BUSI 223 Smartbook Chapter 5 and 13 solutions complete answers

BUSI 223 Smartbook Chapter 5 and 13 solutions complete answers 

 

Time deposits do NOT include:

 

      deposits include checking accounts and other payment methods. This is a one word answer.

 

Institutions typically offering online banking include:

 

An automated teller machine (ATM) is oftentimes referred to as a “      machine.” This is a one word answer.

 

Financial services will usually NOT be affected by:

 

Saving funds for future use is necessary for financial:

 

A       bank is a financial institution that offers a full range of services. This is a one word answer.

 

Demand deposits are NOT:

 

Which of the following services do savings and loans offer?

 

Electronic banking allows a customer to:

 

Which of the following is not true regarding ATM's?

 

A money market fund is a:

 

Financial services can change due to such factors as changing interest rates and rising consumer prices.

 

Payday loans are typically used by people who:

 

      banks are organized as corporations, with individual investors contributing the capital for operations.

 

Which of the following is a service not offered by savings and loans?

 

The savings alternative that offers less liquidity is:

 

A regular savings account usually offers:

 

A ______ fund is an account used for savings offered by investment companies.

 

Certificates of deposit require that a certain amount be on deposit for a stated time period in exchange for

 

If a customer "rolls over" her or his payday loan, it is easy to:

 

Drawbacks of money market accounts include:

 

The savings alternative that offers more liquidity is:

 

A drawback of U.S. savings bonds is:

 

A regular savings account usually does not have:

 

Redeemed EE bonds may be exempt from federal income tax if the funds are used to pay tuition and fees at a college or qualified technical school for yourself or for a dependent and if they were purchased by an individual who is at least 24 years old.

 

Most financial institutions impose a penalty for ____.

 

The rate of return is:

 

A $500 savings account that earned $25 after a year would have a rate of return, or yield, of ______ percent.

 

Benefits of money market accounts include:

 

The ______ is the percentage rate expressing the total amount of interest that would be received based upon time and compounding.

 

Benefits of U.S. savings bonds include:

 

The biggest advantage of using APY is:

 

EE bonds have a minimum holding period of:

 

The rate of      _ is the percentage increase in the value of savings as a result of interest earned.

 

You are in the 25% tax bracket, the after tax savings rate of return is 6%, the yield on the savings account is:

 

A $200 savings account that earned $8 after a year would have a rate of return, or yield, of ______ percent.

 

What types of financial institutions have federal deposit insurance through FDIC?

 

Annual percentage yield is also commonly expressed as:

 

When banks merge, this may cause coverage for FDIC insurance to:

 

The APY formula can be expressed as: APY = 100 {(1 + interest/principal)      /days in term -1}

 

The typical dollar limit per person per financial institution for FDIC insurance is:

 

True or false: EE bonds continue to earn interest past their maturity date.

 

Online payments do NOT include

 

You are in the 25% tax bracket. So, the yield on the savings account is 8%, and the after-tax savings rate of return is:

 

In a regular checking account, it is beneficial to:

 

What type of financial institution typically does not have federal deposit insurance?

 

What three actions should you NOT take if you are a victim of identity theft?

 

Assume FDIC insurance limits are $100,000. John and Mary are married. John has an account with $40,000. John and Mary have a joint account with $60,000. How much FDIC coverage does John require? Remember that John and Mary have equal ownership of the joint account.

 

Checking account fees have _______ in recent years.

 

True or false: Typically each person is insured up to $100,000 deposited in to each financial institution.

 

Overdraft protection is designed to:

 

Common payment choices do not include:

 

protection is less costly than paying a fee for an unfunded check.

 

      checking accounts usually have a monthly service charge that you can avoid by keeping a minimum balance in the account.

 

A joint account means:

 

What actions should you take if you are a victim of identity theft?

 

When you sign the back of the check, this is a(n):

 

On an interest-bearing checking account, always compare the interest earned with:

 

The bank balance of the checking account is $500, the current balance in the checkbook is $325, bank fees are $25, and outstanding checks are the only additional item. How much are the outstanding checks?

 

Overdraft protection is an automatic loan made to checking account customers to cover checks written in excess of:

 

Traveler's checks require ___ signatures.

 

True or false: Bouncing a check can be very inexpensive.

 

The process of saving money to buy a house in three years could be considered an:

 

An account with two or more owners is called a:

 

When looking at investment you should first ask yourself:

 

A(n)       is your signature on the back of the check.

