Unit 1: Banking Basics And Services

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  • 1/16 Questions

    When a person publicly announces they cannot repay their loans it is called

    • Deposit
    • Bankruptcy
    • Mortgage
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About This Quiz

Explore the fundamentals of banking in 'Unit 1: Banking Basics and Services'. This quiz covers key concepts such as banking operations, interest, loans, deposits, mortgages, and bankruptcy. It assesses understanding of essential financial services and their impact.

Unit 1: Banking Basics And Services - Quiz

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  • 2. 

    The business dealing with money and credit is

    • Banking

    • Health care

    • Education

    Correct Answer
    A. Banking
    Explanation
    The correct answer is banking because banking is the business that primarily deals with money and credit. Banks accept deposits from customers, provide loans and credit facilities, and offer various financial services such as investment management, foreign exchange, and insurance. Banking plays a crucial role in the economy by facilitating transactions, promoting savings and investments, and providing financial stability. Therefore, banking is the most appropriate choice among the given options.

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  • 3. 

    The money that a person borrows from a bank or other financial institutions is called a

    • Interest

    • Commercial

    • Loan

    Correct Answer
    A. Loan
    Explanation
    A loan refers to the money that an individual borrows from a bank or other financial institutions. It is a sum of money that is provided to the borrower, who agrees to repay it over a certain period of time, typically with interest. Loans are commonly used for various purposes such as purchasing a house, car, or funding education. The correct answer is "loan" because it accurately describes the money borrowed from a bank or financial institution.

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  • 4. 

    A loan to pay for a home, business or other real estate over a period of time is a

    • Deposit

    • Bankruptcy

    • Mortgage

    Correct Answer
    A. Mortgage
    Explanation
    A mortgage is a loan that is used to finance the purchase of a home, business, or other real estate property over a specific period of time. Unlike a deposit, which is an amount of money that is paid upfront as a security or down payment, a mortgage involves borrowing money from a lender and repaying it gradually, typically with interest, until the loan is fully paid off. Bankruptcy, on the other hand, refers to a legal process where a person or business is unable to repay their debts and seeks relief from their financial obligations.

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  • 5. 

    The money that a person places in a bank account for the bank to use to invest and that also earns interest is called a

    • Loan

    • Deposit

    • Mortgage

    Correct Answer
    A. Deposit
    Explanation
    A deposit refers to the money that an individual places in a bank account for the bank to use for investment purposes. The bank then pays the depositor interest on this money. This arrangement allows the bank to utilize the deposited funds for lending and other investment activities, while the depositor earns interest on their money. Therefore, a deposit is the correct answer as it accurately describes the situation described in the question.

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  • 6. 

    In financial transactions, a CD is a:

    • Certificate of Debt

    • Certificate of Deposit

    • Citizen's Deposit

    • Certificate of Collateral

    Correct Answer
    A. Certificate of Deposit
    Explanation
    A CD, in financial transactions, stands for Certificate of Deposit. A Certificate of Deposit is a financial product offered by banks and other financial institutions where an individual deposits a certain amount of money for a fixed period of time. In return, the bank pays interest on the deposit. The purpose of a CD is to provide a safe and secure investment option with a fixed rate of return. It is commonly used by individuals who want to earn interest on their savings without taking on too much risk.

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  • 7. 

    Opening a checking account requires completing a signature card.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    To open a checking account, completing a signature card is necessary. A signature card is a document that verifies the account holder's signature, providing a means of identification and authorization for transactions. This card is typically filled out during the account opening process and serves as a reference for comparison when the account holder signs checks or other financial documents. Therefore, the statement "Opening a checking account requires completing a signature card" is true.

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  • 8. 

    A pawnshop offers loans to people starting their own business.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    This statement is false because a pawnshop typically offers loans by accepting personal items as collateral. Pawnshops do not specifically cater to people starting their own business.

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  • 9. 

