Banking Exam Core Banking Operations 5

Question 1

Under the Community Reinvestment Act (CRA), banks are evaluated on their:

Accepted Answer

Efforts to meet the credit needs of their entire community, including low-income areas

Answer

The CRA requires banks to serve the credit needs of all community segments, particularly low- and moderate-income neighborhoods.

Question 2

What does 'amortization' mean in the context of a mortgage loan?

Accepted Answer

The gradual repayment of a loan through scheduled principal and interest payments

Answer

Amortization is the systematic reduction of a loan balance through regular payments that cover both principal and interest.

Question 3

Which of the following is an example of a non-interest income source for a bank?

Accepted Answer

Monthly maintenance fees on checking accounts

Answer

Service charges and fees like monthly maintenance fees are non-interest income, as opposed to income derived from interest-earning assets.

Question 4

What is the primary function of the Federal Reserve's discount window?

Accepted Answer

To provide short-term loans to depository institutions facing liquidity shortfalls

Answer

The discount window allows eligible depository institutions to borrow short-term funds from the Federal Reserve to manage liquidity needs.

Question 5

A teller receives a counterfeit $100 bill. The correct first action is to:

Accepted Answer

Keep the bill, give the customer no value for it, and report it to the Secret Service

Answer

Bank policy and federal law require retaining suspected counterfeit currency, providing no value to the customer, and reporting to the U.S. Secret Service.

Banking Exam Practice Test

Banking Exam Practice Test

Banking Exam Core Banking Operations 5