 

Other than length of time invested, what other aspect significantly impacts future value?

 

Comparing your checkbook balance to the bank balance is called:

 

      in an investment means minimal risk of loss while       in an investment means a measure of uncertainty about an outcome.

 

Traveler's checks allow you to make payments when you are:

 

Certificates of deposit, government bonds, and certain mutual funds are all considered       investments.

 

Saving money for retirement would be considered a(n):

 

Which of the following is not considered a speculative investment?

 

Among other factors, a person's priorities, age, and       affect his or her investment goals.

 

Typical returns are higher       and mutual funds which offer high potential returns compared to CDs or        accounts. 

 

Tom wants an investment with a minimal chance of loss. He is mainly concerned about the investment's:

 

"Safe" investments include:

 

Speculative investments assume a:

 

It is vital to determine the amount of risk you are willing to assume.

 

The potential return on an investment should be:

 

If you invested $5,000 four years ago and today the value of that money is $5,800, the rate of return for the entire period would be      %.

 

If interest rates increase, the value of a bond will      .

 

True or false: Interest rate risk is the result of changes in the interest rates in the economy.

 

The amount of risk to assume is based upon:

 

Fluctuation of prices due to the behaviors of investors in the marketplace is known as:

 

Match the potential return on an investment to the risk.

 

Changes in the market price for stocks are ______ to the financial health of the company itself.

 

Joe invests $3,000 dollars. At the end of 10 years the investment is worth $3,300. What is the rate of return for the 10-year period?

 

Match interest rates and the value of bonds.

 

What risk is the result of changes in the interest rates of the economy?

 

For investment income, which of the following would be good choices? (Select all that apply.)

 

The type of market risk that affects a specific company or industry is       risk.

 

Since 1926, stocks have had positive gains ______ than they have lost money.

 

Describe the relationship between the finances of a company and the market price of the stock.

 

Small cap stocks are those issued by small, rapidly       companies.

 

Which of the following would not be a good choice when investing for investment income?

 

True or false: The less time you have to let your investments work, the more advantageous it is to invest in stocks rather than short-term government bonds and certificates of deposit.

 

True or false: Since 1926 stocks have returned approximately 5%, while bonds have returned about 10% during this same time.

 

Another factor affecting investing is your age. Younger investors can afford to invest a larger percentage in growth stocks because if their investment fails:

 

A distribution of money, stock, or other property that a corporation pays to stockholders is called a:

 

What are the two types of stocks?

 

Which of the following are some of the typical asset classes utilized in asset allocation?

 

A person with little to no investing experience may choose mutual funds because they offer:

 

Match your time horizon with the applicable investment option.

 

Year-to-year real estate values nationally increase       to      % on average.

 

The younger you are as an investor, the more likely you are to invest a       portion in growth investments.

 

As an investor, you want to ask your real estate agent about which of the following?

 

For stocks, the company has no obligation to repay the money, and it also:

 

There are two basic types of stock: common stock and        stock.

 

Government bonds are considered a(n)       safety,       risk, investment.

 

People choose mutual funds because they invest in many different investments at one time. This is known as       .

 

The first step for effective investment planning is to:

 

Many beginning investors believe that real estate is an investment that

 

      is the most important factor for real estate investments.

 

After making your investments, it is crucial to:

 

Dividends:

 

Real estate is considered to have a low ______ factor.

 

The minimum record-keeping requirements consist of which of the following?

 

Which of the following is the last step for effective investment planning?

 

True or false: Monitoring is the process of keeping track of your investments and following their progress.

 

This activity helps you spot opportunities to maximize profits or reduce losses when you sell your investments.

 

When investing in stocks, the investor must know the company has no requirement to       the money and no obligation to provide      .

 

Taxes can affect which of the following areas of investing?

 

When establishing the minimum record-keeping requirements you want to keep track of dividends, interest paid, and other sources of      .

 

Accurate record keeping can help you decide if you want to invest       funds in a particular investment.

 

      consequences affect many areas of investing including dividends, interest, and rental income.

 

True or false: Achieving your financial goals and carrying out your daily activities require various financial services.

 

Using savings for ______ living expenses is one of the mistakes people make when managing current cash needs. This is a one word answer.

 

Using savings and increasing borrowing reduce your net worth and

 

A current shortage of cash will require two basic choices:

 

Financial services include all of the following except:

 

Achieving your financial goals and carrying out your daily activities require many _____ services.

