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Banking: How to Manage Your Money (CFA3) Answers

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This is a table that could be used to maintain a record of account transactions. It is similar to what is found in a checkbook ledger. Some of its column headings are missing. How should these columns be labeled?

Balance, Transaction Code, Description

Check Number, Description, Balance

Transaction Code, Balance, Notes

Description, Check Number, Balance

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Which of these is an advantage of checking accounts?

Checking accounts prevent the customer from having overdraft fees.

Checking accounts allow convenient ways to deposit or withdraw funds.

Checking accounts are processed immediately so customer and bank records always match.

Checking accounts offer limited checks but offer higher rates of interest.

What does reconciling an account involve?

checking one's financial records against the bank’s

making sure a paycheck arrives on time

calculating the interest owed on a savings account

identifying instances of identity theft

In which situation would a savings bond be the best investment to earn interest?

if you need access to your cash quickly

if you are saving each month for a new car

if you are putting aside a chunk of money to purchase a house in five years

saving to pay a tax bill in four months

Many checking accounts offer multiple ways of accessing money in addition to checks. Which of these can be used to access money in a checking account?

debit card

credit card

certificate of deposit

passbook

Which of these is a characteristic of certificates of deposit (CDs)?

They are always offered at variable rates.

They last for a set period of time.

They can be opened with any amount of money.

They allow access to the money at any time without penalty.

Which of these is the best reason for Nina to monitor her bank account statements online or on her cell phone app?

to know when her bills are due

to determine the exact date she can retire

to ensure she's paying her fair share in taxes

to know how much money she has for budgeting

Look at the table below showing an example of a checkbook ledger.

$624.50

$704.50

$755.50

$784.50

What is the major difference between a nationwide bank and a community bank?

The community bank offers more services.

The nationwide bank services only local customers.

The nationwide bank has fewer branches.

The community bank services only local customers.

What is a major difference between retail banks and credit unions?

Retail banks only serve businesses, while credit unions only serve individuals.

Retail banks operate in order to earn profit, while credit unions are nonprofit.

Retail banks only have small local branches, while credit unions are nationwide.

Retail banks manage a person’s money, while credit unions focus on providing loans.

Alex has not been keeping his banking records up to date. On his latest bank statement, he found that he had been charged an overdraft fee for writing a bad check. In addition to his being charged a fee, which of these is another possible consequence of an overdraft?

The bank will close the merchant's account.

The merchant who received his check will be charged an overdraft fee.

The bank will cancel his debit card.

The merchant who received his check will expect repayment and a penalty fee.

Sofia has saved $10,000. She wants to be sure that she is earning interest on her money and can add to her savings. She also wants to be able to access her money if the need should arise.Which type of account is most suitable for Sofia’s needs?

a money market account

a certificate of deposit

a savings bond

a checking account

Karina keeps excellent records and always knows precisely how much is in her bank account. However, when she receives her bank statement, she’s surprised to see that she has been charged a $5.00 overdraft fee. After reviewing her well-kept records, she cannot find anything that is incorrect. Which would be the best action for Karina to take?

Review her records again.

Wait for the bank to call her.

Ignore the fee because it is relatively small.

Check her records against her bank statement.

What is one benefit of purchasing saving bonds?

Saving bonds are purchased from the government and guaranteed to increase in value.

Saving bonds are purchased from commercial banks and guaranteed to increase in value.

Saving bonds are short term investments backed by the government to protect from loss.

Saving bonds are long term investments created to help first time home buyers obtain a mortgage.

What is the best reason for Jacinta to have a savings account in addition to a checking account?

A savings account accepts all direct deposits and processes all direct withdraws.

A savings account ensures she will never go into debt.

A savings account guards her money against inflation.

A savings account keeps her money safe and separate from her spending money.

Sara is 16 years old and would like to open a bank account. What will she need in addition to her parent or guardian? Select four answers.

government-issued ID or birth certificate

high school diploma

money to start the account

social security number or immigration form

proof of address

In which situation would a certificate of deposit (CD) be the best banking choice?

Samuel is setting money aside but still needs emergency access to it.

Hafsa wants a guaranteed return, and won’t need the money for several years.

Darren is looking for an investment that has a very high interest rate.

Raj is looking for an investment with a fast return so he can reinvest.

Look at the table below showing an example of a checkbook ledger.

$761.25

$810.30

$814.75

$1,186.25

Glenn and Maggie own a regional chain of juice bars and are looking to expand in the coming year. They already have fifty shops, but they know they will need a loan to reach their goal of one hundred twenty five shops. Which type of banking institution is most suitable for Glenn and Maggie’s business?

a credit union

a savings and loan

a commercial bank

an investment bank

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Banking: How to Manage Your Money (CFA3) Answers

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