Fin 4324 Lec13 Exam 2 Ucf

Front 1

Demand deposits

Back 1

<> an account from which deposited funds can be withdrawn at any time without any advance notice.

<> usually pays no interest but will have higheradministrative costs.

<>Expenses for deposits, withdrawals and checksare usually a function of whether the transaction is conducted with a teller,on the telephone, an ATM, a payment card ....

Front 2

Time deposits

Back 2

<>A savings account or certificate of deposit (CD) held for a fixed-term, with the understanding that the depositor can make a withdrawal only by giving notice.

<>Time deposits will usually have one deposit andone withdrawal and the major expense will be the interest on the deposit.

Front 3

Check 21 Act

Back 3

<>October 28, 2004

<>banks can transfer electronic images (electronicconversion) instead of the actual check.

<>This process reduces operating costs and float associated with the checks

Front 4

A bank must know how much it_______to produceeach type of deposit service

Back 4

costs

Front 5

___________ is one of the largest sources of noninterestincome or fees for banks.

Back 5

Service charges on deposits

Front 6

One fee that accounted for about 75% of the totalservice charges in the U.S. that is expensive

Back 6

Overdraft fees

Front 7

Primary purposes of FDIC Deposit Insurance Fund (DIF)

Back 7

(1) to insure the deposits and protect thedepositors of insured banks on deposits less than or equal to $250,000

(2)to resolve failed banks.

Front 8

The reserve ratio is....?

Back 8

the DIF balance divided by estimated insured deposits.

Front 9

Total Base Assessment Rates vary from______ to ______ basis points or cents per $_____ of deposit insurance assessment baseand vary by risk.

Back 9

2.5 ; 45 ; $100

Front 10

in April 2011 FDIC defined a bank's assessment base as ?

Back 10

its average consolidated total assets minus its average tangible equity.

Front 11

cost of a deposit formula

Back 11

Rdep = [interest expense + administrative costs -service charges + dep. insurance premium]/[average collected balance X (1 -reserve requirement)]

Front 12

Average collected balance =

Back 12

(balance - float).

Float is the amount of deposits that have not yet been collected by the bank.

Front 13

We will assume reserve requirements are _____ on all transaction accounts(demand deposits and NOW accounts) and _____ on other deposits.

Back 13

10% ; 0%

Front 14

MCdep =

Back 14

Δ Total Cost / Δ Amount of Funds

Front 15

EU deposit insurance

Back 15

<> Was a minimum in each EUcountry of 20,000 Euros but could be greater in some countries, e.g., Finland =25,000 Euros.

<> Insurance premiums arebased on capital adequacy.