Question 1

Depository institutions selling deposits to the public in the United States must quote the rate of return pledged to the owner of the deposit,which reflects the customer's average daily balance kept in the deposit.This quoted rate of return is known as:

Accepted Answer

The quoted rate of return pledged to the owner of the deposit, based on their average daily balance, is known as the annual percentage yield (APY). The other options listed are not accurate descriptions of this concept.

Question 2

A stable and predictable base of deposited funds that is not highly sensitive to movements in market interest rates and tend to remain with the bank is called:

Accepted Answer

Core deposits are the stable and predictable base of deposited funds that tend to remain with the bank and are not highly sensitive to movements in market interest rates. These deposits include checking accounts, savings accounts, and certificates of deposit held by consumers and small to medium-sized businesses. TT&L deposits are deposits made by the US government, correspondent deposits are deposits held by other financial institutions, and consumer CDs are a specific type of deposit.

Question 3

__________ are often the most profitable deposit services for a bank.

Accepted Answer

The answer of __________ are often the most profitable deposit...

Question 4

The Federal law that requires U.S.depository institutions to make greater disclosure of the fees,interest rates,and other terms attached to the deposits they sell to the public is called the:

Accepted Answer

The Truth in Savings Act (TISA) was passed by Congress in 1991 and requires depository institutions to provide clear and concise written information about the terms and conditions of deposit accounts to consumers. This includes information about fees, interest rates, and other features of the account. The purpose of TISA is to help consumers make informed decisions about their savings and avoid surprises, such as unexpected fees or penalties.

Question 5

Some people feel that all individuals are entitled to some minimum level of financial services,no matter what their income level is.This issue is often called:

Accepted Answer

Lifeline banking refers to the idea that every individual, regardless of income level, should have access to basic financial services such as a checking account, savings account, and simple loans. It aims to ensure that everyone has access to the basic financial tools needed to manage their money and improve their financial well-being. Lifeline banking is often seen as an important component of financial inclusion efforts, which aim to expand access to financial services to traditionally underserved populations.

Question 6

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:

Accepted Answer

The deposit pricing method that favors large-denomination deposits because services are free if the deposit account balance stays above some minimum figure is known as conditionally free pricing. This pricing method is designed to encourage customers to keep larger balances in their accounts, which can help banks improve their liquidity positions. However, it also makes it less attractive for low-balance customers to use these accounts as they may be subject to fees or other charges. Therefore, the best answer would be B.

Question 7

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(n):

Accepted Answer

MMDA stands for Money Market Deposit Account, which offers flexible interest rates similar to those found in the money market. Unlike a traditional checking account, it allows for a limited number of checks to be written or preauthorized drafts, making it a hybrid between a savings and checking account.

Question 8

Research indicates that at least half of all households and small businesses hold their primary checking account at a depository institution situated within 3 miles of their location.

Accepted Answer

Research indicates that at least half of all households and small businesses hold their primary checking account at a depository institution situated within 3 miles of their location.

Question 9

Urban markets are more responsive to deposit interest rates and fees than rural markets.

Accepted Answer

There is no clear evidence to suggest that rural or urban markets are more responsive to deposit interest rates and fees. It can vary based on factors such as the bank's reputation, competition in the area, and overall economic conditions.

Question 10

Interest payments on regular checking accounts were prohibited in the United States under terms of the:

Accepted Answer

The Glass-Steagall Act of 1933 prohibited commercial banks from paying interest on checking accounts as a measure to prevent speculation and reduce risks associated with banking.

Question 11

According to recent studies cited in this book,in selecting a bank to hold their checking accounts,which of the following factors do household customers rank first?

Accepted Answer

According to recent studies, household customers rank convenient location as the most important factor when selecting a bank for their checking accounts. While other factors such as safety, availability of other services, low fees, and high deposit interest rates are also important, convenient location takes priority for most customers.

Question 12

There are still a number of existing problems with online bill-paying services which has limited its growth.

Accepted Answer

While online bill-paying services have become increasingly popular, they still face challenges such as security concerns, limited adoption by small businesses, and technical glitches. These issues have prevented the service from reaching its full potential and continue to impact its growth.

