CBP Banking Operations and Services 2

Question 1

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

Accepted Answer

Net interest income divided by average earning assets

Answer

NIM measures profitability by dividing net interest income by average earning assets, expressed as a percentage.

Question 2

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

Accepted Answer

Certificate of deposit (CD)

Answer

Certificates of deposit earn higher rates because funds are locked in for a fixed term, reducing liquidity for the depositor.

Question 3

Under Regulation CC, what is the maximum hold period a bank may place on local checks for most customers?

Accepted Answer

Two business days

Answer

Regulation CC generally allows banks to place a two-business-day hold on local checks, though next-day availability applies to certain items.

Question 4

A correspondent banking relationship is best described as:

Accepted Answer

One bank providing services to another bank

Answer

Correspondent banking involves a larger bank providing services such as check clearing, wire transfers, and foreign exchange to smaller banks.

Question 5

Which wire transfer system is used for large-value, time-critical interbank payments in the U.S.?

Accepted Answer

Fedwire

Answer

Fedwire Funds Service is the Federal Reserve's real-time gross settlement system for large-value domestic payments.

(CBP) Certified Banking Professional Practice Test