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COMMERCIAL BANKS (Ues of Funds by Banks (Bank loans (Loan Participations,…

- - - - Demand depodit account or Checking account
      - Negotiable order of withdrawal
    - - Passbook savings account
    - - Retail CD
      - Negotiable CD
    - - Not maturity date, more liquid, lower interest rate than retail
      - provide limited check-writing ability
  - - - accomodate the short-term liquidity need of financial istitutions
      - loans: 1 to 7 days, can bê rolled over.
      - Interest rate usually 0,25% to 1% higher than the yield on a Treasury security.
    - - Short-term (1 day to 1 few weeks), discount loans
      - Prime credit lending rate
      - Fed's approval
    - - Sale of security
      - The securities serve as collateral in the repo transaction
  - - - Fixed assets are usually financed as athe issuance of bonds
    - - Represent funds acquired by the issuance of stock or the retention of earnings
      - Has no obligation to pay out funds in the future