Question 1

Federal Savings Bank of Columbia is a for-profit organization that accepts deposits from all its customers, provides them with services, and makes loans. This is a(n)

Accepted Answer

Federal Savings Bank of Columbia functions as a commercial bank because it accepts deposits, provides services, and makes loans to its customers, which are typical activities of commercial banks.

Question 2

Palmer Bank was chartered by the Illinois banking authorities. It has had both state and federal banking authorities stop by for unannounced inspections of its operations. Palmer Bank is a

Accepted Answer

Palmer Bank was chartered by the Illinois banking authorities, indicating that it is a state-chartered bank. The fact that both state and federal banking authorities have conducted inspections suggests that it is subject to oversight and regulation by both entities. Credit unions, savings and loans associations, and federal banks would not be chartered by the Illinois banking authorities.

Question 3

____ banks are chartered by the U.S. Comptroller of the Currency.

Accepted Answer

National banks are chartered by the U.S. Comptroller of the Currency.

Question 4

Suzanne is considered a member of her financial institution, which provides checking, savings, and other financial services. She is eligible for membership because she is a teacher. This financial institution is a

Accepted Answer

Suzanne's eligibility based on being a teacher indicates that the financial institution is a credit union. Credit unions are typically membership-based and serve specific groups, such as employees of a certain company or members of a particular profession. They offer similar services to banks, such as checking and savings accounts, but are structured differently as non-profit organizations owned by their members.

Question 5

GE Capital is an example of a(n)

Accepted Answer

GE Capital is a subsidiary of General Electric and is primarily focused on providing financial services such as commercial lending, leasing, and insurance. Therefore, the best choice is C) finance company.

Question 6

The business that collects premiums and then provides long-term financing for large real estate projects is a(n)

Accepted Answer

The business described in the question is an insurance company, as they collect premiums from policyholders and invest those funds in real estate projects to generate long-term financing. Commercial banks, credit unions, and mutual savings banks are financial institutions that provide various banking services, but they do not typically specialize in real estate financing to the same extent as insurance companies. The Federal Reserve Bank is a central bank that regulates monetary policy and provides banking services to other banks, but it does not collect premiums or provide long-term financing for real estate projects.

Question 7

Pile & Joseph (P&J) Enterprises wants to obtain long-term financing for a commercial real estate project, but it does not want to go to a regular bank for help. Which of the following institutions could help P&J?

Accepted Answer

An insurance company can provide long-term financing for commercial real estate projects through real estate investment trusts (REITs) or other investment vehicles. REITs typically pool funds from multiple investors to purchase income-producing properties, and distribute the income to investors in the form of dividends.

Question 8

Like other businesses, a bank's primary mission is to

Accepted Answer

A bank's primary mission is to meet the needs of its customers by providing various financial products and services while earning a profit. While storing money and providing check-clearing services are part of a bank's operations, their main goal is to serve their customers' financial needs. Giving financial advice and supplying money are ancillary services that banks may offer but they are not the primary mission of a bank.

Question 9

Banks must meet certain requirements before they receive a charter, or permission to operate from authorities, because

Accepted Answer

Banks deal with money belonging to other individuals and firms, which makes them a high-risk industry. Therefore, they must meet certain requirements before receiving a charter from authorities to operate. This includes ensuring they have sufficient capital reserves, following strict regulatory guidelines, and complying with anti-money laundering laws.

Question 10

Commercial banks have experienced competition from all of the following except

Accepted Answer

Federal Reserve Banks do not compete with commercial banks; instead, they regulate and serve them.

Question 11

A written order for a bank or other financial institution to pay a stated dollar amount to a specified business or person is called a

Accepted Answer

A check is a written order for a bank or other financial institution to pay a stated dollar amount to a specified business or person. A promissory note is a written promise to pay back a loan, a deposit slip is used to deposit money into an account, a debit memorandum is a record of a deduction from an account, and a receipt is a written record of a transaction.

Question 12

Which of the following is not considered a goal of new government banking and financial organization by the Obama administration?

Accepted Answer

The answer of Which of the following is not considered...

Question 13

There are approximately ____ national banks in the United States.

Accepted Answer

As of 2021, there are approximately 1,400 national banks in the United States, according to the Office of the Comptroller of the Currency.

Question 14

In 2011 the seven largest banks in the United States were

Accepted Answer

The seven largest banks in the United States are all national banks. National banks are banks that are chartered by the federal government and are regulated by the Office of the Comptroller of the Currency. Examples of national banks include Bank of America, JPMorgan Chase, and Wells Fargo.

Question 15

Every month, Justin contributes 5 percent of his income and his employer contributes an additional 5 percent to guarantee that Justin will have a regular income when he retires. This is known as

Accepted Answer

Justin's monthly contributions, along with his employer's contributions, are being set aside into a pension fund. This fund is designed to provide Justin with a regular income when he retires, making choice (D) the correct answer. Choices (A) and (B) are incorrect, as they do not accurately describe the situation. Social security (choice C) is a government-run program that provides retirement benefits to eligible individuals, but it is not the same as a pension fund. Retirement planning (choice E) is a broad term that encompasses various strategies for saving and investing for retirement, but it does not specifically refer to an employer-sponsored pension fund.

Question 16

Maya Michey graduated from college and is seeking employment in the banking industry. She believes she has what it takes to be successful because she

Accepted Answer

Maya's honesty and enjoyment of interacting with people align with many positions in the banking industry, which often involve customer service and relationship-building. The other options suggest motivations that may not be as compatible with a successful career in banking, such as seeking an easy job or prioritizing social connections over qualifications.

Question 17

Jack owns a chain of health food stores that has been growing rapidly. He decides that new, larger locations would be extremely successful, and he sells stock for the first time to obtain the needed funding to build the new stores. What type of financial institution can assist Jack in the new common stock issue?

Accepted Answer

Investment banking firms specialize in underwriting and assisting with the distribution of new security issues such as common stock. They provide expertise in pricing, marketing, and selling the securities to potential investors.

Question 18

Kyle uses a local financial institution for his banking needs such as a checking and savings account. When he asks the manager what the money he has deposited is used for, the manager explains that the institution deals primarily with consumer loans and home mortgage loans. Anyone can open an account at this institution. This describes a

Accepted Answer

A savings and loan association primarily deals with consumer loans and home mortgage loans, and anyone can open an account at this type of institution. Commercial mutual banks, mutual funds banks, and national banks also offer a range of banking services and may deal with consumer loans and mortgages, but credit unions are typically focused on providing services to members of a specific community or organization.

Question 19

A financial institution that is owned by its depositors is called a(n)

Accepted Answer

A mutual savings bank is owned by its depositors, who also share in the profits through the form of dividends or decreased loan rates. Common stock banks, insurance companies, savings and loan associations, and national banks may have ownership that includes shareholders, members, or a combination of both.

Question 20

Credit union members usually are

Accepted Answer

Credit unions can have membership requirements based on any of the options listed. Some credit unions may require membership based on employment with a specific company or in a particular profession, while others may be open to anyone who lives in a certain community or geographic area. All credit union members must deposit money into their account as a requirement for membership.

Quiz 18: Understanding Money, Banking, and Credit