B.Com Banking & Insurance Money and Financial Institutions — practice questions
83 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice B.Com Banking & Insurance Money and Financial Institutions in the app →What single test decides whether an item counts as money?Pebbles meet several of the tests money must pass. Why would they still fail as money?A perishable item such as a banana fails as money because it lacks which characteristic?Boulders and heavy gold bars make poor money because money must be what?Which characteristic of money makes transactions of every size possible?What happens when too much money is put into circulation?Which set names the three functions money must perform?Money working as a medium of exchange replaces which older arrangement?What does money achieve when it works as a standard of value?Money held as a store of value can still lose what over time?The money supply is made up of which three components?In the money supply, currency means what exactly?Demand deposits are best described as which of these?Which feature separates a time deposit from a demand deposit?Which two items make up M1?M2 is made up of which of these?A depositor moves money out of a checking account into a three year fixed deposit at the same bank. What happeWhy is a credit card not counted as money?What does a bank actually do when a cardholder pays a shop with a credit card?What is the primary mission of a central bank?What does it mean for a central bank to operate as an independent entity?Which four responsibilities describe a central bank at work today?Which three tools does a central bank use to manage the money supply?Open market operations involve which activity?Government bonds bought and sold in open market operations are best understood as what?A central bank buys government bonds. What follows in the short run?A reserve requirement obliges a bank to do what?What follows when a central bank raises the reserve requirement?Of the three money supply tools, which one is seldom changed in practice?Why is a central bank described as the bank for banks?The discount rate is which interest rate?When will a commercial bank prefer to borrow from the central bank?What is the spread that a bank earns on funds it has borrowed?A central bank wants to slow economic growth. What does it do to the discount rate?Selective credit controls give a central bank power over which two things?Consumer credit rules set which two limits on a consumer loan?A margin requirement specifies what?How are cheques drawn on banks within a single district settled?Float is the gap between which two moments, and whom does it benefit?Financial intermediation describes which process?Taken as a whole, which group supplies funds and which group uses them?Financial institutions split into which two broad groups?Which three kinds of institution accept deposits?Which description fits a commercial bank?What is the main source of funds for a commercial bank, and the main use of those funds?Where does the profit of a commercial bank come from?What is a bank charter?A thrift institution is formed specifically to do what?How does a savings bank differ from a savings and loan association?A credit union is best described as which of these?What do the members of a credit union typically share?Why can a credit union pay more on deposits and charge less on loans?A certificate of deposit pays more than a regular savings account on what condition?What distinguishes a money market deposit account?How does a debit card settle a purchase?Which four institutions make up the main nondepository group?In the financial system, insurance companies act mainly as what?What are the payments a policyholder makes to an insurer called?What does an insurance company do with the premiums it collects?A pension fund is which of these?What does a pension fund do with money beyond its near-term benefit needs?What is the core business of a brokerage firm?What does a finance company require from a borrower?Which borrowers typically turn to a finance company?Why does a finance company usually charge a higher interest rate than a bank?What does deposit insurance protect a depositor against?Who pays the premiums that fund a deposit insurance scheme?A deposit insurer moves from a flat rate to a risk-based premium. What changes?Which criticism is made of deposit insurance?Beyond compliance with the rules, what do bank examiners assess?How are the supervisory reviews of a bank conducted?Which action can a supervisor take when a bank is in serious financial trouble?Why might an insurer cover deposits above the insured ceiling at a troubled bank?Which banking services does a multinational corporation especially need?What is global cash management meant to do for a firm?Why do large banks look beyond their own national borders?Why can lighter regulation abroad make life hard for a bank expanding overseas?What makes international banking a high-risk venture?Which services do fintech firms typically provide?What is happening to branch banking as mobile services spread?Which service channel costs a bank the most to provide?A banking chatbot is best described as what?Why can a large payment processor spot fraud better than a single merchant can?