Question 1

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

Accepted Answer

A)  short term loans
B)  short-term savings instruments.
C)  same approach as if interest rates are rising.
D)  variable-rate loans.
E)  long term loans.F) A) and E)
G) B) and D)

Question 2

A service designed for people who write only a few cheques each month is a(n)  ____________ account.

Accepted Answer

A)  EFT
B)  regular chequing
C)  share draft
D)  interest-bearing chequing
E)  activityF) B) and E)
G) A) and B)

Question 3

An advantage of Canada Savings Bonds is

Accepted Answer

A)  interest earned is exempt from federal income taxes.
B)  interest earned is deferred for federal tax purposes.
C)  a guaranteed rate of return.
D)  they can be converted to other types of investments.
E)  they are sold twice a year.F) B) and D)
G) B) and C)

Question 4

What is a drawback of a regular savings account?

Accepted Answer

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

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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 C)
G) A) and E)

Question 7

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

Accepted Answer

A)  five-year GIC.
B)  interest-bearing chequing account.
C)  regular savings account.
D)  six-month GIC.
E)  money market fundF) All of the above
G) A) and B)

Question 8

Which of the flowing is not a non-deposit institution?

Accepted Answer

A)  Life insurance companies
B)  Mortgage companies
C)  Pawnshops
D)  Investment Companies
E)  Trust companiesF) A) and B)
G) A) and C)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Based on the following information, what amount would be SUBTRACTED from the BANK BALANCE side of a chequing account reconciliation? Service charge $6, Outstanding cheques $260, Interest $3.00, Deposit in transit $65

Accepted Answer

A)  $260
B)  $65
C)  $71
D)  $68
E)  $266F) B) and C)
G) A) and E)

Question 11

What is the major reason why merchants accept Bitcoin?

Accepted Answer

A)  Safer than cash
B)  Safer than credit cards
C)  Lower fees than credit cards
D)  Consumers prefer to pay in cryptocurrency
E)  They want to have off book activitiesF) A) and B)
G) C) and D)

Question 12

To avoid high fees for loans, a person should not borrow from a

Accepted Answer

A)  credit union.
B)  savings and loan association.
C)  pawnshop.
D)  commercial bank.
E)  mutual savings bank.F) C) and D)
G) D) and E)

Question 13

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 B)
G) A) and E)

Question 14

Store credit cards usually charge a lower interest rate than a bank credit card.

Accepted Answer

A) True 
 B)False

Question 15

If the annual rate is 10% and inflation is 4%, then the approximate real rate of return is:

Accepted Answer

A)  14.00%
B)  4.00%
C)  6.00%
D)  6.80%
E)  7.00%F) B) and C)
G) A) and B)

Question 16

The "prime" rate is ___________________________.

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 yield on 1-year government bonds
E)  The yield on corporate bondsF) D) and E)
G) A) and E)

Question 17

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

Question 18

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)  cashable at any time for their face value
D)  can be purchased by cash
E)  A, B, C and D are all characteristics of the compound interest bond.F) B) and E)
G) D) and E)

Question 19

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

Accepted Answer

A)  a passbook account
B)  a regular chequing account
C)  a money market account
D)  a money market fund
E)  a GICF) C) and D)
G) B) and C)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 4: Banking Services of Financial Institutions

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

Correct AnswerverifiedShow Answer

In recent years, membership in credit unions has

Correct AnswerverifiedShow Answer

To avoid high fees for loans, a person should not borrow from a

Correct AnswerverifiedShow Answer

Store credit cards usually charge a lower interest rate than a bank credit card.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is a drawback of a regular savings account?

Correct AnswerverifiedShow Answer

Based on the following information, what amount would be SUBTRACTED from the BANK BALANCE side of a chequing account reconciliation? Service charge $6, Outstanding cheques $260, Interest $3.00, Deposit in transit $65

Correct AnswerverifiedShow Answer

What is the major reason why merchants accept Bitcoin?

Correct AnswerverifiedShow Answer

An advantage of Canada Savings Bonds is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The "prime" rate is ___________________________.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the flowing is not a non-deposit institution?

Correct AnswerverifiedShow Answer

If the annual rate is 10% and inflation is 4%, then the approximate real rate of return is:

Correct AnswerverifiedShow Answer

A service designed for people who write only a few cheques each month is a(n) ____________ account.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified