Chapter 5 Review

Chapter 5 Review

1. What provisions apply to lost or stolen EFT cards?
2. Explain the difference between a certified check and a cashier’s check
3. Distinguish between a minimum balance requirement and an average-balance requirement for a checking account.
4. Describe the three types of endorsements: blank, special, and restrictive
5. What is a certificate of deposit? Who might want to purchase one?

Refer to the following table to answer the next 4 questions

1. Stuart wants to open a checking account with a $100 deposit. Stuart believes he will write 15 checks per month and use other banks’ ATMs eight times a month. He will not be able to maintain a minimum balance. Which bank should Stuart choose?
2. Julie wants to open a bank account with $75. Julie estimates she will write 20 checks per month and use her ATM card at the home bank. She will probably maintain about a $75 balance. Which bank should Julie choose?
3. Veronica plans to open a checking account with her $1,200 tax refund check. She believes she can maintain a $500 minimum balance. Also, she estimates that she will write 10 checks per month and will use other bank’s ATMs as many as 15 times per month. Which bank should Veronica choose?
4. Randy has $500 to deposit in a new checking account. Randy knows he will not be able to maintain a minimum balance. He will not use an ATM card, but will write a large number of checks. Randy is trying to choose between the unlimited check writing offered by South Trust and the low per check fee offered by SunCoast. How many checks would Randy have to write each month for the account at South Trust to be the better option?
5. Twins Barbara and Mary are both 22. Beginning at age 22, Barbara invests $2,000 per year for eight years and then never sets aside another penny. Mary waits ten years and then invests $2,000 per year for the next 33 years. Assuming they both earn 8 percent how much will each twin have at age 65?