Question 1

Discuss the major differences between consumer and commercial loans.

Accepted Answer

Consumer loans and commercial loans are

Question 2

Which of the following had the greatest net interest margin in 2008?

Accepted Answer

A) International banks 
B) Agricultural banks 
C) Credit card lenders 
D) Consumer lenders 
E) Mortgage lenders 
A) International banks 
B) Agricultural banks 
C) Credit card lenders 
D) Consumer lenders 
E) Mortgage lenders

Question 3

According to the Federal Reserve, a non-card bank:

Accepted Answer

A) issues its own card. 
B) does not issue its own card. 
C) operates under a regional card bank. 
D) a.and c. 
E) b.and c. 
A) issues its own card. 
B) does not issue its own card. 
C) operates under a regional card bank. 
D) a.and c. 
E) b.and c.

Question 4

Use the following information for questions 
A bank customer is granted credit for a $2,000 loan at 10% to be repaid in 12 equal installments.
-If the loan is a discount loan, what are the net proceeds of the loan?

Accepted Answer

A) $2,200 
B) $2,100 
C) $2,000 
D) $1,800 
E) Cannot be determined 
A) $2,200 
B) $2,100 
C) $2,000 
D) $1,800 
E) Cannot be determined

Question 5

When a bank keeps dealer reserves, the reserves are primarily used:

Accepted Answer

A) to cover charge-offs. 
B) to increase bank profits. 
C) to increase dealer profits. 
D) to reduce taxes. 
E) to increase advertising revenues. 
A) to cover charge-offs. 
B) to increase bank profits. 
C) to increase dealer profits. 
D) to reduce taxes. 
E) to increase advertising revenues.

Question 6

Under the Equal Credit Opportunity Act, for which of the following is it illegal for a bank to discriminate against borrowers?

Accepted Answer

A) The applicant's income 
B) The applicant's credit history 
C) The applicant's national origin 
D) The applicant's job history 
E) A civil judgement against the applicant 
A) The applicant's income 
B) The applicant's credit history 
C) The applicant's national origin 
D) The applicant's job history 
E) A civil judgement against the applicant

Question 7

The vast majority of credit card revenues comes from:

Accepted Answer

A) merchant discounts. 
B) net credit gains. 
C) advertising revenue. 
D) interest income and annual fees. 
E) interchange fees. 
A) merchant discounts. 
B) net credit gains. 
C) advertising revenue. 
D) interest income and annual fees. 
E) interchange fees.

Question 8

Revolving credit may take the form of:

Accepted Answer

A) overdraft protection. 
B) demand deposit accounts. 
C) excess reserves. 
D) automobile loans. 
E) interchange credit. 
A) overdraft protection. 
B) demand deposit accounts. 
C) excess reserves. 
D) automobile loans. 
E) interchange credit.

Question 9

Salomon Brothers' collateralized automobile receivables securities are labeled:

Accepted Answer

A) AUTOs. 
B) CARDs. 
C) VANs. 
D) CARs. 
E) RACs. 
A) AUTOs. 
B) CARDs. 
C) VANs. 
D) CARs. 
E) RACs.

Question 10

Which of the following is a disadvantage of using a debit card?

Accepted Answer

A) The consumer is charged higher finance charges than on a credit card. 
B) The consumer loses float. 
C) They have higher processing costs than ATMs. 
D) They have lower processing costs than checks. 
E) They are not widely available. 
A) The consumer is charged higher finance charges than on a credit card. 
B) The consumer loses float. 
C) They have higher processing costs than ATMs. 
D) They have lower processing costs than checks. 
E) They are not widely available.

Question 11

During 2007 - 2008, many borrowers had ________ in their homes causing individuals to "walk away" from their homes.

Accepted Answer

A) positive equity 
B) negative equity 
C) positive market value 
D) negative market value 
E) positive asset value 
A) positive equity 
B) negative equity 
C) positive market value 
D) negative market value 
E) positive asset value

Question 12

What are "high LTV" loans and why are they riskier than "low LTV" loans?

Accepted Answer

"High LTV" loans refer to loans with a h

Question 13

Which regulation requires out-of-state-banks that acquire local banks to commit to continued lending in the area and not use the acquired banks simply as deposit gatherers?

