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Activity - 08 2

This document contains 20 multiple choice questions about various types of deposit accounts and banking regulations. The questions cover topics such as transaction accounts, interest rates on checking accounts, money market deposit accounts, core deposits, NOW accounts, conditional pricing of deposit accounts, and factors considered by customers when selecting a bank.

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Mahra AlMazrouei
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19 views

Activity - 08 2

This document contains 20 multiple choice questions about various types of deposit accounts and banking regulations. The questions cover topics such as transaction accounts, interest rates on checking accounts, money market deposit accounts, core deposits, NOW accounts, conditional pricing of deposit accounts, and factors considered by customers when selecting a bank.

Uploaded by

Mahra AlMazrouei
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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Activity 08

Deposit accounts whose principal function is to make payments for purchases of goods and services are
called:
A) Drafts
B) Second-party payments accounts
C) Thrift deposits
D) Transaction accounts
E) None of the above
Answer: D

Interest payments on regular checking accounts were prohibited in the United States under terms of the:
A) Glass-Steagall Act
B) McFadden-Pepper Act
C) National Bank Act
D) Garn-St. Germain Depository Institutions Act
E) None of the above
Answer: A

Money-market deposit accounts (MMDAs), offering flexible interest rates, accessible for payments
purposes, and designed to compete with share accounts offered by money market mutual funds,
were authorized by the:
A) Glass-Steagall Act
B) Depository Institutions Deregulation and Monetary Control Act (DIDMCA)
C) Bank Holding Company Act
D) Garn-St.Germain Depository Institutions Act
E) None of the above
Answer: D

The stable and predictable base of deposited funds that are not highly sensitive to movements in market
interest rates but tend to remain with the bank are called:
A) Time deposits
B) Core deposits
C) Consumer CDs
D) Nontransaction deposits
E) None of the above
Answer: B

Noegotiable Orders of Withdrawal (NOW) accounts, interest-bearing savings accounts that can be used
essentially the same as checking accounts, were authorized by:
A) Glass-Steagall Act
B) Depository Institutions Deregulation and Monetary Control Act (DIDMCA)
C) Bank Holding Company Act
D) Garn-St. Germain Depository Institutions Act
E) None of the above
Answer: B
A deposit which offers flexible money market interest rates but is accessible for spending by writing a
limited number of checks or executing preauthorized drafts is known as a:
A) Demand deposit
B) NOW account
C) MMDAs
D) Time deposit
E) None of the above
Answer: C

The types of deposits that will be created by the banking system depend predominantly upon:
A) The level of interest rates
B) The state of the economy
C) The monetary policies of the central bank
D) Public preference
E) None of the above.
Answer: D

The most profitable deposit for a bank is a:


A) Time deposit
B) Commercial checking account
C) Personal checking account
D) Passbook savings deposit
E) Special checking account
Answer: B

Some people feel that individuals are entitled to some minimum level of financial services no matter what
their income level. This issue is often called:
A) Lifeline banking
B) Preference banking
C) Nondiscriminatory banking
D) Lifeboat banking
E) None of the above
Answer: A

The formula Operating Expense per unit of deposit service + Estimated overhead expense + Planned
profit from each deposit service unit sold reflects what deposit pricing method listed below?
A) Marginal cost pricing
B) Cost plus pricing
C) Conditional pricing
D) Upscale target pricing
E) None of the above.
Answer: B

Using deposit fee schedules that vary deposit prices according to the number of transactions, the average
balance in the deposit account, and the maturity of the deposit represents what deposit pricing
method listed below?
A) Marginal cost pricing
B) Cost plus pricing
C) Conditional pricing
D) Upscale target pricing
E) None of the above.
Answer: C

The deposit pricing method that favors large-denomination deposits because services are free if the
deposit account balance stays above some minimum figure is called:
A) Free pricing
B) Conditionally free pricing
C) Flat-rate pricing
D) Upscale target pricing
E) Marginal cost pricing
Answer: B

According to recent studies cited in this book, in selecting a bank to hold their checking accounts
household customers rank first which of the following factors?
A) Safety
B) High deposit interest rates
C) Convenient location
D) Availability of other services
E) Low fees and low minimum balance.
Answer: C

A financial institution that charges customers based on the number of services they use and gives lower
deposit fees or waives some fees for a customer that purchases two or more services is practicing:
A) Marginal cost pricing
B) Conditional pricing
C) Relationship pricing
D) Upscale target pricing
E) None of the above
Answer: C

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