Banking Unit 4 Terms from Unit 4

Term Definition
Aggregate Measures Tools used to estimate the size of the money supply.
Annual Percentage Rate Nominal rate on which interest is calculated per year.
Annual Percentage Yield Effective rate of interest when compounding is factored in.
Certificate of Deposit (CD) Savings instrument with fixed interest rate and fixed maturity date.
Commodity Money Currency based on some item of value, such as gold or precious stones.
Compound Interest Return calculated by adding interest to principal for next interval.
Demand Deposit Deposit payable on demand whenever the depositor chooses.
Discount Rate Interest rate that the Fed charges for loans to member banks.
Excess Reserves Those reserves held by a bank beyond its reserve requirement.
Federal Funds Rate Interest charged for short-term, interbank loans.
Flat Money Money deemed legal tender by the government but not based on or convertible into a commodity.
Fractional-Reserve System Practice of reserving only part of a deposited quantity.
Interest Price paid for the use of money.
Liquidity The measure of how quickly tings may be converted to something of value like cash.
Money Market Deposit Account (MMDA) Savings account earning a competitive interest rate from invested deposits.
Money Supply Liquid assets held by banks and individuals.
Multiplier Effect Phenomenon that creates new deposits from lending.
Passbook Savings Account Savings account that provides you with a ledger of activity.
Primary Reserves Cash on hand, deposits due from banks, and the percentage required by the Federal Reserve System.
Prime Rate Interest rate banks charge their best and most reliable customers.
Secondary Reserves Reserves other than primary reserves.
Statement Savings Account Provided a monthly or quarterly computerized statement detailing all account activity.
Time Deposit Deposit held for or maturing at a specified time.
Transaction Account Account that allows transactions to occur at any time and in any number.

Leave a Reply

Your email address will not be published. Required fields are marked *