FBLA Banking and Financial SystemsPage 1

  1. Which of the following is not a reason for financial planning?
/ A. to evaluate how wisely you are using your money / B. to get the most from your income / C. to prevent careless and wasteful spending / D. to prepare your income tax returns
  1. A budget can best be describe from the following:
/ A. is a plan to match spending with saving / B. is a plan to increase income / C. is a plan to match expected income with expected outflow / D. will decrease your wants and needs
  1. Savings, house payments, and utilities are all examples of:
/ A. disposable income / B. fixed expenses / C. variable expenses / D. personal records
  1. Families should keep all of the following except:
/ A. income and expense records / B. net worth statement / C. personal property inventory / D. tax records for the past 10 years
  1. A mortgage or lease is an example of a(n):
/ A. implied contract / B. express contract / C. oral contract / D. warranty or guarantee
  1. A financial institution that offers all types of services is called a:
/ A. A. savings & loan / B. credit union / C. full-service bank / D. commercial bank
  1. The checking account that has no minimum balance requirements and no service fees is the:
/ A. free account / B. share draft account / C. standard account / D. interest account
  1. A checking account for which you pay a fee for each check processed is a(n):
/ A. share draft account / B. standard account / C. interest account / D. special account
  1. A disadvantage of a NOW account is that:
/ A. it earns no interest / B. the minimum balance may be high / C. a fee is charge for each check / D. it is available to senior citizens only
  1. A check written by the bank on its own funds is a :
/ A. certified check / B. cashier’s check / C. money order / D. electronic funds transfer
  1. The money used by banks for loans come primarily from:
/ A. the sale of stock / B. service fees and loan charges / C. customers’ savings and deposits / D. open market transactions
  1. Which of the following should not be kept is a safety deposit box?
/ A. birth certificates / B. insurance policies / C. cash / D. jewelry
  1. Writing the words FOR DEPOSIT ONLY on the back of a check before your name constitutes a:
/ A. blank endorsement / B. special endorsement / C restrictive endorsement / D. joint endorsement
  1. An endorsement in full is also called a:
/ A. blank endorsement / B. special endorsement / C. restrictive endorsement / D. joint endorsement
  1. The process of matching your checkbook balance with the bank statement balance is known as:
/ A. endorsement / B. reconciliation / C. canceling / D. processing
  1. You will receive the greatest gain on your principal if interest is compounded:
/ A. quarterly / B. annually / C. daily / D. semiannually
  1. When interest is paid on interest earned, you receive the:
/ A. nominal rate / B. principal rate / C. true APR / D. discretionary interest rate
  1. The withdrawal penalty for a six-month time certificate is:
/ A. six months’ interest / B. three months’ interest / C. a 10 percent penalty / D. three months’ interest plus 10 percent penalty
  1. A type of account that cannot be withdrawn until age 59½ is a(n):
/ A. time certificate / B. cash management account / C. EE bonds / D. IRA
  1. The advantage of buying Series EE savings bonds is that:
/ A. you receive interest payments semi-annually / B. interest earned is never taxed until the bond is cashed / C. interest earned is never taxed / D. it is purchased at face value
  1. Which of these is tax deductible and tax deferred?
/ A. IRA / B. EE bonds / C. HH bonds / D. CDs
  1. Agreements to buy a commodity at a specified price on a specified date are called:
/ A. business ventures / B. futures contracts / C. collectibles / D. down payments
  1. Which of the following is not an investment?
/ A. savings account / B. real estate / C. a business venture / D. mutual fund
  1. A note guaranteed by a pledge of property or assets is:
/ A. secured / B. unsecured / C. diversified / D. a debenture
  1. A preferred stock that does not share with common stock in the profits of the corporation is called:
/ A. cumulative / B. noncumulative / C. participating / D. nonparticipating
  1. The type of fund that invests in short-term government, bank, and corporate notes is called a(n):
/ A. mutual fund / B. specialty fund / C. money market fund / D. income fund
  1. Which of the following is not characteristic of common stockholders?
/ A. they are owners of the company / B. they vote in the affairs of the company / C. they elect the board of directors / D. they are paid dividends before holders of other stocks
