An arrangement between the account holder and the depository institution wherein the institution automatically pays a check that overdraws the account is called:
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A. B. C. D.D
The correct answer is D. Overdraft protection.
Overdraft protection is an arrangement between a depositor (account holder) and a depository institution (bank) that allows the bank to automatically pay a check or debit card transaction that exceeds the available balance in the account.
If the account holder has overdraft protection, the bank will cover the transaction by transferring funds from a linked account (such as a savings account) or by extending a line of credit to cover the overdraft. In exchange, the account holder will be charged a fee for each overdraft transaction, which can add up quickly if the account holder regularly overdrafts their account.
Overdrafts, as mentioned in option A, are a situation where an account holder spends more money than is available in their account, resulting in a negative balance. This can lead to bounced checks, declined transactions, and fees.
Option B, undercrofts, is not a commonly used financial term and does not have any relevance to this question.
Checkbook ledger, mentioned in option C, is a record of an account holder's transactions in their checkbook. It is used to keep track of deposits, withdrawals, and account balances. While a checkbook ledger can help prevent overdrafts, it is not a specific arrangement with a depository institution to cover overdrafts.
Therefore, the correct answer to this question is D. Overdraft protection.