#1
Which type of loan typically requires collateral?
Mortgage loan
ExplanationRequires collateral such as property.
#2
Which financial institution primarily serves its members who have a common affiliation?
Credit union
ExplanationServes members with a common bond, like employment or location.
#3
Which of the following is NOT a type of financial institution?
Hedge fund
ExplanationHedge funds are investment vehicles, not financial institutions.
#4
What does APR stand for in the context of loans?
Annual Percentage Rate
ExplanationAnnualized cost of borrowing, including interest and fees.
#5
What is the term for a loan that is repaid with a series of periodic payments?
Installment loan
ExplanationPaid back over time in regular, fixed amounts.
#6
What is the term for a loan where the interest rate remains fixed for the entire duration?
Fixed-rate loan
ExplanationInterest rate remains constant throughout the loan term.
#7
Which type of loan often has the highest interest rates and fees?
Payday loan
ExplanationCharacterized by high fees and interest rates, often used for short-term borrowing.
#8
What is the primary purpose of a bridge loan?
To provide temporary financing until permanent financing is secured
ExplanationTemporary financing to cover a gap until permanent funding is obtained.
#9
Which financial institution typically offers services such as underwriting and securities trading?
Investment bank
ExplanationSpecializes in complex financial transactions, including underwriting and trading securities.
#10
What is the term for a loan that is backed by the value of the borrower's assets, such as a car or house?
Secured loan
ExplanationAssets like cars or houses are used as collateral to secure the loan.
#11
In the context of financial institutions, what does 'FDIC' stand for?
Federal Deposit Insurance Corporation
ExplanationProvides deposit insurance for banks to protect depositors.
#12
In the context of financial institutions, what does 'SEC' stand for?
Securities and Exchange Commission
ExplanationRegulates securities markets to protect investors.
#13
Which regulatory agency oversees the operations of credit unions in the United States?
National Credit Union Administration
ExplanationRegulates and supervises federal credit unions.
#14
What regulatory agency oversees the operations of banks and ensures they operate safely and soundly?
Office of the Comptroller of the Currency (OCC)
ExplanationRegulates and supervises national banks and federal savings associations.