 

Common mistakes made when managing current cash needs include:

 

Criteria for selection of a savings plan include:

 

A reduction in long-term financial security can be caused by:

 

True or false: A current shortage of cash will require two basic choices: liquidate savings or borrow.

 

Financial services include:

 

True or false: Time deposits include money in savings accounts and certificates of deposits.

 

The ability to transfer money to others is

 

True or false: One criterion for choosing a saving plan is the interest rate.

 

Credit alternatives include:

 

Insurance is a(n) _________________.

 

A _____ is a legal agreement that provides for the management and control of assets by one party for the benefit of another. This is a one word answer.

 

Parents who want to set aside money for their children's education often use a:

 

True or false: The ability to transfer money is not a necessary part of daily business activities.

 

Trusts are commonly managed by:

 

True or false: Credit alternatives are only for people of limited resources.

 

Another name for an asset management account is:

 

Additional financial services that may be needed for successful financial management include:

 

Which of the following are potential benefits of an asset management account that consolidates most of your financial services?

 

A trust is a legal agreement that provides for:

 

True or false: Web-only banks have declined in recent years.

 

Parents who set aside funds for their children will often intend for the money to be used for:

 

Mobile web banking with Internet access of the financial institution's website is one of the three methods to access financial service activities through a(n) _____ or _____ .

 

Trusts are typically created by a:

 

True or false: Asset management accounts are a collection of financial services offered for a single fee.

 

A consolidated financial services account is called a(n):

 

True or false: Banking online and electronic banking have expanded in recent years.

 

Debit cards are different from credit cards because:

 

Your maximum liability for a lost or stolen debit card will be $50 if you notify the financial institution within _____ days.

 

Fraud charges should be reported within how many days of receiving your statement?

 

Another name for an automated teller machine (ATM) is:

 

You are not responsible for charges on your debit card account if they are:

 

Common trade-offs (opportunity costs) for financial services include:

 

Credit cards are different from debit cards because:

 

An opportunity cost is:

 

If you lose your debit card and report it after more than 60 days, your liability may be the _____ amount in your account. This is a one word answer.

 

Fraud charges on a debit card should be reported within _____ days of receiving your statement to protect your right not to be charged for the transaction.

 

You are responsible for charges on your account if they are:

 

Which of the following are good sources of information for economic trends?

 

A common trade-off (opportunity cost) for financial services includes having to keep money in accounts longer to obtain higher interest rates. This leads to reduced:

 

A(n) _____ cost is what you give up when you evaluate, select, and use financial services. This is a one word answer.

 

When interest rates are falling, you should NOT:

 

If you lose your debit card and report it lost after the time period of 2 days and prior to 60 days, your liability may be as high as:

 

When choosing a savings investment and interest rates are rising, you should NOT:

 

Which of the following is NOT a reliable source of information for economic trends?

 

Which of the following are deposit-type institutions that serve as financial intermediaries?

 

When interest rates are falling, you should:

 

When interest rates are falling, you should:

 

Commercial banks offer services to:

 

All of the following are deposit-type institutions that serve as financial intermediaries except:

 

A _____ savings bank is owned by depositors. This is a one word answer.

 

Financial services are now offered by:

 

Life insurance has other uses, including:

 

Deposit institutions would not include:

 

A _____ and loan association traditionally specializes in passbook accounts and mortgage loans.

 

An institution that is owned by depositors and specializes in savings accounts and mortgage loans is a:

 

What are the main types of services that finance companies typically do not offer?

 

Non-deposit institutions include:

 

Which of the following exists primarily to provide loans to purchase homes?

 

The main purpose of life insurance is to provide financial security for

 

High cost financial services typically do not include:

 

The interest rates charged by pawnshops are regulated by:

 

What is the main function of a finance company?

 

Check-cashing outlets usually charge fees of:

 

What is the main function of a mortgage company?

 

Check-cashing outlets do not offer which of the following services?

 

What is the main purpose of life insurance?

 

High cost financial services typically include:

 

Pawnshops charge _____ fees than other financial institutions.

 

The ______ process is defined as a store that leases products to consumers who will eventually keep the items after completing a certain amount of payments.

 

Which type of financial institution typically charges higher rates?

 

Check-cashing outlets offer the following services:

 

Default on an auto title loan can mean that the auto will be:

 

The rent to own process is:

 

Which of the following attributes is not important when selecting a financial institution?

