Exam 12: Managing and Pricing Deposit Services

According to recent studies cited in this chapter,in choosing a bank to supply their deposits and other services,which of the following factors do business firms rank first?

From an analysis on its deposits,a bank determines that account processing and other operating expenses cost the bank $4.15 per month.It has also determined that non-operating expenses on its deposits are $1.65 per month.The bank wants to have a profit margin which is 10 percent of monthly costs.What monthly fee should the bank charge on its deposit accounts?

When financial institutions tempt customers by paying postage both ways in bank-by-mail services or by offering free gifts such as teddy bears,they are practicing __________.

A checking account price schedule characterized by absence of any monthly account maintenance fee or per-transaction fee is called:

When a customer is charged a fixed cost per check,per period,or both,it is called __________________ pricing.

An MMDA is a short-term deposit where the bank can offer a competitive interest rate and which allows up to six preauthorized drafts per month.

Nonprice competition for deposits has tended to distort the allocation of scarce resources in the banking sector.

Deposit accounts whose principal function is to make payments for purchases of goods and services are called:

Domestic deposits generate legal reserves.

Money market deposit accounts (MMDAs),offering flexible interest rates,accessible for payments purposes,and designed to compete with share accounts offered by money market mutual funds,were authorized by the:

When the government collects taxes or sells Treasuries,it usually directs these funds into TT&L deposits first:

Depositors must send their customers the amount of interest earnings received,along with the _________________ earned.It is the interest rate the customer has actually earned on the account.

Personal checking accounts tend to be more profitable for banks than commercial checking accounts.

Prior to Depository Institution Deregulation and Control Act (DIDMCA)being passed,banks used ______________.This tended to distort the allocation of scarce resources.

While demand deposits have about the same gross expenses per dollar of deposit as time deposits do,the _____________ levied against transaction account customers help to lower the net cost of checkable deposits.

Interest-bearing checking accounts,on average,tend to generate lower net returns for banks than regular (non-interest-bearing)checking accounts.

A customer has a savings account for one year.During the year he earns $65.50 in interest.For 180 days he has $2,000 in the account and for another 180 days he has $1,000 in the account.What is the annual percentage yield on this savings account?

_________________________ is a way of pricing deposit services in which the rate,or return,or the fees charged on the deposit accounts are based on the cost of offering the service plus a profit margin.

Under the Truth in Savings Act,customers must be informed of the impact of any early deposit withdrawals on the annual percentage yield they expect to receive from an interest-bearing deposit.

According to the textbook,business (commercial)transaction accounts are generally more profitable than personal checking accounts.Which of the following explains the reason(s)behind this statement?