De Castro, Rhys Anne A.

AC-204
1. Balance Sheet
Balance Sheet is a financial statement that summarizes and reports the financial balances
of an entity, or company. It includes the entity’s liabilities, assets, and equity. It gives an idea to
the investors on how the company is performing.

2. Checkable Deposits
Checkable deposits are bank accounts that allow checks to be drawn or enable the owner
of the account to transfer funds to a third party. These give the owner easy access and are payable
upon demand.
3. Demand Deposit
Demand Deposit is a money deposited into a bank account or funds held by the bank
which can be withdrawn without advance notice.

4. Negotiable Order of Withdrawal

Negotiable Order of Withdrawal or NOW is an account, a checking account, where one
earns interest on the money deposited. It allows the owner of the account to write drafts against
the deposited money.

5. Money- Market Deposit Accounts

Money-Market Deposit Account (MMDA) is a type of high-yield savings account credit
un ion or bank that is somewhat distinct from a traditional savings account because it allows the
account owners to have hybrid accounts with the check-writing capacity offered. Investment
made in this form o account requires a higher balance for consumer than regular investments.
6. Certificate of Deposit
A Certificate of Deposit (CD) is a product of banks which offer money to depositors for a
specific period in the form of certificate offered and issued by them. It is called low-risk because
the money you have deposited receives interest in a reasonably stable way when being saved.

7. Non- Transaction Deposit

Non-Transaction Deposit is a deposit in which banks collect their funds or it is the source
of funds for them. This deposit can not be removed or, by way of checks, passed to third parties.
It requires time deposits which is also classified as a Deposit Certificate (CD) and a savings
account.

8. Savings Account
Savings Account is a basic type of deposit account kept securely by banks or other
financial entities, bearing interest. For potential deposits and uses, the savings account is an
account that holds and saves your assets, hence the name. It can be used conveniently by the
owner of the account.

9. Time Deposit
 Time Deposit is an account that also bears interest that must remain in the account with
the money and can not be withdrawn to earn the stated interest rate before its fixed term or pre-set
date of maturity. Early withdrawal of the money results in fines for certain months, such as
forfeiture of interest.

10. Discount Loans (Advances)

Discount Loan is a type of loan issued for a limited period of time which, by subtracting
or reducing interest and charges, the borrower acquires a reduced amount of loan.

11. Bank Capital

Bank Capital is procurable or can be acquired by subtracting the total assets and
liabilities. This is often referred to as the bank’s net worth or the equity value to investors.

12. Reserves
Reserves are retained earnings or the portion of the profit of a company that is set aside
for the future use.

13. Reserve Requirements

Reserve Requirements are regulation that must include an equal fraction to be held as
reserves over a certain sum of money or checkable deposits at a bank. In other words, it is the
amount of cash that the banks, in conjunction with the costumers’ deposits, would have in their
vaults.

14. Correspondent Banking

Correspondent Banking refers to a third-party financial institution that provides services
to another one or on behalf of another bank that is usually in another country.

15. Deposit Outflows

Deposit Outflows are the withdrawals in cash reserves that are withdrawn or a requested
payment is made by the account holders. It is a loss on the side of the financial institution’s part,
thereby creating an outflow.

16. Liquidity Management

Liquidity Management is the process of managing the assets to lessen or avoid the risks of
losses and to meet the bank’s short-term and immediate obligations to the depositors as well as to
cover the expenses.

17. Asset Management

Asset Management is a systemic approach of obtaining or acquiring assets that have low
default rate which is the percentage of loans that the lender has written off as unpaid.

18. Liability Management

Liability Management is a systemic approach or process of managing the use of assets as
well as the acquisition of low-cost funds to reduce the risk of loss from liabilities.
19. Capital Adequacy Management
Capital Adequacy Management includes the process of coming up to a decision usually
made by the manager regarding the amount of the capital that the bank must maintain or hold as
well as how it should be accessed.

20. Credit Risk

Credit risk is the risk or the possibility of a financial loss to the other party that may arise
on a debt from the failure of the borrower to pay the required amount of loan or meet the
obligations.

21. Interest rate risk

Interest rate risk is the probability that the value of an asset will decrease as a result of un
predictable interest rate volatility.
22. Opportunity Cost
Opportunity cost is the cost of the decision you might have done if you hadn’t made the
first choice.
23. Federal Funds Market
Federal funds Market refers to market wherein the Depository Institutional is able to
borrow or lend their excess money, and allowing the banks to borrow from other banks with
excess money for a short period of time.
24. Negotiable Certificate of Deposit
Negotiable Certificate of Deposit is a certificate which is issued in the form of a bearer
and which can be traded on a secondary market.

25. Return on Assets (ROA)

Return on Assets (ROA) measures the company’s profitability in relation to total asset.

26. Return on Equity (ROE)

Return on Equity (ROE) measures the company’s profitability in relation to stockholders’
equity.

27. Adverse Selection

Adverse Selection defines situation in which either buyers or sellers is taking advantage
of the other groups’ weaknesses, specifically about risk factors relevant to a particular business
transaction.

28. Moral Hazards

Moral Hazards is the risk that the party is entered in a contract that provide misleading
information about its assets, liability, or credit capacity.

29. Restrictive Covenants

Restrictive Covenants is an agreement that limits involvement in such acts by a company
to another party to a deal.
30. Loan Commitment
Loan Commitment is an agreement by a commercial bank or other financial institution to
lend a certain amount of money to a corporation or individual.

31. Compensating Balances

Compensating Balances is a minimum deposit which a creditor must kept in a bank
account.