Banking
A point is a value equal to ___ of a mortgage loan.
1%
A legal claim a lender has on property to secure a debt is called
A lien
One big difference between a commercial bank and mutual savings bank is that
A mutual savings bank is owned by depositors, not stockholders
A decline in total production lasting a minimum of 2 quarters defined
A recession
Which of the following shows the steps of the credit-approval process in proper order?
Application, documentation, processing, underwriting, closing, funding
____ is the second level of the structure of the federal reserve
Board of governors
List two advantages of leasing for a business?
Allows for lower payments per month, can choose to buy, re-lease, or return equipment
In a ___ mortgage, the borrower prepay sort of the interest in order to get a lower rate.
Buy-down
John delucia from Citizens shared which of the following tips for you
Cash is king, know what you have in your bank account because you are the only one that knows, them that gots the gold makes the rules (all of the above)
Which of the following accounts is covered by CC regulations
Checking account
Which of the following is NOT a time deposit
Checking account
What was the most common medium of exchange in colonial America
Clins
Specific property that secures a loan is called ___
Collateral
About 60% of the deposit and loan business in the US is done by
Commercial banks
The ____ rate is the amount of interest charged for short term, from the fed to banks
Discount
The interest rate the federal reserve charges for loans to member banks is called the
Discount rate
The rate of interest the federal reserve charged banks for short term loans is called
Discount rate
What is the best thing to do with money you have extra to investing your future
Diversify it all
The person who signs a draft is the
Drawer
All economists agree that the federal govern can regulate the economy by raising or lowering taxes and expenditures
False
Basic checking accounts always pay interest in the balance deposited in the account
False
By law every bank must join the federal reserve
False
Commercial banks offer their services only to businesses
False
Compound interest uses the same principal amount every time it is calculated
False
During the mortgage and credit crisis, the government did not intervene to rescue financial institutions on the brink of failure
False
For a special birthday present, you can go to the bank to get a new $500 dollar bill
False
Generally speaking, banks offer customers fewer services today than 20 years ago
False
Generally speaking, when interest rates are high more credit is accessible and the economy tends to grow quickly
False
High consumer debt is good for banks, because banks make most of their money from the interest paid on loans.
False
If a credit applicant has opened many new accounts recently, that is probably a sign that the applicant is very creditworthy.
False
In the US, the government plays the greatest role in determining how money is moving
False
Interest rates are usually lower for fixed rate mortgages than for other types.
False
It is illegal for a bank to make different check-cashing rules for customers and non customers.
False
It is illegal for banks to charge higher interest rates for loans than they pay depositors
False
Lowered lending criteria for home mortgages benefited society as the lowered criteria allowed more consumers to achieve their goal of homeownership.
False
MZM is sometimes refered to as the "base" money supply
False
Principal is the price paid for using money
False
Private mortgage insurance protects the lender against loan default; it is not typically required for borrowers whose down payment is 10% or greater.
False
Return on equity is the ratio of net income to totals assets
False
Secured loans are sometimes called signature loans.
False
T/F A charitable group can get a SBA loan if it is less than 100 people?
False
The Fed clears about 90% of the checks written in the US
False
The agreed upon value of money in the US today is based on the governments supply of gold at Fort Knox, Kentucky
False
The amount a borrower pays to use the principal of a loan is called a fee.
False
The first bank of the United States was a government institution
False
The first step in the mortgage approval process is documentation
False
The maker of the check is called the Drawee.
False
The most common form of negotiable instrument is a promissory note
False
The national banking act of 1864 founded an adaptable, flexible system of central banking for the US
False
The national banking act of 1864 spelled the end of the state banking systems in the US
False
The strength of support assessment (SOSA) report is a quarterly report filed by US banks to summarize how each banks branches is performing
False
The term moral hazard means that consumers with poor moral character are a high credit risk.
False
The truth and lending act prohibits bill collectors from using deceptive or abusive tactics
False
The uniform bank performance report is an annual report issued to summarize the performance of international banks operating within the US
False
There was no form of paper currency in colonial America
False
Transmit numbers are not issued to financial institutions that hold accounts at a Federal Reserve bank.
False
You can't get your money from a certificate of deposit before the maturity date
False
The official currency of the US can properly be classified as
Fiat money
The rate to which a lender's interest rate is tied is called the
Index
____ are records of all who have requested a copy of a credit report within the last year.
Inquiries
An ___ loan is a loan for which the amount of the payments, the rate of interest, and the number of payments are fixed.
Installment
Which of the following is a nondepository intermediary
Insurance company
For the bank wha is the advantage of giving out a SBA loan from other commercial loans?
It is guaranteed by the SBA, and thus, backed by the government
The current chair of the federal reserve board is _____
Jannet Yellen
Which of the following statements about HOEPA loans is NOT true?
Lenders are prohibited from charging and APR that is 10 points higher than a rate on a Treasury Bill.