 

Default on an auto title loan can mean that the auto will be _____ upon default. This is a one word answer.

 

Share accounts are typically offered by:

 

A savings plan that requires a certain amount of money to be left for a specified amount of time is NOT a:

 

Minimizing bank fees may require:

 

A challenge of rising-rate CD's include:

 

The benefits of creating a portfolio with CDs with multiple maturities are:

 

Share accounts are the same as:

 

A savings plan that requires a certain amount of money to be left for a specified amount of time, subject to penalty for early withdrawal, is called a:

 

Stock - _____ CDs have rates that vary with the stock market.

 

John has four CDs in the amount of $2,000 each. The first matures in three months, the second matures in six months, the third matures in nine months, and the fourth matures in one year. This is called a CD

 

Money market accounts are insured by federal deposit insurance, whereas money market mutual _____ are not.

 

_____ bonds are NOT a type of federal savings bond.

 

For callable CDs, banks may "call" these instruments if:

 

Money market accounts at commercial banks are insured by ______, whereas money market funds are not.

 

A Savings Bond that has an interest rate based on two components is a(n):

 

Select the bonds that are a type of federal savings bond.

 

A person may purchase up to ____ worth of savings bonds of each series (EE and I bonds) a year, for a total of ____.

 

EE bonds are exempt from state and local taxes, but federal income tax is typically due:

 

The two parts of interest on an I bond are a(n):

 

What is the face value dollar limit for purchase of U.S. EE and I bonds?

 

Some tax advantages of EE bonds are:

 

_____ is a process that calculates interest based on previously earned interest.

 

Using compounding, how much interest will be earned in the second year of a savings account that has an original balance of $200 and earns 6% interest per year?

 

Compounding is the process that calculates earnings based on previously earned:

 

The Truth in Savings law requires _____ to disclose certain charges and fees on savings account plans.

 

Using compounding, how much interest will be earned in the second year of a savings account that has an original balance of $100 and earns 5% interest per year?

 

The Truth in Savings law requires the following items to be disclosed:

 

The rate of return you earn on your savings account should be compared with the inflation rate.

 

_____ is the attribute of savings accounts that allows you to withdraw money on short notice without a loss of principal or fees.

 

When comparing savings accounts rates of return, you should choose one that:

 

There is a trade-off between liquidity and:

 

How much money have savers with deposits covered by federal insurance lost in recent years?

 

What is the purpose of liquidity?

 

To achieve long-term financial goals, many people trade off _____ for a _____ return.

 

Which of the following sentences are true in relation to depositors with federal deposit insurance:

 

Common choices for making payments include all of the following except:

 

Use a credit card to:

 

Smart cards offer electronic services such as:

 

Use a debit card to:

 

Activity accounts charge a fee for each check written and each deposit, as well as:

 

Another name for smart cards is:

 

Sally writes 30 checks a month. Would an activity account be appropriate for her?

 

Share draft accounts at a credit union:

 

Activity accounts charge a fee for each check written and sometimes for:

 

The typical customer of an activity account:

 

A _____ draft account is an interest-bearing checking account at a credit union.

 

According to the text, you should ____ checking accounts that offer several services.

 

A _____ card is the document that records the authorized persons on the account.

 

A _____ ticket or slip is used to add funds to a checking account. This is a one word answer.

 

Accounts that charge a flat fee for a package of services (i.e., safe deposit boxes, travelers checks, and travel insurance) are only valuable to:

 

A blank endorsement is comprised of:

 

A signature card is the document that helps the bank determine who are the ______ on the account.

 

A deposit ticket is used to add funds to:

 

Place the steps to writing a check in rank order from first to last.

 

A stop payment order is not designed to:

 

The three main types of endorsements are:

 

A _____ check is a personal check with guaranteed payment.

 

The steps in writing a check include:

 

Financial institutions consider checks that are older than ______ to be "stale dated."

 

A money order:

 

Useful investment goals are , specific and .

 

A good rule of thumb is to limit consumer credit payments to:

 

An amount of your money that you obtain quickly in case of an immediate need is an:

 

Mr. Jones wants to establish an emergency fund. His living expenses for his family are $2,000 per month. The MINIMUM Mr. Jones should have in his emergency fund is $.

 

Line of is a short-term loan that is approved before money is actually needed.

 

"I want to make $300 quarterly for the next three years". This goal is not only specific but is:

 

A good rule of thumb is to limit consumer payments to 20% of -tax income.

