98. (p. 554) Typically, banks impose a service charge for check-writing privileges or demand a minimum deposit.
99. (p. 554) NOW accounts represent checking accounts that pay interest to depositors.
100. (p. 555) A saving account is also known as a time deposit.
101. (p. 555) A bank can require depositors to give prior notice before they withdraw funds from time deposits.
102. (p. 555) Certificates of deposit (CDs) represent demand deposits issued by banks.
103. (p. 555) The Federal Reserve requires that ATM machines be located within 100 yards of a commercial
bank.
104. (p. 556) Some automatic teller machines (ATMs) allow users to pick up concert tickets and download MP3
music files.
105. (p. 556) Banks focus on the creditworthiness of the borrower when determining whether to grant a loan.
106. (p. 555) Commercial banks offer creditworthy customers automatic loans to cover checks written in excess of
their checking account balance.
107. (p. 556) A bank in Japan enables customers to play a slot machine while it processes their transactions.
108. (p. 556, Spotlight on Small Business box) According to the “Spotlight on Small Business” box in Chapter 20, banks are
great sources of funding for new small businesses.
109. (p. 556, Spotlight on Small Business box) According to the “Spotlight on Small Business” box in Chapter 20, angel
investors usually invest in high-growth companies in fields like technology and biotech rather than local
companies like restaurants and roofers.
110. (p. 557) A savings and loan association (S & L) is a financial institution that accepts both savings and
checking deposits and provides home mortgage loans.
111. (p. 557) Federal law prohibits savings and loan institutions from offering NOW accounts to depositors.
112. (p. 557) Savings and loan associations, also known as thrift institutions, were created to promote consumer
thrift and home ownership.
113. (p. 557) Savings and loans and commercial banks offer very similar services.
114. (p. 557) Credit unions represent nonprofit, member-owned financial cooperatives that offer the full variety of
banking services to their members.
115. (p. 557) As nonprofit institutions, credit unions enjoy an exemption from federal income taxes.
116. (p. 557) The majority of deposits held in U.S. financial institutions are in credit unions.
117. (p. 557) Credit unions may be thought of as financial cooperatives.
118. (p. 557) The term “macrobank” refers to organizations such as life insurance companies, pension funds, and
commercial finance companies.
119. (p. 558) Recent legislation produced greater differences between banks and nonbanks.
120. (p. 558) Some pension funds lend money directly to corporations.
121. (p. 558) Pension funds invest monies contributed by employers and/or employees for the benefit of their
members’ retirement.
122. (p. 558) Large pension funds represent a powerful force in U.S. financial markets.
123. (p. 558) Commercial and consumer finance companies specialize in making low interest loans to individuals
and businesses with strong credit ratings.
124. (p. 558) Brokerage firms now compete with commercial banks by offering high yield combination savings
and checking accounts.
125. (p. 554-555) The interest paid on time deposits represents the essential difference between time and demand
deposits.
126. (p. 555) The ability to access funds without a penalty helps to explain why certificates of deposit (CDs) have
gained popularity.
127. (p. 554) Today’s consumers have fewer options and less flexibility as a result of increased regulation of the
banking industry.
128. (p. 558) Due to federal regulations limiting their investment opportunities, pension funds play a minor role in
U.S. financial markets.
129. (p. 557) After years of banking with Quality Bank and Trust, Saul decided to switch to a competing
institution. Thanks to changes in government regulation, his search will uncover a wide variety of options for a
place to deposit his money.
130. (p. 558) Because they charge higher interest rates, commercial and consumer finance companies often fail to
attract borrowers.
131. (p. 559) The federal government insures savings and loan deposits, as well as deposits with commercial banks
and credit unions.
132. (p. 559) Those with deposits less than $100,000 in banks, savings and loans, and credit unions run the risk of
losing their money in an economic downturn.
133. (p. 559) The FDIC insures deposits in banks and credit unions up to $100,000.
134. (p. 559) The FDIC exists to maintain the public’s confidence in the banking system.
135. (p. 559) When a commercial bank fails, depositors lose all of their money.
136. (p. 559) Established during the Great Depression, the FDIC protects depositors up to $100,000 per account.
137. (p. 559) As a response to a rise in savings and loan failures, the federal government no longer insures holders
of accounts in savings and loan associations.
138. (p. 559) The Savings Association Insurance Fund insures the holders of accounts in savings and loan
associations.
139. (p. 559) Like many other government programs, the FDIC has failed to achieve its goal.
140. (p. 559) The National Credit Union Administration provides coverage up to $100,000 per individual depositor
at each credit union.
141. (p. 559) Cory worries that his $7,537 in a checking account at the Lottadoe National Bank could be lost if the
bank fails. He should relax because his account is fully insured by the federal government.
142. (p. 559-560) Harriet has three types of deposits at her credit union. She has a checking account in her own
name worth $3,123, a joint savings account with her husband, which currently has $14,904 in it, and an IRA
account worth $92,449. Her deposits are at risk because they exceed the $100,000 limit on insurance coverage
143. (p. 559-560) While the FDIC insures deposit accounts with commercial banks, no similar protection is offered
for credit union depositors.
144. (p. 560) The repeal of the Glass-Steagall Act allows banks to own brokerage operations.
145. (p. 560) The Gramm-Leach-Bliley Act prohibits banks from owning brokerage businesses.
146. (p. 560) Recent legislation allows banks and brokerage firms to offer their customers many of the same
services.