  1. Which of the following caused many Americans to lose confidence in credit?
/ A. WW I / B. the Great Depression / C. WW II / D. Truth in Lending Act
  1. Property you possess that is worth more than debts is called:
/ A. collateral / B. capital / C. principal / D. interest
  1. A regular account is often described as:
/ A. installment / B. open-ended / C. closed-ended / D. contract
  1. At which of the following will you probably get they lowest rate of interest for a consumer loan?
/ A. commercial bank / B. finance company / C. credit union / D. pawn shop
  1. It is illegal to discriminate on the basis of which of the following in granting or denying credit?
/ A. bank affiliations / B. occupation / C. type of residence / D. marital status
  1. Point systems can be based on all but which of the following personal factors?
/ A. employment / B. bank affiliations / C. sex / D. type of residence
  1. Under Truth in Lending, if you report your credit card lost or stolen, your liability is limited to:
/ A. $25 / B. $50 / C. $100 / D. $200
  1. The consumer’s present credit status is shown in the
/ A. trade / B. inquiries / C. public records / D. information section
  1. Unauthorized use of a credit report can result in a penalty of a year in jail plus a fine of:
/ A. $500 / B. $1000 / C. $5000 / D. $10,000
  1. Subtracting payments made before computing the charge describes the:
/ A. previous balance method / B. average daily balance method / C. adjusted balance methods / D. annual percentage rate method
  1. When you multiply principal times rate of interest times length of repayment time, the result is the
/ A. principal / B. simple interest / C. refund / D. unearned interest
  1. The difference between cash price and total price when installment payments are made are called:
/ A. full disclosure / B. cost of credit / C. add-on interest / D. discount interest
  1. The wage earner’s plan of bankruptcy is a compulsory, court-enforced plan to repay a portion of debts, usually over a period of:
/ A. 6 months / B. 1 year / C. 3 years / D. 5 years
  1. Which of the following types of debts is not discharged by bankruptcy?
/ A. student loans / B. car loans / C. mortgage payments / D. hospital bills
  1. The type of bankruptcy wherein creditors ask the court to declare a debtor bankrupt is:
/ A. voluntary / B. involuntary / C. Chapter 7 / D. Chapter 13
  1. Which type of bankruptcy is commonly called a straight bankruptcy proceeding?
/ A. Chapter 7 / B. Chapter 13 / C. voluntary / D. involuntary
  1. Which of the following exempted items is incorrect?
/ A. $7500 equity in a home / B. $500 equity in a motor vehicle / C. $750 in tools / D. $200 in appliances
  1. The original Consumer Bill of Rights was introduced by President:
/ A. Nixon / B. Kennedy / C. Johnson / D. Eisenhower
  1. The Better Business Bureau:
/ A. is a government agency / B. accepts complaints and pursues legal actions / C. has no legal authority / D. operates for profit
  1. When interest rates are high, the average consumer will:
/ A. save less / B. buy less / C. not change spending patterns / D. buy nothing at all
  1. Money began with:
/ A. gold coins / B. currency / C. barter / D. commodity money
  1. The first paper money began in the 7th century in:
/ A. Italy / B. Greece / C. Turkey / D. China
  1. When the US currency exchange rate decreases because of a persistent deficit in balance of payments, it’s called:
/ A. exchange rate / B. weak dollar / C. strong dollar / D. economic integration
  1. A bank owned by depositors that mainly handles savings accounts and makes loans to homebuyers is a:
/ A. commercial bank / B. savings and loan / C. credit union / D. mutual savings bank
  1. A nationwide banking plan set up by our federal government to supervise and regulate member banks:
/ A. Federal Reserve System / B. Federal Deposit Insurance Corporation / C. savings and loan association / D. trust companies
  1. A financial institution that specializes in making loans for long-lasting or durable goods and financial emergencies is a:
/ A. commercial bank / B. credit union / C. consumer finance company / D. trust company
  1. Written evidence that you received payment or that you transferred your right of receiving payment to someone else is a(n):
/ A. endorsement / B. blank endorsement / C. special endorsement / D. restrictive endorsement
  1. Withdrawals made on a member’s shares of ownership in a credit union are:
/ A. joint account / B. shares / C. withdrawals / D. share drafts
  1. The owner of the account and the person who signs the check is the:
/ A. drawer / B. payee / C. drawee / D. check holder
  1. The person to whom the check is written:
/ A. drawer / B. payee / C. drawee / D. check holder
  1. The bank or other financial institution that pays a check:
/ A. drawer / B. payee / C. drawee / D. check holder
  1. A form of payment that orders the issuing agency to pay the amount printed on the form to another party is a:
/ A. traveler’s check / B. money order / C. certified check / D. cashier’s check
  1. Writing a personal check for more money than is in one’s account is:
/ A. overdrawing / B. postdating / C. debting / D. drawing
  1. Checks that have been paid by the bank are:
/ A. canceled checks / B. outstanding checks / C. reconciling checks / D. clearing checks
  1. Returning a check to the drawer’s bank to be paid and charged to his or her checking account is called:
/ A. clearinghouse / B. canceled check / C. clearing / D. returned check
  1. Interest computed on the amount saved plus the interest previously earned is:
/ A. simple interest / B. compound interest / C. yield / D. annuity interest
  1. The percentage of interest that will be added to your savings over a period of time is:
/ A. savings plan / B. simple interest / C. annuity interest / D. yield
  1. Interest that is computed only on the amount saved is:
/ A. simple interest / B. compound interest / C. yield / D. annuity interest
  1. A money market account is sometimes preferred to a regular savings account because this amount:
/ A. pays a higher rate of interest / B. provides greater safety / C. is for a person who saves each week / D. has fewer restrictions
  1. A long-term savings account that offers a relatively high rate of interest compared to other accounts is:
/ A. a regular savings accounts / B. a money market account / C. a CD / D. a Christmas club account
  1. Checks are referred to as share drafts in
/ A. brokerage firms / B. savings and loans / C. credit unions / D. money markets
