WorksheetsBF21 Unit 2 Practice Test
Total questions: 43
Worksheet time: 22mins
Which is a disadvantage of investing in a savings account?
The account's potential for loss is high.
The rate of return fails to keep up with inflation.
One must pay a penalty for withdrawing money early.
A minimum balance is required to keep the account active.
A service that a bank provides to a company for the receipt of customers'
payments, which are directed to a special post office box instead of
directly to the company, is referred to as a/an:
lockbox.
vendor lease.
private placement.
asset management.
A marketplace where trading of securities such as equities, bonds,
currencies, and derivatives occurs is referred to as a:
call market.
bear market.
financial market.
foreign exchange market.
A type of market in which each transaction takes place at predetermined
time intervals is referred to as a:
call market.
bond market.
financial market.
continuous market.
Ownership investments are ideal for investors who are:
risk-averse.
risk-tolerant.
close to retirement.
just beginning to invest.
Which is a factor that determines how much investment risk a person can
handle?
goals
income
social status
banking institution
The term that refers to how easily an asset can be converted to cash is
known as:
commodity.
currency.
Eurobond.
liquidity.
Which is an advantage of investing in bonds?
They are very low risk.
They are insured by the FDIC.
They are insured by the FDIC.
They permit people to access their money at any time.
In which financial market do people make investments in cocoa beans
and corn?
money
insurance
soft commodities
selective property
Which is an example of a lending investment?
bonds
stocks
antiques
real estate
Patrick wants to keep a certain amount of his money in a safe place in
which he can earn interest on his savings, and also be able to withdraw
his funds without experiencing sizable financial penalties. In what type of
financial institution should Patrick consider placing his money?
a retail bank
the stock market
a retirement fund
a holding company
Individuals are most likely to require the services of a mortgage company
when they want to:
purchase real estate.
earn interest on savings.
acquire liability insurance.
invest in the stock market.
The application of computers in financial institutions, the rapid
diversification of customer financial services, and the expansion of
facilities have brought enormous changes to the financial industry. These
changes have resulted in a:
general decline in the number of employees who are willing to work in
a bank today.
work environment that lacks the need for training and commitment to
customer service.
general upgrading of banking jobs, calling for people with technical
skills, broadened cultural backgrounds, and a customer-oriented
philosophy.
wide variety of employees being trained to handle single
responsibilities instead of being cross-trained to work throughout the
entire financial institution.
Which type of financial market sells new stock or bond issues to
investors?
primary capital
soft commodities
secondary capital
hard commodities
Brian recently got his first part-time job as a food bagger at a local
grocery store. He needs a safe place to store his income that allows him
to withdraw money easily and frequently. Brian should consider opening
which type of account?
savings
checking
health savings
individual retirement
In the banking industry, a compliance officer is responsible for:
keeping employee records in a secure manner.
checking the documentation on customer accounts.
ensuring that all ethical and regulatory standards are met.
making sure that all safety regulations are being enforced.
Which statement is true about certificates of deposit?
They may depreciate in value.
The riskiest investment is a certificate of deposit.
One must pay a penalty for withdrawing money early.
Certificates of deposit are issued by corporations or governments.
Investors take a risk for the potential of receiving a:
bonus.
prize.
promotion.
return.
Which is an example of a real estate investment?
a corporate bond
a certificate of deposit
partial ownership of a corporation
land to be developed in the future
Which are often considered one of the safest investments?
commodities
penny stocks
precious metals
government bonds
With an ownership investment, investors:
buy a home to live in.
collect popular items.
invest in multiple corporations.
pay for the right to own something.
Which is an advantage of a money market account over a savings
account?
The rate of return on a money market account is significantly better.
Money market accounts provide corporate ownership rights.
One can often write checks from a money market account.
Money market accounts are insured by the FDIC.
A form of money held or traded outside the country in whose currency its
value is stated is known as:
U.S. currency.
Eurocurrency.
export currency.
import currency.
In investing, legal lending or owning agreements between individuals,
businesses, or governments are known as:
bonds.
guarantees.
securities.
treaties.
Successful bank managers and supervisors typically began their
employment as:
A. apprentices.
programmers.
tellers.
volunteers.
The purpose of the risk pyramid is to show a comparison of:
one stock to another.
one investment to another.
stocks to stock mutual funds.
corporate bonds to municipal bonds.
Which type of protection ensures that a check, ATM, wire transfer, or
debit card transaction will clear if the account balance falls below zero?
asset
liability
overdraft
system
A level of performance that describes using the least amount of input to
achieve the highest amount of output is known as:
commodity.
efficiency.
liquidity.
market.
The direction of a client's cash and securities by a financial services
company, usually an investment bank, or an individual is known as:
a lockbox.
a vendor lease.
private placement.
asset management.
What type of investment involves several people pooling their money to
purchase stocks and bonds?
secure
elective
mutual funds
money market accounts
A disadvantage of owning stocks is the:
high degree of risk.
low potential for return.
penalty for early withdrawal.
potential for loss of time and effort.
Proofing, encoding, capturing, and sorting are all steps in which banking
process?
check payment
consumer lending
cash management
commercial lending
One of the biggest risks to a real estate investment is:
depreciation.
a low rate of return.
lacking FDIC insurance.
the inability to write checks.
What type of service might a bank provide a business that needs the
flexibility to borrow different amounts of money at different times
without having to reapply?
mortgage
line of credit
installment loan
certificate of deposit
Which statement most accurately describes the relationship between risk
and return?
For the potential of a low return, an investor usually accepts no risk.
For the potential of a high return, an investor usually accepts a low
risk.
For the potential of a low return, an investor usually accepts a high
risk.
For the potential of a high return, an investor usually accepts a high
risk.
The electronic clearance and settlement system used for financial
transactions by U.S. commercial banks and other institutions is called
the:
Federal Reserve System (FRS).
automated clearing house (ACH).
automated teller machine (ATM).
Federal Deposit Insurance Corporation (FDIC).
Marcus wants to invest a portion of his money in long-term securities to
finance his son's college education and his own retirement. To help him
make the best investment decisions, Marcus should obtain the services
of a:
loan officer.
licensed tax accountant.
certified financial planner.
credit-union representative.
A type of market that allows traders to trade any time the market is
open is known as a:
call market.
bond market.
financial market.
continuous market.
Chris wants to open a small business, and he has a very good business
plan that is likely to succeed. Where would Chris be most likely to go to
apply for a loan?
local bank
national bank
insurance provider
mortgage company
What type of service does a bank provide to a business that needs to
borrow funds for a short period of time?
mortgage
line of credit
installment loan
certificate of deposit
In the banking industry, which professionals advise borrowers on credit
options and payment methods?
bank tellers
loan officers
bookkeepers
bank managers
With a lending investment, investors:
avoid taking any risk.
hire a financial advisor.
allow borrowers to use their money for a price.
maintain a minimum amount of money in the investment.
Which type of investment involves the ownership of items that are worth
far more than originally sold for because of rarity and/or popularity?
stocks
collectibles
real estate
stock mutual funds