147. (p. 561) Existing regulations prohibit Internet banking activities unless the bank also operates a traditional
brick-and-mortar facility.
148. (p. 560) Many banks offer their customers insurance, real estate, and brokerage services.
149. (p. 560, Legal Briefcase box) According to the “Legal Briefcase” box in Chapter 20, holders of business credit cards
as well as holders of consumer credit cards are only liable for the first $50 in charges should the card become
stolen.
150. (p. 561) High startup costs cause the new Internet banks to have higher operating costs than traditional banks.
151. (p. 561) Internet banks offer customers better interest rates and lower fees because these businesses avoid the
costs of constructing and maintaining a bank building.
152. (p. 561) Customers prefer the superior service and security offered by Internet banks.
153. (p. 561) While credit cards increase the number of checks written, they lower the costs of processing those
checks.
154. (p. 561) Credit cards represent the trend toward an electronic funds transfer system.
155. (p. 561) In an electronic funds transfer (EFT) system, the information of a transaction is communicated from
one computer to another.
156. (p. 561) Electronic fund transfer (EFT) tools include debit cards, smart cards, direct deposit, direct payments,
and electronic check conversion.
157. (p. 561) Electronic check conversion allows businesses to reduce the number of bad checks and immediately
gain access to the funds from their customers.
158. (p. 561-562) While an electronic check conversion (ECC) reduces the paper-handling processes of using
checks, debit cards increase the paperwork of using checks.
159. (p. 562) From a bank’s point of view, debit cards and credit cards are treated in identical ways.
160. (p. 561-562) Credit cards and debit cards eliminate the paper handling processes of using checks.
161. (p. 562) Debit cards serve the same function as checks.
162. (p. 562, figure 20.3) Using debit cards as well as using checks immediately transfers funds from the customer’s
account to the seller’s account.
163. (p. 562) Smart cards contain a microprocessor chip that stores information about the user, such as drivers’
license data and bank balance.
164. (p. 562) Smart cards can allow the user to access secure areas within buildings or buy gas with the swipe of
the card.
165. (p. 563) Automatic transactions include direct deposits and direct payments.
166. (p. 560) As Tom approaches graduation, he hopes to find a career in the financial industry. His dad correctly
advised him to avoid the dull jobs in banking or insurance and to focus on landing an interesting job with a
stock brokerage firm.
167. (p. 560) The increased competition in the financial services industry should restrain price increases charged to
consumers.
168. (p. 561) Lower fees and better interest rates motivate customers to open a checking account with an Internet
bank. However, the lack of personal service and concern for information security encourages some customers to
return to a traditional bank.
169. (p. 562) Patrick’s debit card allows him to spend more than his checking account balance, much like his credit
card.
170. (p. 561) While an electronic funds transfer represents a faster and more flexible method of making payments
than writing checks, it is more expensive for banks.
171. (p. 561-562) Big Daddy’s Burgers hopes to improve the speed of their service during the lunch rush hour. To
that end, Big Daddy should accept credit cards to speed up their service.
172. (p. 563) A letter of credit represents a promise that a bank will pay some specified amount at a particular time
if certain conditions are met.
173. (p. 563) Banks help businesses operate in other countries by exchanging the currency of one nation for the
currency of another.
174. (p. 563) A banker’s acceptance represents a promise that a bank will pay a specified amount at a specified
time if certain conditions are met.
175. (p. 563) When traveling in other countries, tourists can use their MasterCard or Visa bankcards to obtain
foreign currencies at ATMs.
176. (p. 563) More than ever, the American economy operates as a distinctly separate entity from the international
economy.
177. (p. 563) International bankers prefer to invest in their own countries whenever possible.
178. (p. 563) The largest banks in the world claim the U.S. as their home base.
179. (p. 563) The global money market trades more than $1.5 trillion every day.
180. (p. 563) International bankers make loans wherever they can get the maximum return for their money at a
reasonable risk.
181. (p. 563) While Federal Reserve actions impact domestic investors, they have little effect on decisions made
by international investors.
182. (p. 564) The World Bank primarily finances projects to protect the environment.
183. (p. 564) The World Bank primarily finances projects to improve the productivity and standards of living in
less-developed nations.
184. (p. 564-565) The International Monetary Fund primarily grants loans to poor nations for projects intended to
improve their standard of living.
185. (p. 564-565) The International Monetary Fund assists the smooth flow of money among nations.
186. (p. 565) Some people believe that involvement by the International Monetary Fund (IMF) exacerbates the
financial crises in a country.
187. (p. 564-565) The International Monetary Fund (IMF) primarily lends money to help less-developed countries
improve their infrastructure.
188. (p. 565, Reaching Beyond Our Borders box) According to the “Reaching Beyond Our Borders” box in Chapter 20, you
cannot cash a check at the World Bank.
189. (p. 565, Reaching Beyond Our Borders box) According to the “Reaching Beyond Our Borders” box in Chapter 20, the
World Bank’s role is to help poor nations become less poor.
190. (p. 563) Abdul Industries wants to import some heavy machinery from a producer located in the Czech
Republic. To facilitate payment to the Czech firm, Abdul arranged for its bank to issue a banker’s acceptance.
Under this arrangement, the bank pays the exporter after the equipment passes inspection.
191. (p. 563) Given the size and strength of the U.S. economy and the widespread use of the dollar, the Federal
Reserve essentially regulates international monetary markets.