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 treasurer asks about a banker's acceptance (BA). This instrument is best described as:
Answer: A time draft drawn on and accepted by a bank, creating a short-term money market instrument
A banker's acceptance is a time draft that a bank 'accepts' (guarantees), making it a tradeable, highly liquid money market instrument.
Which of the following best describes a syndicated loan in corporate banking?
Answer: A loan provided by a group of lenders sharing the risk under common terms arranged by a lead bank
Syndicated loans spread large credit exposures among multiple lenders who share terms negotiated by a lead arranger.
In retail mortgage lending, a 'points' payment at closing represents:
Answer: Prepaid interest, with each point equaling 1% of the loan amount
Each discount point equals 1% of the loan amount and is prepaid interest that typically lowers the ongoing interest rate.
The primary purpose of the Federal Deposit Insurance Corporation (FDIC) is to:
Answer: Protect depositors and maintain stability by insuring deposits up to the statutory limit
The FDIC insures deposits (currently up to $250,000 per depositor per ownership category) and resolves failed insured institutions.
A 'covenant-lite' corporate loan differs from a traditional leveraged loan primarily because it:
Answer: Lacks maintenance financial covenants requiring periodic ratio tests
Covenant-lite loans omit maintenance covenants that would otherwise trigger a default if the borrower's financial ratios deteriorate.
Under the Bank Secrecy Act (BSA), US banks must file a Currency Transaction Report (CTR) for cash transactions exceeding:
Answer: $10,000 in a single day
Banks must file a CTR with FinCEN for any cash transaction — deposit, withdrawal, or exchange — exceeding $10,000 in a single business day.
A retail bank offers a home equity line of credit (HELOC). Which risk is MOST unique to HELOCs compared to fixed home equity loans?
Answer: Interest rate risk because HELOCs typically carry variable rates
HELOCs are usually variable-rate products, meaning borrowers face payment increases when benchmark rates rise, unlike fixed home equity loans.