Podcast
Questions and Answers
What is the main purpose of an Individual Retirement Account (IRA)?
What is the main purpose of an Individual Retirement Account (IRA)?
- To fund college education for children
- To provide immediate financial care for dependents
- To provide loans for home purchases
- To supplement retirement funds through tax-deferred savings (correct)
What is a key feature of Trust Services offered by banks?
What is a key feature of Trust Services offered by banks?
- They provide management of an individual's assets on their behalf (correct)
- They allow individuals to withdraw cash from their trust accounts directly
- They offer immediate liquid assets to the individual
- They only manage retirement funds
Which of the following statements about the Private Retirement Scheme (PRS) is true?
Which of the following statements about the Private Retirement Scheme (PRS) is true?
- It is mandatory for all wage earners to participate
- It is fully government-funded
- It is designed for short-term savings exclusively
- It offers tax relief of up to RM3,000 per year (correct)
What does a Letter of Credit guarantee?
What does a Letter of Credit guarantee?
What function does Electronic Funds Transfer (EFT) serve?
What function does Electronic Funds Transfer (EFT) serve?
Which organization guarantees the safety of deposits in banks up to a certain amount?
Which organization guarantees the safety of deposits in banks up to a certain amount?
What supervision role does the FDIC play in relation to banks?
What supervision role does the FDIC play in relation to banks?
Which statement correctly describes an Automated Teller Machine (ATM)?
Which statement correctly describes an Automated Teller Machine (ATM)?
What aspect of a Banker’s Acceptance is crucial?
What aspect of a Banker’s Acceptance is crucial?
Why do commercial banks pay fees to the FDIC?
Why do commercial banks pay fees to the FDIC?
What is the primary function of a commercial bank?
What is the primary function of a commercial bank?
Which type of financial institution is specifically associated with home mortgages?
Which type of financial institution is specifically associated with home mortgages?
What distinguishes a credit union from other financial institutions?
What distinguishes a credit union from other financial institutions?
Which institution manages a nondeposit pool of funds to provide retirement income?
Which institution manages a nondeposit pool of funds to provide retirement income?
What type of institution collects premiums to provide insurance coverage?
What type of institution collects premiums to provide insurance coverage?
Which financial institution specializes in making loans to businesses and consumers?
Which financial institution specializes in making loans to businesses and consumers?
Which of the following is NOT classified as a deposit institution?
Which of the following is NOT classified as a deposit institution?
What is the main activity of a securities investment dealer?
What is the main activity of a securities investment dealer?
Which of the following is true about a mutual savings bank?
Which of the following is true about a mutual savings bank?
What is a characteristic of a credit union?
What is a characteristic of a credit union?
Flashcards
Commercial Bank
Commercial Bank
A company that takes deposits and uses them to make loans. It also earns profits, pays interest to depositors, and dividends to owners.
Savings and Loan Association (S&L)
Savings and Loan Association (S&L)
A financial institution where depositors are also the owners, sharing in its profits. It specializes in accepting deposits and making loans, primarily for home mortgages.
Credit Union
Credit Union
A nonprofit, cooperative financial institution owned and run by its members, typically employees of a specific organization.
Pension Fund
Pension Fund
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Insurance Company
Insurance Company
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Finance Company
Finance Company
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Securities Investment Dealer (Broker)
Securities Investment Dealer (Broker)
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Deposit Institutions
Deposit Institutions
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Non-Deposit Institutions
Non-Deposit Institutions
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Banking System Changes
Banking System Changes
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Individual Retirement Account (IRA)
Individual Retirement Account (IRA)
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Trust Services
Trust Services
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Private Retirement Scheme (PRS)
Private Retirement Scheme (PRS)
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Letter of Credit
Letter of Credit
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Banker's Acceptance
Banker's Acceptance
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Electronic Funds Transfer (EFT)
Electronic Funds Transfer (EFT)
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Automated Teller Machine (ATM)
Automated Teller Machine (ATM)
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Federal Deposit Insurance Corporation (FDIC)
Federal Deposit Insurance Corporation (FDIC)
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FDIC Role
FDIC Role
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FDIC Membership
FDIC Membership
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Study Notes
Chapter 13: Financial Services
- This chapter covers financial institutions, their services, and the regulation of the banking system.
- It also touches upon international banking and finance.
Learning Outcomes
- Describe different financial institutions and their services.
- Identify key changes in the banking system.
- Discuss international banking and finance institutions and activities.
Financial Institutions (1 of 2)
- Commercial Bank: A company accepting deposits to make loans, earning profits, paying interest to depositors, and dividends to owners. Examples include CIMB, Maybank, and Public Bank.
- Savings and Loan Association (S&L): A financial institution that accepts deposits and primarily provides loans for home mortgages.
Financial Institutions (2 of 2)
- Mutual Savings Bank: A financial institution where depositors share in the bank's profits.
- Credit Union: A non-profit, cooperative financial institution owned and typically operated by its members, often employees of a specific organization.
Nondeposit Institutions (1 of 2)
- Pension Fund: A non-deposit pool of funds managed to provide retirement income for its members. Examples include Employees Provident Fund (EPF).
- Insurance Company: A non-deposit institution investing funds collected as premiums for insurance coverage. Examples include MSIG, Prudential, and AIA.
Nondeposit Institutions (2 of 2)
- Finance Company: A non-deposit institution specializing in providing loans to businesses and consumers.
- Securities Investment Dealer (Broker): A financial institution buying and selling stocks and bonds for investors and its own accounts. Examples include RHB Securities, Maybank Securities, and CIMB Securities.
The Growth of Financial Services
- Individual Retirement Account (IRA): A tax-deferred pension fund to supplement retirement income.
- Trust Services: Bank management of estates, investments, or other assets on behalf of individuals.
- Private Retirement Scheme (PRS): A voluntary long-term savings scheme for retirement with tax incentives up to RM3,000 per year.
International Services
- Letter of Credit: A bank promise to pay a certain amount if specified conditions are met.
- Banker's Acceptance: A bank promise to pay a designated firm a specified amount at a future date.
Electronic Funds Transfer
- Electronic Funds Transfer (EFT): Transferring funds electronically via wire, cable, or microwave.
- Automated Teller Machine (ATM): An electronic machine enabling bank customers to conduct transactions 24/7.
Regulation of the Banking System
- Federal Deposit Insurance Corporation (FDIC): A federal agency guaranteeing deposit safety up to $250,000.
Federal Deposit Insurance Corporation (FDIC)
- Preserves confidence by supervising banks and insuring deposits.
- Commercial banks pay fees for FDIC membership.
- FDIC maintains the right to examine bank activities and accounts.
Malaysia Bank Deposit Insurance
- Malaysian banks' deposit insurance status is a key topic, discussed with images of bank logos.
PIDM's Membership
- PIDM members include all commercial banks licensed under the Financial Services Act 2013 and Islamic banks licensed under the Islamic Financial Services Act 2013, including foreign bank subsidiaries.
International Bank Structure
- World Bank: UN agency funding improvements in developing countries.
- International Monetary Fund (IMF): UN agency with combined resources promoting stable exchange rates, providing short-term loans, and serving other financial purposes.
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