Succeeding in the World of Work

Chapter 21: Banking and Credit

Banking and Credit


1.	What is a not-for-profit financial institution that is similar to a bank?
		A)	bank
		B)	savings and loan
		C)	credit union
		D)	annuity


2.	What is the term for a type of savings account in which the bank sends the account holder a statement of transactions each month?
		A)	passbook account
		B)	statement account
		C)	checking account
		D)	interest account


3.	When interest is compounded, how is it calculated?
		A)	it is paid on the principle plus interest that has already accrued on your initial deposit
		B)	it is paid only on the amount that a person has actually deposited into an account
		C)	it is figured monthly
		D)	it is computed annually


4.	What is the term for a savings account that requires a high minimum balance, and in which money of many investors is pooled?
		A)	savings bond
		B)	certificate of deposit
		C)	IRA
		D)	money market account


5.	What are people essentially doing when they buy savings bonds?
		A)	paying taxes
		B)	opening a government savings account
		C)	lending money to the government
		D)	buying protection against accidental loss


6.	What is an advantage of a certificate of deposit?
		A)	it pays a guaranteed fixed rate of interest
		B)	it is usually protected by FDIC
		C)	it earns more interest than a regular savings account
		D)	all of the above


7.	What is the main characteristic of a defined-benefit retirement plan?
		A)	workers know before they retire how much they will receive after retirement
		B)	workers share in a business's profits
		C)	workers put a portion of their earnings into a tax-deferred account
		D)	all of the above


8.	What are you agreeing to when you invest in an IRA?
		A)	you cannot withdraw the money before age 59 1/2 without paying a penalty
		B)	you must pay taxes on the money you invest
		C)	you must be self-employed
		D)	you must invest in a mutual fund


9.	What must you do before you deposit a check into your account?
		A)	make sure that your account is not overdrawn
		B)	write “non-negotiable” on the check
		C)	date the check
		D)	endorse it


10.	What should you include in your check register?
		A)	include only payments
		B)	include only deposits
		C)	include all credits and debits
		D)	it is usually not necessary for most people to maintain a check register


11.	What happens when you make a purchase with a debit card?
		A)	you agree to pay interest on the charges
		B)	the funds are automatically withdrawn from your bank account
		C)	the transaction is automatically entered in your check register
		D)	you withdraw funds from an ATM


12.	What is the term for the maximum amount you can charge on a credit card?
		A)	credit balance
		B)	annual percentage rate
		C)	credit limit
		D)	collateral


13.	What is the term for a loan that is received in a lump sum and paid back in regular installments?
		A)	credit card
		B)	installment loan
		C)	collateral loan
		D)	auto loan


14.	What is the term for the numerical ratings that credit bureaus give to indicate how likely it is that a creditor will pay his or her bills?
		A)	credit ratings
		B)	credit reports
		C)	repayment ratings
		D)	reconcilement ratings


15.	What is a grace period?
		A)	a period of time during which you are approved for a loan
		B)	the length of time a customer is given to complete a credit application
		C)	a time during which interest is not charged on a loan
		D)	the time it takes for a bank to complete an electronic fund transfer