Accepted Answer

A) Equal Credit Opportunity Act 
B) National Bank Act 
C) Federal Lending Act 
D) Fair Credit Reporting Act 
E) Community Reinvestment Act 
A) Equal Credit Opportunity Act 
B) National Bank Act 
C) Federal Lending Act 
D) Fair Credit Reporting Act 
E) Community Reinvestment Act

Question 14

Use the following information for questions 
A bank customer is granted credit for a $2,000 loan at 10% to be repaid in 12 equal installments.
-If the loan quoted has an add-on rate, what are the net proceeds of the loan?

Accepted Answer

A) $2,200 
B) $2,100 
C) $2,000 
D) $1.800 
E) Cannot be determined 
A) $2,200 
B) $2,100 
C) $2,000 
D) $1.800 
E) Cannot be determined

Question 15

Consumer loans differ from commercial loans in all of the following ways except:

Accepted Answer

A) consumer loans are generally smaller than commercial loans. 
B) consumer loans are generally for longer terms than commercial loans. 
C) consumer loans are generally less expensive to administer on a unit basis than commercial loans. 
D) individuals are more likely to default than businesses. 
E) consumer loans in some states are still covered by usury laws. 
A) consumer loans are generally smaller than commercial loans. 
B) consumer loans are generally for longer terms than commercial loans. 
C) consumer loans are generally less expensive to administer on a unit basis than commercial loans. 
D) individuals are more likely to default than businesses. 
E) consumer loans in some states are still covered by usury laws.

Question 16

Which of the following are two of the "additional Cs" of consumer credit?

Accepted Answer

A) Customer relationships 
B) Competition 
C) Continuous employment 
D) a.and b.only. 
E) b.and c.only. 
A) Customer relationships 
B) Competition 
C) Continuous employment 
D) a.and b.only. 
E) b.and c.only.

Question 17

The Tax Reform Act of 1986 made home equity loans more appealing by:

Accepted Answer

A) eliminating the tax deduction of interest on consumer loans not secured by real estate. 
B) allowing banks to lend up to 125% of the equity in a home. 
C) preventing homes from being liquidated in Chapter 13 bankruptcy cases. 
D) reducing bank income taxes on mortgage loan income. 
E) all of the above. 
A) eliminating the tax deduction of interest on consumer loans not secured by real estate. 
B) allowing banks to lend up to 125% of the equity in a home. 
C) preventing homes from being liquidated in Chapter 13 bankruptcy cases. 
D) reducing bank income taxes on mortgage loan income. 
E) all of the above.

Question 18

Credit card issuers earn income from:

Accepted Answer

A) annual fees. 
B) interest on outstanding balances. 
C) discounting the charges that merchants accept on purchases. 
D) All of the above. 
E) a.and b.only 
A) annual fees. 
B) interest on outstanding balances. 
C) discounting the charges that merchants accept on purchases. 
D) All of the above. 
E) a.and b.only

Question 19

Who is at risk if an indirect loan defaults on a loan with full recourse?

Accepted Answer

A) The bank 
B) The borrower 
C) The dealer 
D) The credit bureau 
E) All of the above 
A) The bank 
B) The borrower 
C) The dealer 
D) The credit bureau 
E) All of the above

Question 20

Use the following information for questions 
A bank customer is granted credit for a $2,000 loan at 10% to be repaid in 12 equal installments.
-If the loan is a discount loan, what is the monthly payment?

Accepted Answer

A) $200.00 
B) $192.35 
C) $184.20 
D) $173.12 
E) $166.67 
A) $200.00 
B) $192.35 
C) $184.20 
D) $173.12 
E) $166.67

Discuss the major differences between consumer and commercial loans.

Which of the following had the greatest net interest margin in 2008?

According to the Federal Reserve, a non-card bank:

Use the following information for questions A bank customer is granted credit for a $2,000 loan at 10% to be repaid in 12 equal installments. -If the loan is a discount loan, what are the net proceeds of the loan?

When a bank keeps dealer reserves, the reserves are primarily used:

Under the Equal Credit Opportunity Act, for which of the following is it illegal for a bank to discriminate against borrowers?