All of the following are considered installment loans except
Lines of credit
The term reserve ____ refers to the way of readily converting bank reserves into cash
Liquidity
The risk that a bank will have to sell its assets at a loss to meet its cash demands is called
Liquidity risk
Services provided by banks that generate revenue but that are not included on their balance sheets are called ____
Off balance sheet activities
Which of the following is not an example of an agency that is focused in making banking safe and mutually beneficial across international borders
Presidents working group on financial markets
If there is too much money moving in the economy
Prices may rise, causing inflation
Which of the following is NOT part of the ongoing organizational structure of the federal reserve
Primary dealer credit facility
The beginning amout used to calculate interest is called
Principal
Marisol has written a $500 check to Stephwn, but she has only $300 in her account and it is returned unpaid to Stephen. Marisol has written a
Promissory note
A ___ qualified endorsement transfers a check to another specified party.
Qualified
The Civil War in America brought monetary issues to a crisis point because
Rampant inflation threatened the entire economic system
Name the four purposes for commercial loans
Real estate, construction, equipment, operations
A bill of ___ is a negotiable and unconditional written order addressed by one party to another.
Recharge
The right of ____ allows a consumer to change his or her mind about a loan until midnight of the 3rd business day following the signing of paper
Recission
The final step of the mortgage approval process is
Recording
Which of the following is NOT considered a factor in money creation
The printing of currency by the Bureau of Engraving and Printing
The Real Estate Settlement Procedures Act was enacted
To protect consumers from hidden costs at closing times
The 9-digit number printed on a check that identifies the bank that holds the checking account and is responsible for payment is called the
Transmit number
A check cannot be negotiated until it has been endorsed.
Trie
A joint tenancy checking account allows each owner to make deposits and withdrawals independently
True
A larger down payment on a home lowers the cost of the monthly payment.
True
A lending policy is a written statement of the guidelines and standards a bank must follow in making credit decisions.
True
A loosening of the lending oversight standards contributed to the recent mortgage crisis
True
All federally chartered banks must be corporations
True
An increase in money supply and incomes often causes prices to go up as well
True
Any escrow surplus of more than $50 must be returned to the borrower.
True
Banks can loan customers the money it has on deposit, minus the reserve requirement
True
Banks may require up to a 7 day notice from a depositor who wants to withdraw money from on a time deposit
True
Check use in the US is beginning to decline
True
Credit cards issued by banks is a form of lending
True
In the absence of a national banking system, state banks grew in number and influence in the early years of the US
True
Interest on home-equity loans is tax deductible for consumers
True
Keeping large amounts of currency on hand as protection against possible increases in customers' demand for withdrawals reduces a bank's ability to make profits from loans.
True
Liquidity is variable, depending on the nature of the asset
True
Money doesn't just mean currency, but also checks, ledger transfers, and even credit
True
Money is a medium of exchange for people to use to trade things of value
True
Most banks offer essentially the same types of accounts
True
Most large money transactions involve ledger entries rather than the movement of physical currency
True
One consequence of credit overextension is a ruined credit rating.
True
One of the main functions of the federal reserve is to serve as a bank for other banks
True
Qualifying veterans may get government-backed mortgage loans with low down payments through the Dept. of Veterans Affairs
True
Record keeping as an important part of securing your money
True
Subprime rates are higher-than-normal interest rates offered to a less-than-perfect credit applicant.
True
The FDIC's Quarterly Banking Profile shows how loan portfolios are diversified across the banking industry.
True
The Gramm-Leach-Bliley Act requires that financial institutions protect the privacy of consumers.
True
The International Monetary Fund (IMF) works to promote economic growth among member countries
True
The fixed exchange rate ties the monetary value of one country's currency to the valuation of another country's currency
True
The flow of money has a direct effect on how the economy performs
True
The prime rate is usually the same among major banks
True
Under some circumstances, it is legal to write a post dated check.
True
A transaction account allows transactions to occur at any time and in any number
Ture
Alan Greenspan has been the chairman of the federal reserve since 2006
False
Which of the following statements about banks is NOT true
All banks are organized as corporations
A full endorsement limits both the transferability and the further negotiability of a check
False
A loan company is not a financial intermediary because it does not receive deposits
False
Which of the following is an example of a restrictive endorsement?
"For Deposit Only"
The largest denomination of paper currency in the US today is the
$100 note
Generally speaking, housing costs should not exceed ___ of gross monthly income.
25-28
If you had these accounts what would be the least liquid
401K account
Today the home ownership rate in the US is about
68 %
What causes stagflation
A stagnant economy, high inflation, high unemployment (all of the above)
How long is a short term loan designed for?
A year or less
The concept that's the borrowers who are most willing to accept a high interest rate are the same borrowers who are most likely to default on their loans is called
Adverse selection
The "a" in CAMELS stand for
Asset adequacy
A type of fixed rate mortgage mortgage in which the entire remaining balance of the loan is due in one single large payment is called a ___ mortgage
Balloon
A ___ instrument is payable to whoever holds it.
Bearer
Which of the following endorsements is the least secure?
