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Chapter Quiz
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1
The difference between a debit card and a credit card is that:
A)A debit card is a type of loan and a credit card draws funds from your checking or savings account.
B)A debit card draws funds from your checking or savings account and a credit card is a type of loan.
C)A debit card is issued by a commercial bank and a credit card is issued by a credit union.
D)There is no difference, they are both the same thing.
2
When interest rates are rising you should:
A)Use short-term loans.
B)Choose long-term savings instruments.
C)Use financial instruments that lock in the high interest rates.
D)Use long-term loans.
3
A credit union offers lower fees and higher interest on savings because:
A)They are nonprofit organizations with "profits" being distributed to the members.
B)They are owned by the government.
C)They offer limited services, such as checking and savings accounts.
D)They are insured by the Federal Government.
4
Which of the following is true about payday loans or cash advance companies:
A)Give you a low cost way to get emergency cash.
B)Is a low cost way to cash a check.
C)Charge extremely high interest for their "loans".
D)Give you loans using your pay check as collateral.
5
A certificate of deposit is:
A)A letter certifying that you have a certain amount in your savings account and is used to secure a loan.
B)A savings deposit that earns higher interest because it is left in the account for a specified period of time.
C)The bank's assurance that your deposits are secure.
D)The insurance carried by banks to guard against loss of deposits.
6
What is the annual percentage yield (APY) on a savings account with $1,500 balance and earns $18 in interest per year?
A)12%
B)0.12%
C)0.012%
D)1.2%
7
Which of the following decrease the rate of return on your savings?
A)Taxes
B)Compounding
C)Liquidity
8
Savings accounts in banks are considered a safe investment because:
A)Banks are corporations and will never go bankrupt.
B)Banks are nonprofit organizations and will never go bankrupt.
C)Banks are insured by the government backed FDIC.
D)Banks do not engage in risky investments and will never go bankrupt.
9
Overdraft protection is:
A)A fee banks charge for not having sufficient funds in your account to cover the check.
B)A service intended to protect businesses against customers writing bad checks
C)The insurance that banks carry to protect deposits.
D)An automatic loan or transfer from savings to cover the amount you are over drawn in your checking account.
10
When reconciling your checking account you should:
A)Subtract outstanding checks and add deposits in transit to your check register balance.
B)Subtract fees and ATM withdrawals but add interest earned and direct deposits to your check register balance.
C)Subtract fees and ATM withdrawals but add interest earned and direct deposits to your bank statement balance.
D)Add outstanding checks and subtract deposits in transit from your bank statement balance.





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