RBC RBC - Online Assessment Financial Literacy and Banking Knowledge Questions and Answers 3

Question 1

What is the primary function of investment banking compared to retail banking?

Accepted Answer

Investment banking assists corporations and governments with capital raising, mergers, and securities transactions

Answer

Investment banking focuses on personal chequing and savings accounts for individual clients

Answer

Investment banking provides CDIC-insured deposits for institutional clients

Answer

Investment banking manages ATM networks and branch operations

Question 2

A client is concerned about exchange rate risk on a future USD payment. Which product would BEST mitigate this risk?

Accepted Answer

A foreign exchange forward contract

Answer

A TFSA in Canadian dollars

Answer

A fixed-rate GIC

Answer

A high-interest savings account

Question 3

What does 'Know Your Client' (KYC) require of a bank advisor?

Accepted Answer

Collecting and maintaining information about a client's financial situation, risk tolerance, and investment objectives

Answer

Memorizing all clients' names and account numbers

Answer

Performing credit checks every time a client makes a transaction

Answer

Requiring clients to pass a financial literacy quiz before opening an account

Question 4

How does compound interest differ from simple interest?

Accepted Answer

Compound interest is calculated on both the principal and previously earned interest; simple interest applies only to the principal

Answer

Simple interest is calculated on both principal and accumulated interest; compound interest is calculated only on the principal

Answer

Both calculate interest the same way but compound interest resets annually

Answer

Compound interest can only be earned in government bonds

Question 5

Which of the following is a key indicator of a bank's profitability measured in its financial statements?

Accepted Answer

Net interest margin (NIM)

Answer

Gross domestic product (GDP)

Answer

Consumer Price Index (CPI)

Answer

Overnight lending rate

Question 6

What is the significance of the 'stress test' applied to Canadian mortgage applicants?

Accepted Answer

It requires borrowers to qualify at a higher rate than the contracted rate to ensure they can withstand rate increases

Answer

It evaluates an applicant's physical health before a large loan is approved

Answer

It tests the bank's own capital resilience during economic downturns

Answer

It is a credit bureau assessment mandated by CDIC