Blank endorsement
Adding interest to the principal and paying interest on the new total is called paying
Compound interest
The government restricts the flow of cash into the economy too severely,
Consumers cannot afford to borrow
A fixed rate mortgage is also known as an ___mortgage
Conventional
A shared application mortgage is another form of consumer loan tied to the appreciated value of a property.
False
What is a bridge loan used for?
Create short term loans until long term deals are reached
Which of the following statements is not true
Credit bureaus may not report information more than one year old
A bank evaluates the ____ of all customers who apply for loans
Creditworthiness
In fiscal policy what is meant by "priming the pump"
Cut taxes
For the purposes of computing interest what one would be the best as an investor
Daily compound
Which of the following directly transfers money from a person's account to the account of a retailer?
Debit Card
List two of the three analytical tools used to evaluate commercial lending.
Debt ratio, debt service coverage ratio
All deposits to cover transactions that make automatic withdrawals or transfers to pay bills without writing checks are called ____ deposits
Demand
People who put money in to banks are called ____
Depositors
A ____ intermediary is a financial institution that obtains funds from the public and uses them to finance its business
Depository
Total assets minus total liabilities equals
Equity
The national currency act of 1863 did all of the following EXCEPT
Established the basic baking system in use today
Resources a bank used to create money through its business transactions are called ____ reserves
Excess
Which of the following largely eliminated the wide variation of legal regulation from the country's payments system?
Expedited funds availability act of 1987
Which of the following attempts to protect the information that credit bureaus may collect
Fair credit reporting act
A bank is a non-profit organization
False
A borrower cannot use mortgaged property until the debt is paid in full.
False
A check is an example of bank currency
False
A check must be written in paper in order to be legal.
False
A dollar bill represents an obligation of the government to provide a commodity of value to you
False
It requires banks to record and repeat data on home lending in order to identify possible discriminatory patterns.
Home Mortgage Disclosure Act
Which of the following elements of the money supply, as defined by the federal reserve, can be spent immediately
M1
The date on which a certificate of deposit is paid is called the ____ date
Maturity
A ____ occurs when one or more banks join or acquire another bank or banks
Merger
The main goals of the federal reserves ____ policy are to maintain economic growth
Monetary
One result of competition among banks is that
More services are available to consumers
The ____ effect is a phenomenon that creates new deposits from lending
Multiplier
Which of the following is NOT an element of negotiability?
Must be payable on demand
What 3 factors determine SBA eligibility?
Operate for profit, business in the US, business size
Banks move money between
Other banks, banks and individual customers, and governments (all of the above)
Which of the following accounts are you LEAST likely to encounter at a modern bank
Passbook savings account
Which of the following elements of the FICO credit-scoring system carries the most weight?
Payment history
Which of the following components of a fixed rate mortgage do not change?
Payments on the loan, interest rate, terms (all of the above)
The annual ___ rate is the amount of interest charge on a loan principal expressed as a yearly figure.
Percentage
A ___ check is a check that is dated later than the date on which it is actually written.
Postdated
This federal reserve regulation requires banks to maintain adequate reserves for the funds they have in deposit
Regulation D
Which of the following statements about reserve requirements is true
Reserve requirements don't change often
The emergency banking act of 1933
Separated commercial banking from investment banking to protect assets
Documentation of most credit problems stays in a consumer's file for at least
Seven years
____ cards have embedded microchips use embedded logic to change and store values and record transactions.
Smart
Which of the following contributed to the mortgage crisis?
Some countries had new levels of wealth available for investment
The difference between what a bank pays in interest and what it receives in interest is called
Spread
A check is dated 6 months or more before it is presented for payment or deposit is called a
Stale check
A ____ savings account provides a monthly or quarterly report detailing all account activity
Statement
This finance charge method takes the total finance charge, divides it by the number of months in the loan term, and assigns a higher ratio of interest to the early payments.
Sum of digits method
____ laws require that the details of lending agreement me be specified in writing
TILA
The term negotiation, as it applies to a negotiable instrument, applies to
The ability of the holder to obtain its value
In the US banks and ___ work together to form the banking system and to ensure the money supply is adequate, appropriate, and trustworthy
The government
Which of the following is NOT q source of income for a bank
The interest earned by depositors
Which of the following assets is the most liquid
The money in your wallet
Which of the following features of a check indicated who is to receive the funds?
The payee
Money on deposit, minus ____ can be loaned by banks to customers
The reserve requirement
If banks must hold more money in reserve
There is less money available to lend
The fair debt collection practices act includes which principles
Third party collectors may not use deceptive or abusive tactics as they try to collect overdue bills, collectors may not call debtors in a harassing manner, collectors may not reveal collection actions to employers of debtors (all of the above)
Which of the following interest rates is linked to some other rate?
Variable rate
The second bank of the US
Was thought by Andrew Jackson to represent the advancement of the few expense of the many
A commercial bank that specializes only in business banking is sometimes called a ____ bank
Wholesale
