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Chapter 5 - bank

QuestionAnswer
• Liquidity: Refers to your access of cash including saving, credit to cover short term and unexpected costs
◦ if someone does not have enough cash they can finance for the short term from financial institutions
◦ Emergency funds can be invested into saving accounts, GICs and money market
◦ Depository institutions : Financial institutions that accept deposits and provide loans to individuals and business. They pay interest on saving deposits and charge interest on loans
‣ Charted banks: Financial institutions that accept deposits in chequing and saving accounts and use the funds to provide business and personal loans. These banks are federally incorporated. CDIC of 100,000
◦ Non-depository institutions: Financial institutions that do not offer federally insured deposits accounts but provide various financial services
‣ Mortgage companies: Non-depository institutions that specialize in providing mortgages loans to individuals
‣ Investment dealers: Facilitate the purchase or sale of various investments by firms or individuals by providing investment banking and brokerage services
‣ Insurance companies: Sell insurance to protect individuals or firms from risk that can result in financial loss
‣ Mutual funds: Sell units to individuals and use the proceeds to invest in securities to create mutual fund
‣ Payday loan companies provide single-payments short term loans to cover a cash shortfall
‣ Cheque Cashing Outlets: cash third party cheques immediately as long as you have adequate personal identification and may charge a fee i.e money mart
‣ Pawn shop: Provide a secured loan for a fee and usually require a resealable item worth more than the loan as a deposit if the loan is not repaid the item is foretied.
◦ Schedule l banks cash third party cheques immediately as long as you have adequate personal identification and may charge a fee i.e money mart
‣ Big 5: RBC, Bank of Canada, Td, BNS, BMO financial group, CIBC
‣ First Nation Bank of Canada: focuses specifically on the indigenous market because section 89 prevents banks from taking reserves as collateral.
◦ Schedule II banks are foreign banks that have subsidiaries operating in Canada ( there are 13 federally regulated in Canada) they are regulated by foreign parent corporations. But are allowed to accept deposits
◦ Schedule III banks: a
‣ Financial conglomerates: financial institutions that offer a diverse set of financial services to individuals or firms
• Trust and loan companies: Financial institutions that provided services similar to banks but can provide financial planning services, administer estates and act as trustee in the administration of trust accounts
• Credit unions/ caisses populaires: Provincially incorporated co-operatives financial institutions that are owned and controlled by their members
• Chequing services: Use a chequing account to withdraw money and offer cheque writing services( you provide cheque for 50 dollars to Bell, Bell goes to cash cheque, bank increase bells account and decreases your)
• Chequing account: typically charge a fee but can be waive if a minimum amount is met
• Debit cards A card the is used to identify you at bank but can allow you to make purchases that are charged against an existing chequing account
◦ NSF fee is attached if you write a cheque the gets bounced
• Overdraft protection: An arrangement that protects customers who wrote cheques for an amount that exceeds their chequing card balance, It's a short term loan for depository institutions where the cheque is maintained
• stop payment: A notice that it will not honour a regular monthly automatic withdraw usually by request of the account owner
• Online banking services: A service offered by financial institutions that allow a customer to check balance, credit card, and investments accounts , transfer funds, pay bills, and preform a number of administrative tasks
◦ Banking apps: can be useful and contain useful features
• Interac e-transfer: allows for user to exchange money for one bank account to another
• Credit card financing: at end of billing cycle you would receive a bill
• Safety deposit box: a box at a financial institution in which a customer can store documents, jewellery, and other valuable that are stored in the banks vault
• Automated banking machines :A machine that individuals can use to deposit and withdraw funds at any time of day
• Certified Cheques: a cheque that can be cashed immediately by the payee without the payee having to wait for the bank to process and clear it
• Money order and drafts: Products that direct your bank to pay a specified amount to the person named on them
• Travellers cheque: a cheque written on behalf of an individual that will be charged against a large well know financial institution
◦ Deposit rates and insurance: you would want to compare what other banks are offering on interest( web based banks tend to be lower due to lower overhead)
◦ Fees: If you use ABM a lot want bank account with favourable ABM withdrawal same with cheque services , Avoid institutions that charge high fees on services
◦ TFSA flexible saving that can be used for short-term or long term, the contribution room for 2020 is 6,000, you have an deductible when you invest in TFSA
◦ Safety Deposit: Traditional saving account offered by depository institutions that pay interest on deposits
◦ Term deposits are short or longterm investments that are cashable designed for people who don't know when they want there money
◦ GIC an instruments issued by depository institutions that specifies a minimum investment an interest rate and maturity date, based on annualized interest rate
◦ Return Depository institutions offer higher interest rates on GIC than on saving deposits and term deposits
◦ Money market Fund: Account that pool money from individual and invest in securites that have short term maturites such as a year or less
Created by: annajone
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