Question 1

Which of these is not a characteristic of the compound interest bond?

Accepted Answer

A)  various purchase options
B)  denominations of $100 up to $10,000
C)  interest paid on November 1 of each year
D)  can be purchased by cash
E)  cashable at any time for their face valueF) A) and B)
G) C) and D)

Question 2

What is a drawback of a money market fund?

Accepted Answer

A)  Low rate of return
B)  Minimum deposit
C)  Service charges
D)  High minimum balance required
E)  Not guaranteedF) None of the above
G) A) and D)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

The yield on a savings account is also referred to as

Accepted Answer

A)  liquidity.
B)  compounding.
C)  asset management.
D)  insolvency.
E)  rate of return.F) C) and D)
G) B) and D)

Question 5

Robert expects interest rates to rise over the next few months.To maximize his earnings he should use a:

Accepted Answer

A)  regular savings account.
B)  five year GIC.
C)  five-year certificate of deposit.
D)  six-month certificate of deposit.
E)  money market fundF) None of the above
G) B) and E)

Question 6

A cash advance is what type of short term financial service?

Accepted Answer

A)  Savings
B)  Chequing
C)  Credit Card
D)  Cash availability
E)  InvestmentF) A) and B)
G) B) and E)

Question 7

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

Accepted Answer

A)  discounted present value.
B)  compounded rate of return.
C)  net present value.
D)  effective annual rate.
E)  after-tax rate of return.F) A) and B)
G) A) and C)

Question 8

A "free" chequing account with a minimum balance of $500 has no opportunity cost.

Accepted Answer

A) True 
 B)False

Question 9

Which of the flowing is not a benefit of online banking?

Accepted Answer

A)  Time savings
B)  No paper trail
C)  Email notices of due dates
D)  Phishing
E)  ConvenienceF) B) and E)
G) B) and C)

Question 10

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

Accepted Answer

A)  liquidity.
B)  compounding.
C)  asset management.
D)  insolvency.
E)  yield.F) A) and C)
G) A) and B)

Question 11

A "free" chequing account with a minimum balance of $500 has an opportunity cost of lost interest.

Accepted Answer

A) True 
 B)False

Question 12

The convenience of using a financial institution with 24-hour banking frequently requires a trade-off with

Accepted Answer

A)  safety.
B)  personal service.
C)  growth of savings.
D)  liquidity.
E)  a lower rate of return.F) A) and B)
G) A) and C)

Question 13

Short term financial servies for short term needs include which one of the following?

Accepted Answer

A)  Cheque cashing
B)  Cash loans for autos
C)  RRSP's
D)  Insurance
E)  Budget counsellingF) B) and D)
G) All of the above

Question 14

Foreign currency exchange is what type of short term financial service?

Accepted Answer

A)  Savings
B)  Chequing
C)  Credit Card
D)  Cash availability
E)  InvestmentF) B) and C)
G) A) and B)

Question 15

A restrictive endorsement will usually include the words "for deposit only."

Accepted Answer

A) True 
 B)False

Question 16

A cashier's cheque is what type of short term financial service?

Accepted Answer

A)  Savings
B)  Chequing
C)  Credit Card
D)  Cash availability
E)  InvestmentF) A) and B)
G) A) and C)

Question 17

Briana Legett expects interest rates to decline over the next few months.To maximize her earnings she should use a(n) :

Accepted Answer

A)  regular savings account.
B)  interest-bearing checking account.
C)  five-year certificate of deposit.
D)  six-month certificate of deposit.
E)  money market fundF) A) and B)
G) A) and E)

Question 18

A $100 savings account that earns $5 interest in a year has a yield of ____________ percent.

Accepted Answer

A)  6
B)  5
C)  4.75
D)  3.75
E)  6.5F) A) and B)
G) A) and E)

Question 19

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

Accepted Answer

A)  safety
B)  cost
C)  compounding
D)  liquidity
E)  convenienceF) B) and E)
G) All of the above

Question 20

What is a drawback of a Guaranteed Investment Certificate?

Accepted Answer

A)  Low rate of return
B)  Minimum deposit
C)  Service charges
D)  High minimum balance required
E)  Not guaranteedF) A) and D)
G) B) and D)

Exam 4: Banking Services of Financial Institutions

Briana Legett expects interest rates to decline over the next few months.To maximize her earnings she should use a(n) :

Correct AnswerverifiedShow Answer

The convenience of using a financial institution with 24-hour banking frequently requires a trade-off with

Correct AnswerverifiedShow Answer

A restrictive endorsement will usually include the words "for deposit only."

Correct AnswerverifiedShow Answer

A "free" chequing account with a minimum balance of $500 has no opportunity cost.

Correct AnswerverifiedShow Answer

A $100 savings account that earns $5 interest in a year has a yield of ____________ percent.

Correct AnswerverifiedShow Answer

The yield on a savings account is also referred to as

Correct AnswerverifiedShow Answer

A "free" chequing account with a minimum balance of $500 has an opportunity cost of lost interest.

Correct AnswerverifiedShow Answer

A cash advance is what type of short term financial service?

Correct AnswerverifiedShow Answer

Which of the flowing is not a benefit of online banking?

Correct AnswerverifiedShow Answer

Short term financial servies for short term needs include which one of the following?

Correct AnswerverifiedShow Answer

Which of these is not a characteristic of the compound interest bond?

Correct AnswerverifiedShow Answer

A cashier's cheque is what type of short term financial service?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is a drawback of a Guaranteed Investment Certificate?

Correct AnswerverifiedShow Answer

Foreign currency exchange is what type of short term financial service?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is a drawback of a money market fund?

Correct AnswerverifiedShow Answer

Robert expects interest rates to rise over the next few months.To maximize his earnings he should use a:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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