BANKING AND FINANCIAL SYSTEMS questions
1) What type of a business is an insurance company considered because it makes money on the
policies it sells, its policies are not tangible, and the protection it offers is financial?
a. depository intermediary
b. financial institution
c. commercial bank
d. savings and loan association
2) Ari Levy invested $46,500 in the Mayflower Aggressive Growth Fund. This fund charges
a 3% front-end load but no back-end load. Two years later, the value of his investment had
grown by $9,620, and Ari elected to invest these funds in another mutual fund. At the time of
the withdrawal, Ari's account balance was
a. $56,120.00
b. $55,831.40
c. $54,725.00
d. $53,083.25
3) Who pays the gift tax on a gift of money or property?
a. the giver
b. the giver and receiver, with the tax split equally
c. the receiver
d. the state in which the tax is received
4) Another term for a "demand deposit" is a(n):
a. revolving credit account
b. ATM withdrawal
c. savings account
d. checking account
5) The purpose of uninsured/underinsured motorist coverage is to:
a. reimburse the insured for losses caused by a driver who is legally liable but is unable to
pay
b. compensate another driver when the insured did not purchase enough liability insurance
to cover medical expenses or losses to another's property.
c. provide funds to pay another for losses other than those involving medical expenses or
damage to that person's automobile
d. settle disputes without regard to fault by paying medical costs of all parties based on a
schedule of payments established by each state
6) Why is title insurance different from other types of insurance?
a. the policy covers both real and personal property
b. in the event of a covered loss, the insurer pays money to someone other than the insured
c. it protects the insured from losses arising from an event that occurred before the policy
was purchased
d. the cost of coverage is paid by someone other than the insured
7) "Smart cards" with embedded microchips are becoming more common. One of the advantages
of such cards is:
a. the length of time between the transaction and the time that funds are deducted from
the cardholder's account is increased, thereby giving consumers more flexibility
b. "electronic purse" applications allow the cards to be plugged into home computers so
card holders can use them for Internet transactions
c. it is easier to complete a check when "smart cards" are used
d. they can be reused as value can be stored, used, and restored by banks or merchants
8) The British (London Stock Exchange) equivalent of the Dow Jones 30 Industrial Average is
called:
a. FTSE 100
b. Straits-Times Index
c. DAX
d. London Dow 50 Stock Index
9) Which of the following is not a profitability ratio?
a. percentage of gross sales to net sales
b. net income to net sales
c. times interest earned
d. debt to equity ratio
10) What is an Internet Explorer and Netscape symbol that means that the information you enter
will be encrypted before transmission?
a. cell phone with a red X through the display
b. right arrow symbol with an X
c. money symbol with an X on top
d. closed-lock symbol
Key
1)B
2)C
3)A
4)D
5)B
6)C
7)D
8)A
9)D
10)D
Banking and Financial Systems
11) Many recent bank closings can be tied to:
a. credit default swaps
b. competition and recent laws governing banks
c. the recession
d. unethical practices and greed
12) What is another name for the rate of the return on a savings account?
a. yield
b. equity
c. liquidity
d. compounding
13) What is the first sale of a common stock to the public called?
a. IPO
b. call
c. debenture
d. secondary market
14) What do actuaries do?
a. evaluate the likelihood of present events
b. evaluate assets and liabilities
c. evaluate the likelihood of future events
d. actually evaluate accounting statements
15) What's the best action to take after an interview?
a. evaluate how you did and send a thank you note
b. write down all the questions you were asked in case you're asked again
c. tell the other interviewees about what went right or wrong
d. e-mail the interviewer to find out when they are going to hire
16) When is revenue recorded?
a. contract talks reach a successful ending
b. when sales or services take place
c. cash is received from the customer
d. at the end of a quarter when financial statements need to be prepared
17) The Board of Governors are:
a. elected by the presidents of the Federal Reserve Banks and serve six-year terms
b. representative governors from states that have Federal Reserve Banks and serve for
four years
c. appointed by the president and confirmed by the Senate for 14 year terms
d. the Presidents of the Federal Reserve Banks
18) EFT is an acronym for
a. electronic funds transit
b. electronic funds transfer
c. electronic funds transmitter
d. electronic financial transfer
19) If you had a savings account at a bank, which of the following would be correct concerning
the interest that you would earn on this account?
a. Income tax may be charged on your interest depending on your income.
b. Your interest would not be credited to your account until you turn 18.
c. Sales tax may be charged on the interest that you earn.
d. Earnings from saving account interest may not be taxed.
20) What is the primary goal of insurance?
a. to protect the insurance companies from losses from natural disasters
b. to aid the government in setting fiscal policy for losses and premiums
c. t to allocate the risks of loss from the individual to a great number of people
d. to make sure that when you have insurance you are always covered for all losses
Key
1)D
2)A
3)A
4)C
5)A
6)B
7)C
8)B
9)A
10)C