Chp 4 Banking
A record of checks, ATM transactions, deposits, and charges on an account.
a.) deposit slip
b.) bank statement
c.) credit card bill
B. bank statement
Measure of ease with which an asset can be converted into cash without losing value.
liquidity
A share in the ownership of a corporation.
stock
The formula for calculating _________________ is principal × rate × time.
simple interest
Bank account designed for daily use, that allows the owner to make deposits, write checks, and withdraw money.
Checking account
Nonprofit financial cooperative owned and operated for the benefit of its members.
credit union
The amount paid to a depositor for keeping their money in a savings account is called ______________.
interest
Spreading risk by putting money in different types of investments is known as _______.
a.) risk tolerance
b.) diversification
B. diversification
Round $4,789 to the nearest hundred dollars.
$4,800
Account designed for accumulating money for future use.
savings account
A(n) ___________ is used to add funds into a checking account.
deposit slip
The amount originally deposited or the initial investment is called ________________.
principal
An overall rise in prices that reduces the value of money is called ________.
inflation
Daniel invested $1,000 at 5% simple interest. How much interest will he earn after 3 years?
$150
Purchasing a financial product or valuable item with the goal of increasing wealth over time in spite of possible loss.
Investments
Which type of bank is commonly known as a full-service bank?
A commercial bank
Restrictions penalties and fees can affect an account’s _________.
a.) earnings
b.) ownership
c.) interest rate
A. earnings
A __________________ is a portion of a company’s earnings that is paid to stockholders.
dividend
Find the balance of an $5,000 account earning 8% compound interest annually after 2 years?
$5,832
Give one benefit for each..
checking account, savings account and an investment.
Checking account: safe, easy to access money, organized records, convenient
Savings Account: emergency fund, earns interest
Investment: grow money, gain wealth, beat inflation, tax benefits
Explain the difference between a credit card and a debit card?
A debit card uses your own money out of your checking account. A credit card uses borrowed money that you will have to pay back.
Describe the difference between simple interest and compound interest.
Simple interest is interest earned on the principal only. Compound interest amount is calculated using the principal plus the interest it earns.
In terms of stock quotes, what is a ticker symbol?
A ticker symbol is an abbreviation of 2-4 letters that identify a company in the stock market.
What are the 6 parts of a check?
date, payee, amount in dollars, amount in words, memo, signature
Describe the difference between a checking, savings and investment account.
Checking account: account for daily use, deposits, withdrawals, checks, debit purchases etc
Savings account: account used to accumulate money for future use (earns little interest)
Investment account: account designed to grow money through investments (hopefully earns higher interest)