Chapter 25 - The Banking System and Financial Services

A charter is required to start a bank.

• True

• False

The FDIC determines the interest rates banks charge for loans.

• True

• False

Mortgage companies are most helpful when a person borrows to buy a home.

• True

• False

Interest refers to the amount paid for the use of money.

• True

• False

A trust company manages money and property for people.

• True

• False

An example of a deposit-type financial institution is

• an investment company

• a credit union

• a consumer finance company

• a life insurance company

A credit union differs from other financial institutions in that it is

• chartered by the federal government

• owned by foreign investors

• taxed at a different rate

• organized as a not for profit organization

A check cashing outlet is commonly used by

• people who do not have a bank account

• consumers who want to buy homes

• people who have life insurance

• investors who desire a high rate of return

The items most likely to be stored in a safe-deposit box are

• cash

• checkbooks

• bond and stock certificates

• deposit slips for a savings account

The main purpose of the Federal Reserve System is to

• protect depositors money in case of bank failure

• inform consumers of wise investment choices

• collect tax revenue for state and local governments

• supervise and regulate member banks