The vast majority of credit card revenues comes from:

Revolving credit may take the form of:

Salomon Brothers' collateralized automobile receivables securities are labeled:

Which of the following is a disadvantage of using a debit card?

During 2007 - 2008, many borrowers had ________ in their homes causing individuals to "walk away" from their homes.

What are "high LTV" loans and why are they riskier than "low LTV" loans?

Which regulation requires out-of-state-banks that acquire local banks to commit to continued lending in the area and not use the acquired banks simply as deposit gatherers?

Use the following information for questions A bank customer is granted credit for a $2,000 loan at 10% to be repaid in 12 equal installments. -If the loan quoted has an add-on rate, what are the net proceeds of the loan?

Consumer loans differ from commercial loans in all of the following ways except:

Which of the following are two of the "additional Cs" of consumer credit?

The Tax Reform Act of 1986 made home equity loans more appealing by:

Credit card issuers earn income from:

Who is at risk if an indirect loan defaults on a loan with full recourse?

Use the following information for questions A bank customer is granted credit for a $2,000 loan at 10% to be repaid in 12 equal installments. -If the loan is a discount loan, what is the monthly payment?

Banking and the Financial Services Industry

Government Policies and Regulation

Analyzing Bank Performance

Managing Noninterest Income and Noninterest Expense

The Performance of Nontraditional Banking Companies

Pricing Fixed-Income Securities

Managing Interest Rate Risk: Gap and Earnings Sensitivity

Managing Interest Rate Risk: Economic Value of Equity

Using Derivatives to Manage Interest Rate Risk

Funding the Bank

Managing Liquidity

The Effective Use of Capital

Overview of Credit Policy and Loan Characteristics

Evaluating Commercial Loan Requests and Managing Credit Risk

Managing the Investment Portfolio

Global Banking Activities

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Exam 15: Evaluating Consumer Loans

Discuss the major differences between consumer and commercial loans.

Which of the following had the greatest net interest margin in 2008?

According to the Federal Reserve, a non-card bank:

Use the following information for questions A bank customer is granted credit for a $2,000 loan at 10% to be repaid in 12 equal installments. -If the loan is a discount loan, what are the net proceeds of the loan?

When a bank keeps dealer reserves, the reserves are primarily used:

Under the Equal Credit Opportunity Act, for which of the following is it illegal for a bank to discriminate against borrowers?

The vast majority of credit card revenues comes from:

Revolving credit may take the form of:

Salomon Brothers' collateralized automobile receivables securities are labeled:

Which of the following is a disadvantage of using a debit card?

During 2007 - 2008, many borrowers had ________ in their homes causing individuals to "walk away" from their homes.

What are "high LTV" loans and why are they riskier than "low LTV" loans?

Which regulation requires out-of-state-banks that acquire local banks to commit to continued lending in the area and not use the acquired banks simply as deposit gatherers?

Use the following information for questions A bank customer is granted credit for a $2,000 loan at 10% to be repaid in 12 equal installments. -If the loan quoted has an add-on rate, what are the net proceeds of the loan?

Consumer loans differ from commercial loans in all of the following ways except:

Which of the following are two of the "additional Cs" of consumer credit?

The Tax Reform Act of 1986 made home equity loans more appealing by:

Credit card issuers earn income from:

Who is at risk if an indirect loan defaults on a loan with full recourse?

Use the following information for questions A bank customer is granted credit for a $2,000 loan at 10% to be repaid in 12 equal installments. -If the loan is a discount loan, what is the monthly payment?

Banking and the Financial Services Industry

Government Policies and Regulation

Analyzing Bank Performance

Managing Noninterest Income and Noninterest Expense

The Performance of Nontraditional Banking Companies

Pricing Fixed-Income Securities

Managing Interest Rate Risk: Gap and Earnings Sensitivity

Managing Interest Rate Risk: Economic Value of Equity

Using Derivatives to Manage Interest Rate Risk

Funding the Bank

Managing Liquidity

The Effective Use of Capital

Overview of Credit Policy and Loan Characteristics

Evaluating Commercial Loan Requests and Managing Credit Risk

Managing the Investment Portfolio

Global Banking Activities

Filters