Bank Management Test: Managing and Pricing Deposit Services
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
9. The _________________________is the added cost of bringing in new funds.
Answer: marginal cost
10. _________________________ pricing is where the financial institution sets up
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
9. The _________________________is the added cost of bringing in new funds.
Answer: marginal cost
10. _________________________ pricing is where the financial institution sets up