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Questions and Answers
What is a key characteristic of demand deposits?
What is a key characteristic of demand deposits?
- They can only be accessed after a specified period.
- They require a minimum balance to maintain.
- They earn high-interest rates.
- They can be withdrawn at any time. (correct)
Which of the following statements about demand deposit facilities is true?
Which of the following statements about demand deposit facilities is true?
- They do not allow for cheque facilities.
- They are only available to business accounts.
- They allow for cheque facilities for a specified amount. (correct)
- They cannot earn interest.
Which feature distinguishes demand deposits from other types of deposits?
Which feature distinguishes demand deposits from other types of deposits?
- They provide immediate access to funds. (correct)
- They are required to be held for a fixed term.
- They generally have lower liquidity.
- They may not be accessed without prior notice.
How do banks generally treat funds in demand deposit accounts?
How do banks generally treat funds in demand deposit accounts?
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What is one possible benefit of demand deposits compared to other forms of deposits?
What is one possible benefit of demand deposits compared to other forms of deposits?
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Study Notes
Demand Deposits
- What are they? Deposits in a bank account that are payable on demand by the depositor.
- Also known as: Current accounts.
- Key Features:
- Withdrawals: Depositors can withdraw money at any time.
- Cheques: Depositors can use cheques to make payments.
- Interest: Some demand deposits, like savings accounts, earn interest.
- Safety: The money is safe and secure in the bank.
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