Q13. When buying from a supplier in France, LTD, based in Cleveland, Ohio, has a
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Question
Q13. When buying from a supplier in France, LTD, based in Cleveland, Ohio, has arranged for its bank to pay the supplier the cost of the desired material when it has passed customs in the United States. Which of the following terms is this type of bank promise called? a. banker's acceptance b. bank trust service c. certified check d. letter of credit e. currency exchange agreement
Q14. Which of the following has a fixed term? a. demand deposits b. time deposits c. money market mutual funds d. credit card accounts e. savings accounts
Q15. Which of the following financial institutions earn profits from loans taken from the funds in each of its depositors' accounts? a. securities investment firms b. pension funds c. credit unions d. commercial banks e. mutual savings banks
Q16. Which of the following reasons is the primary motivator for a commercial bank to acquire new depositors? a. A new deposit account will make more funds available to pay the interest on other deposit accounts. b. A new deposit account will make more funds available to pay the bank's employees. c. A new deposit account will make more funds available to give out in loans. d. A new deposit account will make more funds available to give out in dividends to its investors. e. A new deposit account will make more funds available to facilitate brokerage transactions.
Q17. Which of the following laws has had significant effects in maintaining bank identity records? a. the Check Clearing for the 21st Century Act b. the USA Patriot Act c. the Bank Secrecy Act d. the Federal Reserve Act e. the Emergency Economic Stabilization Act
Q18. Which of the following indices indicates the relative strength of the currencies of two countries? a. trade rate b. exchange rate c. trade balance d. relative gross national products e. international loan rate
Explanation / Answer
13. d. letter of credit
A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
14. b. time deposits
Time Deposits: Those deposits which are not payable on demand and on which cheques cannot be drawn. They have a fixed term to maturity.
15. e. mutual savings banks
A mutual savings bank is a financial institution chartered by a central or regional government, without capital stock, that is owned by its members who subscribe to a common fund
16. c. A new deposit account will make more funds available to give out in loans.
A commercial bank makes its profits from investments and loans derived from its depositors' cash.
17. b. the USA Patriot Act
USA PATRIOT Act Section 314(b) permits financial institutions, upon providing notice to the United States Department of the Treasury, to share information with one another in order to identify and report to the federal government activities that may involve money laundering or terrorist activity.
18. b. exchange rate
The exchange rate is value of one currency for the purpose of conversion to another.
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