Bank Deposits and Loans Quiz

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8 Questions

Match the following terms with their meanings:

Cash credit = Type of loan where the borrower can withdraw money up to a certain limit against some security. Overdraft = Allows the account holder to withdraw money from the bank even if the account balance is zero. Ordinary or clean Loan = A standard type of loan provided by the bank without any specific collateral security. Discounting of bills = Process of selling a bill of exchange to a bank at a discount before it is due.

Match the following bank deposits with their descriptions:

Fixed deposits = Require money to be deposited for a fixed period and cannot be withdrawn early Current deposits = For traders and businessmen who make frequent payments and do not earn interest Savings deposits = Aim to encourage small savings and have restrictions on withdrawals Cash credit accounts = Allow the bank to make payments exceeding the available balance, resulting in a negative bank balance

Match the following types of loans with their characteristics:

Overdraft = Occurs when a purchase or check exceeds the available balance, resulting in a negative account balance Ordinary or clean loan = Considered low risk for the lender and typically requires a good credit history, stable income, and collateral Cash credit = Allows payments exceeding the available balance Default = In the event of this, the lender can seize the collateral and sell it to recoup their losses

Match the following loan requirements with their descriptions:

Good credit history, stable income, and collateral = Typically required for an ordinary or clean loan History of repaying debts on time, stable and reliable income, and pledged collateral = Typically required for loans exceeding the available balance Stable income and reliable income = Typically required for cash credit and overdraft Seizure of collateral in case of default = Typically a consequence of defaulting on a loan

Match the following banking departments with their primary responsibilities:

Personal Banking Services Department = Meeting the needs of individuals, such as opening bank accounts and issuing credit cards Corporate Banking Department = Meeting the needs of companies and institutions by providing bank account management and commercial credit services Credit and Loan Department = Handling loan and credit applications from customers and providing necessary consultations Investment and Financial Planning Department = Helping clients achieve their financial goals by providing investment and financial planning services

Match the following types of loans with their characteristics:

Ordinary or clean loans = Typically have lower interest rates and are less risky for the lender High-risk loans = Have higher interest rates and pose a greater risk for the lender Personal loans = Example of ordinary or clean loans Auto loans = Example of ordinary or clean loans

Match the following loan processes with their descriptions:

Discounting of bills = Financial transaction in which a business sells its outstanding invoices to a third-party financier at a discounted price Handling loan and credit applications = Responsibility of the Credit and Loan Department Determining the requirements and types of payment = Part of the Credit and Loan Department's responsibilities Helping clients achieve their financial goals = Responsibility of the Investment and Financial Planning Department

Match the following loan-related terms with their definitions:

Invoice discounting = Also known as discounting of bills, involves selling outstanding invoices to a third-party financier at a discounted price Third-party financier = Entity that assumes responsibility for collecting payments from a business's customers after purchasing outstanding invoices at a discounted price Outstanding invoices = Unpaid invoices that a business sells to a third-party financier at a discounted price High-risk loans = Type of loans with higher interest rates and greater risk for the lender

Study Notes

Bank Deposits and Loans Summary

  • The bank accepts three types of deposits: fixed deposits, current deposits, and savings deposits.
  • Fixed Deposit Accounts require money to be deposited for a fixed period and cannot be withdrawn early. The longer the period, the higher the interest rate.
  • Current Deposit Accounts are for traders and businessmen who make frequent payments and do not earn interest. They have to pay incidental charges to the bank.
  • Savings Deposit Accounts aim to encourage small savings and have restrictions on withdrawals. They offer a low-interest rate compared to fixed deposits.
  • Cash Credit Accounts allow the bank to make payments exceeding the available balance, resulting in a negative bank balance.
  • Overdraft occurs when a purchase or check exceeds the available balance, resulting in a negative account balance.
  • An ordinary or clean loan is considered low risk for the lender and typically requires a good credit history, stable income, and collateral.
  • Cash credit and overdraft are types of loans and advances provided by the bank.
  • Cash credit allows payments exceeding the available balance, while overdraft results in a negative balance in the account.
  • An ordinary or clean loan is low-risk for the lender and requires a good credit history, stable income, and collateral.
  • These loans typically require the borrower to have a history of repaying debts on time, a stable and reliable income, and pledged collateral.
  • In the event of default, the lender can seize the collateral and sell it to recoup their losses.

Test your knowledge of bank deposits and loans with this informative quiz. Explore different types of deposits such as fixed, current, and savings, and understand the features and limitations of each. Learn about cash credit accounts, overdrafts, and various types of loans, including their requirements and risks for both lenders and borrowers.

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