Banking and Financial Products Quiz

Commercial banks perform the fundamental function of accepting deposits from customers.

APR stands for Annual Percentage Rate, representing the total cost of borrowing, including interest and fees, expressed as a yearly percentage.

FDIC stands for Federal Deposit Insurance Corporation, providing insurance coverage to depositors in case of bank failures.

A debit card allows the cardholder to make purchases by directly accessing funds from their associated bank account.

A mortgage is a loan used to purchase real estate, with the property itself serving as collateral for the loan.

Compound interest is the calculation of interest on the initial principal and also on the accumulated interest from previous periods, leading to exponential growth.

A certificate of deposit (CD) is a financial product that allows individuals to earn a fixed interest rate for a specified period, usually with penalties for early withdrawal.

The primary function of the Federal Reserve System is to regulate interest rates and implement monetary policy to ensure economic stability.

A mutual fund is an investment vehicle that pools money from multiple investors to collectively invest in a diversified portfolio of securities.

Liquidity in finance refers to the ease with which assets can be converted into cash without a substantial loss in value.

A 401(k) retirement plan provides a tax-advantaged way for individuals to save for retirement by deferring taxes on contributions until withdrawal.

The main function of an investment bank is to underwrite securities, facilitate mergers and acquisitions, and provide advisory services to corporations and governments.

The SEC's purpose is to regulate the securities industry and protect investors by ensuring fair and transparent financial markets.

The primary function of a credit union is to provide financial services to a specific group of members, often with a focus on community-based and cooperative principles.

A credit score is a numerical representation used to assess an individual's credit risk, helping lenders evaluate the likelihood of timely loan repayments.

A dividend is a distribution of a portion of a company's earnings to its shareholders, typically in the form of cash or additional shares.

A derivative is a financial instrument whose value is derived from the value of an underlying asset, such as stocks, bonds, or commodities.

The Dodd-Frank Act aims to regulate the financial industry, enhance accountability, and protect consumers from abusive financial practices, enacted in response to the 2008 financial crisis.

Leverage in finance refers to the use of borrowed funds to amplify the potential return on an investment, but it also increases the associated risk.