BMGT Final Exam UPDATED Exam
Questions and CORRECT Answers
banker's acceptance - CORRECT ANSWER - a promise that the bank will pay some
specified amount at a particular time
barter - CORRECT ANSWER - The direct trading of goods or services for other goods or
services.
certificate of deposit (CD) - CORRECT ANSWER - A time-deposit (savings) account that
earns interest to be delivered at the end of the certificate's maturity date.
commercial bank - CORRECT ANSWER - A profit-seeking organization that receives
deposits from individuals and corporations in the form of checking and savings accounts and
then uses some of these funds to make loans.
credit unions - CORRECT ANSWER - Non profit , member-owned financial cooperatives
that offer the full variety of banking services to their members.
debit card - CORRECT ANSWER - an electronic funds transfer tool that serves the same
function as checks: it withdraws funds from a checking account
demand deposit - CORRECT ANSWER - The technical name for a checking account; the
money in a demand deposit can be withdrawn anytime on demand from the depositor.
discount rate - CORRECT ANSWER - the interest rate the Fed charges on loans to
member banks
electronic funds transfer (EFT) system - CORRECT ANSWER - A computerized system
that electronically performs financial transactions such as making purchases, paying bills, and
receiving paychecks.
,Federal Deposit Insurance Corporation (FDIC) - CORRECT ANSWER - An independent
agency of the U.S. government that insures bank deposits.
International Monetary Fund (IMF) - CORRECT ANSWER - Organization that assists the
smooth flow of money among nations.
letter of credit - CORRECT ANSWER - A promise by the bank to pay the seller a given
amount if certain conditions are met.
M-1 - CORRECT ANSWER - Money that can be accessed quickly and easily (coins and
paper money, checks, traveler's checks, etc.)
M-2 - CORRECT ANSWER - money included in M-1 plus money that may take a little
more time to obtain (savings accounts, money market accounts, mutual funds, certificates of
deposit, etc.)
M-3 - CORRECT ANSWER - M-2 plus big deposits like institutional money market funds
money - CORRECT ANSWER - anything that people generally accept as payment for
goods and services
money supply - CORRECT ANSWER - The amount of money the Federal Reserve Bank
makes available for people to buy goods and services.
nonbanks - CORRECT ANSWER - financial organizations that accept no deposits but
offer many of the services provided by regular banks (pension funds, insurance companies,
commercial finance companies, consumer finance companies, and brokerage houses)
open-market operations - CORRECT ANSWER - The buying and selling of U.S.
government bonds by the Fed with the goal of regulating the money supply.
,pension funds - CORRECT ANSWER - Amounts of money put aside by corporations,
nonprofit organizations, or unions to cover part of the financial needs of members when they
retire
reserve requirement - CORRECT ANSWER - A percentage of commercial banks'
checking and savings accounts that must be physically kept in the bank.
savings and loan association (S&L) - CORRECT ANSWER - A financial institution that
accepts both savings and checking deposits and provides home mortgage loans.
Savings Association Insurance Fund (SAIF) - CORRECT ANSWER - the part of the
FDIC that insures holders of accounts in savings and loan associations
smart card - CORRECT ANSWER - An electronic funds transfer tool that is a
combination credit card, debit card, phone card, driver's license card, and more.
time deposit - CORRECT ANSWER - The technical name for a savings account; the bank
can require prior notice before the owner withdraws money from a time deposit.
World Bank - CORRECT ANSWER - The bank primarily responsible for financing
economic development; also known as the International Bank for Reconstruction and
Development.
benchmarking - CORRECT ANSWER - Comparing an organization's practices, processes,
and products against the world's best.
bureaucracy - CORRECT ANSWER - An organization with many layers of managers who
set rules and regulations and oversee all decisions.
, centralized authority - CORRECT ANSWER - an organizational structure in which
decision making authority is maintained at the top level of management
chain of command - CORRECT ANSWER - the line of authority that moves from the top
of a hierarchy to the lowest level
core competencies - CORRECT ANSWER - those functions that the organization can do
as well as or better than any other organization in the world
cross-functional self-managed teams - CORRECT ANSWER - groups of employees from
different departments who work together on a long-term basis
decentralized authority - CORRECT ANSWER - an organizational structure in which
decision-making authority is delegated to lower-level managers more familiar with local
conditions than headquarters management could be
departmentalization - CORRECT ANSWER - the dividing of organizational functions into
separate units
digital natives - CORRECT ANSWER - young people who have grown up using the
internet and social networking
economies of scale - CORRECT ANSWER - The situation in which companies can reduce
their production costs if they can purchase raw materials in bulk; the average cost of goods goes
down as production levels increase.
flat organizational structure - CORRECT ANSWER - An organizational structure that has
few layers of management and a broad span of control.
formal organization - CORRECT ANSWER - The structure that details lines of
responsibility, authority, and position; that is, the structure shown on organization charts.
