Banking Exam Core Banking Operations 3 — Questions and Answers
Question 1: Which federal agency primarily supervises nationally chartered banks in the United States?
- Federal Deposit Insurance Corporation (FDIC)
- Federal Reserve
- Office of the Comptroller of the Currency (OCC) (Correct answer)
- Consumer Financial Protection Bureau (CFPB)
Correct answer: Office of the Comptroller of the Currency (OCC)
The OCC charters, regulates, and supervises all national banks and federal savings associations.
Question 2: What is the primary purpose of a bank's reserve requirement?
- To ensure banks earn adequate profits
- To limit the amount of money banks can lend internationally
- To ensure banks maintain enough liquid funds to meet withdrawal demands (Correct answer)
- To protect shareholders from losses
Correct answer: To ensure banks maintain enough liquid funds to meet withdrawal demands
Reserve requirements ensure banks retain a minimum percentage of deposits as liquid assets to meet customer withdrawal demands.
Question 3: When a bank sells a mortgage loan to Fannie Mae but continues to collect payments, the bank is acting as a:
- Loan originator only
- Mortgage servicer (Correct answer)
- Secondary market investor
- Correspondent lender
Correct answer: Mortgage servicer
A mortgage servicer collects payments, manages escrow accounts, and handles customer service on loans owned by another entity.
Question 4: Which type of bank account typically offers the highest interest rate but restricts the number of monthly withdrawals?
- Checking account
- NOW account
- Money market deposit account (Correct answer)
- Certificate of deposit
Correct answer: Money market deposit account
Money market deposit accounts offer higher rates than standard savings accounts but are limited to 6 convenient transactions per month under Regulation D.
Question 5: A bank issues a $10,000 cashier's check. Who is primarily liable for payment of this instrument?
- The payee
- The remitter who purchased it
- The issuing bank itself (Correct answer)
- The Federal Reserve
Correct answer: The issuing bank itself
A cashier's check is a direct obligation of the issuing bank, making it more secure than a personal check.
Question 6: Under the Bank Secrecy Act, a Currency Transaction Report (CTR) must be filed for cash transactions exceeding:
- $5,000
- $7,500
- $10,000 (Correct answer)
- $25,000
Correct answer: $10,000
Banks must file a CTR with FinCEN for any cash transaction exceeding $10,000 in a single business day.
Question 7: What does 'overdraft protection' linked to a savings account do when a checking account balance is insufficient?
- Automatically denies the transaction
- Transfers funds from savings to cover the shortfall (Correct answer)
- Increases the account's credit limit
- Charges a penalty and freezes the account
Correct answer: Transfers funds from savings to cover the shortfall
Savings-linked overdraft protection automatically transfers available funds from a savings account to cover a checking account deficit.
Banking Exam Core Banking Operations 3
Which federal agency primarily supervises nationally chartered banks in the United States?