FINS1612 Chapter Notes - Chapter 3: Contingent Liability, Asset Management, Financial Instrument
Document Summary
2. 1 the main activities of commercial banking: asset management. A bank restricts growth in its lending to the level of funds available from its depositor base: liability management. A bank actively manages its sources of funds (liabilities) in order to meet future loan demand (assets: off-balance-sheet business. Transactions that represent a contingent liability and therefore are not recorded on the balance sheet. 2. 2. 1 current account deposits: current account deposits. Liquid funds held in cheque account; cheques drawn to purchase goods and services. 2. 2. 2 call or demand deposits: call deposits. Funds held in a savings account that can be withdrawn on demand. Funds lodged in an account for a predetermined period and at a specified fixed interest rate. 2. 2. 4 negotiable certificate of deposit: certificate of deposit. A short-term discount security issued by a bank; face value repayable at maturity: negotiable security. A financial instrument that can easily be sold into a deep and liquid secondary market.
