PDF Banking Test - MoneyPower - Loudoun County Public Schools

Banking Test - MoneyPower

Multiple Choice Identify the choice that best completes the statement or answers the question.

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1. If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the a. U. S. Treasury Department. b. Federal Deposit Insurance Corporation. (FDIC) c. State Banking Commission. d. Federal Reserve Board.

____ 2. Which financial product can you buy for $25, is safe, and will be worth $50 at a future date?

a. Series EE savings bond

c. 50 shares of ABC Co. stock

b. Certificate of deposit

d. ABC Co. bond

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3. A blank endorsement on a check: a. Has no effect on the check b. Cancels the check c. Creates a check that can be cashed by anyone d. Restricts the use of the check

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4. 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. Cash

c. Cashier's check

b. Certified check

d. A check

____ 5. Which financial product typically pays the highest rate of interest?

a. Savings account

c. Certificate of deposit

b. Money market account

d. Common stock

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6. Safe-deposit boxes are: a. A free benefit for accounts with deposits starting at $50,000 b. Safe and can be accessed only by the owner of the box c. Available at all banks d. Convenient and accessible at any hour of the day or evening

____ 7. Which financial product has the most predictable income?

a. Stock

c. Certificate of deposit

b. Real estate

d. Option/future contract

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8. Employees prefer direct deposits because: a. There is a small fee for the service b. The danger of losing a paycheck is slightly reduced c. The money is generally deposited in their checking account sooner than it would be if they had to deposit it in person d. Direct deposits earn a higher rate of interest

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9. "The Fed" is short for: a. The Federal Reserve System b. Congress c. FBI d. The Federal Deposit Insurance Corporation

____ 10. Troy has $50 a month transferred electronically from his checking account to his savings account. This is an

example of:

a. An installment payment

c. An ATM transaction

b. A savings plan

d. A debit card transaction

____ 11. 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? a. Determine that checks already written have cleared. b. Deposit sufficient funds to adjust the balance in the checkbook to match the bank's balance. c. Adjust the balance in the checkbook so it is the same as the bank's balance. d. Notify the bank in writing to adjust the statement.

____ 12. What action should a person take who must make a tuition payment at the end of August each year? a. Decide how much money will be needed and then place 1/12th of that amount in a separate account each month. b. Divide the total amount of money that will be needed into 12 equal parts and invest that amount in stocks. c. Obtain a short-term collateralized loan for the needed amount of money. d. Plan to open a new credit card account that will be used to charge the needed amount of money.

____ 13. Joan wants to open a checking account and wonders if checking accounts pay interest. How would you answer her question? a. All checking accounts per interest b. Some types of checking accounts pay interest c. Checking accounts never pay interest d. Checking accounts pay interest if the account balance does not fall below $300.00

____ 14. 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 a. protect him from providing opportunities for forgery. b. insure that he does not receive important materials he is likely to lose. c. lessen the bank's need to maintain records of check transactions. d. save the bank money associated with returning copies of the checks.

____ 15. 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?

a. Credit union

c. Savings and loan association

b. Commercial bank

d. Investment club

____ 16. Which financial product may pay a dividend?

a. Savings account

c. Certificate of deposit

b. Money market account

d. Common stock

____ 17. The financial institution where Ms. Sanchez has her checking account will continue to pay out money for the checks she writes as long as: a. She uses checks from her checkbook b. The financial institution has sufficient funds c. There is enough money in Ms. Sanchez's account to cover the amount of the checks d. She maintains a good record of deposits and handles her account responsibly

____ 18. 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? a. They typically require a two day waiting period before giving cash b. They typically charge high fees c. There is likely to be a ceiling on the size of the check he can cash d. They generally require a co-signor

