[SOURCE] Midterms Flashcards by Rochelle Joy A. Macayan

Which bank enjoys the monopoly of note issuance

a. Universal Bank
b. Rural Bank
c. Commercial Bank
d. Central Bank

ANS: d. Central Bank.

❌c. Commercial Bank❌

source: gemini

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A company that provides services like raising funds and underwriting IPOs, loans, and mergers. They only deal with companies and businesses

a. Wholesale Banking
b. Retail Banking
c. Investment Banking
d. Merchant Banking

**d. Merchant Banking

❌c. Investment Banking.❌

source: chatgpt search

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It refers to financial institutions that provide various financial solutions to individual customers or small business clients.

a. Retail Banking
b. Wholesale Banking
c. Commercial Banking
d. Investment Banking

c. Commercial Banking

❌a. Retail Banking.❌

source: chatgpt search

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Refers to the services provided by banks to large entities like government agencies, financial institutions, large organizations, real estate developers, and investors

a. Wholesale Banking
b. Investment Banking
c. Retail Banking
d. Universal Banking

ANS: a. Wholesale Banking.

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It certainly helps retail customers conduct their daily financial dealings more effectively and safely

a. Wholesale Banking
b. Retail Banking
c. International Banking
d. Investment Banking

ANS: b. Retail Banking.

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The use of services like bank drafts, checks, bills of exchange, credit cards, and letters of credit has revolutionized both national and international trade

a. Banks promote capital formation
b. Investment in new enterprises
c. Promotion of trade and industry
d. Development of agriculture

ANS: c. Promotion of trade and industry.

❌b. Investment in new enterprises❌

source: chatgpt search

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The source of income from bank loans

a. The interest on the loan
b. The repayment of the loan
c. Income from fees charged due to lending relationships
d. All of the above

e. a and c only

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Which of the following are true about investment banks

a. Were generally separated from commercial banks prior to the dismantling of the Glass-Steagall Act, except in a few exceptional cases
b. Are financial intermediaries that provide OAT as well as brokerage services
c. Are key players in the financial market
d. Help companies raise capital through IPOs
e. All of the above

ANS: e. All of the above.

❌d. Help companies raise capital through IPOs❌

source: chatgpt search

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A financial intermediary that performs complex financial transactions such as underwriting, acting as an intermediary between a securities issuer and the investing public, facilitating mergers and other corporate reorganizations, and acting as a broker and/or financial adviser for institutional clients

a. Universal Bank
b. Investment Bank
c. Commercial Bank
d. Central Bank

ANS: b. Investment Bank.

❌c. Commercial Bank❌

source: chatgpt search

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Services offered include savings and checking accounts, mortgages, personal loans, debit or credit cards, and certificates of deposit (CDs)

a. Wholesale Banking
b. Investment Banking
c. Retail Banking
d. Merchant Banking

ANS: c. Retail Banking.

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Commercial banks make it easy for SMEs or budding entrepreneurs to acquire the loan they need to jumpstart their business. The provision of timely credit increases the productive capacity of the economy

a. Banks promote capital formation
b. Investment in new enterprises
c. Promotion of trade and industry
d. Development of agriculture

b. Investment in new enterprises

❌a. Banks promote capital formation❌

source: chatgpt search

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It delivers financial products and services that meet the unique business needs of institutions such as large corporations, government agencies, and other banks.

a. Wholesale Banking
b. Investment Banking
c. Retail Banking
d. Merchant Banking

ANS: a. Wholesale Banking.

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Universal bank combines these services into one roof, except:

a. Retail Banking
b. Wholesale Banking
c. Commercial Banking
d. Investment Banking

c. Commercial Banking

❌b. Wholesale Banking.❌

source: chatgpt search

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The government institution that has responsibility for the amount of money and credit supplied in the economy as a whole is the

a. Central bank
b. Commercial bank
c. Universal bank
d. Monetary fund

ANS: a. Central bank.

❌b. Investment in new enterprises❌

source: chatgpt search

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They’re the most common and more accessible banks in the Philippines. These banks are run by private corporations, except for:

a. Bank of the Philippine Islands (BPI)
b. Banco de Oro Universal Bank (BDO)
c. Metropolitan Bank and Trust Company (Metrobank)
d. Development Bank of the Philippines (DBP)

ANS: d. Development Bank of the Philippines (DBP).

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Bank charge interest on

a. Deposit
b. Loans
c. Both (a) and (b)
d. None of the above

b. Loans

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The following are bank services offered by Universal Banks except for

a. Wholesale Banking
b. Retail Banking
c. International Banking
d. Investment Banking

ANS: c. International Banking.

