28/4/2014

Quia - Commercial Banking (Pepe)

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Commercial Banking (Pepe)

Fill in the gaps with the following words (hint: you may need to look at the next panel to see the
rest of a sentence giving you more of a clue as to which term is correct): accounts, current
account, lend, overdraft, return, bank loan, debt, liabilities, salary, transfer, cheque, depositors,
liquidity, spread, wages, customers', deposits, optimise, standing orders, withdraw.

1. Commercial banks are businesses that trade in money. They can receive and hold
deposits

(1 point)

2. Banks pay money according to the customers

3. Banks can also lend

instructions. (1 point)

money to clients who need it (1 point)

4. There are still many people in Britain who do not have bank accounts

5. Traditionally, factory workers were paid wages

(1 point)

in cash on Fridays. (1 point)

6. Non-manual workers, however, usually receive a monthly salary

in the form of

a cheque (1 point)

7. They can also be paid by a transfer

8. A current account

paid directly into their bank account (1 point)

(US: checking account) usually pays little or no interest but... (1 point)

9. ... but allows the holder to withdraw

his or her cash with no restrictions. (1 point)

10. Deposit accounts (in the US also called time or notice accounts) pay interest. They do not
usually provide cheque

(US: check) facilities, and notice is often required to

withdraw money. (1 point)

11. standing orders

and direct debits are ways of paying regular bills at regular

intervals. (1 point)

12. A bank loan

is a fixed sum of money, lent for a fixed period, on which interest is

paid; banks usually require some form of security or guarantee before lending. (1 point)

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28/4/2014

Quia - Commercial Banking (Pepe)

13. An overdraft

is an arrangement by which a customer can overdraw an account, i.e.

run up a debt to an agreed limit... (1 point)

14. ... interest on the debt

is calculated daily. (1 point)

15. Banks make a profit from the spread

or differential between the interest rates

they pay on deposits and those they charge on loans. (1 point)

16. They are also able to lend more money than they receive in deposits because
depositors

rarely withdraw all their money at the same time. (1 point)

17. In order to optimise

the return on their assets (loans), bankers have to find a

balance between yield and risk... (1 point)

18. ... and liquidty

and different maturities... (1 point)

19. ...and to match these with their liabilities

(deposits). (1 point)

20. The maturity of a loan is how long it will last; the yield of a loan is its annual
return

- how much money it pays - expressed as a percentage. (1 point)

Submit answers

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