Retail and Corporate Banking 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 Retail and Corporate Banking flashcards as text
A corporate client requests a revolving credit facility. Which feature best describes this product?
Answer: The borrower can draw, repay, and redraw up to an approved limit
A revolving credit facility allows borrowers to draw and repay funds repeatedly up to an approved limit, unlike a term loan.
Which deposit account type typically pays the highest interest rate in US retail banking?
Answer: Certificate of Deposit (CD)
Certificates of Deposit lock funds for a fixed term, so banks offer higher rates to compensate for reduced liquidity.
A bank's net interest margin (NIM) is calculated as:
Answer: Interest income minus interest expense divided by average earning assets
NIM measures profitability by comparing net interest income to the average earning assets generating that income.
Under the Community Reinvestment Act (CRA), US banks are primarily evaluated on their:
Answer: Lending, investment, and service activities in low- and moderate-income communities
CRA requires regulators to assess how well banks serve credit needs in low- and moderate-income communities where they operate.
A standby letter of credit (SBLC) in corporate banking primarily functions as:
Answer: A guarantee of payment if the applicant defaults on an obligation
An SBLC is a contingent payment instrument that the bank honors only if the applicant fails to meet their contractual obligation.
Which ratio measures a bank's ability to absorb losses and is most closely monitored by US regulators under Basel III?
Answer: Common Equity Tier 1 (CET1) capital ratio
CET1 is the highest-quality capital measure under Basel III and the primary regulatory focus for loss-absorption capacity.
A retail bank customer disputes a debit card transaction under Regulation E. The bank must provisionally credit the customer's account within:
Answer: 10 business days of receiving the notice
Regulation E requires banks to provisionally credit the disputed amount within 10 business days while completing their investigation.