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A banking facility that offers financial services to the general population rather than companies

a. Wholesale Banking
b. Retail Banking
c. International Banking
d. Investment Banking

ANS: b. Retail Banking.

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Combines the services of other types of banks and an investment bank, providing all services from within one entity. The services can include deposit accounts, a variety of investment services, and may even provide insurance services.

a. Commercial Banking
b. Cooperative Banking
c. Thrift Banking
d. Universal Banking

ANS: d. Universal Banking.

❌a. Commercial Banking❌

source: chatgpt search

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It offers consulting, merger and acquisition assistance, and bulk currency conversion.

a. Wholesale Banking
b. Retail Banking
c. Merchant Banking
d. None of the above

ANS: c. Merchant Banking.

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Bank pays interest on

a. Deposit
b. Loans
c. Both (a) and (b)
d. None of the above

a. Deposit

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A division of financial corporations that creates new debt and security instruments, underwrites IPO processes, offers advice on mergers and acquisitions, and helps high-net-worth individuals and banks.

a. Wholesale Banking
b. Investment Banking
c. Retail Banking
d. Merchant Banking

ANS: b. Investment Banking.

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Examples include pension disbursement services to government entities, cash management, mergers and acquisition, working capital financing services, consultancy, interbank lending, fund management, underwriting, etc.

a. Wholesale Banking
b. Retail Banking
c. International Banking
d. Investment Banking

a. Wholesale Banking

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A specialized banking stream that facilitates business entities, government, and organizations in generating capital through debts and equity.

a. Retail Banking
b. Wholesale Banking
c. Commercial Banking
d. Investment Banking

ANS: d. Investment Banking.

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These are state-owned development banks in the Philippines, except for: a. Al Amanah Islamic Investment Bank b. Development Bank of the Philippines c. Philippine National Bank (PNB) d. Land Bank of the Philippines (LBP)

ANS: c. Philippine National Bank (PNB).

It is also known as consumer banking or personal banking that provides financial services to individual consumers rather than businesses. a. Wholesale Banking b. Investment Banking c. Retail Banking d. Merchant Banking

ANS: c. Retail Banking.

The safest place in keeping money. a. A pit dug in the ground b. An iron box c. Bank d. Money Lender

ANS: c. Bank.

Refers to the services provided by banks to large entities like government sector agencies, financial institutions, large corporations, real estate developers, investors, etc. a. Wholesale Banking b. Retail Banking c. International Banking d. Investment Banking

a. Wholesale Banking

Borrowing and lending massive amounts to the government and pension funds fall under this function of Universal Banking. a. Retail Banking Services b. Wholesale Banking c. Investment Banking d. Commercial Banking

b. Wholesale Banking

Securities underwriting, asset management, trading, and raising capital is an example of: a. Retail Banking Services b. Wholesale Banking c. Investment Banking d. Commercial Banking

ANS: c. Investment Banking. | ❌d. Commercial Banking❌ ## Footnote source: chatgpt search

An important financial institution that assists in the initial sale of securities in the primary market is the: a. Investment Bank b. Commercial Bank c. Stock Exchange d. Brokerage House

ANS: a. Investment Bank. | ❌b. Commercial Bank❌ ## Footnote source: chatgpt search

A banking service that directly handles individual consumers, not enterprises. a. Wholesale Banking b. Retail Banking c. International Banking d. Investment Banking

ANS: b. Retail Banking.

The role of banks in the economy fostering the growth of locally based businesses will lead to economic growth. Course funds to provide financial resources to businesses in the form of loans. a. Banks promote capital formation b. Investment in new enterprises c. Promotion of trade and industry d. Development of agriculture

b. Investment in new enterprises | ❌c. Promotion of trade and industry❌ ## Footnote source: chatgpt search

Services offered by a Universal Bank such as Checking or Savings Account, Overdraft, Loans, Credit Cards, and Safety Deposit Boxes. a. Retail Banking Services b. Wholesale Banking c. Investment Banking d. Commercial Banking

ANS: a. Retail Banking Services.

Banking provides financial services to individual consumers rather than businesses. a. Wholesale Banking b. Investment Banking c. Retail Banking d. Merchant Banking

ANS: c. Retail Banking.

