BANKING AND ITS FUNCTIONS

What of the following is true? Bank... (4)

• is a financial institution

• is a financial intermediary

• is a private business and is not regulated

• connects customers that have capital deficits to customers with capital surpluses

• accepts deposits and channels those deposits into lending activities

Which of the following are the functions of commercial banks (both primary and secondary)? (3)

• maintain record of Government revenue and expenditure

• determine foreign exchange rates

• exchange foreign currencies

• receive deposits

• give loans

What functions have the merchant (investment) banks? (2)

• raise funds for industry on the various financial markets

• determine foreign exchange rates

• finance international trade

• receive deposits

What are the main functions implemented by the Central bank? (4)

• It prints the national currency and determines foreign exchange rates

• it advises the Government on monetary and credit policies and maintains record of Government revenue and expenditure

• offer stockbroking and portfolio management services to rich corporate and individual clients

• it decides on the interest rates for bank deposits and bank loans

• maintain deposit accounts of all other banks and advances money to other banks, when needed

What is the difference between current and fixed deposit?

• Current deposit is only for small sums of money

• Fixed deposits can be withdrawn any time, but current deposits can not

• Current deposits can be withdrawn any time, but fixed deposits can not

What types of loans do you know? (3)

• Savings

• Cash credit

• overdraft

• current

• Mortage

What is collateral?

• Hollywood movie with Tom Cruise

• an asset to secure the loan

• the board of directors of the central bank

• member of bank staff

Why banks make profit? The main source

• They collect more interest than they pay to savers

• They pay more to savers than they collect

• They sell a lot of currency

• They render a lot of consult services

What kind of bank does not take or keep the money of individual?

• investment (merchant)

• commercial

• retail

• savings

Which of the following are Central banks? (3)

• Federal Reserve of the United States

• Bank of England

• Central Bank of Russia

• Barclays

• Sberbank