Question 1

.When reporting errors or unauthorized transactions,it is best to notify your bank

Accepted Answer

It is recommended to notify your bank of any errors or unauthorized transactions by telephone and follow-up with a letter, keeping a copy for your records. This ensures that there is a record of your communication and provides documentation in case of any disputes or issues that may arise.

Question 2

The interest earned on your Series EE savings bonds

Accepted Answer

The interest earned on Series EE savings bonds is tax-deferred until redemption. This means that you do not have to pay taxes on the interest earned until you redeem or cash in the bond. At that point, you will owe federal income taxes on the interest earned, but not state income taxes. Therefore, the correct answer is B.

Question 3

Funds in a ____ must remain on deposit for the stated time period in order to avoid an interest penalty.

Accepted Answer

Certificates of deposit typically come with a fixed term, during which the funds must remain on deposit to earn the promised interest rate. If the depositor withdraws the funds before the term ends, they may be subject to an interest penalty.

Question 4

A check you issued has been stolen.You can prevent it from being withdrawn from your account by an unauthorized person by

Accepted Answer

Requesting a stop-payment order is the best choice in this situation. This will block the stolen check from being paid and prevent any unauthorized person from withdrawing money from your account using the check. Writing a new check or depositing the correct amount of money may not prevent the stolen check from being cashed, while tearing up the check or properly endorsing the check will not provide any protection in this situation.

Question 5

An asset management account provides a

Accepted Answer

An asset management account typically combines various financial services, including a checking account, money market deposit account, brokerage account, and line of credit, offering a comprehensive financial management solution.

Question 6

You have $900 in your checking account when your EFTS card and PIN are stolen.You could lose up to ____ if you report the lost EFTS card within 60 business days.

Accepted Answer

If you report the loss within 60 business days, your liability is limited to $500 according to the Electronic Fund Transfer Act.

Question 7

When doing a bank reconciliation,interest earned on your account should be

Accepted Answer

Interest earned on your account should be added to your checkbook ledger because it is income that has not yet been recorded in your checkbook.

Question 8

You have $450 in your checking account when your EFTS card and PIN are stolen.You could lose up to ____ if you report the lost EFTS card within 8 business days.

Accepted Answer

The answer of You have $450 in your checking account...

Question 9

Sandy wants to go on a trip in 10 years.If she invests $1,000 per year at the end of each year for 10 years at a 12% interest rate,she will accumulate ____ to spend on her trip.(Use time value table or financial calculator.)

Accepted Answer

The future value of an annuity formula is used to calculate the total amount accumulated after making regular investments. Using a financial calculator or time value table for a 12% interest rate over 10 years, the future value factor is approximately 17.549. Multiplying this factor by the annual investment of $1,000 gives $17,549.

Question 10

If you invest $100 at 8% for one year,compounded semiannually,at the end of the year your balance will be (use time value tables or financial calculator)

Accepted Answer

Using the formula for compound interest:
A = P(1 + r/n)^(nt)
where A is the ending balance, P is the principal, r is the interest rate, n is the number of times compounded per year, and t is the time in years.

Plugging in the values given:
A = 100(1 + 0.08/2)^(2*1)
A = 100(1.04)^2
A = 108.16

Therefore, the balance at the end of the year will be $108.16, which corresponds to choice C.

Question 11

Gordon started saving $25 a month at age 20 in an account earning 4% compounded monthly.At age 40,he will have ____ in this account.(Use time value tables or financial calculator.)

Accepted Answer

The answer of Gordon started saving $25 a month at...

Question 12

You have $450 in your checking account when your EFTS card and PIN are stolen.You could lose up to ____ if you report the lost EFTS card within 2 business days.

Accepted Answer

If you report the loss of your EFTS card and PIN within 2 business days, you are only responsible for up to $50 of unauthorized charges made with the stolen card. Therefore, you stand to lose up to $50 if you report the loss within 2 business days. Choosing option C is the best choice as it gives the correct answer.

Question 13

A check you wrote to buy shoes last week has not yet been processed by the bank.It is said to be

Accepted Answer

The check has not yet been processed by the bank, so it is considered outstanding, meaning it has not yet cleared. The other choices do not accurately describe the status of the check. B) in transit typically means that the check is on its way to the bank but has not yet arrived, C) endorsed refers to the signature on the back of the check indicating who is authorized to cash or deposit it, D) certified means that the bank has verified the funds are available and set them aside for the check, and E) subtracted is not a term used in relation to checks.

Question 14

Which of the following accounts has special tax advantages under certain conditions when used to fund qualified college education expenses?

Accepted Answer

Series EE savings bonds have special tax advantages when used to fund qualified college education expenses. The interest earned on these bonds is tax-free if the bond owner pays for qualified education expenses. The other options listed do not have special tax advantages for funding college expenses.

Question 15

You are going on an overseas trip and you want to have checks that are easily converted into local currency.You should purchase

Accepted Answer

Traveler's checks are designed specifically for people traveling abroad and are widely accepted for conversion into foreign currency. They are also a secure option as they can be replaced if lost or stolen.

Question 16

Whenever you write a check or make a deposit,an entry should be made in your

Accepted Answer

Checkbook ledger is the record-keeping tool where you should make entries of all your financial transactions, including check writing and depositing. This is important to keep track of your account balance and avoid overdrafts or other mistakes. Other options listed are not suitable for this purpose.

Question 17

Terry started saving $50 a month at age 25 in an account earning 6% compounded monthly.At age 40,she will have ____ in this account.(Use time value tables or financial calculator.)

Accepted Answer

Terry saves for 15 years (180 months). Using the future value of an annuity formula for monthly compounding: FV = Pmt * [(1 + r)^n - 1] / r, where Pmt = $50, r = 0.06/12, and n = 180. Calculating gives approximately $14,541.

Question 18

If you invest $1,200 per year at the end of each year for 40 years at an 8% rate of return,you will have accumulated (use time value table or financial calculator)

Accepted Answer

The future value of an annuity formula is used to calculate the accumulated amount. Using a financial calculator or time value table, the future value of $1,200 invested annually at an 8% return over 40 years is approximately $310,862.

Question 19

Joe Gustafson is a very busy person who likes to handle all his financial service needs with one account if possible.Which of the following types of accounts would best serve this need?

Accepted Answer

An asset management account (AMA) would be the best choice for Joe Gustafson because it is a comprehensive account that combines all of his financial services needs in one place, including checking, savings, investments, and other financial services. An AMA may also provide access to financial advisors and other specialized services, making it a convenient option for a busy person like Joe.

Question 20

If you write a check for an amount greater than your account balance,the result will be

Accepted Answer

Writing a check for an amount greater than your account balance creates an overdraft. This means that the check will not be covered by the funds in your account, and the bank may charge overdraft fees.

Quiz 4: Managing Your Cash and Savings