#1
Which of the following is not a type of financial institution?
Pharmaceutical company
ExplanationFinancial institutions deal with monetary transactions, unlike pharmaceutical companies.
#2
What is the function of a commercial bank?
Providing loans to businesses and individuals
ExplanationCommercial banks accept deposits and provide loans to support economic activities.
#3
What is the primary function of an investment bank?
Facilitating the issuance of securities and advising on mergers and acquisitions
ExplanationInvestment banks assist companies in raising capital through securities issuance and provide advisory services.
#4
What is the purpose of the Dodd-Frank Wall Street Reform and Consumer Protection Act?
Strengthening financial regulation and protecting consumers
ExplanationDodd-Frank Act aims to prevent financial crises by regulating financial institutions and protecting consumers.
#5
What is the primary purpose of the Consumer Financial Protection Bureau (CFPB) in the United States?
Protecting consumers in the financial marketplace
ExplanationCFPB safeguards consumers by enforcing financial laws and regulations and promoting fair practices.
#6
What is the primary function of a central bank?
Issuing currency
ExplanationCentral banks regulate money supply and issue currency to maintain economic stability.
#7
What is the role of the Federal Reserve in the United States?
Regulating monetary policy
ExplanationThe Federal Reserve sets interest rates and oversees the nation's banking system to stabilize the economy.
#8
Which financial institution typically focuses on facilitating international trade by providing various financial services?
Export-Import Bank
ExplanationExport-Import Banks aid in financing and insuring international trade transactions.
#9
What is the purpose of the Securities and Exchange Commission (SEC) in the United States?
Regulating securities markets and protecting investors
ExplanationSEC ensures fair and transparent markets while protecting investors from fraudulent practices.
#10
Which of the following is a characteristic of a credit union?
Owned by its shareholders
ExplanationCredit unions are member-owned cooperatives, with shareholders being its members.
#11
What does FDIC stand for in the context of banking?
Federal Deposit Insurance Corporation
ExplanationFDIC insures deposits in banks, safeguarding depositors' funds in case of bank failures.
#12
What is the purpose of a SWIFT code in international banking?
Identifying financial institutions globally
ExplanationSWIFT codes help in identifying banks during international transactions for smooth fund transfers.
#13
Which financial institution acts as a middleman between buyers and sellers of financial securities in the stock market?
Stock exchange
ExplanationStock exchanges facilitate the trading of various financial securities between buyers and sellers.
#14
What is the primary purpose of the Basel Committee on Banking Supervision?
Setting standards for banking supervision and regulation
ExplanationBasel Committee establishes guidelines to enhance banking sector stability and minimize risks.
#15
In banking, what does the term 'LTV' stand for?
Loan to Value
ExplanationLTV ratio measures the proportion of a loan to the appraised value of the collateral property.