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Marjon A. Limot October 7, 2020 Bsba-3B TTH (5:30Pm-7:00Pm) Fm130:Monetary Policy and Banking Prof: Maam Erlinda J. Diasemen Assignment No.2

This document contains an assignment for a monetary policy and banking class. It includes definitions for several banking and finance terms in both multiple choice and essay questions. Specifically, it defines non-interest bearing checking accounts, checkable deposits, savings deposits, private money market mutual funds, and money market deposit accounts. It also includes the differences between small-denomination and large-denomination time deposits as well as private and institutional money market mutual funds. The assignment is for a student named Marjon A. Limot and is due on October 7, 2020.

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110 views

Marjon A. Limot October 7, 2020 Bsba-3B TTH (5:30Pm-7:00Pm) Fm130:Monetary Policy and Banking Prof: Maam Erlinda J. Diasemen Assignment No.2

This document contains an assignment for a monetary policy and banking class. It includes definitions for several banking and finance terms in both multiple choice and essay questions. Specifically, it defines non-interest bearing checking accounts, checkable deposits, savings deposits, private money market mutual funds, and money market deposit accounts. It also includes the differences between small-denomination and large-denomination time deposits as well as private and institutional money market mutual funds. The assignment is for a student named Marjon A. Limot and is due on October 7, 2020.

Uploaded by

Marjon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Marjon A.

Limot October 7, 2020


BSBA-3B TTh(5:30pm-7:00pm)
FM130:Monetary Policy and Banking Prof: Maam Erlinda J. Diasemen
ASSIGNMENT NO.2

A- KNOW THE FOLLOWING AND EXPLAIN EACH (10pts each)

1. Non-interest-bearing checking account


 A checking account which does not earn interest on the money in the account.
 Often used as a basic or starter checking account, frequently for children or teens who are
only storing a small amount of money.
 Another advantage of these accounts is that in some cases, a non-interest-bearing account
will have limited or no fees.
2. Checkable deposits
 A technical term for any demand deposit account against which checks or drafts of any
kind may be written. (A demand deposit account means the owner can withdraw funds
on demand, with no notice.)
 Checkable deposit accounts are the most liquid accounts a consumer can open.
3. Savings deposit
 It refers to an interest-bearing deposit account held at a bank or other financial
institution.
 These accounts typically pay a modest interest rate, their safety and reliability make
them a great option for parking cash you want available for short-term needs.
4. Private money market mutual funds
 A type of investment company that issues shares and invests in CD’s large-denomination
treasury bills, commercial paper, or other short-term credit instruments.
5. Money market deposit account
 It is an interest-bearing account at a bank or credit union.
 A type of bank deposit that bears interest allows limited checking privileges,and may be
withrawn without penalty.
6. Overnight repurchase agreement
 Banks sell their customers securities for cash,agreeing to repurchase them the next day
for a slightly higher price. In effect,buying a security from a bank subject to a repurchase
agreement is similar to making a deposit. The higher repurchase price represents interest
earned on the deposit,but legal restrictions on interest payments on business demand
deposits are avoided.
 A practice in which a bank or other financial institution buys securities with the provision 
that the seller repurchase the same securities the following day. Financial institutions do t
his in order to raise short-term capital. 
 As a means of raising short-term money for financing inventories.
B- (30pts each)
1. What is the difference between small-denomination time deposits and large-
denomination time deposits?
 The difference between small-denomination time deposits and large-denomination time
deposit is that in small-denomination time deposits it is a deposit of less than hundred
thousand of dollars at banks and thrifts that must remain on deposit for an agreed period
in order to earn the full agreed rate of interest while large-denomination time deposits it
is also known as negotiable certificates of deposits, or certificate of deposits of hundred
thousands of dollars and up may, unlike their smaller cousins, be sold by depositor to a
third party before maturity. This Feature increases their liquidity.

2. What is the difference between Private Money Market Mutual funds and Institutional
Money Market Mutual funds?
 The difference between private money market mutual funds and Institutional money
market mutual funds is that in private money market mutual funds it is an investment
company that issues shares and invests in CD’s large-denomination treasury bills,
commercial paper, or other short-term credit instruments. Whereas institutional money
market funds serve institutions rather than individuals. Unlike most money markets, the
NAV here can float based on market conditions. Companies and pension funds often
purchase this type of mutual fund.

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