A key difference between commercial banks and credit unions is that:
a.) Commercial banks are 'for‐profit' and credit unions are 'not‐for‐profit'
b.) Commercial banks typically pay higher interest rates than credit unions.
c.) Credit unions are more commonly located in rural areas while co...
Unit 2 Test Bank Questions
A key difference between commercial banks and credit unions is that:
a.) Commercial banks are 'for‐profit' and credit unions are 'not‐for‐profit'
b.) Commercial banks typically pay higher interest rates than credit unions.
c.) Credit unions are more commonly located in rural areas while commercial banks are more commonly
located in urban areas.
d.) Commercial banks offer more services, such as debit cards and online banking, than credit unions. -
✔✔A
Since Taylor was a young child she has kept her savings in a piggy bank. She likes this method of saving
because she can have immediate access to the money if she needs it. Recently, in a class at school,
discussion focused on why depository institutions are safer than her piggy bank. Some students'
comments were based on fact while others were based on myths. Which aspect of security at a
depository institution is NOT TRUE?
a.) Depository institutions have insurance protection for up to $250,000 per depositor per account type.
If something happened to the money in the bank, you would get the value of your account back as long
as the deposited amount was no more than the insurance limit.
b.) All money stored at a depository institution is kept safe at all times by numerous security measures.
c.) Information about depositors and their accounts is kept in secure data storage.
d.) Depository institutions have insur -✔✔D
Sanjay is concerned about the safety of the money in his savings account. Which type of depository
institution should he choose?
a.) A commercial bank, since his deposits would be insured by the Federal Deposit Insurance
Corporation (FDIC)
, b.) A credit union, since his deposits would be insured by the National Credit Union Association (NCUA)
c.) He could safely choose either a commercial bank or a credit union, as long as his savings account
balance meets the insurance requirements.
d.) Neither a commercial bank nor a credit union. Money is most safely kept at home in a personal safe
or vault. -✔✔C
Ariel is saving money to purchase a new computer before she leaves for college in two years. She wants
to open a special account at a depository institution to keep her saved money safe. She has asked you
for advice on which type of account would be best for her. What would be the best advice for Ariel?
a.) Check several depository institutions and choose one with a free, no‐interest checking account. That
way, when Ariel has saved enough for her computer she can simply write a check to pay for it.
b.) Shop around for the depository institution with the highest interest rates for their savings accounts.
She would be able to make regular savings deposits and earn interest while she is saving up for the
computer.
c.) Look for a Credit Union that offers share draft accounts. These secure accounts are designed
especially for saving for long‐term financial goals.
d.) Shop around for a depository institution that -✔✔B
Savings tools offered by depository institutions may earn interest. Which of the following statements is
NOT TRUE about interest?
a.) Interest is the price paid for using someone else's money.
b.) When earning interest, look for low rates.
c.) When paying interest, look for low rates.
d.) The amount of interest earned or paid is determined by the interest rate. -✔✔B
Samantha wants to be able to use funds in her checking account but finds going to the bank to withdraw
cash to be inconvenient. She would like a more effective way to access her checking account funds.
What would you suggest she do?
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