Banking Quiz Review

Which of the following careers would be the best choice for someone interested in money and finance? A) Banker. B) Crime Scene Investigator. C) Engineering. D) Social Worker.

A - Bankers, financial analysts, investment bankers, security broker, Certified Financial Planners, mortgage brokers, cyber security and insurance agents all have careers related to money and finance.

If a person makes a cash deposit of more than $10,000 into a bank account, the bank must notify the - A) U.S Department of the Treasury. B) Federal Deposit Insurance Corporation. ( FDIC ) C) Consumer Financial Protection Bureau. ( CFPB ) D) Federal Reserve Board.

A - In order to track large deposits, the federal government requires that deposits of more than $10,000 be reported to the U.S Department of the Treasury which is responsible for the Internal Revenue Service ( IRS ). Some concerns may be that a person might be trying to avoid paying taxes on game winning or illegal gains.

A high school student has obtained a part time job. This employee may want to open a personal bank account because - A) Direct deposit, if offered by the employer, requires an account. B) It guarantees a person will automatically qualify for a bank loan. C) Fewer taxes will be withheld from the person's paycheck. D) The person will receive a bonus from the employer.

A - One of the benefits of opening a bank account is that a person can have her paycheck directly deposited if the employer offers the service to employees. The advantage being that the money can be withdrawn or used on payday and prevents the person from losing a paycheck.

The National Credit Union Administration ( NCUA ) insures accounts at - A) Credit Unions. B) Commercial Banks C) Brokerage Firms D) Savings Banks

A - The NCUA insures each depositor's account at a credit union up to the legal limit. It's similar to and has the same legal limit as Federal Deposit Insurance Corporation ( FDIC ) at member banks the insure account up to the legal limit.

Before opening a savings account a person should - A) Compare bank fees, interest rates, and services at various financial institutions. B) Apply for an account at the financial institution that advertises online. C) Open an account at the same financial institution as the person's employer. D) Check the mortgage rates at that bank and compare rates to other financial institutions.

A - The most important considerations in choosing a financial institution and the best savings accounts includes: the rate of interest paid by the bank the services they provide and the accessibility of ATMs.

The routing number on a check is the - A) "Driving directions" for money being transferred. B) Balance in a person's account. C) Same as a person's Social Security number. D) Indication of the size of a bank.

A - The routing number on a check is an instruction directing monies to be properly transferred to the correct bank and bank account. The routing number is a nine-digit number used to identify the financial institution involved in the transaction. The number can be found on the bottom of a check.

U.S. Postal money orders are sometimes an unreliable payment because - A) They may be counterfeit. B) They are only worth half their face value. C) Post Offices are closing. D) Fewer banks are accepting them for deposits.

A - There have been a growing number of instances in which postal money orders have been counterfeited. For that reason, they are not considered as reliable as they once were, and therefore not the worth of the money order is its face value and new safeguards for recognizing counterfeited money orders have been put in place.

Jacob lost his debit card. If Jacob reports his lost debit card within two business days, he can be held responsible for - A) Up to $50 of unauthorized transaction. B) Up to $500 of unauthorized transactions. C) All unauthorized without a limit. D) No purchases.

A - Under the Electronic Fund Transfer Act, if a consumer reports the theft of an EFT, ATM, or debit card to the issuing financial institution within two business days, he or she is liable for no more than $50 of unauthorized transfers.

A certificate of deposit ( CD ) from a bank is a - A) Personal retirement plan with benefits similar to a "Traditional Individual Retirement Account." ( Traditional IRA ) B) Restricted savings account that requires the money to remain in the bank for a fixed period of time. C) Cash deposit in a bank that earns interest. D) Guarantee that 50% of the deposited funds are insured.

B - A certificate of deposits ( CD ) is a savings instrument that requires a minimum deposit for a specified period of time ( term ) during which the saver cannot withdraw money without having to pay a penalty. Usually, a CD pays more interest than a savings account.

