Question 1

The money market fund offered by investment companies is a highly liquid financial service.

Accepted Answer

A) True 
 B)False

Question 2

List the fees and charges that chequing accounts may have.

Accepted Answer

Fees could include any of the following
...

Question 3

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) None of the above
G) C) and D)

Question 4

A trust has the purpose of

Accepted Answer

A)   solving a person's financial problems.
B)   obtaining low-interest loans.
C)   handling daily money management activities.
D)   managing the assets of a person.
E)   improving a person's budgeting skills.F) A) and C)
G) A) and D) D

Question 5

The storage of funds for future use is the purpose of ____________ services.

Accepted Answer

A)   trust
B)   borrowing
C)   credit card
D)   savings
E)   cash chequingF) None of the above
G) B) and E)

Question 6

If you think interest rates will decrease, you should consider investing your money in a longer-term GIC.

Accepted Answer

A) True 
 B)False

Question 7

Based on the following information, find the true balance of your chequing account and the sum, if any, of deposits in transit.
Balance on bank statement, $581
Total of outstanding cheques, $200
Service charges, $11
Interest earned on account, $7
Balance in your chequebook, $540

Accepted Answer

Reconciled balance =...

Question 8

In recent years, membership in credit unions has

Accepted Answer

A)   become more difficult due to higher taxes.
B)   continued to increase.
C)   been limited to government employees.
D)   declined due to poor credit union management.
E)   stayed at about the same level.F) B) and E)
G) A) and B)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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) C) and E)
G) D) and E)

Question 11

If the annual rate is 2% and inflation is 3%, then the approximate real rate of return is:

Accepted Answer

A)   5.00%
B)   3.00%
C)   1.00%
D)   - 1.0%
E)   0%F) A) and D)
G) A) and C)

Question 12

Direct deposit and automatic monthly payments are features of

Accepted Answer

A)   savings accounts.
B)   chequing accounts.
C)   electronic banking.
D)   investments.
E)   reserve funds.F) A) and E)
G) All of the above

Question 13

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

Accepted Answer

A)   restrictive
B)   common
C)   special
D)   blank
E)   documentedF) B) and D)
G) C) and E)

Question 14

An advantage credit unions may have over other financial institutions is

Accepted Answer

A)   interest-bearing chequing accounts.
B)   flexible-rate loans
C)   low-cost personal loans.
D)   credit cards.
E)   variable-rate savings plans.F) D) and E)
G) B) and D) C

Question 15

When preparing a bank reconciliation, outstanding cheques should be

Accepted Answer

A)   added to the bank statement balance.
B)   subtracted from the bank statement balance.
C)   added to the chequebook balance.
D)   subtracted from the chequebook balance.
E)   added to direct deposits.F) A) and D)
G) A) and E)

Question 16

Activity accounts are designed for people who write many cheques each month.

Accepted Answer

A) True 
 B)False

Question 17

A $400 savings account that earns $15 interest in a year has a yield of ____________ percent.

Accepted Answer

A)   6
B)   15
C)   4.75
D)   3.75
E)   6.5F) A) and C)
G) A) and B)

Question 18

Savings compounded ____________ would have the lowest effective yield

Accepted Answer

A)   monthly
B)   annually
C)   semi-annually
D)   daily
E)   weeklyF) A) and E)
G) B) and E)

Question 19

Which best describes the prime rate of interest?

Accepted Answer

A)   The lending rate banks charge their most creditworthy clients
B)   The yield on 91-day treasury bills
C)   The yield on 30-year government bonds
D)   The lending rate the Bank of Canada charges financial institutions.
E)   The base rate for all mortgagesF) D) and E)
G) All of the above A

Question 20

The first information to be recorded when writing a cheque is the

Accepted Answer

A)   date.
B)   cheque stub or cheque register.
C)   payee.
D)   amount.
E)   signature.F) None of the above
G) B) and C)

Exam 4: The Banking Services of Financial Institutions

The money market fund offered by investment companies is a highly liquid financial service.

Correct AnswerverifiedShow Answer

List the fees and charges that chequing accounts may have.

Correct AnswerverifiedFees could include any of the following...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

A trust has the purpose of

Correct AnswerverifiedD

The storage of funds for future use is the purpose of ____________ services.

Correct AnswerverifiedShow Answer

If you think interest rates will decrease, you should consider investing your money in a longer-term GIC.

Correct AnswerverifiedShow Answer

Based on the following information, find the true balance of your chequing account and the sum, if any, of deposits in transit. Balance on bank statement, $581 Total of outstanding cheques, $200 Service charges, $11 Interest earned on account, $7 Balance in your chequebook, $540

Correct AnswerverifiedReconciled balance =...View AnswerShow Answer

In recent years, membership in credit unions has

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the annual rate is 2% and inflation is 3%, then the approximate real rate of return is:

Correct AnswerverifiedShow Answer

Direct deposit and automatic monthly payments are features of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An advantage credit unions may have over other financial institutions is

Correct AnswerverifiedC

When preparing a bank reconciliation, outstanding cheques should be

Correct AnswerverifiedShow Answer

Activity accounts are designed for people who write many cheques each month.

Correct AnswerverifiedShow Answer

A $400 savings account that earns $15 interest in a year has a yield of ____________ percent.

Correct AnswerverifiedShow Answer

Savings compounded ____________ would have the lowest effective yield

Correct AnswerverifiedShow Answer

Which best describes the prime rate of interest?

Correct AnswerverifiedA

The first information to be recorded when writing a cheque is the

Correct AnswerverifiedShow Answer

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Fees could include any of the following
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Reconciled balance =...
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C

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