Which of the Following Is True of the Relationship Between

question 33

Multiple Choice

Which of the following is true of the relationship between the drawee bank and its customer?

• A)The drawee bank becomes a creditor and the customer becomes a debtor at the time of opening a checking account.
• B)The drawee bank becomes an insurer and the customer the insured at the time of opening a checking account.
• C)The drawee bank becomes the customer's debtor at the time of opening a checking account and agent while collecting checks.
• D)The drawee bank becomes a debtor to the customer when the bank pays more than the customer has on deposit.

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Definitions:

Effective Annualized Rate

The interest rate that is annualized using compounding over a given period, providing a true reflection of the financial cost.

Simple Interest

Interest calculated on the principal portion of a loan or deposit, without compounding over time.

GICs

Guaranteed Investment Certificates, a type of Canadian investment that offers a guaranteed rate of return over a fixed period of time.

Compounded Annually

Interest on an investment calculated once a year, taking into account both the initial principal and the interest from previous periods.