BMO Foundational Concepts & Principles 2

Question 1

A BMO client holds a chequing account and a savings account at the same branch. Under CDIC coverage, how are these deposits treated?

Accepted Answer

Combined into one $100,000 limit

Answer

CDIC combines deposits in the same category (deposits held in one name) at the same member institution into a single $100,000 limit.

Question 2

Which of the following best describes BMO's role as a Schedule I bank in Canada?

Accepted Answer

A domestically incorporated bank regulated under the Bank Act

Answer

Schedule I banks are domestically incorporated Canadian banks regulated under the federal Bank Act and supervised by OSFI.

Question 3

What is the primary purpose of a Know Your Client (KYC) process at a bank like BMO?

Accepted Answer

To verify client identity and assess suitability of financial products

Answer

KYC processes verify client identity and gather financial information to ensure products recommended are suitable and to prevent financial crime.

Question 4

If a customer's BMO mortgage has a variable rate tied to the BMO Prime Rate, what happens to their payment when the Bank of Canada raises its policy rate?

Accepted Answer

Payments typically increase as BMO Prime Rate rises

Answer

BMO's Prime Rate closely tracks the Bank of Canada's policy rate, so a rate hike generally increases variable-rate mortgage payments.

Question 5

Which financial statement would a BMO analyst review to assess the bank's short-term liquidity position?

Accepted Answer

Balance sheet and liquidity coverage ratio

Answer

The balance sheet combined with the Liquidity Coverage Ratio (LCR) reveals whether the bank holds sufficient high-quality liquid assets to cover short-term obligations.

(BMO) Bank of Montreal Assessment Practice Test

(BMO) Bank of Montreal Assessment Practice Test

BMO Foundational Concepts & Principles 2