4.00 Bluff1 2 3 4 5 6 7 8 9 10

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39

40 41 42 43 44

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 companiesInvestment companies

Consumer finance companiesMortgage companiesCheck-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 banksParticipation of open market activities

Acting as a clearinghouse Holding reserves

Approving bank mergersSupplying 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