Questions and CORRECT Answers
banker's acceptance - CORRECT ANSWER - a promise that the bank will pay some
specified amount at a particular time
barter - CORRECT ANSWER - The direct trading of goods or services for other goods or
services.
certificate of deposit (CD) - CORRECT ANSWER - A time-deposit (savings) account that
earns interest to be delivered at the end of the certificate's maturity date.
commercial bank - CORRECT ANSWER - A profit-seeking organization that receives
deposits from individuals and corporations in the form of checking and savings accounts and
then uses some of these funds to make loans.
credit unions - CORRECT ANSWER - Non profit , member-owned financial cooperatives
that offer the full variety of banking services to their members.
debit card - CORRECT ANSWER - an electronic funds transfer tool that serves the same
function as checks: it withdraws funds from a checking account
demand deposit - CORRECT ANSWER - The technical name for a checking account; the
money in a demand deposit can be withdrawn anytime on demand from the depositor.
discount rate - CORRECT ANSWER - the interest rate the Fed charges on loans to
member banks
electronic funds transfer (EFT) system - CORRECT ANSWER - A computerized system
that electronically performs financial transactions such as making purchases, paying bills, and
receiving paychecks.
,Federal Deposit Insurance Corporation (FDIC) - CORRECT ANSWER - An independent
agency of the U.S. government that insures bank deposits.
International Monetary Fund (IMF) - CORRECT ANSWER - Organization that assists the
smooth flow of money among nations.
letter of credit - CORRECT ANSWER - A promise by the bank to pay the seller a given
amount if certain conditions are met.
M-1 - CORRECT ANSWER - Money that can be accessed quickly and easily (coins and
paper money, checks, traveler's checks, etc.)
M-2 - CORRECT ANSWER - money included in M-1 plus money that may take a little
more time to obtain (savings accounts, money market accounts, mutual funds, certificates of
deposit, etc.)
M-3 - CORRECT ANSWER - M-2 plus big deposits like institutional money market funds
money - CORRECT ANSWER - anything that people generally accept as payment for
goods and services
money supply - CORRECT ANSWER - The amount of money the Federal Reserve Bank
makes available for people to buy goods and services.
nonbanks - CORRECT ANSWER - financial organizations that accept no deposits but
offer many of the services provided by regular banks (pension funds, insurance companies,
commercial finance companies, consumer finance companies, and brokerage houses)
open-market operations - CORRECT ANSWER - The buying and selling of U.S.
government bonds by the Fed with the goal of regulating the money supply.
,pension funds - CORRECT ANSWER - Amounts of money put aside by corporations,
nonprofit organizations, or unions to cover part of the financial needs of members when they
retire
reserve requirement - CORRECT ANSWER - A percentage of commercial banks'
checking and savings accounts that must be physically kept in the bank.
savings and loan association (S&L) - CORRECT ANSWER - A financial institution that
accepts both savings and checking deposits and provides home mortgage loans.
Savings Association Insurance Fund (SAIF) - CORRECT ANSWER - the part of the
FDIC that insures holders of accounts in savings and loan associations
smart card - CORRECT ANSWER - An electronic funds transfer tool that is a
combination credit card, debit card, phone card, driver's license card, and more.
time deposit - CORRECT ANSWER - The technical name for a savings account; the bank
can require prior notice before the owner withdraws money from a time deposit.
World Bank - CORRECT ANSWER - The bank primarily responsible for financing
economic development; also known as the International Bank for Reconstruction and
Development.
benchmarking - CORRECT ANSWER - Comparing an organization's practices, processes,
and products against the world's best.
bureaucracy - CORRECT ANSWER - An organization with many layers of managers who
set rules and regulations and oversee all decisions.
, centralized authority - CORRECT ANSWER - an organizational structure in which
decision making authority is maintained at the top level of management
chain of command - CORRECT ANSWER - the line of authority that moves from the top
of a hierarchy to the lowest level
core competencies - CORRECT ANSWER - those functions that the organization can do
as well as or better than any other organization in the world
cross-functional self-managed teams - CORRECT ANSWER - groups of employees from
different departments who work together on a long-term basis
decentralized authority - CORRECT ANSWER - an organizational structure in which
decision-making authority is delegated to lower-level managers more familiar with local
conditions than headquarters management could be
departmentalization - CORRECT ANSWER - the dividing of organizational functions into
separate units
digital natives - CORRECT ANSWER - young people who have grown up using the
internet and social networking
economies of scale - CORRECT ANSWER - The situation in which companies can reduce
their production costs if they can purchase raw materials in bulk; the average cost of goods goes
down as production levels increase.
flat organizational structure - CORRECT ANSWER - An organizational structure that has
few layers of management and a broad span of control.
formal organization - CORRECT ANSWER - The structure that details lines of
responsibility, authority, and position; that is, the structure shown on organization charts.