 

A(n) fund is an amount of money you can obtain quickly in case of an immediate need. This is a one word answer.

 

Mr. Smith wants to establish an emergency fund. His living expenses for his family are $1,800 per month. What is the minimum Mr. Smith should have in his emergency fund?

 

In times of financial crisis, consumers should:

 

A short-term loan that is approved before the money is actually needed is a(n):

 

When looking at investment you should first ask yourself:

 

Other than length of time invested, what other aspect significantly impacts future value?

 

In times of financial crisis, consumers may need a larger than usual fund.

 

The rate of can vary in percentage, yet every percent greater makes a significant impact on future value.

 

True or false: Speculative investments are medium-risk investments made with the hope of earning a relatively large profit in a short amount of time.

 

The risk associated with bad news that a company may bring to the public is the risk in decreased .

 

Ben is a father of three children who is concerned about his future career with his company. His investment choices will most likely be:

 

A high-risk investment made in the hope of earning a relatively large profit in a short time is called a:

 

One type of risk that investors in stock take is a decrease in:

 

If you are a young married couple with no children, you will most likely choose investments:

 

It will cost you more money to buy general goods if you wait and invest and your:

 

A rise in the general level of prices is called:

 

You invest $10,000 today in hopes of purchasing a computer system and gain 3.5% on your investment. At the same time inflation rises 4% over the same time period. It will cost you an additional ______ to purchase the same goods.

 

Inflation is the rise in the general level of .

 

An investment with a $1,500 face value has a 6% interest rate compounded annually. The annual interest is $.

 

True or false: Any time you invest in stocks, corporate bonds, and mutual funds that invest in stocks, you assume business failure risk.

 

An investment has a $1,000 face value and a 9% interest rate compounded annually. What is the annual amount of interest to be received in the first year?

 

Market risk is the fluctuation of stock and bond prices due to the behaviors of investors in the marketplace.

 

A growth company has:

 

Certificates of deposit, mutual funds, and government bonds:

 

The risk that the company you are investing in might go under is called:

 

A growth company is a company that has better than average earnings potential and is expected to have revenue that can be high or low, but is .

 

Savings and checking accounts are considered more because the money can be converted into cash quickly.

 

The process of spreading your assets among several different types of investments to lessen risk is called:

 

A factor that is utilized for asset allocation is the dollar amount of your investments.

 

Asset allocation or diversification is the process of spreading your assets among several different types of investments.

 

The categorical spreading of your investments is dependent on which of the following factors?

 

Based upon the image shown of the investment pyramid, what level would gold bars be included? Gold is a commodity.

 

Based upon the image shown of the investment pyramid, what level would owning an apartment building be included?

 

Money that a business obtains from its owners is called:

 

Corporations are under a legal obligation to pay dividends.

 

Preferred stockholders receive:

 

Equity capital is money that a business obtains from its .

 

The maturity date is the date on which the entity repays the _____.

 

If financial problems occur, a business will pay dividends to stockholders first.

 

An investment company that pools the money from many investors to invest in a variety of securities is called a:

 

A corporation's written pledge to repay a specified amount of money, along with interest is a:

 

A(n) fund is an investment company that pools the money from many investors to invest in a variety of securities. This is a one word answer.

 

Mutual funds range from very _____ to very _____.

 

Collectibles, options, gems, and precious metals are all considered investments. This is one word answer.

 

Which type of investment ranges from very conservative to very speculative?

 

Which of the following have little chance of providing a predictable income?

 

affect many areas of investing including dividends, interest, and rental income.

 

What types of investments have a small chance of providing a predictable income?

 

When searching for information on investments, selective use of the is essential.

 

Often listened to in a car and watched at home, and can be good sources to gather information on investments.

 

What resource is essential for up-to-date investment information and investment research?

 

Magazines such as Advertising Age focus on information about the firms in a(n):

 

Many radio and television stations broadcast _______ as part of their regular news programs.

 

Business Week, Forbes, and Fortune magazines provide general news about the overall , and detailed financial information about specific corporations.

 

When selling new securities, corporations must release all information regarding the investment in a document known as a(n) .

 

Standard and Poor's Stock Reports provide up-to-date information on corporations and include an area of ______ and ______ regarding each stock.

 

Select magazines that provide investment information include which of the following?

 

Who requires the release of the prospectus for corporations selling new securities?

 

Morningstar Investment Reports track thousands of: