Capital One Assessment Test Fundamentals and Core Concepts 3 — Questions and Answers
Question 1: What does APR stand for in the context of credit products?
- Annual Payment Rate
- Annual Percentage Rate (Correct answer)
- Adjusted Principal Ratio
- Average Payoff Requirement
Correct answer: Annual Percentage Rate
APR (Annual Percentage Rate) represents the yearly cost of borrowing, including interest and fees, expressed as a percentage.
Question 2: Capital One's data-driven business model is often described as relying heavily on:
- Branch network expansion
- Advanced analytics and machine learning for credit decisions (Correct answer)
- Exclusively manual underwriting by loan officers
- Fixed-rate products only
Correct answer: Advanced analytics and machine learning for credit decisions
Capital One pioneered the use of statistical analysis and data science to make more accurate credit risk decisions at scale.
Question 3: What is a 'secured credit card' typically used for?
- Purchases that require government ID verification
- Building or rebuilding credit using a cash deposit as collateral (Correct answer)
- International travel with no foreign transaction fees
- Business-only expenses with enhanced fraud protection
Correct answer: Building or rebuilding credit using a cash deposit as collateral
Secured cards require a refundable security deposit that typically equals the credit limit, making them accessible to those building credit.
Question 4: Under the CARD Act of 2009, credit card issuers must provide advance notice before raising a customer's interest rate. How many days notice is required?
- 15 days
- 30 days
- 45 days (Correct answer)
- 60 days
Correct answer: 45 days
The Credit CARD Act requires issuers to provide 45 days advance notice before increasing a cardholder's interest rate.
Question 5: Which metric best measures a bank's ability to meet short-term obligations?
- Return on equity (ROE)
- Net interest margin (NIM)
- Liquidity ratio (Correct answer)
- Debt-to-income ratio (DTI)
Correct answer: Liquidity ratio
A liquidity ratio measures the proportion of liquid assets to short-term liabilities, indicating a bank's ability to cover immediate obligations.
Question 6: What is 'charge-off' in banking terminology?
- A fee charged for an overdraft on a checking account
- A debt declared unlikely to be collected, written off as a loss (Correct answer)
- The fee for closing a credit card account early
- A penalty for exceeding a credit limit
Correct answer: A debt declared unlikely to be collected, written off as a loss
A charge-off occurs when a lender writes off a debt as a loss after a prolonged period of non-payment, typically 180 days for credit cards.
Question 7: Capital One's Venture and Quicksilver cards are examples of which card category?
- Business corporate cards
- Student credit-building cards
- Consumer rewards credit cards (Correct answer)
- Debit prepaid cards
Correct answer: Consumer rewards credit cards
Venture and Quicksilver are consumer rewards cards offering miles or cash-back on purchases, among Capital One's flagship products.
Capital One Assessment Test Fundamentals and Core Concepts 3
What does APR stand for in the context of credit products?