4.00 Bluff

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

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

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

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

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

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

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

How many votes do common stockholders get? One per share

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

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

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

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

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

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

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

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

What’s the first step in creating a budget? Prepare a list of income and expense items.

What’s the last step in creating a budget? Clearly communicate the budget to key employees in order to make sound business decisions.

Checks that have not been deducted from the bank statement balance (they haven’t been cleared by the bank). Outstanding

What’s the first step in opening a checking account? Signing a signature card

This financial statement lists assets, liabilities, and owner’s equity. Balance sheet

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

Type of ratio: Equals current assets/current liabilities Current ratio

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

Type of ratio: Equals net profit/owner’s equity Return on equity ratio

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

What are the 2 classifications of financial institutions? Depository and nondepository

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

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

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

Name 2 types of non- depository institutions. Life insurance companies Investment companies Consumer finance companies Mortgage companies Check-cashing outlets Pawnshops

What does it mean to reconcile a bank statement? Make the check register (your records) equal the bank statement (bank’s records)

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

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

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

What’s the last step in writing a check? Signing it

Which is the FIRST step in the check writing process? Writing the appropriate information in the check register

Which banks are required to join the Federal Reserve? National banks

How many districts are in the Federal Reserve? 12

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

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

Name 3 of the 7 services offered by financial institutions. Savings, payment, lending, electronic banking, storage of valuables, investment advice, management of trusts

What are liabilities? Money owed to others that must be paid back

How much does the FDIC insure up to per account? $250,000