Banking Wise Practice Test Exam Questions with 100% Correct Answers 2024
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Banking Wise Practice Test Exam Questions with 100% Correct Answers 2024
If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the
US Treasury Department- In order to track large deposits, the federal government requires that deposits of $10,000 or more be repor...
banking wise practice test exam questions with 100
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Banking Wise Practice Test Exam Questions
with 100% Correct Answers 2024
If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the
US Treasury Department- In order to track large deposits, the federal government requires that
deposits of $10,000 or more be reported to the Treasury Department. Some concerns may be that a
person might be trying to avoid paying taxes on game winnings or perhaps illegal gains
The National Credit Union Administration (NCUA) insures accounts in:
Credit unions - The National Credit Union Association (NCUA) insures each depositor's accounts up to
$100,000 in one credit union. For example, if a customer has a checking account of $1,000 and a
savings account of $8,000 in the same credit union, the customer will have total insurance coverage
of $9,000
When James received his paycheck, he planned to cash it at a check cashing store. You advise him to
cash it at his own bank if possible. Why?
They typically charge high fees - Check-cashing stores usually charge high fees to cash checks and
sometimes encourage consumers to take out high interest rate payday loans
The term used to describe the ease and speed with which you can convert savings or an investment to
cash is:
Liquidity - The ease and speed with which you can convert savings or an investment to cash is called
liquidity. Checking and statement savings accounts are highly liquid because deposits and withdrawals
can be made at any time. A certificate of deposit has less liquidity because it has a fixed term - a
period during which money must be kept on deposit. There can be substantial penalties for cashing in
a certificate of deposit before the end of its term, perhaps losing up to three to six months' interest
Banks use savings account deposits to
Give loans to consumers and businesses - The basic functions of banks and credit unions are to be an
intermediary between savers and borrowers. Banks and credit unions pay interest on customers'
savings accounts and hold customers' money through checking accounts and then lend most of that
money to other consumers and businesses for a fee (interest).
Troy has $50 a month transferred electronically from his checking account to his savings account. This
is an example of:
A savings plan - When a consumer requests that his or her bank or credit union electronically transfer
money from a checking account to a savings account every month, it is a (forced) savings plan. If you
manage your checking account so there are always enough funds to cover the transfer, a forced
savings plan is a good option because you avoid the problem of not making regular deposits in your
savings account and spending the money instead. Starting a (forced) savings plan with automatic
deposits is one way to do what is known as "paying yourself first."
Pat has a savings account and a car loan from a not-for-profit financial institution owned by its
members. She is probably a member of what type of financial institution?
Credit union - Credit unions are not-for-profit savings and lending financial institutions. Membership
in a credit union is made up of individuals who have something in common, such as a place of
employment, membership in a professional organization, or residence in the same geographic area.
Loans are made to its members from the savings of other members. Loan costs tend to be lower and
savings interest rates higher at credit unions than at other types of financial institutions
, Money orders are
A purchased certificate to pay a specified amount to a specific payee - A money order is a purchased
certificate used to pay a specified amount to a specific payee. They are a safe, convenient way to send
payment through the mail as an alternative to personal checks or cash. Money orders sold and backed
by the U.S. Postal Service are called postal money orders. Private companies, such as banks, credit
unions, supermarkets, convenience stores, and drug stores, also sell money orders for a fee.
Which financial product can you buy for $25, is safe, and will be worth $50 at a future date?
Series EE savings bond - Series EE savings bonds, which are issued and backed by the U.S. Treasury,
are purchased for one-half of their face value. These bonds earn interest monthly, and a $50 Series EE
bond, which is purchased for $25, is guaranteed to reach face value within 17 years, and may reach
face value sooner.
A bank Certificate of Deposit is a:
Savings instrument that requires a deposit for a period of time during which there is a penalty for
withdrawals - A certificate of deposit (CD) is a savings instrument that requires a deposit for a period
of time (term) during which the saver cannot withdraw money from the plan without a penalty. CDs
are issued with terms from 31 days up to eight years. The longer the consumer agrees to loan the
money to the bank or credit union, generally the higher the interest rate. It is considered a form of
savings because the consumer is paid interest based on the dollar amount and term of the CD. If the
consumer does not collect his/her money at the end of the term, the money may be rolled over into
another CD.
Travelers checks, often used for vacations
Function as cash and are easily replaced if lost - Traveler's checks are documents that function as
cash, can be replaced if lost or stolen, and are generally accepted throughout the world. For these
reasons, they are often used on vacations and other trips. The purchaser signs a traveler's check
immediately after purchasing it and again when paying for a purchase with it.
Which financial product typically pays the highest rate of interest?
Certificate of deposit - All of these types of accounts and financial products earn interest except for
common stock. They all earn interest at different rates. Generally, certificates of deposit have the
highest interest rate and savings accounts the lowest. Some companies declare and pay dividends to
their shareholders
Which documents should be stored in a safe-deposit box?
Mortgage loan papers.- The purpose of having a safe deposit box is to have a fireproof, secure place
to store valuables and irreplaceable items including legal documents such as a birth certificate and
precious jewelry
Margaret wants to store a valuable coin collection and important papers. Generally, consumers
should
Rent a safe deposit box for their valuables - Bank customers can rent safe deposit boxes from the
bank. They are metal boxes kept in the bank vault where customers often keep valuable papers,
financial records, jewelry, and collections
Safe-deposit boxes are
Safe and can be accessed only by the owner of the box -Safe-deposit boxes are metal boxes in a
bank's vault. Taking two keys, one owned by the bank and one by the customer, to open the safe-
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