It is the most important types of financial institutions because of their size and role in indirect financial markets.

It is a checking account in which the owner is entitled to receive his or her funds on demand and to write checks on the account, which transfers legal ownership of funds to others.

NOW accounts are just demand deposits that pay interest.

Federal Deposit Insurance Corporation insures the holders of such accounts against any changes in profit rate up to a 25% per individual depositor.

It is a form of loan in which the bank sells securities to the lender but simultaneously contracts to repurchase the same securities.

Group 1: List down the three deposit accounts.

Group 2: List down the three principal types of capital accounts.

It provides term financing to take care of temporary discrepancies between business revenues and expenses that are the result of the manufacturing or sales cycle of a business.

In attempting to quantify a  customer's default risk characteristics, banks typically analyze the 5 Cs of credit:

It is an efficient, inexpensive, and objective method for analyzing a potential borrower's character.

This is the easiest and cheapest way to enter international banking.

It involves assessing the probability that part of the interest or principal of the loan will not be repaid.

It refers to rolling over a loan, often capitalizing interest arrears, or extending the loan's maturity.

The bank guarantees payment for goods in a commercial transaction.

The banks use derivatives to hedge the risks they are exposed to as a result of the asset transformation functions they perform.

These are off-balance-sheet activities that may ultimately become obligations of the bank.