5. Read, translate, and analyze text 4; study vocabulary to texts 3 &4 to ensure you know it .

Text 4. Certificates of Deposit

Certificates 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 CD.

THE BANK OF LEWIS AND CLARK CERTIFICATE OF DEPOSIT 30431 St. Louis, Missouri March 15, 2004 Owen R. Kennedy has deposited in this bank Ten thousand Dollars $ 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

Here, Owen R. Kennedy is the payee.

Banks do not pay out CD'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 CD's are usually significantly higher than on savings or chequeing accounts, where the depositor is far more likely to withdraw from an account.

Vocabulary

interest відсотки (на капітал)

due строк платежу

comakers спільні векселедавці

execute the note оформляти (документ)

liable 1) відповідальний 2) зобов'язаний

collateral note забезпечений вексель

prematurely передчасно

mortgage note іпотечне зобов'язання; письмове зобов'язання повернення

боргу (зобов'язання, забезпечене заставою власності, є доказом позики і обумовлює умови його повернення)

to pledge віддавати під заставу, закладати

to force змушувати, примушувати

documents of title титульні документи

bond облігація

warehouse receipt квитанція на товар, прийнятий на зберігання

life insurance

policy поліс страхування життя

security забезпечення, гарантія

receipt of money одержання грошей

long-term довгостроковий

before maturity до настання строку

to inhibit стримувати

to withdraw from

an account зняти з рахунку

to withdraw 1) анулювати; знімати 2) відзивати, скасовувати 3) вилучати

Reviewing important points

There are four important types of commercial paper:

a) drafts, b) cheques (a special type of draft), c) promissory notes, and

d) certificates of deposit.

1. In general, drafts are unconditional orders to another party to pay a certain sum of money on demand or at a definite future time. Cheques are unconditional orders to a bank to pay a certain sum of money on demand. Initially three parties are involved in drafts and cheques: the drawer, who gives the order to pay; the drawee, who gets the order; and the payee, to whom payment is to be made.

2. A cheque differs from other types of drafts in that:

a/ the drawee of a cheque is always a bank,

b/ a cheque is drawn against funds the drawer has on deposit in the bank, and с/ a cheque is always payable on demand.

3. Promissory notes and certificates of deposit are unconditional promises to pay a certain sum of money on demand or at a definite future time. Initially two parties are involved; the maker, who promises to pay; and the payee, to whom payment is promised.

4. Various forms of cheques and drafts have been devised for special purposes. These forms include a) certified cheques, b)cashier’s cheques, c) bank drafts, d) money orders, and e) traveler’s cheques. ( see Supplementary Reading and Writing)