 

If you seek financial security, which investments are appropriate for you?

 

Garrett Jennings is thinking about buying an investment that represents safety and income within the investment pyramid. Which investment is Garrett thinking about purchasing?

 

Mike Lively is thinking about buying an investment that represents an ownership claim on a company. The most important priority he has with this investment is receiving his dividends before dividends are paid on other types of investments. What investment is Mike thinking about purchasing?

 

Audrey is thinking about an investment that involves buying a written pledge by a corporation to repay a specified amount of money. It also pays interest every 6 months until it matures. What investment is Audrey thinking about purchasing?

 

A corporation selling stock is obligated to:

 

The money obtained by a company from selling corporate bonds:

 

If a $1,000 bond pays 5% interest each year, how much would each semiannual interest payment be?

 

Which one of these investments pools the funds of many investors, hires a professional money manager to manage those funds, and offers diversification to investors?

 

Hugh Jackman is thinking about buying an investment. The investment option that he is thinking about buying is an investment where investors pool their money. One of the key features is that it is managed by professional managers. What investment is Hugh thinking about purchasing?

 

Chris O'Donnell is thinking about investing in an investment that is high-risk in the hopes of earning a relatively large profit in a short amount of time. Which investment is he most likely considering?

 

Bob McDowell is thinking about buying an investment. The most important consideration when making this investment is the location of the investment. What investment is Bob thinking about purchasing?

 

Which one of the following would not be considered a safe investment for a conservative investor?

 

Which one of the following investments would provide the most predictable source of income?

 

For an investor who wants to be conservative, which of the following investments would not be appropriate?

 

Which of the following statements is true regarding effective investment planning?

 

Which newspaper is one of the most readily available sources of information for the average investor?

 

Which one of the following is not a business periodical?

 

The fees for investor services and newsletters generally range from ____________ per year.

 

Standard & Poor's and Value Line are companies that would be examples of:

 

Which of the following does not offer investor services?

 

Which one of the following is not a recommended step individuals can use to weather a future financial crisis?

 

To avoid the financial problems associated with excessive credit card debt, you should:

 

Which type of risk affects only a specific company or a specific industry?

 

Which one of these is not an example of systematic risk?

 

Stocks provide average safety while government bonds provide _____ safety.

 

The average credit card debt for undergraduate college students is:

 

In the beginning of 2016, the average balance on bank cards for U.S. families was about how much?

 

In how many of the years since 1926 have stocks lost money?

 

It is suggested that you allocate a percentage of your assets to growth investments based on the:

 

Many financial planners typically charge hourly consulting fees in the following range:

 

Which of the following types of investment information can be found on the Internet?

 

Establishing a ___________ ensures that you will have an amount of money that can be obtained quickly in case of immediate need.

 

The maximum dollar amount that can be borrowed using the cash advance provision on a credit card is called the:

 

Which of the following is not true of stocks?

 

An investment program can be seen as a pyramid consisting of _____levels?

 

Bondholders normally receive interest payments every _____months.

 

Which of the following is not true of mutual funds?

 

Typical asset classes used for diversification include all of the following except:

 

The advantages of asset allocation include all of the following except:

 

What percentage of your assets should be invested in safer, more conservative investments according to many financial planners if you are 30 years of age?

 

For a corporation, equity capital is provided by: