Banking Exam Core Banking Operations 2

Question 1

A customer presents a check drawn on another bank. The teller accepts it and credits the customer's account. What is this process called?

Accepted Answer

Check clearing

Answer

Check clearing is the process by which banks exchange checks and settle the resulting balances between institutions.

Question 2

Under Regulation CC, what is the maximum hold period a bank may place on local checks for most customers?

Accepted Answer

2 business days

Answer

Regulation CC generally requires banks to make funds from local checks available within 2 business days.

Question 3

Which document establishes the terms, interest rate, and repayment schedule for a bank loan?

Accepted Answer

Promissory note

Answer

A promissory note is a legally binding written promise to repay a loan under specified terms including interest rate and schedule.

Question 4

A bank's net interest margin (NIM) is best described as:

Accepted Answer

Difference between interest earned and interest paid, as a percentage of earning assets

Answer

NIM measures profitability by comparing the net interest income a bank earns relative to its interest-earning assets.

Question 5

What type of endorsement restricts a check's use to a specific purpose, such as 'For Deposit Only'?

Accepted Answer

Restrictive endorsement

Answer

A restrictive endorsement limits how the check can be negotiated, such as requiring it only be deposited to a specific account.

Banking Exam Practice Test