  1. Which of the following is not an advantage of checks?
/ A. proof of payment / B. easy for small purchases / C. record for your finances / D. provided by commercial banks
  1. Which sentence is true about checking accounts?
/ A. they are either interest-bearing or non-interest bearing / B. they all pay interest if the minimum balance each month is $500 or more / C. they are provided only by commercial banks / D. names must be printed on the back to cash the check
  1. If you made a deposit in your checking account of 3 dimes, 5 quarters, and 4 one-dollar bills, which should be the total of your deposit slip?
/ A. $4.85 / B. $5.15 / C. $5.75 / D. $5.55
  1. Jonathan Fry opened a checking account and was handed a checkbook. The checkbook should contain a:
/ A. check and deposit slips / B. checks, deposit slips, and record keeping forms / C. checks only / D. ATM card
  1. Most financial experts agree that families should set aside at least how much of their disposable income each pay period?
/ A. 10 / B. 15 / C. 20 / D. 25
  1. Lunch, medical bills, personal care items, and clothing are all examples of:
/ A. income / B. fixed expenses / C. variable expenses / D. investments
  1. The most common purpose for a net worth statement is:
/ A. fire loss proof / B. damage report / C. loan or credit application / D. employment application
  1. The IRS can audit your tax returns for a period of how many years, except in the case of fraud, where there is no time limit.
/ A. one / B. three / C. ten / D. six
  1. When a person changes the terms of an offer, she or he has made a(n):
/ A. agreement / B. acceptance / C. exchange / D. counteroffer
  1. The price, which may be in the form of money, a promise, or a performed act, is known as a(n):
/ A. offer / B. consideration / C. acceptance / D. competent parties
  1. A contract that is missing one or more of the essential elements, and is not legally enforceable, is said to be:
/ A. void / B. valid / C. voidable / D. express
  1. A person who creates or signs a promissory note is called the:
/ A. payee / B. maker / C. cosigner / D. agent
  1. Any person who is how old or older and who is not mentally deficient, is considered a competent party?
/ A. 18 / B. 16 / C. 21 / D. no set age
  1. A commonly used negotiable instrument is a(n):
/ A. mortgage / B. ATM card / C. check / D. driver’s license
  1. Which of the following items is the most liquid?
/ A. home ownership / B. passbook savings / C. certificate of deposit / D. stock investment plan
  1. A type of savings plan whereby you set aside money at a financial institution for a set period of time is a(n):
/ A. regular account / B. share draft account / C. certificate of deposit / D. government bond plan
  1. Savings bonds may be purchased at:
/ A. retail stores / B. finance companies / C. post offices / D. most banks
  1. An IRA is no longer deductible when joint income is:
/ A. $50,000 / B. $25,000 / C. $40,000 / D. $45,000
  1. Which of the following is not a major service of banks?
/ A. making loans / B. selling of stock / C. taking deposits / D. transferring checking account money
  1. Traveler’s checks come in all but which of the following amounts?
/ A. $5 / B. $20 / C. $50 / D. $100
  1. A warranty must be in writing to provide any protection to the buyer of a product.
/ A. True / B. False
  1. When a person is a minor, the missing element to a valid contract is called offer and acceptance?
/ A. True / B. False
  1. A voidable contract is one that can become enforceable by acts or failure to act by the innocent party.
/ A. True / B. False
  1. When your assets are not greater than your liabilities, you are said to be solvent, which is a good credit position.
/ A. True / B. False
  1. When a check you have issued has been lost or stolen, you should request a stop payment order.
/ A. True / B. False
  1. To write a date on a check that is weeks or months in the future is to float a check.
/ A. True / B. False
  1. A TSA is a retirement plan for state and local government workers and school employees.
/ A. True / B. False
  1. Clearing a check means getting approval from a bank before depositing it.
/ A. True / B. False
  1. The type of government bond that pays interest semiannually is the Series HH savings bond.
/ A. True / B. False
  1. When you deposit money in a savings account, the financial institution pays you dividends for the use of the money.
/ A. True / B. False
  1. To prepare your personal budget, you should first list sources of money you expect to receive, known as income.
/ A. True / B. False
  1. A major reason for financial planning is to prevent careless spending.
/ A. True / B. False