General Flashcards

Which of the following best describes a 'demand deposit'?

Answer: A deposit that can be withdrawn at any time without prior notice

Demand deposits, like checking accounts, allow customers to withdraw funds at any time without advance notice.

In banking, what is the 'prime rate'?

Answer: A benchmark interest rate banks use as a base for lending to creditworthy customers

The prime rate is a reference interest rate that banks use to set rates for various loans, typically tied to the federal funds rate.

What is 'wire fraud' in the context of banking?

Answer: A scheme to defraud using electronic communications or wire transfers

Wire fraud involves using electronic communications such as phone, email, or wire transfers to execute a fraudulent scheme.

What does the Community Reinvestment Act (CRA) require of banks?

Answer: Banks must meet the credit needs of the communities they serve, including low- and moderate-income areas

The CRA requires banks to help meet the credit needs of all communities, including low- and moderate-income neighborhoods.

A bank's 'Tier 1 capital' is best described as:

Answer: Core equity capital including common stock and retained earnings

Tier 1 capital is the core measure of a bank's financial strength, consisting primarily of common equity and retained earnings.

What is 'phishing' in banking security?

Answer: A fraudulent attempt to obtain sensitive information by disguising as a trustworthy entity

Phishing involves criminals impersonating legitimate institutions to trick customers into revealing passwords, account numbers, or personal data.

Which financial statement shows a bank's assets, liabilities, and equity at a specific point in time?

Answer: Balance sheet

The balance sheet (statement of financial position) shows what a bank owns (assets), owes (liabilities), and the owners' stake (equity) on a given date.