Lesson 3 Banking Today Quiz

What is one advantage of electronic payments over paper checks?

• They are more secure.

• They are faster and more convenient.

• They are less expensive.

• They are easier to track.

What is a primary activity of banks?

• Selling goods

• Lending money

• Providing insurance

• Manufacturing products

What is 'limited liability' in the context of a corporation?

• Shareholders are responsible for the corporation's debt.

• Shareholders are not responsible for the corporation's debt.

• The corporation cannot incur debt.

• The corporation must pay all debts immediately.

What must a bank do to legally accept deposits?

• Issue stock

• Pay high interest rates

• Follow state laws

• Hire attorneys

What is a Certificate of Deposit (CD) considered as?

• A form of electronic payment

• A deposit

• A loan from a consumer to the bank

• A type of savings account

What happens when a bank receives a new deposit?

• It can only invest it in bonds.

• It must return it to the depositor.

• It can lend out a portion of it.

• It must keep all of it as reserves.

What is the 'spread' in banking terms?

• The difference between the interest rate paid on deposits and the interest rate charged on loans.

• The total amount of deposits a bank has.

• The percentage of reserves a bank must keep.

• The number of loans a bank can issue.

What is one risk associated with debit cards?

• They can be lost or stolen, giving access to all your money.

• They have high interest rates.

• They are not accepted by most merchants.

• They can be used to build credit.

What is a key feature of a checking account?

• It restricts withdrawals.

• It allows purchases up to the limit of your deposit.

• It pays high interest rates.

• It is only for long-term savings.

Why might a bank prefer electronic banking over paper checks?

• It generates more paper.

• It is faster and reduces paperwork.

• It is less secure.

• It is more expensive.