Banking Terms - MCQs with answers - Part II

Banking Terms - MCQs with answers - Part II


1. Which one of the following is the ratio of the loan principal to the appraised value?

a) Combined Loan To Value: (CLTV) ratio
b) Loan-to-Value Ratio
c) Mortgage Loan
d) Statutory Liquidity Ratio

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ANSWER: b) Loan-to-Value Ratio

The loans with LTV ratios higher than 100% are called underwater mortgages.



2. What is the product of the share price and number of the company's outstanding ordinary shares?

a) Market Capitalization
b) Market Price
c) Market Trend
d) Treasury Stock

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ANSWER: a) Market Capitalization

Market capitalization or market cap reflects the equity value of a company.



3. Which one of the following pools money from various investors in order to purchase securities?

a) Fund derivative
b) Money fund
c) Mutual fund
d) Pension fund

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ANSWER: c) Mutual fund

Investors in a mutual fund pay the fund’s expenses, which reduce the fund's returns and performance.



4. Which one of the following is the Federal regulatory agency that charters and supervises Federal credit unions?

a) AIRCSC
b) ARC
c) CAG
d) NCUA

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ANSWER: d) NCUA

NCUA stands for National Credit Union Administration.



5. Which one of the following is used when describing the monthly charges on a mortgage?

a) BIS
b) CPI
c) FII
d) PITI

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ANSWER: d) PITI

PITI is the common acronym for principal, interest, taxes, and insurance.



6. Which one of the following allow bank customers to effect transfers of funds from their deposit accounts and other financial transactions at retail establishments?

a) CBS
b) DBS
c) IBS
d) POS

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ANSWER: d) POS

At the Point of Sale (POS), the retailer would calculate the amount owed by the customer and provide options for the customer to make payment.



7. Which is the policy that offers multiple coverage combinations for both buildings and contents?

a) PRP
b) REPO
c) UNDP
d) WPI

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ANSWER: a) PRP

PRP stands for Preferred Risk Policy.



8. Which one of the following requires lenders to provide "good faith" estimates of settlement costs?

a) FOIA
b) NCUA
c) RESPA
d) TILA

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ANSWER: c) RESPA

The Real Estate Settlement Procedures Act (RESPA) ensures that consumers are provided with helpful information about the cost of the mortgage settlement and protected from unnecessarily high settlement charges caused by certain abusive practices.



9. Which one of the following is the rate at which the RBI lends money to commercial banks in the event of any shortfall of funds?

a) Benchmark Prime Lending Rate
b) Annual Percentage Rate
c) Bank Rate
d) Repo Rate

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ANSWER: d) Repo Rate

If Repo rate increases it becomes expensive to borrow money from RBI and vice versa.



10. Which one of the following requires lenders to provide standardized information?

a) TILA
b) RESPA
c) NCUA
d) UCC

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ANSWER: a) TILA

The Truth in Lending Act (TILA) is a Federal law that requires lenders to provide standardized information so that borrowers can compare loan terms. Lenders must provide information on what credit will cost the borrowers, when charges will be imposed, and what the borrower's rights are as a consumer.



11. Which one of the following is a set of statutes enacted to provide consistency among the States' commercial laws?

a) AIRSCS
b) ARC
c) NSC
d) UCC

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ANSWER: d) UCC

Uniform Commercial Code (UCC) includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading.



12. When financial institutions and banks undertake activities related to banking like investment, issue of debit and credit card etc then it is known as _____________________.

a) Internet banking
b) Universal banking
c) Virtual Banking
d) Wholesale banking

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ANSWER: b) Universal banking

Universal banks may offer credit, loans, deposits, asset management, investment advisory, payment processing, securities transactions, underwriting and financial analysis.



13. Which one of the following is controlled by the world wide web?

a) Universal banking
b) Virtual Banking
c) Wholesale Banking
d) None of these

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ANSWER: b) Virtual Banking

Internet banking is known as virtual banking. It is called so because it has no bricks and boundaries.



14. Which one of the following focuses on the financial needs of the institutional clients and the industry?

a) Universal banking
b) Virtual Banking
c) Internet banking
d) Wholesale banking

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ANSWER: d) Wholesale banking

Some services might include currency conversion, working capital financing and large trade transactions.


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