Currency circulated by banks that could be redeemed for gold was called: a. Junk Bonds b. Bank Notes c. Gold Bills d. State Money

b. Bank Notes | ❌c. Gold Bills❌ ## Footnote source: chatgpt search

The government institution that has responsibility for the amount of money and credit supplied in the economy as a whole is the: a. Universal Bank b. Investment Bank c. Commercial Bank d. Central Bank

d. Central Bank | ❌a. Universal Bank❌ ## Footnote source: chatgpt search

It helps businesses build capital by raising funds from investors based on the years of reputation that they have built. a. Wholesale Banking b. Retail Banking c. Investment Banking d. Merchant Banking

ANS: c. Investment Banking.

A division of financial corporations that create new debt and security instruments, underwrite IPO processes, merge or acquire companies, and help high-net-worth individuals and banks facilitate high-value investments. a. Wholesale Banking b. Retail Banking c. International Banking d. Investment Banking

ANS: d. Investment Banking.

Refers to financial services concerning large and complex transactions, investment advice, capital raising, risk management, and other financial solutions. a. Wholesale Banking b. Investment Banking c. Retail Banking d. Merchant Banking

ANS: b. Investment Banking.

For a commercial bank, a new loan is: a. A reserve b. Capital c. A liability d. An asset

d. An asset

This account is most suitable for individual households. They combine the features of both checking accounts and time deposits. a. Savings Account b. Demand Deposit Account c. Fixed Deposit d. Recurring Deposit

a. Savings Account

Non-interest-bearing checking accounts are known as: a. Demand deposits b. NOW accounts c. Money market deposit accounts d. Money market mutual funds

ANS: a. Demand deposits.

To constitute a customer, the following essentials must be fulfilled, except for: a. He must have a sort of account b. Even a single transaction constitutes a customer c. He must have transactions in a bank d. The dealing must be of a banking nature

ANS: c. He must have transactions in a bank.

Primary functions of commercial banks are the following, except: a. Accepting deposits b. Providing credit facilities c. Promote and maintain price stability d. Withdrawal facilities

ANS: c. Promote and maintain price stability.

Primary functions of commercial banks are the following, except: a. Accepting deposits b. Providing credit facilities c. Promote and maintain price stability d. Withdrawal facilities

ANS: c. Promote and maintain price stability.

They can be withdrawn only after the maturity of the specified term. They carry a higher rate of interest. a. Savings Account b. Demand Deposit Account c. Fixed Deposit d. Recurring Deposit

ANS: c. Fixed Deposit.

When commercial banks make loans, they: a. Increase bank capital b. Increase bank reserves c. Create checking account money d. Create new currency

ANS: c. Create checking account money. | ❌a. Increase bank capital❌ ## Footnote source: chatgpt search

What is a commercial bank? a. A financial institution that accepts deposits and offers check account services b. An organization that is, generally, formed independently from the government c. A legal entity representing an association of people d. A precise kind of business structure found only in the Philippines

ANS: a. A financial institution that accepts deposits and offers check account services.

Bank responsibilities to its customers are the following, except: a. Handling account withdrawals b. Collecting from checks and bills c. Providing account receivables d. Maintaining confidentiality

ANS: c. Providing account receivables.

Which of the following are covered by the bank secrecy law? a. Only demand deposits b. All deposits of whatever nature c. Investments in bonds issued by the Philippine Government d. B and D

a. Only demand deposits

This has to do with the amount of cash and cash assets that a banking institution has on hand for conversion. a. Liquidity Coverage Ratio b. Bank Liquidity Ratio c. Current Ratio d. Bank Liquidity Risk

ANS: b. Bank Liquidity Ratio.

Which of the following balance sheet entries is not a tool used in purchased liquidity management? a. Bonds b. Federal Fund c. Demand Deposit d. Repurchase Agreement e. Subordinated Note

ANS: c. Demand Deposit. | ❌a. Bonds❌ ## Footnote source: chatgpt search

Current account deposits are: a. Non-repayable b. Non-repayable on demand c. Repayable on demand d. None of these

ANS: c. Repayable on demand.

Checks: a. Are orders to depository institutions to transfer money to the party who received the check b. May be safely sent in the mail c. Provide a record of payment d. All of the above e. None of the above

d. All of the above ## Footnote source: chatgpt search

These accounts are generally maintained by businessmen and industrialists who receive and make business payments of large amounts through checks. a. Savings Account b. Demand Deposit Account c. Fixed Deposit d. Recurring Deposit

ANS: b. Demand Deposit Account.

On a commercial bank’s balance sheet, a checking account appears as: a. A security b. A liability c. An asset d. Capital

ANS: b. A liability.

