Chapter 5 Test: The Banking System

Which of the following is a form of payment guaranteed by the bank?

• third-party check

• money order

• stop payment

• cashier’s check

Savings accounts at banks generally are insured by the FDIC up to the legal limit of $250,000 per deposit per bank.

• True
• False

The payee is the person who is writing the check.

• True
• False

Using the Rule of 72, if you can invest your money at 10 percent interest, how long will it take to double your investment amount?

• 5 years
• 6 years
• 7.2 years
• 8.5 years

An ATM card

• can only be used to make withdrawals and deposits at ATM machines
• is the same as a debit card
• has all the same protections provided with credit cards
• can be used to make purchases

All of the following may be required to open a checking account except a

• security question
• signature card
• cashier’s check
• minimum deposit

Overdraft protection helps you avoid

• ATM fees
• inactive account fees
• monthly service fees
• nonsufficient funds fees

When you write a check but there isn’t enough money to cover it, the check will “bounce” unless you have overdraft protection.

• True
• False

When writing out a check for $50.00, the amount in numbers should be written as?

• Fifty Dollars

• Fifty Dollars and no cents

• Fifty Dollars and 00/100

• 50 Dollars and 00/100

If you have overdraft protection, you will never be charged a fee if you overdraw your account.

• True

• False