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Banking Notes
Questions for banking chapter 4
21
Business
11th Grade
04/27/2006

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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.
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