Deck 10: Specialized Bank Services

Question 1

The Single Euro Payments Area (SEPA) designates specific bank branches within major European cities where customers can go to pay bills for items purchased in other countries.

Answer 1

False

Question 2

Sovereign wealth funds use money that is part of a country's official currency reserves.

Answer 2

False

Question 3

The number of banks that help companies conduct business overseas is declining.

Answer 3

False

Question 4

The person who creates a trust is called a

A)corpus.
B)donor.
C) beneficiary.
D) maker.

Question 5

The practice of buying debt at a discount is called

A)discounting.
B)investing.
C) financing.
D) factoring.

Question 6

The demand for a given currency will be strong if all of the following factors are present EXCEPT

A)low inflation.
B)low interest rates.
C) a positive trade balance.
D) a strong economic forecast.

Question 7

The most common type of trade financing involves a letter of credit.

Question 8

Investing in mutual funds usually increases your cost of investing.

Question 9

Probate is a court proceeding that settles an estate's final debts and formally passes legal title to property from the decedent to his or her heirs.

Question 10

A capital investment is more liquid than stocks or bonds.

Question 11

A trust is an arrangement by which one party holds property on behalf of another party for certain defined purposes.

Question 12

Because of the tax advantages, many people use annuities as the basis of their overall financial plan, instead of CDs or savings accounts.

Question 13

Foreign bank branches operating in the United States can only accept deposits less than $100,000 from U.S. citizens.

Question 14

The type of business insurance that pays for medical care and physical rehabilitation of workers injured on the job is called

A)workers' compensation.
B)short-term disability.
C) commercial liability.
D) long-term disability.

Question 15

The risk posed by variations in exchange rates between countries is called

A)currency risk.
B)financial risk.
C) country risk.
D) exchange risk.

Question 16

Health insurance pays benefits when the holder is unable to earn a living because of illness or injury.

Question 17

Every business, no matter how large or small, needs to disburse and collect cash to complete business transactions.

Question 18

Which of the following is a provision of the Gramm-Leach-Bliley Act?

A)Banks are prohibited from owning brokerage firms.
B)Banks are not allowed to sell stock.
C) Financial services companies are required to have and provide to customers a written privacy policy.
D) All of the above are provisions of the Gramm-Leach-Bliley Act.

Question 19

An instrument given by a bank on behalf of a buyer to pay back the bank of the seller a given sum in a given time is called a(n)

A)promissory note.
B)draft.
C) international IOU.
D) letter of credit.

Question 20

Which of the following bank collection services allows accounts receivable payments to be sent directly to the bank?

A)zero-balance accounts
B)automated clearing house network
C) lockbox service
D) none of the above

Question 21

A foreign ____________________ rate is the value of one currency in terms of another.

Question 22

Which of the following retirement products allows employees to make tax-deferred contributions, which are often matched by the company, to a trust?

A)traditional IRA
B)variable annuity
C) 401 (k) plan
D) Roth IRA

Question 23

The value of one U.S. dollar equals 0.45 samolians, the currency of the country of Erehwon. What would $500 be worth, converted into samolians?

Question 24

The program that was developed to provide standardized euro payments either within a country's borders or across countries' borders is called ____________________.

Question 25

Money ____________________ is the practice of depositing, investing, or exchanging money in such a way as to conceal its illegal source.

Question 26

A business accepted a note of $7,000 plus a $500 service fee to be paid in 12 months. Not long after, the business arranged for a local bank to purchase the debt for a factoring fee of 3 percent. What was the cash amount of the factoring fee?

Question 27

____________________ insurance compensates the owner of real estate if his or her clear ownership of property is challenged.

Question 28

What organization has primary responsibility for supervising the branches and agencies of foreign banks operating within the United States?

Question 29

The practice of having an outside party supply a product or service to a firm that the firm had been supplying itself is called ____________________.

Question 30

A debt instrument issued for a period of more than one year with the purpose of raising capital through borrowing is called a(n)

A)bond.
B)annuity.
C) certificate of deposit.
D) stock.

Question 31

Name three special risks for bankers involved in underwriting international businesses.

Question 32

The entire range of political, legal, social, and economic conditions that may put international business at risk is called ____________________ risk.

Question 33

A(n) ____________________ bank acts as a point of contact for other banks that do not have a branch in the host country.

Question 34

____________________ corporations are financial corporations that are federally chartered and allowed to engage only in international banking or other financial transactions related to international business.

Question 35

A business accepted a note of $9,000 plus a $1,000 service fee to be paid in 12 months. Not long after, the business arranged for a local bank to purchase the debt for a factoring fee of 4 percent. How much will the business receive from the bank?

Question 36

The value of one U.S. dollar equals 0.45 samolians, the currency of the country of Erehwon. What would 135 samolians be worth, converted into U.S. dollars?

Question 37

Accounts ____________________ refers to short-term debt from purchases on credit that must be paid to suppliers of goods or services, typically within 60 days or less.

Question 38

Assume the current exchange rate for euros to the U.S. dollar is currently 1.10 euros to 1 U.S. dollar. Convert the value of U.S. goods valued at $55,000 to euros.

Question 39

____________________ is the capital raised by a corporation through the issuance of shares entitling holders to an ownership interest in the corporation.

Question 40

The ____________________ charters and supervises U.S. national banks that do international business.

Question 41

Name and briefly describe three common personal health insurance policies available in the United States.

Question 42

What is Electronic Data Interchange (EDI)?

Question 43

Describe the function and purpose of a zero-balance account (ZBA).

Question 44

What is the primary goal of insurance?

Question 45

What savings can a firm derive from outsourcing?

Question 46

Briefly define the terms mutual fund and diversification.

Question 47

What is a living trust?

Question 48

What are the World Bank and the International Finance Corporation (IFC)? Name the functions of the IFC.

Question 49

Define the terms estate, will, and executor. Describe the steps that are usually involved in the settlement of an estate.

Question 50

What is a sovereign wealth fund?