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Financial Institution Operations & Management Flashcards

7 cards from real CFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial Institution Operations & Management flashcards as text

  1. Under the Bank Secrecy Act (BSA), what is the minimum cash transaction amount that triggers a Currency Transaction Report (CTR) filing requirement?

    Answer: $10,000

    Financial institutions must file a CTR for any cash transaction exceeding $10,000 in a single business day.

  2. A financial institution's liquidity risk management program should primarily ensure the institution can meet its obligations:

    Answer: At minimum cost and without incurring unacceptable losses

    Effective liquidity risk management ensures obligations can be met as they come due at minimum cost and without unacceptable losses.

  3. Which regulatory body is primarily responsible for supervising federally chartered credit unions in the United States?

    Answer: National Credit Union Administration (NCUA)

    The NCUA charters, regulates, and supervises federal credit unions and administers the National Credit Union Share Insurance Fund.

  4. An institution's asset/liability management (ALM) committee is MOST concerned with managing which type of risk?

    Answer: Interest rate risk and its effect on net interest margin

    The ALM committee primarily manages interest rate risk to protect the institution's net interest income and economic value of equity.

  5. Under prompt corrective action (PCA) provisions, a bank is classified as 'critically undercapitalized' when its tangible equity capital ratio falls below:

    Answer: 2%

    A bank is critically undercapitalized when its tangible equity to total assets ratio drops to 2% or less, triggering the most severe PCA restrictions.

  6. Which document establishes the foundational governance framework for a financial institution by specifying the rules for conducting business and the rights of directors and shareholders?

    Answer: Corporate bylaws

    Corporate bylaws govern the internal management of the institution, including board composition, officer duties, and meeting procedures.

  7. A bank's 'efficiency ratio' is calculated by dividing non-interest expense by:

    Answer: Net interest income plus non-interest income

    The efficiency ratio divides non-interest expense by total revenue (net interest income plus non-interest income), with lower ratios indicating better operational efficiency.