Question 13

The types of deposits that will be created by the banking system depend predominantly upon:

Accepted Answer

The types of deposits created by the banking system depend primarily on the public's preference, such as whether they prefer savings or checking accounts, CDs or money market accounts. Other factors may also influence deposit creation, but public preference for different types of accounts is the main determinant. Interest rates, the state of the economy, and monetary policies may affect demand for different types of accounts, but ultimately it is the public's preference that determines the mix of deposits created by the banking system.

Question 14

Deposit accounts whose principal function is to make payments for purchases of goods and services are called:

Accepted Answer

Deposit accounts whose principal function is to make payments for purchases of goods and services are called transaction accounts. Examples of transaction accounts are checking accounts or demand deposit accounts.

Question 15

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:

Accepted Answer

The Garn-St. Germain Depository Institutions Act of 1982 authorized the creation of money market deposit accounts (MMDAs) to help banks compete with money market mutual funds.

Question 16

The total dollar value of checks paid in the United States has grown modestly in recent years.

Accepted Answer

The total dollar value of checks paid in the United States has been declining over recent years due to the rise of electronic payments and other forms of digital transactions that have become more popular and widely adopted.

Question 17

The formula-operating expense per unit of deposit service plus estimated overhead expense plus planned profit from each deposit service unit sold-reflects which of the deposit pricing method listed below?

Accepted Answer

The formula described in the question is used in the cost plus pricing method, where the cost per unit of deposit service is calculated and then a profit margin is added to arrive at the final price.

Question 18

Negotiable Order of Withdrawal (NOW)accounts-interest-bearing savings accounts that can be used essentially the same as checking accounts-were authorized by:

Accepted Answer

Negotiable Order of Withdrawal (NOW) accounts were authorized by the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) in 1980. This act removed many restrictions on banks and allowed them to offer new types of accounts to attract customers, including NOW accounts that pay interest and have checking-like functions.

Question 19

The depository institutions which tend to have the highest deposit yields are credit unions.

Accepted Answer

The answer of The depository institutions which tend to have...

Question 20

Using deposit fee schedules that vary deposit prices according to the number of transactions,average balance in the deposit account,and maturity of the deposits represents which of the deposit pricing method listed below?

Accepted Answer

The deposit fee schedule that varies deposit prices based on the number of transactions, average balance, and maturity of deposits represents conditional pricing. This pricing method offers discounts or higher fees based on certain conditions, such as account usage or characteristics. Marginal cost pricing is based on the cost of providing each additional unit of a product or service. Cost plus pricing involves adding a markup to the cost of providing a product or service. Upscale target pricing involves setting higher prices to attract customers who are more willing to pay for premium products or services.

Quiz 12: Managing and Pricing Deposit Services

Depository institutions selling deposits to the public in the United States must quote the rate of return pledged to the owner of the deposit,which reflects the customer's average daily balance kept in the deposit.This quoted rate of return is known as:

A stable and predictable base of deposited funds that is not highly sensitive to movements in market interest rates and tend to remain with the bank is called:

__________ are often the most profitable deposit services for a bank.

The Federal law that requires U.S.depository institutions to make greater disclosure of the fees,interest rates,and other terms attached to the deposits they sell to the public is called the:

Some people feel that all individuals are entitled to some minimum level of financial services,no matter what their income level is.This issue is often called:

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 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(n) :

Research indicates that at least half of all households and small businesses hold their primary checking account at a depository institution situated within 3 miles of their location.

Urban markets are more responsive to deposit interest rates and fees than rural markets.

Interest payments on regular checking accounts were prohibited in the United States under terms of the:

According to recent studies cited in this book,in selecting a bank to hold their checking accounts,which of the following factors do household customers rank first?

There are still a number of existing problems with online bill-paying services which has limited its growth.

The types of deposits that will be created by the banking system depend predominantly upon:

Deposit accounts whose principal function is to make payments for purchases of goods and services are called:

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:

The total dollar value of checks paid in the United States has grown modestly in recent years.

The formula-operating expense per unit of deposit service plus estimated overhead expense plus planned profit from each deposit service unit sold-reflects which of the deposit pricing method listed below?

Negotiable Order of Withdrawal (NOW) accounts-interest-bearing savings accounts that can be used essentially the same as checking accounts-were authorized by:

The depository institutions which tend to have the highest deposit yields are credit unions.

Using deposit fee schedules that vary deposit prices according to the number of transactions,average balance in the deposit account,and maturity of the deposits represents which of the deposit pricing method listed below?