3G - Truth in Savings Act - Reg DD - OPERATIONS
D The correct answer is d. 12 CFR 1030.8 (b) and Commentary Outline II D(6) The other required disclosures may be linked to the triggering term without being in the same location. However, the consumer must be able to view the APY and interest rate simultaneously.
ABC Bank's Internet Web site has the following statement on the home page: "You won't believe our sky-high CD rates. Rates start at 1.5 percent." This statement has a link next to it that takes the viewer to another page with the following information: • Minimum to open the account: $25,000 • Substantial penalty for early withdrawal • Principal compounded monthly • APY = 1.65 percent One of these pieces of information must appear on the home page. Which one must be on the same page as the advertisement? A. Minimum to open the account: $25,000 B. Substantial penalty for early withdrawal C. Principal compounded monthly D. APY = 1.65 percent
D The correct answer is d. 12 CFR 1030.2(f) and (n), and 12 CFR 1030.4(b)(7) Outline II B(1)(b)(xi) Gifts are bonuses, not interest. The amount or type of bonus, when the bonus is provided for any minimum balance or time requirement, must be disclosed in account disclosure statements.
First National Bank is giving away gifts with all new certificates of deposit over $5,000. How must a portable stereo worth $250 be treated on the account disclosure? A. It is a bonus and, therefore, is considered to be interest and does not have to be disclosed on the account disclosure. B. It is interest and must be included in the simple interest rate on the account disclosure. C. It is neither a bonus nor interest and does not have to be disclosed on the account disclosure. D. It is a bonus, and not interest, and must be disclosed on the account disclosure.
B The correct answer is b. 12 CFR 1030.8(c)(3) Outline II D The tiered rates must be disclosed. The bank cannot simply disclose the rate available for the highest balances. The account cannot be described as free because a transaction fee applies to it. The rate cannot be expressed solely as an interest rate. The annual percentage yield must be disclosed.
First National Bank offers a money market account that has a $500 minimum balance and offers tiered interest rates that begin at .75 percent and progress to 1.5 percent, depending on the minimum balance each month. The account has a transaction fee of $5 per month, charged only if the average balance drops below the $500 minimum during the month. If the balance stays above this amount, the customer pays no fee. Which of the following is permissible in an advertisement for the account? A. Interest rate: 1.25 percent; annual percentage yield: 1.5 percent B. $500 minimum balance required C. Free money market checking D. 1.25 percent interest
D The correct answer is d. 12 CFR 1030.6(a)(3) Outline II B(4) This is the only true statement. TISA does not prescribe a particular frequency of compounding interest, nor does it mandate that periodic statements be sent. Interest must begin to accrue no later than prescribed by the Expedited Funds Availability Act.
Of the following statements that describe the requirements of Regulation DD, which statement is true? A. The act requires the bank to begin accruing interest on interest-bearing accounts no later than the second business day following the day of deposit. B. The act requires the bank to compound interest no less than monthly. C. The act requires the bank to send periodic statements on all accounts no less than quarterly. D. The act requires the disclosure of all fees imposed during the statement period in connection with the account on any periodic statement.
D The correct answer is d. 12 CFR 1030.2(a) Outline I B The Truth in Savings Act (and therefore Regulation DD) applies only to natural persons who open an account for other than business purposes. In this case, because both the party opening the account and the beneficiary of the funds are consumers, the account is covered.
To which of the following potential customers would First National Bank have to make available a Regulation DD account disclosure? A. National Lumber Company (a local corporation) B. Rogers and Rogers (a law firm in the form of a partnership) C. John Jones, DBA Jones Consulting Company (a sole proprietorship) D. Eva Gilcrest, POD (payable on death) to Jane Gilcrest
C The correct answer is c. 12 CFR 1030.8(c)(3) Outline II D(7)(c)
When an advertisement states the APY, what other disclosure does Regulation DD require? A. Interest rate, using that terminology B. Index for variable rate transactions C. Minimum balance to obtain the stated APY D. Advertisement inviting the reader to inquire about other features of the account
B The correct answer is b. 12 CFR 1030.4(b)(2) Outline II B(1)(b)(vii)
Which of the following accurately describes disclosure requirements under Regulation DD? A. Reference must be made to all required disclosures regardless of whether they apply to a particular deposit account. B. The effects of closing an account must be disclosed if accrued interest may not be paid to the consumer. C. Check printing charges must be disclosed for accounts where checks are required. D. If interest is compounded, the frequency of compounding need not be disclosed if crediting of interest practices is disclosed.
D The correct answer is d. 12 CFR 1030.2(a) and (h) Outline I B
Which of the following does NOT require a Truth-in-Savings Act disclosure? A. An individual holding the account for personal, family, or household purposes B. Holders of IRA and SEP accounts when invested in covered accounts C. Holders of accounts under the Uniform Transfer to Minors Act D. Accounts established for unincorporated, nonbusiness associations
C The correct answer is c. 12 CFR 1030.8(b) Outline II D If an advertisement states a rate, it must be the annual percentage yield, using that term. The interest rate may also be disclosed, but not more conspicuously than the APY.
Which of the following rate disclosure formats would be acceptable in an advertisement of First National Bank's consumer certificate of deposit? A. 1 percent annual percentage rate B. 1.15 percent C. 1.15 percent annual percentage yield D. 1 percent interest rate