What is an uncollateralized loan? A) A loan not backed by a co-signer who agrees to cover the amount of the loan. B) A personal loan without assets that can be sold if the person defaults on the loans. C) A home equity loan. D) A loan taken on a life insurance policy.

B - An "uncollateralized loan" is one that does not have an asset that can be sold or taken in the event the barrower defaults on the loan. "Collateral," is a tangible asset that is used to secure a loan. For a mortgage, the actual house or apartment is collateral for that loan, the bank or other lending agency has the right to "keep" the collateral.

A person has a checking account balance of $150 and deposits a $400 check. The check deposited is from a local bank. When can she withdraw $200 in cash without having to pay a fee? A) The same day as the check was deposited. B) As soon as the check deposited clears. C) After receiving a checking account statement at the end of the month. D) Withdrawal is not possible since banks require a minimum of a $1,000 balance.

B - Checks deposited in bank accounts usually need to be in the bank account for two or more days before the money can be withdrawn as cash because the check needs to go through the process of being cleared. In this case, the account holder could withdraw funds against the $150 unless a balance is needed for the account.

A person deposits a $200 check from his sister into his checking account. When will that money be available for him to withdraw from his account? A) As soon as the check is deposited. B) Generally, within one to three days after the check is deposited. C) When FDIC is notified the check was deposited. D) On the date his sister wrote the check.

B - Generally, most banks take 3 business days to clear the check, if less than $5,000. This means that the depositor does not have access to the funds for 3 days. Check with the bank to determine their policy on the availability of funds when checks are deposited.

A person asks if checking accounts pay interest. What is the correct response? A) All checking accounts pay interest. B) Some checking accounts pay interest. C) Checking accounts never pay interest. D) Checking accounts pay interest if deposits are made weekly.

B - Interest bearing checking accounts are available. Each bank has its own requirements ( such as a minimum balance ) to determine if a checking account earns interest. Consumers need to comparison shop to find the most suitable financial institution for them.

A person wants to start saving and needs to make withdrawals often. Her money needs to be safe and to earn interest. Which of the following options will best meet her needs? A) Purchasing a certificate of deposit. ( CD ) B) Opening a savings account. C) Buying a corporate bond. D) Investing in stocks.

B - Most savings accounts pay some interest and money can easily be withdrawn. Funds are safe because they are FDIC insured. Commercial banks, savings and loan banks, and credit unions offer savings accounts.

Checking account overdraft protection at a bank is an optional service that is - A) Provided free to all customers without cost when used. B) A short-term loan with a high rate of interest. C) For low-income account holders. D) For customers over age 65.

B - Overdraft protections is a short-term loan with a very high interest rate for checking account owners that applied for and make use of the service. This service will pay checks when there is not sufficient funds in the checking account.

Financial services and products offered by most banks and credit unions generally include - A) Real Estate Listings. B) Savings Accounts and Personal Loans. C) Legal and Accounting Services. D) Business Plans.

B - The basic financial services offered by banks and credit unions are checking accounts, savings accounts, and personal and business loans.

When borrowing money from a bank, the customer's loan application is reviewed by the bank's - A) Investment Advisor. B) Loan Officer. C) Manager. D) Teller.

B - The person at the bank responsible for reviewing loan applications is the loan officer.

A person should AVOID giving his social security number to - A) Prevent his age from being disclosed. B) Protect him against being a victim of identity theft. C) Reduce the chance of getting phone calls from solicitors. D) Avoid being contacted by scam artists.

B - When someone gets a person social security number, they might be able to gather personal information that can be used to used to steal a person's identity.

A person wants to buy a car in two months but does not have enough money. What is the best way for the person to get the money for the purchase? A) Purchase a one-year certificate of deposit. B) Apply for a bank loan. C) Open a money market account. D) Pawn a valuable piece of jewelry.

B -The best way for this person to get the money needed to buy a car is to borrow the money by getting a car loan from an automobile dealer, bank, or credit union using the car as a collateral.

