CBP Banking Fundamentals 2

Question 1

Which federal agency provides deposit insurance for credit unions in the United States?

Accepted Answer

NCUA

Answer

The National Credit Union Administration (NCUA) insures deposits at federally insured credit unions up to $250,000 per depositor.

Question 2

What is the primary purpose of the Federal Funds Rate?

Accepted Answer

Determine the interest rate banks charge each other for overnight lending of reserves

Answer

The Federal Funds Rate is the target interest rate at which commercial banks lend reserve balances to each other on an overnight basis.

Question 3

A bank's net interest margin (NIM) is best described as:

Accepted Answer

The difference between interest earned on assets and interest paid on liabilities, expressed as a percentage of earning assets

Answer

NIM measures how much a bank earns from its interest-bearing activities relative to its earning assets, reflecting core profitability.

Question 4

Under the Basel III framework, what does the Liquidity Coverage Ratio (LCR) require banks to maintain?

Accepted Answer

Enough high-quality liquid assets to survive a 30-day stress scenario

Answer

The LCR requires banks to hold high-quality liquid assets equal to or greater than projected net cash outflows over a 30-day stress period.

Question 5

Which of the following best defines a correspondent bank relationship?

Accepted Answer

A financial institution that provides services to another bank that lacks the resources or access to perform them directly

Answer

Correspondent banking allows smaller or foreign banks to access financial services such as wire transfers, currency exchange, and check clearing through a larger bank.

(CBP) Certified Banking Professional Practice Test

(CBP) Certified Banking Professional Practice Test

CBP Banking Fundamentals 2