    Groups of people such a workers who pool their money together for savings and to make loans is called a

    • Labor union

    • Credit union

    • State of the union

    Correct Answer
    A. Credit union
    Explanation
    A credit union is a financial cooperative where groups of people, such as workers, pool their money together for savings and to make loans. Unlike traditional banks, credit unions are owned and operated by their members, who have a say in the decision-making process. This allows members to benefit from lower interest rates on loans, higher interest rates on savings, and personalized customer service. Therefore, a credit union is the correct answer for the given question.

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  • 10. 

    A ____________________ is used to add funds to a bank account.

    • Check

    • Deposit slip

    • Signature card

    • Withdrawal slip

    Correct Answer
    A. Deposit slip
    Explanation
    A deposit slip is used to add funds to a bank account. When a person wants to deposit money into their account, they fill out a deposit slip with their account number, the amount they are depositing, and any other required information. The slip is then given to the bank teller along with the cash or check being deposited. The teller uses the deposit slip to accurately credit the funds to the correct account.

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  • 11. 

    A service charge on your bank statement will result in:

    • A higher balance

    • A lower balance

    • Earning more interest

    • More outstanding checks

    Correct Answer
    A. A lower balance
    Explanation
    A service charge on your bank statement will result in a lower balance because it represents a fee charged by the bank for providing certain services, such as account maintenance or transaction processing. This fee is deducted from your account balance, reducing the total amount of money available. Therefore, the presence of a service charge will decrease the balance shown on your bank statement.

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  • 12. 

    A blank endorsement allows anyone to cash a check.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    A blank endorsement on a check means that the back of the check is left blank without any specific payee information or restrictions. This type of endorsement essentially turns the check into a bearer instrument, allowing anyone who possesses the check to cash or deposit it. Therefore, it is true that a blank endorsement allows anyone to cash a check.

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  • 13. 

    A outstanding check refers to one written on an account with a very low balance.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    An outstanding check refers to a check that has been written by the account holder but has not yet been cashed or cleared by the bank. It does not necessarily have to be written on an account with a very low balance. Therefore, the statement that an outstanding check refers to one written on an account with a very low balance is false.

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  • 14. 

    The amount of money a bank charges for the privilege of allowing a person to borrow money or the amount of money the bank pays a person for depositing his money for the bank to invest is called.

    • Loan

    • Mortgage

    • Interest

    Correct Answer
    A. Interest
    Explanation
    Interest refers to the amount of money that a bank charges a borrower for the privilege of borrowing money or the amount of money that the bank pays a depositor for depositing their money for the bank to invest. It is a fee or compensation for the use of borrowed funds or the opportunity cost of lending money. Interest rates are typically expressed as a percentage of the loan or deposit amount and can vary based on factors such as the borrower's creditworthiness and prevailing market conditions.

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  • 15. 

    Negative financial information can stay on your credit report for?  

    • 2 years

    • 5 years

    • 7 years

    • 10 years

    Correct Answer
    A. 7 years
    Explanation
    Negative financial information can stay on your credit report for 7 years. This includes late payments, accounts in collections, and bankruptcies. During this time, lenders and creditors can assess your creditworthiness based on this information, which may impact your ability to obtain credit or loans. It is important to maintain good financial habits and make timely payments to avoid negative information on your credit report.

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  • 16. 

    A credit report is

    • A list of you financial assets and liabilities

    • Your monthly credit card statement

    • A loan and bill payment history

    • Your credit line with your financial institution

    Correct Answer
    A. A loan and bill payment history
    Explanation
    A credit report is a record of an individual's borrowing and repayment activities. It includes information about loans taken out, such as mortgages or car loans, as well as payment history for bills and other financial obligations. This report is used by lenders, landlords, and other financial institutions to assess an individual's creditworthiness and determine their ability to repay debts. It provides a comprehensive overview of a person's financial history and helps lenders make informed decisions about granting credit.

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  • Current Version
  • May 08, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Dec 08, 2015
    Quiz Created by
    Fsparks
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