Chapter 4 Vocab

Question 1

trust

Answer 1

a legal agreement that provides for the management and control of assets by one party for the benefit of another

Question 2

chartered bank

Answer 2

a financial institution that offers a full range of financial institution that offers a full range of financial services to individuals, businesses, and government agencies
- own different corporations, lend funds to businesses and consumers at interest rates that are higher than those the banks pay on deposits

Question 3

credit union/ caisse populaire

Answer 3

user owned, non profit co-operative financial institution that is organized for the benefit of its members

Question 4

money market fund

Answer 4

a savings investment plan offered by investment companies, with earnings based on investments in various short term financial instruments

Question 5

features of online banking

Answer 5

electric bill
pre authorized debits/ transfers 
stop payments 
cheque services 
email money transfer 
downloadable statements 
synchronization with quicken or money

Question 6

term deposit

Answer 6

deposit made for a specificied term in exchange for a higher rate of return. Can be redeemed before maturity by earning a reduced rate of interest

Question 7

guaranteed investment certificates

Answer 7

term deposits made for a longer period, usually one to five years

Question 8

rate of return

Answer 8

the percentage of increase in the value of savings as a result of interest earned, aka yield

higher rate of return obtained at cost of lower liquidity

Question 9

overdraft protection

Answer 9

an automatic loan made to chequing account customers to cover the amount of cheques written in excess of the available balance in the account

Question 10

financial service: savings

Answer 10

time deposits in savings

Question 11

financial service: payment services

Answer 11

automatic payments

checking accounts commonly called demand deposits

Question 12

financial service: borrowing

Answer 12

for the short or long term

Question 13

financial service: other financial services

Answer 13

insurance, investment, real estate, purchases, tax assistance, and financial planning are additional services you may use

Question 14

schedule 1 banks

Answer 14

full domestic service: smaller ones like TD, RBC

Question 15

schedule 2 banks

Answer 15

subsidiaries of foreign banks in Canada, focus on commercial corporate loans

Question 16

schedule 3 banks

Answer 16

branches of foreign institutions, authorized under Bank Act, to do banking business in Canada

Question 17

Trust Companies

Answer 17

offer broad range of services such as acting as Trustees - owned by banks

Question 18

non deposit type institutions

Answer 18

insurance companies, investment companies, mortgage and loan companies, pawnshops, cheque cashing outlets, banking via phone

Question 19

concerns to online banking

Answer 19

potential privacy violation, ATMS can be costly, difficulty depositing cheques and cash

Question 20

pros and cons of regular savings account

Answer 20

benefits - low minimum balance, easy withdrawal

cons - no returns

Question 21

pros and cons GICs

Answer 21

pros - guaranteed rate of return for GIC

cons - possible penalty of early withdrawal , minimum deposit

Question 22

pros and cons of interest earning Checking accounts

Answer 22

interest earned

cons - service charge for going below minimum balance

Question 23

Canada savings bond pros and cons

Answer 23

pros - return with interest rates that compoound

cons - no interest if redeemed before three months