Chapter 5- Bank Services & Managing Money

Question 1

Depositary institutions

Answer 1

Financial institution that accepts deposits from and provide loans to individuals and businesses

Question 2

What are the three types of depositary institutions ?

Answer 2

Chartered banks
Trust and loan companies
Credit unions

Question 3

Non depositary institutions

Answer 3

Financial institutions that do not offer federally insured deposit accounts but have other financial services

Question 4

Schedule 1 banks

Answer 4

Domestic that are authorized to accept deposits

Question 5

Schedule 2 banks

Answer 5

Foreign banks that have subsidiaries operating in Canada, can accept deposits

Question 6

Schedule 3 banks

Answer 6

Subsidiaries of foreign banks that are restricted in authority to accept deposits

Question 7

Financial conglomerates

Answer 7

Financial institutions that offer an adverse set of financial services to individuals or firms

Question 8

Investment dealers

Answer 8

Non depository

Purchase or sell various investments by firm or individual by providing investment banking and brokerage services

Question 9

Insurance companies

Answer 9

Non depository

Sell insurance to protect individuals or firms from risks that can incur financial loss

Question 10

Mutual fund companies

Answer 10

Sell units to individuals and use the proceeds to invest in securities to create mutual funds

Question 11

Overdraft protection

Answer 11

An arrangement that protects customers who write cheques for amount balances that exceed their chequing account balance

Question 12

Certified cheques

Answer 12

A cheque that can be cashed immediately by the payee without the payee having to wait for the bank to process and clear it

Question 13

Money orders and drafts

Answer 13

Products that direct your bank to pay a specified amount to the person named on them

Question 14

Travellers cheques

Answer 14

A cheque written on behalf of an individual that will be charged against a large well know, financial institution, or credit card sponsors account

Question 15

How to select a financial institution

Answer 15

Convenience
Deposit rates and insurance
Fees

Question 16

TFSA

Answer 16

Tax free savings account
The registered investment account that allows you to purchase investment, with after tax dollars. This does not attract any Tax payable on your investment growth

Question 17

GIC

Answer 17

Guaranteed investment certificates
An instrument issued by a depository institution that specifies a minimum investment, an interest rate, and a maturity date.

Question 18

CSB’s

Answer 18

Short term to medium term return high quality debt securities issued by the government of Canada

Question 19

MMF’s

Answer 19

The accounts that pool money from individuals and invest in have short term maturities such as one year or less.

Question 20

Liquidity

Answer 20

This is a necessity because there will be times that income won’t cover expenses