A cashier's check is a check that is - A) Issued by someone with a checking account. B) Easily cashed if lost or stolen. C) Issued to the payee and guaranteed by the bank. D) A loan used for making large and needed purchases.

C - A bank guarantees payment on a cashier's check that a customer can buy from them. The customer tells the bank who the third-party payee is that will be given the check. The payment is guaranteed because the check is issued in the bank's name. Many businesses require that bills be paid by cashier's check instead of a personal check, because there checks are guaranteed. It is NOT as easy to place a stop movement or cancelled the way one can on a personal check.

A true statement about online banking is that - A) Any person can open an account without required identification. B) Cash withdrawals can be made from home. C) Current balances for accounts can be checked while on vacation. D) The person must use a laptop computer.

C - Banking online offers the convenience of checking a balance and transferring money from one while on vacation. People use smart phones, tablets, computers, and other electronic device to do their online banking.

How do banks or credit unions use savings account deposits? A) To make their services and products attractive for new depositors. B) To pay for employee special projects. C) To make consumer and business loans. D) To improve the quality of life in low-income communities.

C - Banks and credit unions pay interest on customers' savings accounts and hold customers' money through checking accounts and then lend most of that money to other consumers and businesses for a fee ( interest ).

Which type of financial institution usually charges the lowest interest rate on loans? A) Savings Association. B) Commercial Bank. C) Credit Union. D) Investment Bank.

C - Credit unions offer customers lower interest rates on loans than commercial banks. Credit unions function in the same way as banks. They are, however, nonprofit organizations that are owned by their members. Today, most credit unions are open to anyone who wants to bank with them.

A person reconciling her checking account notices that the balance in her checkbook register does not match the balance on the bank statement. Which action is appropriate for the person to take first? A) Correct the balance in the checkbook register so it is the same as the bank balance. B) Deposit or withdraw funds in the checking account to have the two balances agree. C) Determine if all checks issues have cleared. D) Notify the bank in writing to correct the bank statement.

C - Often, the balance reported on a checking account's bank statement differs from the balance in the person's checkbook register. Reasons for that difference may be due to checks that have been written, but they have not been cleared ( returned to the bank for payment ). Therefore, the person must looks at the bank's statement and compare it to his/her checkbook register to see that all checks written have cleared.

Using any of the following is borrowing from a lender except getting or using a - A) Tax Refund Advance. B) Credit Card. C) Debit Card. D) Pawn Shop.

C - People use their own money when using their debt card. Using a debit card is not borrowing. Debit cards allow is to access or own money.

Which of the following activities results in a bank account balance increasing? A) Clearing Checks. B) Balancing the Account. C) Making a Deposit. D) Making a Withdrawal.

C - Putting money into a bank account, which is "making a deposit," increases the balance of that bank account.

A person sold her house and deposited the money from the sale into her savings account. In doing so, she has - A) Earnings. B) Risk. C) Liquidity. D) Dividends.

C - Saving accounts have more liquidity than real estate property.

A person who wants money to be FDIC-insured will probably deposit the money in a - A) Money market mutual fund at an investment firm. B) Bank issues life insurance policy. C) Certificate of deposit ( CD ) at a bank. D) Credit union savings account.

C - The FDIC only insures accounts in member banks and savings institutions. Securities and investment firm money and market accounts are not FDIC insured. FDIC insured accounts include bank savings, Certificates of Deposit, checking, and bank money market deposit accounts. Money held in a credit union Administration ( NCUA ), not by the FDIC.

The term used to describe the ease and speed with which a financial product can be converted to cash is - A) Convenience. B) Principal. C) Liquidity. D) Rate of Return.

C - The ease and speed with which a person can convert a financial product to cash is called liquidity. Checking and savings accounts are highly liquid because deposits and withdrawals can be made at any time.

The financial institution where a person has her checking account will continue to pay out money for checks she writes if - A) She has a good credit score. B) The money in the account has been on deposit for more than 30 days. C) There is enough money in her account to cover the amount of the checks. D) She keeps a record of checks written.

