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Details Title: Banking Notes Description: Questions for banking chapter 4 Total Flash Cards: 21 Created: 04/27/2006 06:34:23	To study from this set of flash cards, or to create your own your own study flash cards, register HERE. If you are already a registered user, CLICK HERE.
Cards Term What are two categories of accounts? Definition 1. Transaction Accounts 2. Time deposits Term What is a transaction account? Definition It’s an account that allows transaction to occur at any time and in any number. Term What is an example of demand deposit? Definition Transaction is an example of a demand deposit, because they are payable on demand whenever the depositor chooses. Term Why is it important for consumer to look closely at fees charged and services offered for their checking accounts? Definition A basic account may actually cost more money to operate than another type of account if there are many transactions raising the fees. Term What are time deposits? Definition Deposits that are held for or mature at a specified time. Term What is passbook savings account? Definition It provided a ledger of activity that the teller updated when the customer made deposits or withdrawals. Term What are statement savings accounts? Definition It provided a monthly or quarterly computerized statement detailing all account activity, including interest additions and fees charged. Term What are money market deposit accounts? Definition It offer a higher rate of interest than savings accounts, but usually require a higher initial deposit to open an account. Term What is a certificate of Deposit? Definition It is certificate offered by a ban that guarantees payment of specified interest rate until a designated date in the future. That date is called the maturity date. Term What is a share-draft account? Definition Functions like a checking account Term What is a share account? Definition Works essentially like a savings account Term What is a share certificate? Definition Is equivalent to a Certificate of Deposit Term What is interest? Definition It is the price paid for the use of money. Term How do you calculate money? Definition *The beginning amount is called the principal. *R is rate *T is time ( P x R x T = I ) *I is interest Term What is the most powerful tool in savings? Definition Compound interest Term What is compound interest? Definition It’s adding interest to the principal and paying interest on the new total. Term What are the two terms that allow to compare interest? Definition 1. annual percentage rate (APR) – the nominal rate on which interest is calculated per year. 2. annual percentage yield (APY) – represent the effect of compounding. Term What is raw money? Definition New money, which the seller of the securities deposit in financial institutions. Term What is the engine that drives the flow of deposit? Definition It is the economy itself. Term What are account rules? Definition It explains characteristics of each type of account. Term What are deposit rate schedules? Definition It list interest rates in effect at the time for various types of account.