Core Banking Operations Flashcards
7 cards from real Banking Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Core Banking Operations flashcards as text
Under the Community Reinvestment Act (CRA), banks are evaluated on their:
Answer: Efforts to meet the credit needs of their entire community, including low-income areas
The CRA requires banks to serve the credit needs of all community segments, particularly low- and moderate-income neighborhoods.
What does 'amortization' mean in the context of a mortgage loan?
Answer: The gradual repayment of a loan through scheduled principal and interest payments
Amortization is the systematic reduction of a loan balance through regular payments that cover both principal and interest.
Which of the following is an example of a non-interest income source for a bank?
Answer: Monthly maintenance fees on checking accounts
Service charges and fees like monthly maintenance fees are non-interest income, as opposed to income derived from interest-earning assets.
What is the primary function of the Federal Reserve's discount window?
Answer: To provide short-term loans to depository institutions facing liquidity shortfalls
The discount window allows eligible depository institutions to borrow short-term funds from the Federal Reserve to manage liquidity needs.
A teller receives a counterfeit $100 bill. The correct first action is to:
Answer: Keep the bill, give the customer no value for it, and report it to the Secret Service
Bank policy and federal law require retaining suspected counterfeit currency, providing no value to the customer, and reporting to the U.S. Secret Service.
What is the role of correspondent banking?
Answer: A relationship where one bank provides services to another bank, often to facilitate international transactions
Correspondent banking enables banks to conduct business in foreign markets or access services by using larger banks as agents.
Under Regulation E, which type of transaction is covered?
Answer: Electronic fund transfers involving consumer accounts, such as ATM and debit card transactions
Regulation E governs electronic fund transfers involving consumer accounts, providing error resolution rights and liability protections.