BUS 410 EXAMS SCRIPT ALL SET QUESTIONS AND
ANSWERS SET A+
✔✔The cheque clearing system - ✔✔APPROVAL
1) Payee deposits the cheque
2) Bank takes the cheque and notes it
CLEARING
3) Sends the image to the clearing house
4) Info is sent to the payer's bank
5) Payer bank must validate the cheque
SETTLEMENT
6) Once validated, the clearing house allows the transfer of funds
✔✔ACSS - ✔✔Automated Clearing Settlement System - this is the clearing house for
cheques and E-transfers.
✔✔Visa and Mastercard - ✔✔payment processing networks that connect banks and
merchants. They are the clearinghouse for the card systems.
✔✔PPN - Authorization - ✔✔1) The cardholder authorizes the merchant to transmit info
to the merchant.
2) The merchant sends a request its bank to process the payment
3) Merchant's bank forwards that request to the card network
4) Card network routes it to the customers' bank
5) Bank checks credit limits and place a temp hold on your funds
6) Approval and denial is issued through the same path
✔✔PPN - CLEARING - ✔✔- Merchant submits all the approved transactions to the
merchant bank
- Sends these to card network
- Card network validates the transactions
- Forwards transactions to the customer banks
, - Prepares to transfer funds
✔✔PPN - SETTLEMENT - ✔✔- Card network calculates the net settlement position for
all the banks
- Customer bank withdraws funds; the Card network deducts their fees
- Merchant bank deposits the funds
- Merchant receives the payment
✔✔Tokenization - ✔✔The process of replacing sensitive data with unique identification
symbols that retain all the essential information about the data without compromising its
security.
✔✔Distributed Ledger Technology - ✔✔A shared transaction ledger with copies stored
across multiple network participants.
✔✔Consensus mechanism - ✔✔The rules participants use to agree that a transaction is
valid before updating the ledger.
✔✔DLT transaction process - ✔✔Transaction submitted → nodes validate →
consensus reached → ledgers updated → transaction completed.
✔✔Why do we need money - ✔✔- convenience of exchange
- allows savings
- common measure of value
✔✔barter economy - ✔✔direct exchange of goods (inefficient)
✔✔Commodity monies - ✔✔widely accepted, but difficult to transport and divide with a
limited supply
✔✔Representative Monies - ✔✔Paper claims are backed by a commodity like gold.
✔✔Role of banks back then - ✔✔- Stored gold
- Facilitated physical payments
- Began the process of lending gold out
✔✔Fractional Reverse Banking - ✔✔- Banks keep a fraction of the reserves
- Lend out the remaining funds
- The loaned-out money is deposited and spent, increasing the overall money supply
A 1000 deposit at a 10% reserve rate: 900 will be lent out, which will then be deposited,
which will be lent out ($810) to the point where 1000 can turn into 10,000 of money.
✔✔Outside money - ✔✔money created by the state or the central bank
ANSWERS SET A+
✔✔The cheque clearing system - ✔✔APPROVAL
1) Payee deposits the cheque
2) Bank takes the cheque and notes it
CLEARING
3) Sends the image to the clearing house
4) Info is sent to the payer's bank
5) Payer bank must validate the cheque
SETTLEMENT
6) Once validated, the clearing house allows the transfer of funds
✔✔ACSS - ✔✔Automated Clearing Settlement System - this is the clearing house for
cheques and E-transfers.
✔✔Visa and Mastercard - ✔✔payment processing networks that connect banks and
merchants. They are the clearinghouse for the card systems.
✔✔PPN - Authorization - ✔✔1) The cardholder authorizes the merchant to transmit info
to the merchant.
2) The merchant sends a request its bank to process the payment
3) Merchant's bank forwards that request to the card network
4) Card network routes it to the customers' bank
5) Bank checks credit limits and place a temp hold on your funds
6) Approval and denial is issued through the same path
✔✔PPN - CLEARING - ✔✔- Merchant submits all the approved transactions to the
merchant bank
- Sends these to card network
- Card network validates the transactions
- Forwards transactions to the customer banks
, - Prepares to transfer funds
✔✔PPN - SETTLEMENT - ✔✔- Card network calculates the net settlement position for
all the banks
- Customer bank withdraws funds; the Card network deducts their fees
- Merchant bank deposits the funds
- Merchant receives the payment
✔✔Tokenization - ✔✔The process of replacing sensitive data with unique identification
symbols that retain all the essential information about the data without compromising its
security.
✔✔Distributed Ledger Technology - ✔✔A shared transaction ledger with copies stored
across multiple network participants.
✔✔Consensus mechanism - ✔✔The rules participants use to agree that a transaction is
valid before updating the ledger.
✔✔DLT transaction process - ✔✔Transaction submitted → nodes validate →
consensus reached → ledgers updated → transaction completed.
✔✔Why do we need money - ✔✔- convenience of exchange
- allows savings
- common measure of value
✔✔barter economy - ✔✔direct exchange of goods (inefficient)
✔✔Commodity monies - ✔✔widely accepted, but difficult to transport and divide with a
limited supply
✔✔Representative Monies - ✔✔Paper claims are backed by a commodity like gold.
✔✔Role of banks back then - ✔✔- Stored gold
- Facilitated physical payments
- Began the process of lending gold out
✔✔Fractional Reverse Banking - ✔✔- Banks keep a fraction of the reserves
- Lend out the remaining funds
- The loaned-out money is deposited and spent, increasing the overall money supply
A 1000 deposit at a 10% reserve rate: 900 will be lent out, which will then be deposited,
which will be lent out ($810) to the point where 1000 can turn into 10,000 of money.
✔✔Outside money - ✔✔money created by the state or the central bank