Bank regulations: a. Can prevent bank failures b. Can eliminate economic risks for banks c. Serve as guidelines for sound operating policies d. Guarantee bankers will make sound management decisions e. Guarantee bankers act in an ethical manner

c. Serve as guidelines for sound operating policies | ❌d. Guarantee bankers will make sound management decisions❌ ## Footnote source: chatgpt search

A special kind of term deposit offered by banks that helps people with regular incomes deposit a fixed amount every month into a maintained deposit account and earn interest at the rate applicable to time deposits. a. Savings Account b. Demand Deposit Account c. Fixed Deposit d. Recurring Deposit

ANS: d. Recurring Deposit.

Secondary sources of liquidity are the following, except: a. Negotiating its debt obligations b. Liquidating Loans c. Liquidating assets d. Bankruptcy protection and reorganization

b. Liquidating Loans

It is a written agreement acknowledging the amount of money to be paid against the goods purchased at a given point of time in the future. a. Discounted bills of exchange b. Overdraft facility c. Agency functions d. General utility services

ANS: a. Discounted bills of exchange.

How do commercial banks create money? a. Through Cash Reserve Ratio b. Through Investing c. Issue of Loans d. Accepting New Deposits

ANS: c. Issue of Loans.

Which of the following inquiries will be considered a violation of the domestic bank deposit secrecy law? a. Periodic inquiry or special examination of bank deposit by BSP to ensure compliance with the anti-money laundering law b. Inquiry of the bank deposit by the BIR Commissioner in relation to an application for a compromise of taxable liability or determination of the deceased’s gross estate under the National Internal Revenue Code c. Inquiry of the bank deposit by PDIC when there are findings of unsafe or unsound banking practices d. Inquiry of the bank deposit by DOJ Secretary for the purpose of the persecution of the members of the opposing political party

ANS: d. Inquiry of the bank deposit by DOJ Secretary for the purpose of the persecution of the members of the opposing political party.

Depositors of current account make arrangements with the banks that in case a check has been drawn by them which are not covered by the deposit, then the bank should grant and honor the check. a. Discounted bills of exchange b. Overdraft facility c. Agency functions d. General utility services

ANS: b. Overdraft facility.

The assets of a typical commercial bank include: a. Commercial loans b. Common stock c. Demand deposits d. Equity

ANS: a. Commercial loans.

In all of the following cases, the deposits may be examined, inquired, or looked into by any person, government official, bureau, or office. Choose the exception. a. When permitted (written) by the depositor b. In cases of impeachment c. When the depositor is a public official d. In cases where the money deposited or invested is the subject matter of litigation

ANS: c. When the depositor is a public official.

What is known as "Lender of Last Resort"? a. Whenever the government declares a debt relief, the BSP will have to bear the brunt of it b. If a person or firm which is eligible to get a loan does not get it from any commercial bank, they may approach the Bangko Sentral ng Pilipinas (BSP) for a loan c. If the Philippine government is in crisis and needs money for the short term, they can approach BSP for this purpose d. If a commercial bank is in crisis, it may place its reasonable demand for accommodation to BSP

ANS: d. If a commercial bank is in crisis, it may place its reasonable demand for accommodation to BSP.

A secondary function of a commercial bank where the amount can also be cleared before the quoted time through a discounting method of a commercial bank. a. Discounted bills of exchange b. Overdraft facility c. Agency functions d. General utility services

ANS: a. Discounted bills of exchange.

Primary sources of liquidity are the following, except: a. Cash balances (generally in a bank account) b. Short-term funds c. Long-term funds d. Cash flow management

ANS: c. Long-term funds.

A bank’s excess reserves are equal to: a. Total reserves minus required reserves b. Demand deposits minus loans c. Cash plus deposits at the central bank d. Net worth

ANS: a. Total reserves minus required reserves.

A bank is fully loaned up when it has no: a. Capital b. Reserves c. Excess reserves d. vault cash

ANS: c. Excess reserves.

What is NOT a task of a bank? a. Make loans and take deposits b. Provide financial advice c. Print money d. Invest in securities and other financial products

ANSWER: c. Print money.

This type of liquidity ratio focuses on the bank’s ability to cover all immediate debt obligations using cash and convertible assets. a. Current Ratio b. Quick or Acid Test Ratio c. Inventory Ratio d. None of the above

ANSWER: b. Quick or Acid Test Ratio.

