Understanding Financial Institutions

What is the primary business of financial institutions?

• Providing legal advice

• Manufacturing goods

• Selling insurance policies

• Managing money (saving, lending, investing, etc.)

What is the main difference between savings and checking accounts?

• Savings accounts earn interest over time

• Checking accounts are used for investments

• Checking accounts cannot be used to pay bills

• Savings accounts are for loans only

Why do checking accounts usually offer little to no interest?

• Because the money is not intended to be saved long-term

• Because they are only used by businesses

• Because the money is used for investments

• Because they are riskier than savings accounts

What is the purpose of a cashier's check?

• To withdraw all your money at once

• To provide a safer way to make large payments

• To earn interest on a large sum of money quickly

• To deposit money into another account

How do financial institutions use the money from savings accounts?

• To pay their employees

• To invest in the stock market

• To provide loans to other customers

• To buy real estate

What makes credit unions different from banks?

• Credit unions do not offer loans

• Credit unions are not-for-profit

• Credit unions do not have savings accounts

• Credit unions are government-owned

Why might someone choose a bank over a credit union?

• Credit unions have limited membership criteria

• Banks are non-profit organizations

• Credit unions do not offer checking accounts

• Banks offer higher interest rates on savings

What is the main focus of savings and loan associations?

• Providing personal loans only

• Investing in stocks and bonds

• Offering business loans

• Focusing primarily on home loans

How are bank deposits insured in the United States?

• By the Federal Reserve

• By the Federal Deposit Insurance Corporation (FDIC)

• By the National Credit Union Administration (NCUA)

• By private insurance companies

What is the insurance limit for deposits in banks and credit unions in the United States?

• $500,000

• No limit

• $250,000

• $100,000