Demand Deposit
Account paying funds on demand without notice of intended withdrawal.
2.
Certificate of Deposit (CD)
Receipt for a time deposit issued for a period and normally bearing a fixed interest rate. It differs from the general type of time deposit in that it is negotiable and can be sold to another party before maturity.
3.
Time Deposit
Deposit account paying interest for a fixed period, and the funds cannot be withdrawn before maturity.
4.
Joint Account
A bank account owned by two or more persons, who equally share rights and liabilities of the account.
5.
Cheque
An unconditional order in writing addressed by one person to a bank, requiring the bank to pay on demand or at a determinable future time a sum to the order of a specified person, or to the bearer.
6.
Crossed Cheque
The cheque can only be paid into the bank account of the payee.
7.
Open Cheque / Uncrossed Cheque
The cheque can be exchanged for cash at the drawer's bank account on which it is drawn.
8.
Pay to Bearer
Cheque, draft or other negotiable instrument transferable to the holder by delivery, without endorsement.
9.
Pay to Order
Negotiable instrument payable by endorsement and delivery.
10.
Cashier Order
Cheque drawn by a bank on itself authorizing payment of the amount shown to the payee.
11.
Bank Draft
Payment order in writing that instructs a second party, the drawee, to pay a specified sum to a third party.
12.
Demand Draft
Written order directing payment to be made, on sight, to a third party. Person writing the draft is the drawee, the bank making payment is the drawer, and the beneficiary is the payee.
13.
Night Depository
Bank vault for merchant deposits after banking hours.
14.
Easy-Pay-System (EPS)
Transferring cash directly from a customer's bank account to vendor at a cash check point.
B. Foreign Exchange
1.
Cross rate
When a domestic currency is not directly traded with another currency, it requires a third country's currency as a base to determine the exchange rate. The rate expressed in terms of a third currency is called the cross rate.
2.
Exchange rate
Conversion price for exchanging one currency for another.
3.
Spot rate
The rate quoted for on the spot delivery to meet immediate orders for purchase or sale of a currency at current market prices.
4.
Spread
Difference between the buying and selling rate for the foreign exchange concerned.
5.
Forward exchange contract
Agreement between two parties to exchange one currency for another at a forward or future date.
6.
Eurocurrency
Those other than the domestic currency of the country in which the bank taking the deposit or lending the funds is located.
7.
Mail transfer (M/T)
A payment order mailed by remitting bank to their correspondent bank to transfer an amount of currency to beneficiary.
8.
Telegraphic transfer (T/T)
A payment order sent through telegraphic wire by remitting bank to their correspondent bank to transfer an amount of currency to beneficiary.
9.
Travellers cheques
A cheque with an amount of currency issued by a financial institution sold to customer through its agent. The customer pays for the cheques in advance. He signs the cheques once when purchasing and counter signs when encashing.
10.
Remitting bank
A bank on behalf of its customer sends a payment order to their correspondent bank to transfer an amount of currency to beneficiary.
C. Loans
1.
Fixed rate loan
Loan with an interest rate that does not vary over the term of the loan.
2.
Floating rate loan
Loan carrying an interest rate that fluctuates according to changes in an INDEX rate. The rate paid by the borrower may rise or fall, depending on changes in prime rates.
3.
Hire purchase
A method of buying goods in which the purchaser takes possession of them as soon as he has paid an initial instalment of the price (a deposit) and obtains ownership of the goods when he has paid all the agreed number of subsequent instalments and exercises his option to purchase the goods.
4.
Mortgage loan
A loan whereby the borrower gives the lender a mortgage in exchange for the right to use the property while the mortgage is in effect, and agrees to make regular payments of principal and interest.
5.
Instalment loan
Loans granted by the bank to customer over a fixed period of time. Repayment schedule is usually fixed in amount and time.
6.
Secured loan
Loan that is collateralized by assignment of rights to property and a SECURITY INTEREST in personal property or real property taken by the lender.
7.
Unsecured loan
Loan granted on the strength of the borrower's credit history or reputation in the community, earnings potential, and other assets owned, even if unpledged, rather than a pledge of assets as COLLATERAL.
8.
Project finance
Lending (usually for a major capital or infra-structural project) which is structured so that the lenders rely on the income stream from the project (once it has been established) to pay interest on and repay the loan.
9.
Syndicated loan
Banks joint together to form syndicate to finance projects.
10.
Hong Kong inter-bank offered rate (HIBOR)
Hong Kong inter-bank offered rate on Hong Kong dollar deposits traded between banks.
11.
London inter-bank offered rate (LIBOR)
London inter-bank offered rate on U.S. dollar deposits outside the United States traded between banks.
12.
Overdraft
Amount by which a check exceeds the AVAILABLE BALANCE in a checking account, i.e. the negative account balance that results when a depositor writes checks exceeding the account balance.
13.
Overdraft protection
Bank customer's personal credit line that advances funds to cover an OVERDRAFT. Overdraft protection allows the check to be honored by the drawee bank. The check writer avoids having to pay NOT SUFFICIENT FUNDS (NSF) charges when temporarily short of funds, but pays daily interest on the loan.
14.
Credit line
(a) Maximum amount of credit available in an open-end credit arrangement.
(b) Funds available to a borrower for a specified period.
15.
Prime rate
The interest rate which a lender is at any particular time extending to his most creditworthy customer.
16.
Spread
Percentage difference between interest rate charged on a bank loan and the lender's cost of funds.
17.
Guarantee services
Contractual agreement that the bank is to take the responsibility for payment of a debt or performance of some obligations if the person primarily liable fails to comply.
18.
Revolving loan
A revolving loan is a standby credit limit granted for a certain period of time on secured or unsecured basis. Borrower can withdraw any amount within the credit limit and select applicable interest period, provided that the outstanding amount in aggregate shall not exceed the credit limit.
D. Investment
1.
Dow Jones industrial average
Price-weighted average of 30 leading industrial stocks traded on the New York Stock Exchange.
2.
Hang Seng Index
A market indicator derived from the price movements of 42 major stocks traded on The Hong Kong Stock Exchange.
3.
Floating Rate Note
Negotiable instrument with an interest rate that is periodically reset, usually every 3-6 months and carry a fixed spread.
4.
Option
(a)
Contract granting the right to purchase or sell property, or assets during a specified period at an agreed upon price.
(b)
Means a contract giving certain rights to the grantee and creating obligations for the grantor under the terms and subject to the conditions specified by the relevant exchange or other market, which may be for physical delivery or cash settlement.
5.
Warrant
(a)
Short-term interest bearing note issued by a state or local government to pay debts, repayable from a defined income source.
(b)
Certificate giving the bearer the right to buy securities, gold, or other commodities at a stated price for a stated period or at any time in the future.
6.
Mutual Fund
Investment company that pools money from its shareholders in stocks, bonds, government securities and short-term money market instruments.
7.
Unit Trust
Trust funds held in unit form for the benefit of the unit-holders. The pool of funds may be invested in a variety of stocks, bonds or other financial instruments by fund manager.
8.
Futures contract
Negotiable contract to make or take delivery at an agreed price of a standardized amount of a commodity or financial instrument during a specific month. Futures contracts are often used as a hedging device against interest rate or price risk.
9.
Hedging
Financial technique to offset the risk of loss from price fluctuations in the market.
10.
Nominee
Person holding securities or other assets on behalf of the beneficial owner.
