#1
What does APR stand for in banking?
Average Percentage Rate
Annual Percentage Rate
Asset Percentage Ratio
Accrued Principal Return
#2
What is the main function of a checking account?
To earn interest on deposited money
To facilitate everyday transactions and payments
To provide long-term investment opportunities
To secure loans
#3
What is the primary purpose of a savings account?
To facilitate daily transactions and payments
To earn interest on deposited money while keeping it accessible
To invest in long-term assets
To provide short-term loans to customers
#4
What does the term 'overdraft' mean in banking?
An investment that has not yet reached its maturity date
An account balance that goes below zero due to exceeding available funds
A type of loan offered to customers with excellent credit history
A government-issued bond with a face value higher than its market value
#5
What is the purpose of a wire transfer?
To transfer money electronically between two bank accounts
To physically transport cash between banks
To convert one currency to another
To purchase stocks and bonds
#6
What is the purpose of a 401(k) retirement account?
To provide short-term loans to employees
To facilitate everyday transactions and payments
To invest pre-tax income for retirement
To earn high interest rates on deposited money
#7
Which of the following is NOT a type of credit card?
Visa
Mastercard
Debit card
American Express
#8
What does the term 'liquidity' refer to in banking and finance?
The ease with which an asset can be converted into cash without affecting its market price
The profitability of an investment
The total value of a company's outstanding shares
The amount of money borrowed by an individual or entity
#9
What does the term 'amortization' refer to in finance?
The process of increasing the value of an asset over time
The process of paying off debt over a period of time through regular payments
The process of converting variable-rate loans into fixed-rate loans
The process of selling securities on the open market
#10
What is the role of a financial intermediary in the banking system?
To facilitate direct transactions between buyers and sellers
To provide insurance against financial losses
To match savers with borrowers and channel funds between them
To regulate interest rates in the market
#11
What is a collateralized loan?
A loan secured by an asset, such as real estate or a vehicle
A loan with no security provided by the borrower
A loan with a variable interest rate
A loan with a fixed interest rate
#12
What does the term 'foreclosure' mean in the context of mortgages?
The process of a borrower selling their property to pay off the mortgage
The process of a lender taking possession of a property due to non-payment of the mortgage
The process of refinancing a mortgage to lower the interest rate
The process of transferring a mortgage from one lender to another
#13
What is the function of the Federal Reserve in the United States?
Issuing driver's licenses
Regulating monetary policy and supervising banks
Managing national parks
Collecting federal taxes
#14
What is the difference between a credit union and a bank?
Credit unions are not-for-profit organizations, while banks are for-profit institutions
Credit unions offer higher interest rates on savings accounts than banks
Banks are only accessible to individuals with high credit scores, while credit unions are open to all
Credit unions offer a wider range of financial services compared to banks
#15
What does the term 'compound interest' mean?
Interest calculated only on the initial principal amount
Interest calculated on the sum of the initial principal and any accumulated interest
Interest that remains fixed over time
Interest calculated on a decreasing balance
#16
What does the term 'fractional reserve banking' refer to?
A banking system where banks must hold a fraction of their deposits as reserves
A banking system where banks can lend out all of the deposits they receive
A banking system where banks must have a reserve equal to their total deposits
A banking system where banks must borrow funds to meet their reserve requirements
#17
What does the term 'derivative' mean in finance?
A financial contract whose value is derived from the performance of an underlying asset
A type of investment with guaranteed returns
A financial instrument that is not affected by market fluctuations
A bond issued by the government
#18
What is the role of an underwriter in securities issuance?
To oversee trading activities on the stock exchange
To evaluate the creditworthiness of borrowers
To guarantee the sale of securities to investors
To manage the assets of mutual funds