The Difference Between a Demand Deposit and a NOW Account

question 5

Multiple Choice

The difference between a demand deposit and a NOW account is that

• A)checks may not be written against NOW account balances.
• B)demand deposits pay no interest.
• C)NOW accounts pay no interest.
• D)checks may not be written against demand deposit balances.

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Definitions:

Main Purpose Rule

A legal principle stating that if the main purpose of a transaction is to benefit the guarantor, then a written agreement isn't necessary to enforce the guaranty.

Debt

An amount of money borrowed by one party from another, with the condition that it is to be paid back, often with interest.

Enforceable

A legal term referring to a contract or agreement that is recognized by law and can be upheld in a court of law.

Oral Order

A verbal command or instruction to perform a task or service, which can be legally binding in certain contexts.