Banking Exam General 4

Question 1

Which of the following best describes a 'demand deposit'?

Accepted Answer

A deposit that can be withdrawn at any time without prior notice

Answer

Demand deposits, like checking accounts, allow customers to withdraw funds at any time without advance notice.

Question 2

In banking, what is the 'prime rate'?

Accepted Answer

A benchmark interest rate banks use as a base for lending to creditworthy customers

Answer

The prime rate is a reference interest rate that banks use to set rates for various loans, typically tied to the federal funds rate.

Question 3

What is 'wire fraud' in the context of banking?

Accepted Answer

A scheme to defraud using electronic communications or wire transfers

Answer

Wire fraud involves using electronic communications such as phone, email, or wire transfers to execute a fraudulent scheme.

Question 4

What does the Community Reinvestment Act (CRA) require of banks?

Accepted Answer

Banks must meet the credit needs of the communities they serve, including low- and moderate-income areas

Answer

The CRA requires banks to help meet the credit needs of all communities, including low- and moderate-income neighborhoods.

Question 5

A bank's 'Tier 1 capital' is best described as:

Accepted Answer

Core equity capital including common stock and retained earnings

Answer

Tier 1 capital is the core measure of a bank's financial strength, consisting primarily of common equity and retained earnings.

Banking Exam Practice Test