Level 20 Level 22
Level 21

Liquidity Needs


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Cash Management
The management of cash and near cash (liquid) assets.
Liquid Assets
Cash and investments that can easily be converted into cash, such as checking accounts, money market funds, and certificates of deposit (CDs).
Deposit-Type Financial Institutions
Financial institutions that provide traditional checking and savings accounts. Commonly referred to as "banks."
Nondeposit-Type Financial Institutions
Financial institutions such as mutual funds and stock brokerage firms, which don't provide checking and savings accounts.
Online Banking
The ability to perform banking operations through your personal computer.
demand deposit
the money in checking accounts
NOW (Negotiable Order of Withdrawal) Account
A checking account on which you earn interest on your balance.
Savings Account
A deposit account that pays interest.
money market deposit account (MMDA)
Deposits with limitied checking account privileges that typically pay an interest rate comparable to Treasury bills or other money market instruments.
Certificates of Deposit (CDs)
Savings alternatives that pay a fixed rate of interest while keeping your funds on deposit for a set period of time that can range from 30 days to several years.
Money Market Mutual Funds (MMMFs)
Mutual funds that invest in short-term (generally with a maturity of less than 90 days) notes of very high denomination.
Asset Management Accounts
Comprehensive financial services packages offered by a brokerage firm, which can include a checking account; credit and debit cards; an MMMF; loans, automatic payment of fixed payments such as mortgages; brokerage services (buying and sel…
U.S. Treasury Bills or T-Bills
Short-term notes of debt issued by the federal government with maturities ranging from 3 months to 12 months.
Denomination
The face value or amount that's returned to the bondholder at maturity. It's also referred to as the bond's par value.
U.S. Savings Bond
A type of security that's actually a loan on which you receive interest, generally every six months for the life of the bond. When the bond matures, or comes due, you get back you investm…
Annual Percentage Yield (APY)
The simple annual percentage yield that converts interest rates compounded for different periods into comparable annual rates. It allows you to easily compare interest rates.
After-Tax Return
The actual return you earn on taxable investments once taxes have been paid. It is equal to the taxable return (1 - marginal tax rate) + the nontaxable return.
Federal Deposit Insurance Corporation (FDIC)
the government agency that insures customer deposits if a bank fails
National Credit Union Association
The federal agency that insures accounts at credit unions.
Direct Deposit
The depositing of payments, such as payroll checks, directly into your checking account. This is done electronically.
Safety-Deposit Box
A storage unit at a bank or other financial institution in which valuables and important documents are stored for safekeeping.
Overdraft Protection
Provision of an automatic loan to your checking account whenever sufficient funds are not available to cover checks that have been written against the account.
Stop Payment
An order you can give your financial institution to stop payment on a check you've written.
Cashier's Check
A check drawn on a bank or financial institution's account.
Certified check
A check from a personal checking account that has been stamped by the bank to guarantee that there are sufficient funds in the account to cover it
Money order
A purchased certificate used to pay a specified amount to a particular payee.
Traveler's Checks
Checks issued by large financial institutions, such as Citibank, Visa, and American Express, that are sold through local banking institutions and are similar to cashier's checks except that they don't specify a specific payee…
Electronic Funds Transfer (EFT)
The movement of funds by electronic means
Automated Teller Machine (ATM) or Cash Machine
Machines found at most financial institutions that can be used to make withdrawals, deposits, transfers, and account inquiries.
Personal Identification Number (PIN)
A four-to-seven-digit personal identification number assigned to your credit account.
debit card
a card used to withdraw money
Smart Cards
Similar to debit cards, but these cards actually magnetically store their own accounts. Funds are transferred into the cards, which are then used the same way you'd use a debit card. When the funds…
Non Deposit-Type Financial Institutions
Financial Institutions such as mutual funds and stock brokerage firms, which don't provide checking and savings accounts
Negotiable Order of Withdrawal Account
(NOW) A checking account on which you earn interest on your balance
Money Market Deposit Account
(MMDA) A bank account that provides a rate of interest that varies with the current market rate of interest
Certificate of Deposit
(CD) Savings Alternatives that pay a fixed rate of interest while keeping your funds on deposit for a set period of time that range from 30 days to several years
money market mutual fund
a fund that pools money from small savers to purchase short-term government and corporate securities
Asset Management Account
Comprehensive financial services packages offered by a brokerage firm, which can include a checking account; credit and debit cards; an MMMF; loans; automatic payment of fixed payments such as mortgages; brokerage services (buying and sel…
Quick Ratio
(Current Assets-Inventory)/Current Liabilities
Cash Ratio
Cash/Current Liabilities
Net Working Capital Ratio
Net Working Capital/Total Assets
Interval Ratio
Current Assets/Average Daily Operational Costs