General Flashcards
7 cards from real Banking Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 General flashcards as text
Which federal agency insures deposits at most U.S. commercial banks up to $250,000 per depositor?
Answer: FDIC
The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per depositor, per insured bank.
What is the primary purpose of a bank's reserve requirement?
Answer: Ensure banks maintain sufficient liquidity to meet depositor withdrawals
Reserve requirements ensure banks keep a minimum fraction of deposits on hand to meet customer withdrawal demands.
A customer writes a check for more than their account balance. What is this called?
Answer: Overdraft
An overdraft occurs when a withdrawal or check exceeds the available balance in the account.
What does APY stand for in banking?
Answer: Annual Percentage Yield
APY (Annual Percentage Yield) reflects the real rate of return on savings, accounting for compound interest.
Which type of bank account typically offers the highest interest rate but restricts early withdrawals?
Answer: Certificate of Deposit (CD)
CDs offer higher interest rates in exchange for locking funds for a fixed term, with penalties for early withdrawal.
The Bank Secrecy Act (BSA) requires banks to file a Currency Transaction Report (CTR) for cash transactions exceeding what amount?
Answer: $10,000
Banks must file a CTR with FinCEN for any cash transaction exceeding $10,000 in a single business day.
What is the term for the difference between the interest rate a bank charges on loans and the interest rate it pays on deposits?
Answer: Net interest margin
Net interest margin (NIM) measures the spread between interest earned on loans and interest paid on deposits, a key profitability metric.