Retail Banking Industry And Processes MCQ Questions Answers

1. What is meant by the term "Bank Spread"?

2. How does a bank make money by providing currency exchange services to its customers?

3. What type of account would someone who wants to earn a high rate of interest and does not intend to have many transactions open?

4. What can the FDIC do to a member bank if the bank fails to comply with the set standards?

5. What is "Negotiable Order of Withdrawal Account" i.e. NOW Account, another name for?

6. What type of account would someone put their money into if they wanted to earn a high rate of return and not to have access to their money for a fixed period e.g. 90 days?

7. What is the term which describes illegally benefiting from float e. g. by depositing and drawing checks between accounts at two or more banks?

8. What is a holder in due course?

9. What does the term "Straight Paper" denote?

10. What is meant by the term "risk based pricing"?

11. What is the primary function of a bank?

12. What is the primary way a bank earns money?

13. Why was the FDIC limit of insurance raised to $250,000 temporarily in 2008 thru 2009?

14. What is the situation in which many customers try to withdraw their bank deposits simultaneously, but the bank's reserves are not sufficient to cover the withdrawals called?

15. What is a bank branch?

16. Why do the words Debit and Credit have meanings on a bank statement different from the ones which they have in normal accounting ( i. e. a debit is actually a withdrawal, a credit a deposit)?

17. Why was the FDIC created?

18. What is a negotiable instrument drawn against deposited funds to pay a specified amount of money to a specific person on demand called?

19. What is "Demand Deposit" account another name for?

20. What does MMDA stand for?

21. What is a typical retail banking service?

22. Which of the following is a risk with having money in a bank?

23. What is meant by the term "Discrete Compounding"?

24. What does FDIC stand for?

25. Why do banks offer debit cards and off-site ATM machines?

26. What does the term "Nostro Account" imply?

27. Which of the following is a benefit of an offshore bank account?

28. What is meant by "online banking"?

29. Which of the following is a reason for a person to open an offshore account?

30. What would happen if Mr. X made a check out to Mr. Y for $100, who indorsed the check, and then sold it for $50 to Mr. Z? Would Mr. Z be able to cash the check?

31. What is the purpose of the FDIC?

32. When was the FDIC established?

33. What is meant by the term "Clearing House"?

34. What is an example of 'restrictive endorsement'?

35. What amount would a customer be insured for if they made deposits to their accounts at three different locations of their bank?

36. What amount would a customer be covered for by the FDIC if he/she had $250,000 in savings at Bank XYZ, and also $50,000 in a retirement account with the same bank?

37. What is the definition of a negotiable instrument?

38. Why do offshore banks not save someone from paying taxes on the money in the account?

39. Why do banks charge higher interest rates from customers with poorer credit?

40. What is a "promissory note"?

41. How have banks changed in recent years to respond to customer needs and wants?

42. What is a "bill of exchange"?

43. What is one criticism of offshore banking?

44. What is meant by the term "Thrift"?

45. Checking all bank account papers to make sure that the bank records and your records agree is known as:

46. What is the current maximum limit that the FDIC will insure any one person at a bank for?

47. What is meant by the term "Amortization"?

48. What does the term "Netting" mean?

49. What is a secondary way through which banks earn money?

50. Why can't anyone start a new bank?

51. What was the purpose of the 2006 Deposit Insurance Fund?

52. What is the definition of an offshore bank?

53. What level will the FDIC insure any one person at a bank for beginning January 1, 2010?

54. Which of the following would not be covered by the FDIC?

55. What method would a consumer most likely use to move funds between their offshore account and their domestic account?

56. What amount would someone who has $500,000 in one bank and $250,000 in another bank be insured for in total?

57. What type of account would someone who wants the facility to pay people through checks open?

58. What is the payment that people receive after a mishap which leaves them in the same financial position as they were in before they suffered the loss called?

59. What does the term "Ex Gratia Payment" mean?

60. Which of the following is not covered by the FDIC?

61. How is a money market account different from a savings account?

62. What are the four requirements for a promissory note to be legal?

63. What is meant by "restrictive endorsement"?

64. What is the government entity that insures bank balances?

65. Why are offshore banks often able to offer a client higher interest rates?

66. What is another name for a bill of exchange?

67. What is meant by the term Retail Banking?

68. Which of the following is a feature often found in an offshore bank account, not usually found in an onshore bank account?

69. Which of the following is a requirement that a bank has to comply with?

70. How do banks offer services to all levels and types of individuals and still earn money?

71. What does the term "Debenture" imply?

72. Why is a negotiable instrument a "special contract"?

73. What is the process which the Federal Reserve uses to influence the availability and cost of money and credit called?

74. What is the signing of a check on its back by the payee referred to as?

75. How is a savings account different from a certificate of deposit?

76. What is meant by the term "Redemption"?

77. What is the ratio of bank reserves to bank deposits called?

78. What does the term "Availability Float" imply?

79. What would a person do if they wanted to have the facility to save money as well as issue checks?

80. Would a bank be allowed to pay someone from a personal account without a mandate from the customer?

81. Which of the following is a characteristic of a certificate of deposit?