Financial Institutions & Checking and Savings Accounts Quiz

What is a financial institution (FI)?

• A company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange.

• A company that manufactures financial products.

• A government agency that regulates financial markets.

• A non-profit organization that provides financial education.

Which of the following is NOT listed as a type of financial institution in the provided material?

• Banks

• Credit Unions

• Retail Stores

• Government Lenders

Which of the following is a type of financial institution that deals with insurance?

• Commercial Banks

• Insurance Companies

• Investment Companies

• Credit Unions

What is a bank?

• A place to store personal belongings

• A financial institution licensed to receive deposits and make loans

• A type of restaurant

• A government office

Which of the following services is NOT typically provided by banks?

• Wealth management

• Currency exchange

• Safe deposit boxes

• Medical services

How do financial institutions make money?

• By charging fees for account maintenance

• From the "spread" - the difference between the interest rate they pay for deposits and the interest rate they receive on the loans they make

• By selling financial products

• By offering investment advice

Why do consumers look for a high interest rate on deposits?

• Because the higher the number, the lower the earnings

• Because the higher the number, the higher the earnings

• Because the higher the number, the lower the risk

• Because the higher the number, the higher the fees

Why do consumers look for a low interest rate on loans?

• Because the higher the number, the higher the payments will be on the loan

• Because the higher the number, the lower the payments will be on the loan

• Because the higher the number, the higher the earnings

• Because the higher the number, the lower the risk

What do savers provide to banks in the financial system?

• Loans

• Deposits

• Repayment of loans

• Interest payments

What do banks provide to borrowers in the financial system?

• Deposits

• Withdrawals

• Loans

• Interest payments