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Multiple Choice Quiz
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1
Which of the following would be a financial service for short-term needs?
A)U.S. Savings Bond
B)Individual Retirement Account
C)Car insurance
D)Regular checking account
E)All of the above
2
A certificate of deposit that starts with a higher initial interest rate and which has a longer time to maturity but which can be retired by the financial institution is:
A)A rising or bump-up CD.
B)A stock-indexed CD.
C)A callable CD.
D)A global CD.
E)None of the above.
3
What type of financial institution makes loans to consumers and small businesses. This type of financial institution has short and intermediate term loans with a higher interest rate than other types of financial institutions. It can be easier for people with no credit history or a bad credit history to get a loan from this type of institution.
A)Commercial Banks
B)Credit Unions
C)Finance Companies
D)Mortgage Companies
E)None of the above
4
Which of the following is a drawback of a money market account?
A)Low rate of return
B)Penalty for early withdrawal
C)High minimum balance
D)Not insured
E)All of the above are drawbacks of money market accounts.
5
Which of the following would be one of the things listed in the book that you would consider when choosing a savings plan?
A)Where the financial institution is located
B)The safety of the savings plan
C)The convenience of the financial institution
D)The size of the financial institution
E)All of the above are things you must consider when choosing a savings plan.
6
Which of the following is liquidity?
A)It is the annual yield you earn on a savings plan.
B)It is the fact that you may earn interest on interest.
C)It is the fact that your purchasing power may change as price levels change and must be considered when comparing savings plans.
D)It is the fact that you can withdraw your money on short notice without loss of principal.
E)None of the above is liquidity.
7
You have a balance in your savings account of $1000. You keep your money in that account for 182 days and earn $28 in interest. What is the annual percentage yield on this account?
A)2.80%
B)5.69%
C)1.39%
D)8.25%
E)None of the above
8
A(n) __________ is an all-in-one account that includes savings, checking, borrowing, investing and other services for a single fee.
A)Regular savings account
B)Regular checking account
C)Asset management account
D)Certificate of Deposit
E)None of the above
9
A(n) __________ is a financial institution that offers a full range of financial services to individuals, business and government agencies.
A)Commercial bank
B)Savings and Loan
C)Credit union
D)Investment company
E)None of the above
10
__________ is the process of earning interest on interest.
A)Rate of return
B)Compounding
C)Inflation
D)Liquidity
E)None of the above





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