Ch.3 Banks and FI's

Question 1

What is a Global FI?

Answer 1

• There is no true global FI or bank

- however, it is defined as one that operates in multiple countries in more than one part of the world.

Question 2

Commercial Banks

Answer 2

• Federal or State chartered that accepts deposits and makes commercial loans.

Question 3

What are the two types of depository accounts

Answer 3

• DDA, demand deposit account(Checking account)

- TDA, Time deposit accounts(CD’s)

Question 4

SWIFT

Answer 4

• first 4 characters, bank code(alpha)
• next 2, Country code(Alpha)
• Next 2, Location code (Alpha)
• Last 3, Branch code, optional(XXX for primary office)

Question 5

What services do investment banks provide?

Answer 5

• Underwriting
• Facilitating mergers
• Acting as a broker

Question 6

What are the special purpose FI’s?

Answer 6

1. Industrial Banks - Limited in scope deposits and loans only
2. Captive Finance Companies - finance for a corporations customer base
3. Factors - provide ST financing to companies for their AR
4. Insurance Companies - …