WorksheetsFIN370 Ch2 Bank and Customer Relationship Part 2
Total questions: 27
Worksheet time: 14mins
What is the primary reason banks charge service fees to customers?
To cover operational costs
To increase customer loyalty
To provide free services
To reduce interest rates
What is the net interest margin?
The total amount of deposits
The fees charged for services
The difference between interest earned and paid
The total loans issued by the bank
Which of the following factors does NOT affect the interest rate charged by banks?
Prevailing market conditions
Customer's age
Type of loan
Borrower's creditworthiness
In which case was the bank liable for setting off a current account against a loan account?
Buckingham & Co vs London & Midland Bank Ltd
Greenwood v. Martin Bank
Smith v. Bank of England
Jones v. National Bank
What accounts cannot be set off by a bank to recover a debt?
Private debt account and trust credit account
Checking account and fixed deposit account
Loan account and credit card account
Current account and savings account
What is the bank's right when a loan is due for repayment?
To charge additional fees
To forgive the debt
To extend the loan term
To penalize the customer for late payment
What does the right to utilize deposited money allow banks to do?
Withdraw funds without permission
Make loans to other customers
Use funds for personal expenses
Invest in stocks
What is the duty of a customer when drawing a cheque?
To avoid using bank cheque forms
To keep the cheque book in a safe place
To inform the bank of their balance
To ensure the cheque is filled out correctly
What is the legal right of a bank to retain possession of a customer's property until a debt is satisfied called?
Right to interest
Right to repayment
Right to set-off
Right to lien
What is the duty of a banker regarding customer instructions?
To follow them strictly
To consult with other banks
To modify them for security reasons
To ignore them if they seem unreasonable
What must a bank do to honor a cheque?
Ensure the customer has sufficient funds
Verify the customer's identity
Contact the payee
Wait for the cheque to clear
What is the duty of secrecy in banking?
To report suspicious activities
To keep customer information confidential
To disclose all transactions to the public
To share information with other banks
What happens if a bank breaches its duty of secrecy?
They will be rewarded
They may face legal penalties
They must apologize to the customer
They can ignore the breach
What is a garnishee order?
A method of transferring funds
A type of bank fee
A court order to freeze funds
A request for loan forgiveness
What right do customers have regarding their account statements?
To receive them monthly or quarterly
To ignore them completely
To receive them only upon request
To alter them as needed
What is the customer's right regarding the repayment of their account balance?
To withdraw funds at any time
To demand higher interest rates
To refuse payment of fees
To transfer funds without limits
What is the right to appropriate payments?
To decide how payments are applied to debts
To refuse to make payments
To demand lower interest rates
To request refunds for fees
What principle was established in Deeley v Lloyd's Bank Ltd?
Debtor's intention in payment allocation
Bank's right to charge fees
Customer's right to withdraw funds
Bank's duty to honor all cheques
What should customers do if they notice discrepancies in their bank statements?
Change banks immediately
Wait for the bank to contact them
Ignore them
Notify the bank promptly
What is the duty of customers regarding cheque records?
To keep records only for large transactions
To discard all records after use
To share records with the bank
To maintain proper records of issued cheques
What is the consequence of issuing a cheque without sufficient funds?
Automatic loan approval
No consequences
Immediate account closure
Liability for fees and potential legal action
What is the importance of using the bank's cheque forms?
To avoid bank fees
To allow for personal customization
To save money on printing
To prevent fraud and ensure acceptance
What should customers do if they suspect fraud on their account?
Ignore it
Change their account number
Wait for the bank to investigate
Notify the bank immediately
What is the duty of a customer regarding cheque alterations?
To inform the bank of any false alterations
To alter cheques as needed
To ignore alterations
To allow the bank to make changes
What is the primary duty of a banker when processing cheques?
To exercise reasonable care and diligence
To ignore customer instructions
To charge fees for processing
To approve all transactions
What is the consequence of not complying with a garnishee order?
Increased customer trust
Legal and financial repercussions
Higher interest rates
No consequences
What is the significance of the case London Joint Stock Bank v MacMillan & Arthur?
It defined bank fees
It established the duty of care in cheque drawing
It set interest rates
It clarified loan agreements
