5
Q:

What does Earned Income Tax Credit (EITC) means ? 

Answer:



Q:

In a fractional reserve banking system

A) bank accepts deposits B) bank accepts some loans
C) bank has some cash reserves D) All the above
 
Answer & Explanation Answer: D) All the above

Explanation:

Fractional reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities. Fractional reserve banking is a banking system in which only a fraction of bank deposits are backed by actual cash on hand and are available for withdrawal. This is done to expand the economy by freeing up capital that can be loaned out to other parties.

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Q:

The reserves of a commercial bank consist of

A) the bank's net worth B) the amount of money market funds it holds
C) government securities that the bank holds D) deposits at the Federal Reserve Bank and vault cash
 
Answer & Explanation Answer: D) deposits at the Federal Reserve Bank and vault cash

Explanation:
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0 69
Q:

What is true about certificates of deposit?

A) the money has to remain in the account for a specified period of time B) they are the most liquid account available
C) they offer lower interest rates than savings accounts D) All the above
 
Answer & Explanation Answer: A) the money has to remain in the account for a specified period of time

Explanation:

A certificate of deposit (CD) is a savings certificate with a fixed maturity date, specified fixed interest rate and can be issued in any denomination aside from minimum investment requirements.

CD's are generally issued by commercial banks

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0 94
Q:

What is an example of an inflation risk?

Answer

Inflation risk, also called purchasing power risk, is the chance that the cash flows from an investment won't be worth as much in the future because of changes in purchasing power due to inflation.


 


HOW IT WORKS (EXAMPLE):



For example, $1,000,000 in bonds with a 10% coupon might generate enough interest payments for a retiree to live on, but with an annual 3% inflation rate, every $1,000 produced by the portfolio will only be worth $970 next year and about $940 the year after that. The rising inflation means that the interest payments have less and less purchasing power. And the principal, when it is repaid after several years, will buy substantially less than it did when the investor first purchased the bonds.

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1 103
Q:

In preparing a bank reconciliation, outstanding checks are

A) Deducted from the balance sheet B) Added to the bank balance
C) Deducted from the bank balance D) Added to the balance sheet
 
Answer & Explanation Answer: A) Deducted from the balance sheet

Explanation:

If an outstanding check of the previous month clears the bank (is paid by the bank) in the current month, you simply remove that check from the list of outstanding checks.

If an outstanding check of the previous month does not clear the bank in the current month, the check will remain on the list of outstanding checks until the month that it does clear the bank.

In the bank reconciliation process, the total amount of the outstanding checks is deducted from the balance appearing on the bank statement.

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1 240
Q:

Reconciling the bank statement monthly is an example of

A) establishment of responsibility B) independent internal verification
C) documentation procedures D) segregation of duties
 
Answer & Explanation Answer: B) independent internal verification

Explanation:

Reconciling the bank statement monthly is an example of independent internal verification

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Q:

The yield to maturity on a discount bond is

A) equal to both the coupon rate / current yeild B) less than the current yeild but greater than the coupon rate
C) greater than both the coupon rate / current yeild D) equal to the current yeild but greater than the coupon rate
 
Answer & Explanation Answer: A) equal to both the coupon rate / current yeild

Explanation:

Yield to maturity is a concept for fixed rate bonds and is the internal rate of return i.e. the rate at which future flows are discounted on a compound basis to give the present value of the bond including accrued interest.

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1 144
Q:

Tally package is developed by

A) Tally Solutions B) Coral Softwares
C) Vedika Softwares D) Peutronics
 
Answer & Explanation Answer: A) Tally Solutions

Explanation:

Tally package is developed by Tally Solutions. 

 

Tally Solutions, then known as Peutronics, was co-founded in 1986 by Shyam Sunder Goenka and his son Bharat Goenka.

 

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