#1
Which of the following is a factor to consider when choosing a financial institution?
Interest rates and fees
ExplanationInterest rates and fees are crucial factors affecting the cost and returns on financial products.
#2
Which of the following is NOT a type of financial institution?
Retail Store
ExplanationRetail stores are not financial institutions; they are commercial establishments selling goods and services.
#3
What does APR stand for in the context of loans and credit cards?
Annual Percentage Rate
ExplanationAPR stands for Annual Percentage Rate, representing the annualized interest rate applied to loans or credit cards.
#4
Which of the following is a benefit of using online banking services?
Convenience of accessing accounts from anywhere with internet
ExplanationOnline banking services offer the convenience of accessing and managing accounts from any location with internet access.
#5
Which of the following factors is important to consider when choosing a checking account?
Monthly fees and minimum balance requirements
ExplanationImportant factors when choosing a checking account include monthly fees and minimum balance requirements, impacting the cost and accessibility of the account.
#6
What does FDIC stand for in the context of banking?
Federal Deposit Insurance Corporation
ExplanationFDIC stands for Federal Deposit Insurance Corporation, which insures deposits in banks and thrifts.
#7
Which of the following services might a credit union typically offer?
Providing mortgage loans
ExplanationCredit unions commonly offer mortgage loans, among other financial services, to their members.
#8
What is one advantage of using a local community bank?
Lower fees for services
ExplanationLocal community banks often offer lower fees for banking services compared to larger institutions.
#9
Which federal agency regulates national banks in the United States?
Office of the Comptroller of the Currency (OCC)
ExplanationThe Office of the Comptroller of the Currency (OCC) regulates and supervises national banks and federal savings associations in the United States.
#10
Which of the following is NOT typically considered a factor in credit scoring?
Favorite color
ExplanationFavorite color is not a factor in credit scoring; factors typically include payment history, credit utilization, and length of credit history.
#11
What is the primary function of a brokerage firm?
Executing trades in financial markets
ExplanationBrokerage firms primarily facilitate the buying and selling of financial securities on behalf of clients in financial markets.
#12
What is the primary purpose of the SWIFT network in the context of financial institutions?
To facilitate international money transfers
ExplanationThe SWIFT network primarily facilitates secure and efficient international money transfers between banks.
#13
In the context of financial institutions, what does AML typically refer to?
Anti-Money Laundering
ExplanationAML, or Anti-Money Laundering, refers to regulations and procedures designed to prevent the illegal conversion of money obtained from criminal activities.
#14
What is the primary function of an investment bank?
Facilitating mergers and acquisitions
ExplanationInvestment banks primarily facilitate corporate actions such as mergers, acquisitions, and underwriting securities.
#15
Which of the following is a characteristic of a money market account?
High liquidity
ExplanationMoney market accounts are known for their high liquidity, allowing easy access to funds.
#16
Which of the following is a characteristic of a 401(k) retirement account?
Contributions are not subject to taxes
ExplanationContributions to a 401(k) retirement account are often tax-deferred, meaning they are not subject to income tax until withdrawn in retirement.
#17
What does the term 'liquidity' refer to in finance?
The ability to convert assets into cash quickly without significant loss
ExplanationLiquidity in finance refers to the ease with which an asset can be converted into cash without affecting its market price significantly.