Which is the primary activity of a commercial bank? a. Maintaining deposit accounts including current accounts b. Issuing and paying checks c. Collecting checks for the bank’s customers d. All of these

d. All of these ## Footnote source: chatgpt search

What happens when the central bank withdraws reserves from the market? a. None of the following b. The interbank interest rate rises c. The interbank interest rate doesn’t change d. The interbank interest rate drops

ANSWER: b. The interbank interest rate rises.

The roles of a commercial bank are as follows, except: a. They aid in the successful implementation of monetary policies. b. They boost the industrial sector by offering short-, medium-, and long-term finance. c. They formulate trade by offering agency services, overdraft facilities, and other solutions to wholesale and retail businesses. d. They accelerate trade by offering agency services, overdraft facilities, and other solutions to wholesale and retail businesses.

ANSWER: c. They formulate trade by offering agency services, overdraft facilities, and other solutions to wholesale and retail businesses.

What does a bank do if there are no excess reserves? a. Stop clients’ transactions b. Take back the loans from clients c. Borrow reserves either from another bank or directly from the central bank d. Set a higher interest rate

ANSWER: c. Borrow reserves either from another bank or directly from the central bank.

An advance given by allowing a customer keeping a current account to overdraw his current account up to an agreed limit. a. Discounted bills of exchange b. Overdraft facility c. Agency functions d. General utility services

ANSWER: b. Overdraft facility.

Majority equity lies in the hands of the government. Nationalized banks provide financial services to mass customers at affordable rates. a. Commercial Bank b. Public Banks c. Private Banks d. Foreign Banks

ANSWER: b. Public Banks.

Risk of being unable to satisfy claims without impairment of financial or reputational capital. a. Bank Liquidity b. Liquidity Risk c. Solvency Risk d. Liquid Asset Risk

ANSWER: b. Liquidity Risk.

The purpose of the Bank Secrecy Deposit Act? a. To encourage people to deposit their money in banking institutions b. To discourage private hoarding of money so that the same may be utilized by banks in authorized loans c. B and C d. None of the above

ANSWER: c. B and C.

[TRUE OR FALSE] Demand deposits pose a liquidity risk for Financial Institutions (FIs) because funds may be withdrawn at any time.

Ans: True.

[TRUE OR FALSE] Depository institutions generally rely on each other for cash and to meet their daily liquidity needs.

Ans: True.

[TRUE OR FALSE] Bank runs occur because customers know that banks will be forced to liquidate assets at fire-sale prices.

Ans: False.

[TRUE OR FALSE] Depositors have the right to register complaints/grievances if not satisfied with the service provided by the bank.

Ans: True.

[TRUE OR FALSE] Even a single transaction in a bank constitutes a customer.

Ans: True.

[TRUE OR FALSE] Liquid funds can be obtained by a Depository Institution (DI) through unlimited borrowing in the money or purchased funds markets.

False.

[TRUE OR FALSE] When funds are deposited in a savings account, the excess reserves of a bank remain unaffected.

Ans: False.

[TRUE OR FALSE] When cash is deposited in a checking account, the reserves of commercial banks increase.

Ans: True.

[TRUE OR FALSE] A financial intermediary transfers funds from borrowers to lenders by creating claims on itself.

False.

[TRUE OR FALSE] Even with liquidity planning, net deposit withdrawals and/or the exercise of loan commitments can pose significant liquidity problems for banks.

Ans: True.

[TRUE OR FALSE] The role performed by banks in the economy in which they transform savings into credit is known as the intermediation role.

Ans: True.

[TRUE OR FALSE] Universal banks are commercial banks that offer an unbelievable range of services under one roof.

Ans: True.

[TRUE OR FALSE] Banks which offer virtually all financial services are known as universal banks.

Ans: True.

[TRUE OR FALSE] Banks that underwrite issues of new securities for their corporate customers are known as investment banks.

Ans: True.

[TRUE OR FALSE] Nonbank banks can offer deposits to the public, but these deposits are not eligible for insurance coverage by the PDIC.

False.

[TRUE OR FALSE] When cash is deposited in a checking account, the reserves of commercial banks increase.

Ans: True.

[TRUE OR FALSE] When individuals withdraw cash from checking accounts, the money supply is unaffected.

Ans: False.

[TRUE OR FALSE] A financial intermediary transfers funds from borrowers to lenders by creating claims on itself.

False.

[TRUE OR FALSE] Banks that serve primarily households and small firms are known as universal banks.

Ans: False.

[TRUE OR FALSE] Safekeeping of valuables is a traditional service provided by banks in which the banks store the valuables of their customers and certify their true value.

Ans: True.