Capital One Assessment Test Fundamentals and Core Concepts 2 — Questions and Answers
Question 1: Capital One is primarily classified as which type of financial institution?
- Investment bank
- Bank holding company and credit card issuer (Correct answer)
- Credit union
- Mortgage-only lender
Correct answer: Bank holding company and credit card issuer
Capital One is a bank holding company best known for its credit card products, though it also offers banking, auto loans, and more.
Question 2: Which regulatory body primarily supervises Capital One's banking operations?
- FDIC only
- The Federal Reserve and Office of the Comptroller of the Currency (OCC) (Correct answer)
- Securities and Exchange Commission (SEC)
- Consumer Product Safety Commission
Correct answer: The Federal Reserve and Office of the Comptroller of the Currency (OCC)
As a national bank and bank holding company, Capital One is supervised by both the Federal Reserve and the OCC.
Question 3: What does the term 'credit utilization ratio' refer to?
- The interest rate applied to outstanding balances
- The percentage of available credit currently being used (Correct answer)
- The number of credit inquiries in the past year
- The ratio of secured to unsecured debt
Correct answer: The percentage of available credit currently being used
Credit utilization ratio is the proportion of your revolving credit limit that you are actively using, a key factor in credit scoring.
Question 4: In banking, what is 'KYC' an abbreviation for?
- Keep Your Customers
- Know Your Customer (Correct answer)
- Key Yield Criteria
- Knowledge-based Year Compliance
Correct answer: Know Your Customer
KYC (Know Your Customer) is a mandatory process banks use to verify client identity and assess risk of illegal activity.
Question 5: A customer's FICO score of 720 would typically be categorized as:
- Poor (below 580)
- Fair (580–669)
- Good (670–739) (Correct answer)
- Exceptional (800+)
Correct answer: Good (670–739)
A FICO score of 720 falls in the 'Good' range (670–739), making the borrower eligible for competitive interest rates.
Question 6: What is the primary purpose of the Truth in Lending Act (TILA) as it applies to credit cards?
- To set maximum interest rates on all credit products
- To require lenders to clearly disclose loan terms and costs to borrowers (Correct answer)
- To insure consumer deposits up to $250,000
- To regulate stock trading by bank employees
Correct answer: To require lenders to clearly disclose loan terms and costs to borrowers
TILA mandates transparent disclosure of APR, fees, and other credit terms so consumers can make informed borrowing decisions.
Question 7: Which of the following best describes a 'grace period' on a credit card?
- The time after a missed payment before a late fee is charged
- The period during which no interest accrues if the full balance is paid by the due date (Correct answer)
- An extension granted when a customer requests a higher credit limit
- The waiting period before a new card is activated
Correct answer: The period during which no interest accrues if the full balance is paid by the due date
A grace period lets cardholders avoid interest charges by paying the statement balance in full before the due date.
Capital One Assessment Test Fundamentals and Core Concepts 2
Capital One is primarily classified as which type of financial institution?