Banking Review

Which statement regarding Commercial Banks is INCORRECT?

• They only loan money to members.

• Offers savings and checking accounts to individuals.

• Provides residential mortgage loans.

• Interest rates vary.

Why does a bank pay interest to a depositor?

• the bank is able to use deposits to earn profit.

• It is a requirement of the Federal Deposit Insurance Corporation (FDIC).

• It helps the bank invest in the local community.

• It is a benefit of having a bank credit card.

Which of the following would be considered an asset?

• Credit card account.

• Checking account.

• Car loan.

• Student loan.

A form of payment that is guaranteed to be as good as cash is a

• personal check.

• bank check.

• credit card charge.

• promissory note.

Deposits in bank savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to

• $50,000

• $100,000

• $150,000

• $250,000

Many companies offer a service to electronically deposit an employees's net pay into his designated bank account. This service is known as

• barter.

• amortization.

• automatic savings.

• direct deposit.

The highest interest rate on a loan is charged by a

• savings bank.

• credit-card company.

• pawnshop.

• investment bank.

What is the main risk lenders take on when they loan you money?

• lenders will make money on the loan.

• borrowers are unable to repay the loan.

• lenders will not receive enough interest.

• you will come back for more money.

Why do many people prefer to use a debit card instead of a credit card?

• they can purchase items and have the money withdrawn directly from their account without having to pay interest on a credit card balance.

• they can earn interest on accounts equal to 5% of purchases made with the debit card.

• they do not have to worry about overdrawing their checking accounts.

• there are no fees charged when a debit card is used to withdraw money from an out-of-network ATM.

Which term refers to the extra fee paid in return for borrowing a sum of money - excluding the origination fee?

• mortgage.

• credit rate.

• interest rate.

• debit rate.