C - The financial institution is not obligated to honor a check if it is written for more money than the current checking account balance. When there are insufficient funds, the bank returns ( not pay ) the check and charges a penalty for each check not covered by funds in the account. The exception is for accounts covered by overdraft protection which prevents a check from bouncing ( not being paid ).

What is the difference between a debit card and a credit card? A) Using a debit card is taking a loan and using a credit card the person is paying with his own money. B) Using a credit card is for a person with a low credit score and using a debit card is for a person with a high credit score. C) Using a debit card is a person paying with his own money and a credit card is taking a loan that needs to be paid. D) Using a credit card never results in any fee and using a debit card always includes

C - When a person buys something with a debit card it results in the money being withdrawn immediately from the person's checking or savings account. Buying something on a credit card is using money from a credit card company which is taking a loan that must be paid.

In order to make a deposit into a personal bank account, a person can do all the following EXCEPT - A) Scan a check with a smartphone deposit app. B) Call the bank to authorize a transfer of funds. C) Have his employer directly deposit the paycheck into the account. D) Have cash scanned for deposit into his account.

D - A person cannot scan cash for deposit into a bank account. For deposits into a personal bank account, a person may physically go to the bank and deposit the check with teller, use the ATM machine and even, if set up with the proper app, use his smart phone to scan the check to deposit.

All of the following activities should be recorded in the checkbook register to ensure that the checking account balance on the checkbook register is accurate EXCEPT for - A) Deposits, including electronic deposits. B) Fees and bank charges. C) ATM and debit card transactions. D) Dividends earns from securities.

D - All transactions both into and out of the checking account should be recorded in the check register ( checks written, direct deposits, deposits made by account owner, ATM and debit card transactions as well as fees charged by the check ). This enables the accounts owner to know how much money is in the account so she avoids overdrawing on the account.

Bank services include overdraft protection or stopping the payment on a check that will result in a cost that the account owner has to pay. The cost is known as a - A) Commission. B) Premium C) Deductible D) Fee.

D - Banks generally charge customers a fee when they provide a service. Examples of services include stopping the payment on a check, overdraft protection when used, a safe deposit box, printing checks, etc.

A person can deposit an $80 check into her checking account in all of the following ways EXCEPT - A) The ATM at her bank. B) An app on her smartcell phone. C) Through a teller at one of her bank's branches. D) A check-cash store.

D - Checks can be deposited into a person's checking by all the ways given except a check-cashing store.

The following are usually required to open a personal bank account EXCEPT - A) A valid drivers license or passport ID. B) Proof of residence. C) A Social Security number or business ID number. D) A high school diploma.

D - Federal law requires certain identification documents to open a bank account. The person will need a valid photo ID such as a driver's license, or military ID. Non-citizens must provide their alien registration number. The person also needs to have her Social Security number and proof of her address ( a utility bill or apartment lease will do ).

One of the Federal Reserve System ( Fed ) functions is to - A) Issue certificates of deposits. ( CDs ) B) Funds new businesses. C) Helps banks increase the number of branches. D) Promote stability of the financial system.

D - One important role of the Federal Reserve System is to promote the stability of the financial system. The Fed also conducts the monetary policy of the country, supervises and regulate financial institutions and activities and foster payment and settlement system safety.

Instead of keeping money under a mattress, people prefer using a bank or credit union savings account for all the following reasons EXCEPT - A) Saving accounts in banks and credit unions are protected. B) Savings accounts earn interest. C) Banks and credit unions provide a monthly statement D) The interest earned is not taxable.

D - The owner of a bank or credit union savings account DOES have to pay taxes on the interest earned. Money kept "under the mattress" could be stolen or lost in a fire, does not earn interest, and is too easy to spend.

A person who has a bank safe deposit box should use it to store - A) Checkbook Statements. B) Copies of Past Budgets. C) Current Payment Stubs. D) Title to a Car.

D - The purpose of having a safe deposit bow is to have a secure place to store valuables and irreplaceable items including legal documents such as title to a car, a birth certificate, mortgage papers, and precious jewelry.