____ 19. The most liquid type of investment is: a. A corporate bond b. A certificate of deposit

c. Real estate holding d. A money market account

____ 20. The National Credit Union Administration (NCUA) insures accounts in:

a. Credit unions

c. Brokerage firms

b. Commercial banks

d. Savings banks

____ 21. How can individuals be prepared for losing their job or having a large medical expense? a. Maintain a checking account with sufficient funds b. Pay credit card bills on time c. Prepare a budget d. Save at least three months of income

____ 22. The best reason for depositing money in a bank or credit union savings account instead of keeping your money "under the mattress" is that: a. Money deposited in savings accounts are F.D.I.C. insured. b. Most savings accounts earn a guaranteed rate of interest. c. Most savings accounts come with a free credit card. d. Money in a savings account can be accessed any time during day or night.

____ 23. 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? a. The same day as the $200 deposit b. 3 to 7 days later, depending on your bank's check clearance policy c. After receiving a checking account statement at the end of the month d. On the day you make your next deposit

____ 24. Which is the best example of a way to reduce fees paid for ATM transactions? a. When making supermarket purchases with a debit card, a person adds $50 in cash to the transaction instead of using an ATM machine.

b. When using an ATM machine, a person takes only $20 each time out of the ATM machine located in a neighborhood store.

c. A person uses any nearby bank ATM machine rather than going to a branch of the issuing bank to make ATM withdrawals.

d. A person uses any convenient ATM machine but only at night and on the weekends.

____ 25. Consumer finance companies, which are often advertised on TV, are also known as: a. Banks b. Savings and loan associations c. Small loan companies d. Purchase loan lenders

____ 26. Financial services and products generally offered by banks and credit unions include:

a. Real estate listings

c. Legal services

b. Savings and loans

d. Business plans

____ 27. Traveler's checks, often used for vacations: a. Are equivalent to credit cards b. Are free at most banks c. Function as cash and are easily replaced if lost d. Are FDIC insured

____ 28. Banks use savings account deposits to: a. Make their services and products attractive for new depositors b. Pay for employee special projects c. Give loans to consumers and businesses d. Improve the quality of life in low-income communities

____ 29. A bank Certificate of Deposit is a: a. Savings instrument that requires a deposit for a period of time during which the saver can withdraw money from the plan at any time without a penalty b. Savings instrument that requires a deposit for a period of time during which there is a penalty for withdrawals c. Cash deposit in a savings account that earns interest d. Certificate for deposits that are issued for half the face value

____ 30. The phrase used for putting money into a savings account is:

a. Verifying the account

c. Making a deposit

b. Balancing the account

d. Making a withdrawal

____ 31. The term used to describe the ease and speed with which you can convert savings or an investment to cash is:

a. Convertibility

c. Liquidity

b. Principal

d. Rate of return

____ 32. Margaret wants to store a valuable coin collection and important papers. Generally, consumers should: a. Store valuables in a cabinet at home b. Rent a safe deposit box for their valuables c. Hand valuables over to their attorney d. Store valuables in locked drawer

____ 33. The best suggestion you gave a friend who is writing a check for the first time is: a. Date the check because it is usually proof of payment b. Use pencil to permit changes c. Make the check payable to cash d. Use the checkbook stub or register to keep a record of the date you write the check

____ 34. A person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should a. include the reason that both cash and a check are being deposited. b. indicate what bank issued the check that is being deposited. c. indicate the amount of money that is currently in the checking account as well as in a savings account to cover the check. d. list the cash deposit separately from the check as well as the total of the deposit.

____ 35. Money orders are: a. Distributed by the Treasury Department b. Available for no fee at banks and retail stores c. A purchased certificate to pay a specified amount to a specific payee d. A certified check used to pay a specified amount to a specific payee

____ 36. 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? a. Interest earned on savings accounts is not taxable b. A sales tax will be charged on the interest earned c. Savings account interest is taxable d. If the interest is under $50, it is not taxable

____ 37. Which documents should be stored in a safe-deposit box?

a. Checkbook statements.

c. Current paycheck stubs.

b. Copies of current and past budgets.

d. Mortgage loan papers.

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