DP14 - FDIC InsuranceCoverage Exam
Questions With Verified Answers
1. Katherine has one account at Best Bank. She has just deposited a check for $83,000 into her
money market account bringing the balance to $275,000. Assuming Katherine wants to keep
her funds in interest bearing accounts, how would the amount over $250,000 be handled under
the current FDIC insurance rules?
A. Katherine will receive a letter urging her to purchase additional insurance for the $25,000
B. The $25,000 will be uninsured
C. The $25,000 will be insured at a higher rate
D. Katherine will be asked to move $25,000 out of her account - answer✔B
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Not answered. The correct answer is B. A is incorrect because the FDIC does not offer additional
insurance. C is incorrect because the $25,000 will not be insured at all even for a higher rate. D
is incorrect because the only communication Katherine may receive from the bank would be to
provide information on FDIC insurance coverage.
2. What is the primary reason the Federal Deposit Insurance Act created the FDIC?
A. To restore confidence in the banking system by providing government insurance for bank
deposits
B. To refinance efforts of BIF and SAIF
C. To increase insurance coverage limits
D. To insure deposits at thrift institutions - answer✔A
Not answered. The correct answer is A. B is incorrect because BIF and SAIF were created as part
of the amendments in FIRREA. C is incorrect because the Federal Deposit Insurance Act did not
originally set insurance limits. D is incorrect because the FSLIC was created to insure thrifts.
3. One of the FDIC's most important functions is to insure the deposit accounts of millions of
Americans in all the FDIC-insured financial institutions across the country. What fund does the
FDIC administer?
A. Federal Insurance Fund (FIC)
B. Deposit Insurance Fund (DIF)
C. Insurance Deposit Fund (IDF)
D. Secure Deposit Fund (SDF) - answer✔B
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Not answered. The correct answer is B. A, C, and D are incorrect because the FDIC administers
the Deposit Insurance Fund (DIF).
4. James Johnson has single ownership accounts in two separately chartered financial
institutions. How does FDIC calculate the insurance coverage for James' accounts?
A. Each account is insured separately
B. Accounts are aggregated and the total is insured for up to $250,000
C. The oldest account is insured first
D. The account with the largest balance has the priority for insurance coverage - answer✔A
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Not answered. The correct answer is A. B, C, and D are incorrect because accounts held in
separately chartered financial institutions are not added together and are insured separately.
5. What does that term ''pass-through" deposit insurance coverage mean?
A. The account is opened by individuals who are passing through the area
B. Funds in the account are owned by the principal not the third party who set up the account
C. Ownership of the funds passes through the account to the bank
D. The FDIC passes the insurance through the account to the FDIC's insurance fund - answer✔B
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Not answered. The correct answer is B. A, C, and D are incorrect because a pass-through
account is one set up by a third party with funds owned by the principals of the account.
6. Your marketing department wants to place an advertisement in your branch promoting a
new deposit product. Which statement provides accurate signage instructions?
A. Signage must contain the ''Member FDIC'' logo
B. Any advertisement for a non-deposit investment product must contain the ''Member FDIC''
logo
C. Any non-covered product or service must contain the ''Member FDIC'' logo
D. ''Member FDIC'' signs are only required at the financial institution's principal place of
business - answer✔A
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Not answered. The correct answer is A. B is incorrect because any advertisement for a non-
deposit investment product may NOT contain this logo. C is incorrect because advertisements
for any non-covered product or service may NOT contain this logo. D is incorrect because
insured depository institutions must display the official ''Member FDIC'' signs at each station or
window where insured deposits are usually and normally received, both at a depository
institution's principal place of business and in all its branches.
7. Fred has five business accounts with your bank for Freddie's Fries, LLC: two operating
accounts, two payroll accounts, and a commercial money market savings account. Which
statement concerning business entity insurance is generally true?
A. The checking accounts are insured but the money market is not
B. Only the checking accounts are aggregated - the money market is insured separately
C. All Fred's accounts are aggregated because they are under the same ownership and the
maximum insurance is $250,000
D. Each account is separately insured up to $250,000 - answer✔C
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