Chap012 - Chapter 12 Managing and Pricing Deposit Services Fill in the Blank Questions 1 A(n requires the bank to honor withdrawals immediately

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Chapter 12 Managing and Pricing Deposit Services Fill in the Blank Questions 1. A(n) _________________________ requires the bank to honor withdrawals immediately upon request. Answer: demand deposit 2. A(n) _________________________ is an interest bearing checking account and gives the bank the right to insist on prior notice before customer withdrawals can be honored. Answer: Negotiable order of withdrawal (NOW) 3. A(n) _________________________ is a short-maturity deposit which pays a competitive interest rate. Only 6 preauthorized drafts per month are allowed and only 3 of these can be by check. Answer: money market deposit account 4. _________________________ are designed to attract funds from customers who wish to set aside money in anticipation of future expenditures or financial emergencies. Answer: Thrift deposits 5. _________________________ are the stable base of deposited funds that are not highly sensitive to movements in market interest rates and tend to remain with a depository institution. Answer: Core deposits 6. Some people feel that everyone is entitled access to a minimum level of financial service no matter their income level. This issue is called the issue of _________________________. Answer: basic (lifeline) banking 7. _________________________ is a way of pricing deposit services in which the rate or return or fees charged on the deposit account are based on the cost of offering the service plus a profit margin. Answer: Cost plus pricing 8. When financial institutions tempt customers by paying postage both ways in bank-by-mail services or by offering free gifts such as teddy bears, they are practicing ___________. Answer: nonprice competition Rose/Hudgins, Bank Management and Financial Services, 8/e 195
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9. The _________________________is the added cost of bringing in new funds. Answer: marginal cost 10. _________________________ pricing is where the financial institution sets up a schedule of fees in which the customer pays a low or no fee if the deposit balance stays above some minimum level and pays a higher fee if the balance declines below that minimum level. Answer: Conditional 11. When a customer is charged a fixed charge per check this is called __________________ pricing. Answer: flat rate 12. When a customer is charged based on the number and kinds of services used, with the customers that use a number of services being charged less or having some fees waived, this is called __________________ pricing. Answer: relationship 13. _________________________ is part of the new technology for processing checks where the bank takes a picture of the back and the front of the original check and which can now be processed as if they were the original. Answer: Check imaging
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This note was uploaded on 10/16/2011 for the course FINANCE 101 taught by Professor Sanghoonlee during the Three '11 term at University of Wollongong, Australia.

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Chap012 - Chapter 12 Managing and Pricing Deposit Services Fill in the Blank Questions 1 A(n requires the bank to honor withdrawals immediately

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