4.00 Bluff

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4.00 Bluff

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2
Ted deposits money in a savings plan regularly.
The interest he earns on this plan is indicative
of how the money markets are doing. Which savings
plan is he using?

• Money market account

3
What term refers to how fast an investment can be
turned into cash?

• Liquidity

4
Bob sells specialty guitars and hopes to exchange
the guitars for a much higher value than the
purchase price. Which type of investment could
the guitars become?

• Collectibles

5
RadioShack offers shares of stock to investors at
a consistent rate of 6 without any voting
rights. What type of stock is it offering?

• Preferred

6
The city government needs 1.2 million dollars to
build a new medical facility. Which type of bond
investment opportunity would help the city
government obtain funding for the facility?

• Municipal

7
Sam prefers a savings plan that allows him to
earn interest on previously earned interest.
Which type interest does he prefer?

• Compound

8
Mary prefers a relatively safe investment that
will allow her to withdraw money after a few days
without losing any of her principal. Which is the
BEST investment choice for Mary?

• Money Market Account

9
How many votes do common stockholders get?

• One per share

10
Todd gave Intrek Computer Services a personal
check for which his bank guaranteed payment. This
is an example of which type of payment services?

• Certified check

11
Jack reviewed his company's budget for six months
and determined that it is spending more on credit
card purchases. Which type of budget was used?

• Operating

12
Direct Finance Company's primary function is to
use its own money instead of customers' savings
to provide loans to other businesses. This is an
example of which type of financial institution?

• Non-depository

13
Harry's Grocery Store revenue for last year was
98,000 and it paid 103,000 in expenses. Which
is the net income/net loss amount for the store?

• 5,000 net loss

14
Carl estimated that his business could invest an
additional 40,000. Which type of budget was used?

• Cash

15
Phase of a business Financial planning includes
determining whether enough money is made to cover
growth opportunities.

• Expansion

16
Budget used by a new business or during expansion
of a business until profits are made.

• Start up

17
Budget used to estimate cash flow in and out of a
business

• Cash

18
Whats the first step in creating a budget?

• Prepare a list of income and expense items.

19
Whats the last step in creating a budget?

• Clearly communicate the budget to key employees
  in order to make sound business decisions.

20
Checks that have not been deducted from the bank
statement balance (they havent been cleared by
the bank).

• Outstanding

21
Whats the first step in opening a checking
account?

• Signing a signature card

22
This financial statement lists assets,
liabilities, and owners equity.

• Balance sheet

23
This financial statement includes sales,
expenses, and net profit or loss.

• Income statement

24
Type of ratio Equals current assets/current
liabilities

• Current ratio

25
Type of ratio Shows how much the business relies
on money borrowed externally versus money from
within the business. Ideally, this ratio should
be less than 2.0.

• Debt to equity ratio

26
Type of ratio Equals net profit/owners equity

• Return on equity ratio

27
Type of ratio Shows the amount of sales needed
for each dollar of net income. While there is
not an ideal ratio, managers use this number to
compare to past periods to determine how changes
in sales affect net income.

• Net income ratio

28
What are the 2 classifications of financial
institutions?

• Depository and nondepository

29
Type of depository institution not-for profit,
serve their members only, and are owned by their
depositors.

• Credit unions

30
Type of depository institution offer many
different services, including savings, loans, and
checking accounts.

• Commercial banks

31
Type of financial institution Earns money to
finance their business by selling specific
services such as policies, investments, and loans

• Non-depository

32
Name 2 types of non-depository institutions.

• Life insurance companies
• Investment companies
• Consumer finance companies
• Mortgage companies
• Check-cashing outlets
• Pawnshops

33
What does it mean to reconcile a bank statement?

• Make the check register (your records) equal the
  bank statement (banks records)

34
Anyone may cash a check with this type of
endorsement.

• Blank

35
This type of endorsement transfers payment of a
check to someone else.

• Special

36
This type of endorsement is the safest type of
endorsement, as it cannot be cashed by a thief or
someone who finds the check.

• Restrictive

37
Whats the last step in writing a check?

• Signing it

38
Which is the FIRST step in the check writing
process?

• Writing the appropriate information in the check
  register

39
Which banks are required to join the Federal
Reserve?

• National banks

40
How many districts are in the Federal Reserve?

• 12

41
Name 2 services provided by the Fed.

• Supervision of banks
• Participation of open market activities
• Acting as a clearinghouse
• Holding reserves
• Approving bank mergers
• Supplying paper currency
• Managing the discount rate

42
The Federal Reserve System aids in transferring
funds between banks in North Carolina and New
Jersey. This is an example of which service of
the Federal Reserve System?

• Clearinghouse

43
Name 3 of the 7 services offered by financial
institutions.

• Savings, payment, lending, electronic banking,
  storage of valuables, investment advice,
  management of trusts

44
What are liabilities?

• Money owed to others that must be paid back

45
How much does the FDIC insure up to per account?

• 250,000