4. Certificates of Deposit

A certificate of deposit is a written acknowledgment by a bank of receipt of money, with an unconditional promise to repay it. The stated amount is payable with interest at a definite future time, normally ranging from several months to several years. A certificate of deposit is often called a C/D.

THE BANK OF LEWIS AND CLARK 30431

St. Louis, Missouri March 152002

Owen R. Kennedy has deposited in this bank

Ten thousand and 00 Ј Dollars 5 10,000.00

and this sum will be repaid to said depositor or order one year from date with interest at seven (7) percent per year By: M. B. Brown, cashier THE BANK OF LEWIS AND CLARK

Here, Owen R. Kennedy is the payee.

Banks do not pay out C/D's or other long-term deposits before ma­turity. Usually the penalty is a sharp reduction in the amount of inter­est payable on the funds. This inhibits depositors from withdrawing funds prematurely and leaves the banks free to lend the funds to others on a long-term basis. As a consequence, interest rates on C/D's are usu­ally significantly higher than on savings or checking accounts, where the depositor is far more likely to withdraw from an account.

TASKS

I. Answer the questions:

1. What is a check?

2. What is the purpose of crossing a check?

3. What is a bill of exchange?

4. What is the person who draws the bill called?

5. What is the person upon whom the bill is drawn called?

6. What is a negotiable document?

7. What is an endorsement?

WORDS TO REMEMBER

insufficient funds	недостаток средств на счете
certified check	гарантированный чек (чек, обеспеченный финансами)
cashier's check	банковский чек
remittance	денежный перевод
personal check	чек, выданный отдельным лицом (в отличие от чека компании)
bank draft	1) банковский счет; 2) тратта, выставленная банком на другой банк
money order	денежный почтовый перевод
express company	компания по посылочной торговле, компания по доставке грузов населению
traveller's cheque	туристский чек

TEXT E

WHAT ARE SOME OF THE SPECIALIZED FORMS OF COMMERCIAL PAPER IN USE?

Although the four types of commercial paper described in the pre­vious section are the most frequently used, certain variations of the forms are available for specialized needs. These include:

1. Certified Checks

A person to whom a personal check is offered as payment may fear the bank will not honor the check because of insufficient funds in the drawer's account. However, accepting a check is much safer if the bank has already agreed to pay the check, because only the unlikely event of the bank's failure will prevent the payee or current owner of the check from receiving the money due. A personal check that has been accepted by a bank in advance of payment is known as a certified check. At the time of certification, the bank draws sufficient funds from the deposi­tor's account and sets them aside in a special account to pay the check when it is presented. In addition, the bank marks the front of the check with "accepted^ or "certified," the date, and the bank's signature.