Banking: Ch. 4

Which of the following is the formula for calculating simple interest:

• W x M

• P/R x T

• P x R x T

• M1 x M2

Which of the following is a time deposit?

• certificate of deposit

• money market account

• savings account

• all of the above

Which of the following governing documents list interest rates in effect at the time for various types of accounts?

• deposit rate schedules

• account rules

• disclosure statements

• fee schedules

A check that is dated six months or more before it is presented for payment or deposit is called a(n)

• bounced check

• post-dated check

• stale check

• overdraft check

Which of the following accounts is NOT considered a time deposit account?

• money market account

• savings account

• certificate of deposit

• checking

Adding interest to the principal and paying interest on the new total is called paying ____________

• total interest.

• simple interest.

• compound interest.

• semi annual interest

Which of the following is NOT a way that the Fed adjusts the money supply?

• Buying U.S government securities to put money into the economy

• Selling U.S government securities to take money out of the economy

• Adjusting the discount rate

• Closing banks that the Fed does not like

The most common form of a transaction account is a ____

• checking account

• money market account

• certificate of deposit

• deposit

Which of the following accounts is the MOST liquid?

• money market account

• certificate of deposit

• checking account

• savings account

Which of the following statements about reserve requirements is true?

• Reserve requirements are the most important factor in bank lending.

• If reserve requirements are high, banks must keep more money on hand and therefore have less to lend.

• Reserve requirements apply to the M1 and M2 money supply.

• If reserve requirements are low, banks must keep more money on hand and therefore have less to lend.