Vocabulary Exercises

I

Five lypes of banks are menlioned in the dialogue. Find them and match Ihem wilh the definitions given below.

1. A bank which regulales the supply of currency within an
area, also serving as a clearing house.

2. A bank wilh which anolher bank has regular dealings.

3. A bank on which an item of.exchange is drawn.

4. A bank which makes loans for Ihc purchase or manufac-
lure of induslrial products, using a repayment plan of cer­
tificate purchased by instalment which permits higher le­
gal rales of interest than on other loans.

5. A savings bank which is owned by the deposiliors.

II

Using the words in brackets as a guide, explain the mean­ing of the following terms:

1. clearing house (checks drawn on one another, exchange,banks, an office, where)

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2. collection (an item of exchange, obtaining payment of, the process of)

3. instalment, (an obligation, several payments on, one of)

4. endorse (to transfer ownership, the back of the document,
to place one's signature on)

5. debentures (issued by a corporation, an obligation, but
is, which pays interests, often unsecured)

6. to honour a cheque (payment, make, on)

7. subscribe (financing, agree, a business operation, to lake
a share in)

8. rediscount (less than, at a price, sell, its maturity value, a
note or other investment)

9. transit department (to do with, other banks, having,
drawn, on, the collection of checks)

10. discount house (institution, the City of London, promis­
sory notes, buys, resells)

III

Choose the best answer:

1. "to clear items of exchange at par" means:

a) to exchange checks between banks at their face value,

b) to make profit out of exchanging check between banks.

2. "commercial papers" in the U.S.A. arc:

a) business letters,

b) short-term obligations of industrial companies.

3. "a quotation on listed slocks" is:

a) making a bid for slocks accepted for sale on a slock ex­
change,

b) a slalemcnl of the current price of slocks accepted for
sale on a slock exchange.

4. "to endorse a check with recourse" means:

a) to be legally responsible for making payment of the
amount due,

b) to endorse in such a way thai the parly which endorses
it must make payment if the other parly to the transac
lion refuses payment.

IV

Say what is true and what is false. Correct the false, sen­tences:

1. Correspondent banks make a collection charge on any item

of exchange from Iheir central banks.

2. Central banks seldom advise correspondent banks on their
investments, like commercial papers and shorl-lcrm de­
bentures.

3. Every bank which handles an item of exchange endorses il^v
wilh recourse.

4. Federal laxes are paid into the United Slates Treasury.

5. Commercial banks and industrial banks must be members
of the Federal Reserve System.

6. All the money which the discount houses invest has been
lenl lo Ihem.

7. The proceeds of daily transactions carried out by a dis­
count house are sufficient lo repay Ihe calls made any day.

X. Minimum lending rale is the same as Ihe Treasury bill

rale.

i). Your car is your liquid asset. K). If rales of interest are on the increase, banks are willing

to lend money for fixed periods.

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Word groups. For each of the verbs listed below, find two
nouns which are related to them:
assist invest

collect manage

draw pay

endorse subscribe

VI

Using prefixes un-, in-, dis-, etc., give negative adjectives

which are related to the, following:

active important

cleared licensed

direct listed

endorsed regular

honoured sufficient

VII

Combine the words listed below into meaningful livo or three word expressions:

asset

account

bank

bill

correspondent

central

collection

charge

company

commercial

daily

department

VIII

Fill in the blanks:

The central banking system of the United States is called

..... It differs from that of most other countries'.... in that

it consists not of one bank but of twelve and some twenty

four branches under the control of the Federal Reserve Board in Washington. The Federal Reserve Banks perform a lot of

services for...... Checks flowing through the System are

cleared at...... These checks are endorsed in such a way

that the parties who endorse them must make payment if the

other..... to the transaction refuse.. The checks are

................. The Federal Reserve Banks assist their

banks in many other ways. For instance when their cash..

becomes low, the Federal Reserve Banks will accept frohr
them any notes that can be sold below their value at matu­
rity. They will accept any notes that can be...... They also

help in the.... of new bonds to replace ones that have ma­
tured.

IX

Demonstrate Ihe meaning of Иге following expressions in sentences of your own:

1. to clear an item of exchange through a bank

2. to effect the collection

3. to present for collection

4. to endorse a check with/without recourse

5. to clear a check at par

6. to be liable for the amount

7. to rediscount some paper

8. to provide the necessary money

9. to charge the minimum lending rate

10. to make the greatest profits

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