Question 1

The ________ converts interest rates compounded for different periods into comparable annual rates,allowing you to compare interest rates easily.

Accepted Answer

A)  APR
B)  APY
C)  YTD
D)  YAYE) None of the above
F) C) and D)

Question 2

Which of the following characteristics apply to liquid assets?

Accepted Answer

A)  They are characterized by low returns.
B)  They involve low risk.
C)  The temptation to spend is greater.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 3

Explain the two types of gift,or stored value,cards.

Accepted Answer

There are two kinds of gift,or stored va...

Question 4

Four banking conveniences are listed below.Which one is not typical?

Accepted Answer

A)  Safety deposit boxes
B)  Online banking services
C)  Direct deposit
D)  Overdraft protection
E)  All of the above are typical banking conveniences.F) B) and D)
G) A) and B)

Question 5

Keeping your funds in liquid assets is riskier than keeping them in illiquid assets and therefore investors require a higher expected rate of return on liquid assets.

Accepted Answer

A) True 
 B)False

Question 6

A tax free investment will always have a higher after-tax return than a taxable investment.

Accepted Answer

A) True 
 B)False

Question 7

What is the name for an automatic loan made to your checking account whenever your account does not contain enough cash to cover the checks that you have written against it?

Accepted Answer

A)  No fee checking coverage
B)  Overdraft protection
C)  Automatic check coverage (AC
C)  
D)  Draft-free checking
E)  None of the above are correct answers.F) C) and E)
G) A) and E)

Question 8

What are the four questions you should answer when looking for a financial institution?

Accepted Answer

You will want to know if it offers the k...

Question 9

Liquid assets or funds are important to

Accepted Answer

A)  cover unplanned expenses.
B)  prevent interrupting your long-term investments.
C)  prevent overdrafts in checking accounts.
D)  cover some planned expenses.
E)  All of the above are correct.F) C) and D)
G) A) and B)

Question 10

What recommendations would you give Christopher concerning his cash management?

Accepted Answer

A)  Create a budget and set some savings goals.
B)  Automate a savings plan using EFT.
C)  Set up an account at a mutual fund company.
D)  All of the above are good recommendations.
E)  All of the above except C are good recommendations.F) B) and C)
G) C) and E)

Question 11

Online banking simplifies cash management and budgeting for consumers.

Accepted Answer

A) True 
 B)False

Question 12

Explain the advantages of credit unions.Are there any disadvantages to them?

Accepted Answer

Credit unions enjoy a tax-exempt status ...

Question 13

A disadvantage of an MMMF is

Accepted Answer

A)  high interest rates.
B)  administrative fees.
C)  limited risk.
D)  check writing privileges.E) A) and B)
F) B) and D) B

Question 14

Suppose that you go to a bank at which you have no account,give the bank cash,and in return obtain a check drawn against that bank which you will use to pay someone else.This is called a

Accepted Answer

A)  cashier's check.
B)  certified check.
C)  traveler's check.
D)  None of the above are correct.E) B) and C)
F) B) and D)

Question 15

It is wise to wait until you are earning a substantial amount of money before you establish a disciplined financial plan for your future.

Accepted Answer

A) True 
 B)False

Question 16

Online and mobile banking allows you to do the following

Accepted Answer

A)  access your accounts at any time of day.
B)  transfer funds between accounts.
C)  pay bills and receive payments online.
D)  all of the above.E) A) and B)
F) A) and C)

Question 17

How do you compare cash management alternatives to determine which is best for you?

Accepted Answer

A)  Compare returns using comparable interest rates.
B)  Take into account their tax status.
C)  Consider their safety or risk.
D)  All of the above are correct.E) A) and D)
F) C) and D) D

Question 18

According to the Keown book,one way to think of liquid assets is as a(n)

Accepted Answer

A)  reservoir,with money moving in as wages are received and moving out as living expenses are paid.
B)  apple tree farm: pick money off of the money tree whenever you need it.
C)  garden: plant the seeds and the green is readily available.
D)  wind current: easy come,easy go.E) C) and D)
F) A) and D)

Question 19

Why is it important to convert interest rates into the APY on different accounts and with different banks?

Accepted Answer

A)  Some banks and accounts pay higher advertised rates.
B)  The same advertised rate will vary with different compounding periods.
C)  The Truth in Savings Act of 1993 omits this comparison.
D)  With FDIC Banks it is not necessary to convert interest rates for comparison.E) A) and C)
F) B) and C) B

Question 20

You have $5,000 in a 36 month Certificate of Deposit that has an APR of 3.75%.If inflation averages 4.25% during these 36 months,what is the real return on your CD?

Accepted Answer

A)  3.75 percent
B)  8.0 percent
C)  Negative .50 percent
D)  Negative 8.0 percentE) A) and B)
F) A) and C)

Exam 5: Cash or Liquid Asset Management

The ________ converts interest rates compounded for different periods into comparable annual rates,allowing you to compare interest rates easily.

Correct AnswerverifiedShow Answer

Which of the following characteristics apply to liquid assets?

Correct AnswerverifiedShow Answer

Explain the two types of gift,or stored value,cards.

Correct AnswerverifiedThere are two kinds of gift,or stored va...View AnswerShow Answer

Four banking conveniences are listed below.Which one is not typical?

Correct AnswerverifiedShow Answer

Keeping your funds in liquid assets is riskier than keeping them in illiquid assets and therefore investors require a higher expected rate of return on liquid assets.

Correct AnswerverifiedShow Answer

A tax free investment will always have a higher after-tax return than a taxable investment.

Correct AnswerverifiedShow Answer

What is the name for an automatic loan made to your checking account whenever your account does not contain enough cash to cover the checks that you have written against it?

Correct AnswerverifiedShow Answer

What are the four questions you should answer when looking for a financial institution?

Correct AnswerverifiedYou will want to know if it offers the k...View AnswerShow Answer

Liquid assets or funds are important to

Correct AnswerverifiedShow Answer

What recommendations would you give Christopher concerning his cash management?

Correct AnswerverifiedShow Answer

Online banking simplifies cash management and budgeting for consumers.

Correct AnswerverifiedShow Answer

Explain the advantages of credit unions.Are there any disadvantages to them?

Correct AnswerverifiedCredit unions enjoy a tax-exempt status ...View AnswerShow Answer

A disadvantage of an MMMF is

Correct AnswerverifiedB

Suppose that you go to a bank at which you have no account,give the bank cash,and in return obtain a check drawn against that bank which you will use to pay someone else.This is called a

Correct AnswerverifiedShow Answer

It is wise to wait until you are earning a substantial amount of money before you establish a disciplined financial plan for your future.

Correct AnswerverifiedShow Answer

Online and mobile banking allows you to do the following

Correct AnswerverifiedShow Answer

How do you compare cash management alternatives to determine which is best for you?

Correct AnswerverifiedD

According to the Keown book,one way to think of liquid assets is as a(n)

Correct AnswerverifiedShow Answer

Why is it important to convert interest rates into the APY on different accounts and with different banks?

Correct AnswerverifiedB

You have $5,000 in a 36 month Certificate of Deposit that has an APR of 3.75%.If inflation averages 4.25% during these 36 months,what is the real return on your CD?

Correct AnswerverifiedShow Answer

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There are two kinds of gift,or stored va...
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You will want to know if it offers the k...
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Credit unions enjoy a tax-exempt status ...
View Answer

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B

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D

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B

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