Banking Exam General 3

Question 1

Which of the following is an example of a secured loan?

Accepted Answer

Mortgage

Answer

A mortgage is secured by the property being purchased, which the lender can seize if the borrower defaults.

Question 2

What does the term 'amortization' refer to in banking?

Accepted Answer

Gradual repayment of a loan through scheduled payments covering principal and interest

Answer

Amortization is the process by which loan payments are structured so that each payment gradually reduces the principal balance.

Question 3

Which regulatory body charters and supervises national banks in the United States?

Accepted Answer

Office of the Comptroller of the Currency (OCC)

Answer

The OCC charters, regulates, and supervises all national banks and federal savings associations.

Question 4

A bank's 'liquidity' refers to its ability to:

Accepted Answer

Meet short-term financial obligations without significant loss

Answer

Liquidity is a bank's ability to quickly convert assets to cash to meet depositor withdrawals and other obligations.

Question 5

What is 'collateral' in the context of a bank loan?

Accepted Answer

An asset pledged by the borrower to secure the loan

Answer

Collateral is property or assets a borrower pledges to the lender, which can be seized if the borrower defaults.

Banking Exam Practice Test