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Banking Practice Questions

1) Forms of legal tender in include one or more of the following. a) bank notes b) c) credit cards d) gift cards e) all of the above Explanation: Bank notes are the only form of legal tender in Canada

2) An instrument used by the to control the supply is called the bank rate, which is also known as the: a) prime lending rate b) daily rate c) current rate d) money supply rate e) none of these Explanation: The prime lending rate is also known as the overnight lending rate. The overnight lending rate is the interest rate at which major financial institutions borrow and lend overnight funds among themselves. Changes in the overnight lending rate can influence consumer loans and mortgages. The rate can also affect the exchange rate of the Canadian Loonie.

3) A temporary loan from a financial institution that results when the institution pays a written for more money than is in a person’s bank account, is called: a) collateral. b) an outstanding cheque. c) an overdraft. d) a personal . e) a savings plan.

4) The Bank of Canada: a) Provides income to the government. b) Earns a profit for the shareholders. c) Helps to control the money supply and interest rates. d) Prevents banks from reporting losses. e) Is a slush fund for the Prime Minister. Explanation: The Bank of Canada is also known as the of Canada. The Bank of Canada has four main areas of responsibilities: Monetary Policy To control inflation by adjusting the interest rate Design, distributes, and produce Canada’s bank notes .The are printed by the Royal Canadian Financial System To promote stable and efficient financial systems in Canada and internationally Funds Management Manage funds for the government of Canada

5) A cheque that is dated more than 6 months ago is called ______. a) an NSF cheque. b) an endorsement c) stale dated. d) a certified cheque e) a line of credit. Explanation: A cheque that is stale dated can no longer be cashed

6) The confidential electronic signature that is similar to the signature on a signature card is known by the abbreviation: a) ABM. b) PIM. c) PIN. d) ABN. e) MICR. Explanation: PIN stands for Personal Identification Number

7) The abbreviation for the organization that is charged with protecting most savings-plan deposits in banks, trust companies, and loan companies in Canada is: a) CDCC. b) COIC. c) CDIC. d) CCID. e) DCIC. Explanation: CDIC stands for Canada Insurance Corporation

8) Who is the current Governor of the Bank of Canada? a) Mark Carney b) David Johnson c) Stephen S. Poloz d) Stephen Harper e) Jim Flaherty

9) Assume you have just written a cheque to purchase a new computer. Who is the Drawee? a) Your financial institution. b) The guarantor of the transaction. c) The person whose account the money will be taken from. d) The person or business to whom the cheque is written. e) The Central Bank which clears the cheque.

10) One of the functions of the Bank of Canada is: a) To mint our coins b) To provide mortgages c) To provide bank accounts for citizens d) To maintain the value of our e) Both a and b

Explanation: One of the functions of the Bank of Canada is to maintain the value of the . This is done by increasing and decreasing the money supply through foreign exchange.

11) Which of the following is great for emergencies, is pre-arranged between you and your bank, and only requires interest on a monthly basis? a) b) Mortgage c) Term Loan d) Line of Credit e) Debit Card

12) If your bank is a member of the government agency that insures deposits, your deposited funds are insured up to: a) $50,000 b) $60,000 c) $75,000 d) $100,000 e) $120,000

13) The newest Canadian bank notes are created using: a) cotton fibres b) flax paper c) Mylar film d) linen paper e) synthetic polymer

14) The has production operations in which two cities? a) Toronto and Ottawa b) Winnipeg and Ottawa c) Ottawa and Vancouver d) Montreal and Toronto e) Montreal and Halifax

15) Which of the following is a Schedule 2 bank in Canada? a) Bank of Montreal b) ING Bank of Canada c) Scotiabank d) CBIC e) Royal Bank of Canada

Explanation: Schedule 2 banks are foreign bank subsidiaries that are authorized under the Bank Act to accept deposits.

16) The process of making sure that an individual balance in a transaction register agrees with the information provided on a bank statement is known as a) balancing b) recording c) reconciling d) budgeting e) compounding

17) Which of the following services would you not expect to be provided by the financial institution you bank with? a) Provide personal cheques b) Offer a safety deposit box c) Provide small business loans d) List your house for sale e) Offer a savings account