Term
| What are two categories of accounts? |
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Definition
| Transaction accounts and Time deposits |
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Term
| What is a transaction account? |
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Definition
| An account that allows transactions to occur at any time and in any number. |
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Term
| What is an example of a demand deposit? |
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Definition
| A transaction account is an example of a demand deposit because it is payable on demand when every the depositor chooses |
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Term
| What is a specific example of demand deposit? |
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Definition
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Term
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Definition
| By writing a check a depositor can withdraw money by giving written notice to the bank to pay a name person a specified amount from his or her account. |
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Term
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Definition
| By writing a check a depositor can withdraw money by giving written notice to the bank to pay a name person a specified amount from his or her account. |
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Term
| What is a basic checking account? |
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Definition
| It’s an account that offers a few simple services form minimal cost. |
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Term
| What is an interest-bearing checking account? |
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Definition
| A checking account that pays interest on the balance deposited on the account |
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Term
| Why is it important for consumers t look closely at fees charge and services offered for their checking accounts? |
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Definition
| Its possible a basic account may actually cost more money to operate than another type of account if there are many transactions raising the fees. |
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Term
| What other transactions are categorized as demand deposit transactions? |
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Definition
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Term
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Definition
| Interest is the price paid for the use of money |
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Term
| What is the formula for calculating interest? |
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Definition
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Term
| What does each symbol in the formula stand for? |
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Definition
| P= principal R= rate T= time I= interest |
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Term
| What does each symbol in the formula stand for? |
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Definition
| P= principal R= rate T= time I= interest |
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Term
| When may interest be paid? |
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Definition
| Interest may be paid one a year (annually), every six months (semi-annually), every three months (quarterly), or any other interval as defined in the accounting regulations. |
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Term
| What is compound interest? |
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Definition
| Its when you add interest to the principal and paying interest on the new total. |
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Term
| When does the compound interest start over? |
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Definition
| The compound interest starts over with a new principal every time interest is paid. |
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Term
| What is the algebraic formula for compound interest? |
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Definition
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Term
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Definition
| APR (annual percentage rate) is the nominal rate on which interest is calculated per year. |
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Term
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Definition
| APY (annual percentage yield) represents the effect of compounding. |
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Term
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Definition
| Money includes checks, ledger transfers, and even credit |
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Term
| What is the greatest factor in the flow of deposits? |
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Definition
| The activity of the economy at large |
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Term
| Why do economist track and analyze so much data? |
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Definition
| To predict the flow of the economy |
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Term
| What are some limitations of reserve requirements? |
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Definition
The fed can put more money into the economy
They can take money out of the economy |
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Term
| What is the discount rate? |
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Definition
| The rate the fed charges for discount loans. |
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Term
| How the federal reserve influence the flow of deposits? |
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Definition
They can set reserve requirement
They can create or remove money
Setting the discount rate |
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Term
| What does this documentation protect? |
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Definition
| This documentation protects both the consumer and the bank from misunderstanding the loss. |
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Term
| What does this documentation protect? |
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Definition
| This documentation protects both the consumer and the bank from misunderstanding the loss. |
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Term
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Definition
| It explains characteristics of each type of account |
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Term
| What is a deposit rate schedule? |
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Definition
| It lists interest rates in effect at the time for various types of accounts |
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Term
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Definition
| It shows all charges that apply to each specific type of deposit account. |
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Term
| What is a check hold policy? |
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Definition
| It explains when deposited funds will be available for use by the consumer. |
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Term
| What is a governing document? |
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Definition
| It’s a name for deposit account documents |
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Term
| What is a disclosure statement? |
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Definition
| It provides full information about bank policies |
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Term
| What is a disclosure statement? |
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Definition
| It provides full information about bank policies |
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Term
| What are reference to governing documents? |
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Definition
| When account holders agree to abide by the rules as set forth in the rest of the governing documents |
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Term
| What is a signature policy? |
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Definition
| When banks keep a signature card on file with the signature of all parties to an account, whether it is solely or jointly with other persons |
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Term
| What is an opening and closing account? |
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Definition
| Its policies governing opening requirements that may include a specified minimum opening deposit. |
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Term
| What is a deposit collection? |
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Definition
| This provision is similar to the check hold policy of the governing documents, except that it goes further in explaining the effect of uncollected deposits on the account. |
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Term
| What is overdraft policies? |
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Definition
| Its when an account has insufficient funds to meet its obligations, it is overdrawn. |
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Term
| What is minimum balance/service charges? |
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Definition
| This is when the bank specifies exactly the terms for when failure to maintain minimum balance charges apply. |
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Term
| What are withdrawal policies? |
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Definition
| They are requirements for withdrawing funds from the bank. |
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Term
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Definition
| These are policies that include requirements for accurate dating of checks and timely. |
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Term
| What is an account statement policy? |
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Definition
| These policies deal with the bank statement sent by the bank. |
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Term
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Definition
| The account rules may also contain notices about carious waivers, such as the customer agreeing to waive protest of dishonored items or the banks willingness to waive certain fees. |
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Term
| List three types of time deposits. Which of these are exempt from reserve requirements? |
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Definition
Savings Accounts
Certificates of Deposits (CDs)
Money Market Deposit Accounts
The money market deposit accounts are exempt from the reserve requirements. |
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Term
| Why is compound interest such a powerful savings tool? |
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Definition
| Compound interest is such a powerful savings tool because you are adding interest to the principal and paying interest on the new total. |
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Term
| Why are governing documents necessary? |
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Definition
| Governing documents are necessary because they help customers with questions about policies and procedures related to their accounts. |
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Term
| How do governing documents and account rules differ |
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Definition
| The differ because governing documents are to help customers with questions about policies and procedures related to their accounts and account rules explain characteristics about each type of account. |
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