Laura Keeps Only $250,000 Combined in Her Savings and Checking

question 218

Multiple Choice

Laura keeps only $250,000 combined in her savings and checking accounts at Union Bank because she knows that

• A) any more will not earn additional interest.
• B) this is the maximum allowed under federal law.
• C) her bank prohibits her from depositing more.
• D) her fees will be significantly higher if more money is deposited.
• E) this is the maximum amount insured per depositor.

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Definitions:

Return On Investment Ratio

A financial metric used to evaluate the efficiency of an investment, calculated by dividing the net profit by the original capital cost of the investment.

Judgmental Factors

Elements that require personal assessment and decision-making in the valuation of assets, determination of liabilities, or other financial reporting activities.

Static Budget

A budget that remains unchanged over the period it covers, regardless of changes in sales volume, production levels, or other external factors, often used for fixed expenses.

Control Costs

The practice of managing and regulating expenses to ensure they do not exceed budgets.