Unit 2 Test Personal Finance

A key difference between commercial banks and credit unions is that:

• a. Commercial banks are ‘for‐profit’ and credit unions are ‘not‐for‐profit’

• b. Commercial banks typically pay higher interest rates than credit unions.

• c. Credit unions are more commonly located in rural area while commercial banks are more

  commonly located in urban areas.

• d. Commercial banks offer more services, such debit cards, and online banking, than credit

  unions.

Commercial banks offer more services, such debit cards, and online banking, than credit

unions.

• a. Depository institutions have insurance protection for up to $250,000 per depositor per

  account type so if something happened to the money in the bank, you would get it back as

  long as the deposited amount was no more than the insurance limit.

• b. All money stored at a depository institution is kept safe at all times by numerous security

  measures.

• c. Information about depositors and their accounts is kept in secure data storage.

• d. Depository institutions have insurance protection. Depositors can have multiple accounts

  insured at the same depository institution as long as each account has no more than

  $100,000

Sanjay is concerned about the safety of the money in his savings account. Which type of depository

institution should he choose?

• a. A commercial bank, since his deposits would be insured by the Federal Deposit Insurance

  Corporation (FDIC)

• b. A credit union, since his deposits would be insured by the National Credit Union Association

  (NCUA)

• c. He could safely choose either a commercial bank or a credit union, as long as his savings

  account balance meets the insurance requirements.

• d. Neither a commercial bank nor a credit union. Money is most safely kept at home in a

  personal safe or vault.

Ariel is saving money to purchase a new computer before she leaves for college in two years. She

wants to open a special account at a depository institution to keep her saved money safe. She has

asked you for advice on which type of account would be best for her. What would be the best

advice for Ariel?

• a. Check several depository institutions and choose one with a free, no‐interest checking

  account. That way, when Ariel has saved enough for her computer she can simply write a

  check to pay for it.

• b. Shop around for the depository institution with the highest interest rates for their savings

  accounts. She would be able to make regular savings deposits and earn interest while she is

  saving up for the computer.

• c. Look for a Credit Union that offers share draft accounts. These secure accounts are

  designed especially for saving for long‐term financial goals.

• d. Shop around for a depository institution that offers safe deposit boxes. These accounts

  offer extra security for deposits and can be set up to allow her to withdraw her money

  when she needs it.

5. Savings tools offered by depository institutions may earn interest. Which of the following

statements is NOT TRUE about interest?

• a. Interest is the price paid for using someone else’s money.

• b. When earning interest, look for low rates.

• c. When paying interest, look for low rates.

• d. The amount of interest earned or paid is determined by the interest rate.

  6.

6. Samantha wants to be able to use funds in her checking account but finds going to the bank to

withdraw cash to be inconvenient. She would like a more effective way to access her checking

account funds. What would you suggest she do?

• a. Apply for mobile banking. That way she can access her money with her smartphone to pay

  for the things she needs. The amount she spends would automatically be deducted from

  her savings account.

• b. Apply for a debit card. That way she can use the card instead of cash to purchase the things

  she needs and the amount spent is immediately deducted from her account.

• c. Apply for a credit card. That way she can use the card to purchase the things she needs and

  pay for it when the credit card statement comes from her checking account.

• d. Request a cashier’s check from her depository institution. That way she can spend money

  from her checking account without risk of an overdraft fee.

7. Common fees that may be charged by a depository institution include all EXCEPT:

• a. Overdraft fee

• b. Late fee

• c. ATM fee

• d. Minimum Balance fee

David made a mistake in his checking account recordkeeping and spent $10 more than he had

deposited in his account. As a result, he can expect to be charged a(n):

• a. ATM Fee

• b. Contact Fee

• c. Safe Deposit Fee

• d. Overdraft Fee

Which

statement is NOT TRUE about property taxes?

• a. Property tax is often charged by states or

  local governments to pay for local schools.

• b. The property tax rate is set by the federal

  government to be equal in every state.

• c. The fee paid to license a vehicle is an example of property tax.

• d. Property taxes are most often paid only once

  or twice each year.

Taxes that are charged on consumption items such as gasoline, hotel rooms, and airline tickets are called which kind of taxes?

• a. Sales

• b. Excise

• c. Federal use

• d. property