RBC RBC - Online Assessment Financial Literacy and Banking Knowledge Questions and Answers 2

Question 1

A client holds a diversified portfolio of stocks and bonds. What is the main benefit of this diversification?

Accepted Answer

It reduces overall portfolio volatility by spreading risk across asset classes

Answer

It eliminates all investment risk entirely

Answer

It guarantees returns above the benchmark index

Answer

It removes the need for periodic rebalancing

Question 2

What is the difference between a secured and an unsecured loan?

Accepted Answer

Secured loans are backed by collateral; unsecured loans rely solely on the borrower's creditworthiness

Answer

Secured loans have higher interest rates than unsecured loans

Answer

Unsecured loans require a co-signer; secured loans do not

Answer

Secured loans are only available for business purposes

Question 3

If the Bank of Canada raises its overnight lending rate, what is the likely immediate effect on RBC's prime rate?

Accepted Answer

RBC's prime rate will increase

Answer

RBC's prime rate will decrease

Answer

RBC's prime rate will remain unchanged

Answer

RBC will stop offering variable-rate products

Question 4

What is the purpose of a credit bureau report in the lending process?

Accepted Answer

It provides lenders with a detailed history of a borrower's past credit behaviour and outstanding obligations

Answer

It certifies the value of collateral offered by the borrower

Answer

It calculates the exact maximum loan amount a client may receive

Answer

It confirms the borrower's employment and salary details

Question 5

Which financial product would BEST help a small business manage cash flow gaps between issuing invoices and receiving payment?

Accepted Answer

Business line of credit

Answer

Term deposit

Answer

Registered Education Savings Plan (RESP)

Answer

Fixed-rate personal mortgage

Question 6

What does 'amortization period' mean in the context of a Canadian mortgage?

Accepted Answer

The total length of time over which the mortgage loan is scheduled to be fully repaid

Answer

The time until the mortgage interest rate is reset

Answer

The penalty period if the mortgage is paid off early

Answer

The number of years the lender holds the title to the property