Bcom Bachelor of Commerce Bachelor of Commerce: Banking & Insurance 2

Question 1

Which type of bank account typically earns the highest interest rate?

Accepted Answer

Certificate of Deposit (CD)

Answer

Certificates of Deposit lock funds for a fixed term and typically offer higher interest rates than regular savings or checking accounts.

Question 2

What is the primary function of the Federal Reserve in the United States?

Accepted Answer

Conducting monetary policy and regulating banks

Answer

The Federal Reserve conducts monetary policy, supervises banks, maintains financial system stability, and provides financial services.

Question 3

In insurance, what does 'subrogation' mean?

Accepted Answer

The insurer's right to pursue a third party after paying a claim

Answer

Subrogation allows an insurer who paid a claim to step into the insured's shoes and recover the amount from the at-fault third party.

Question 4

What is a 'balloon payment' in the context of loans?

Accepted Answer

Small periodic payments followed by one large final payment

Answer

A balloon payment loan requires small regular payments throughout the term with one large lump-sum payment due at the end.

Question 5

Which of the following best describes 'term life insurance'?

Accepted Answer

Coverage for a specific period with no cash value component

Answer

Term life insurance provides a death benefit for a specified period (e.g., 20 years) and expires without cash value if no claim is made.

Bcom Bachelor of Commerce Practice Test