Banking Basics Quiz

<p>The ability to trade one currency for another. (A)</p> Signup and view all the answers

<p>By ensuring secure transactions for importers and exporters. (C)</p> Signup and view all the answers

<p>A bridge connecting different locations. (D)</p> Signup and view all the answers

<p>Demand Deposits (C)</p> Signup and view all the answers

<p>Transactional Services (D)</p> Signup and view all the answers

<p>Savings and Investment Management Services (C)</p> Signup and view all the answers

<p>Letter of Credit (C)</p> Signup and view all the answers

<p>Short term (D)</p> Signup and view all the answers

<p>Financial Advisory Services (B)</p> Signup and view all the answers

<p>Standing Orders &amp; Disbursements (C)</p> Signup and view all the answers

<p>Money Transfer – WUMT, Moneygram (A)</p> Signup and view all the answers

<p>Mortgages (B)</p> Signup and view all the answers

<p>Loans and Advances (D)</p> Signup and view all the answers

<p>45% to 50% (A)</p> Signup and view all the answers

<p>Low levels of financial intermediation and a high degree of fragmentation. (D)</p> Signup and view all the answers

<p>To comply with the Central Bank of Nigeria's recapitalization directive. (D)</p> Signup and view all the answers

<p>N25 billion (C)</p> Signup and view all the answers

<p>Serving as assessors of risk due to their expertise and scale (D)</p> Signup and view all the answers

<p>Decreased from 89 to 25. (C)</p> Signup and view all the answers

<p>Through directing funds to desired channels via loans and investments (C)</p> Signup and view all the answers

<p>Through balancing requirements and availability of funds. (D)</p> Signup and view all the answers

<p>A combination of factors, including instability and poor management (A)</p> Signup and view all the answers

<p>By increasing the volume of goods and services produced. (D)</p> Signup and view all the answers

<p>50 (B)</p> Signup and view all the answers

<p>To rapidly expand access to basic financial services. (A)</p> Signup and view all the answers

<p>Goldsmiths who provided safe storage for valuables (B)</p> Signup and view all the answers

<p>By ensuring efficient and effective operations within the banking sector. (D)</p> Signup and view all the answers

<p>Via ensuring smooth and stable income provision to market players (C)</p> Signup and view all the answers

<p>Accepting and discounting bills of exchange. (B)</p> Signup and view all the answers

<p>Through the difference in interest rates between deposits and loans. (D)</p> Signup and view all the answers

<p>The capacity of the bank to meet its short-term obligations. (A)</p> Signup and view all the answers

<p>Liquid assets typically provide low returns, while illiquid assets may not be easily converted to cash. (C)</p> Signup and view all the answers

<p>It increases the bank's liquidity but lowers its profitability. (D)</p> Signup and view all the answers

<p>Low liquidity and high profitability. (C)</p> Signup and view all the answers

<p>Secondary or supplemental income, beyond their core financial intermediation. (C)</p> Signup and view all the answers

<p>To be able to continue operating and providing financial services amidst potential financial challenges. (A)</p> Signup and view all the answers

<p>Because strategies that boost liquidity often come at the expense of a bank's ability to make profits. (A)</p> Signup and view all the answers

<p>45% (B)</p> Signup and view all the answers

<p>To reduce excess liquidity in the banking system via a monetary policy tool (B)</p> Signup and view all the answers

<p>Overdrafts and Loans (D)</p> Signup and view all the answers

<p>Minimum Risk Assets (A)</p> Signup and view all the answers

<p>Banking Software (A)</p> Signup and view all the answers

<p>They can easily vanish in the face of liquidity pressure (C)</p> Signup and view all the answers

<p>Tax Payments to the government (C)</p> Signup and view all the answers

<p>The bank's deposit mix (C)</p> Signup and view all the answers

Signup and view all the answers

Accessing your bank account and making transactions through a website or mobile app, allowing you to check your balance, pay bills, and transfer funds without visiting a physical branch.

Plastic cards linked to your bank account used for making purchases or obtaining credit.

Services provided by banks to help people save and grow their wealth.

Services provided by banks that allow the exchange of one currency for another, helping businesses and travelers manage transactions in different countries.

Services provided by banks to facilitate international trade by offering secure payment methods.

A type of investment account that pools money from multiple investors to purchase a diversified portfolio of stocks or bonds.

A guarantee of payment for a transaction, ensuring the seller receives their money.

A bank's role in helping individuals and businesses manage their money, facilitating transactions, and enabling financial growth.

Banks can assess the risk of investments better than individuals due to their expertise and ability to spread risk across a wider portfolio.

Banks play a crucial role in mobilizing savings (money people don't spend) and directing it towards investments that fuel economic growth.

Banks create new money in the form of demand deposits when they grant loans or buy securities.

Banks facilitate trade within and outside a country by handling bills of exchange (documents that promise payment).

Banks ensure financial stability by efficiently managing their operations and managing the flow of funds.

Banks provide credit to businesses and individuals, enabling them to invest and grow, ultimately driving economic growth.

Banks connect surplus units (those with extra money) with deficient units (those needing money) in an economy, facilitating efficient resource allocation.

Banks contribute to the smooth functioning of stock exchanges by ensuring a stable flow of income for investors, promoting market capitalization.

Products owned by the bank and considered as assets on the balance sheet.

Products representing customer deposits and considered as liabilities on the balance sheet.

Financial products that appear only in a bank's footnotes and don't directly impact the balance sheet.

Products that mature quickly, typically within a year or less.

Products that mature in a longer period, typically more than a year.

Banking products designed for individual customers.

Banking products and services for business customers.

Accessing traditional banking services through online platforms.

A situation where a small number of large companies dominate a specific industry. This leads to limited competition and potential price manipulation.

The process of combining or integrating multiple companies into a single, larger entity. This can improve efficiency, market share, and financial stability.

An economic measure that reflects the amount of money available in an economy for lending and investment. It is an indicator of financial strength and potential growth.

The act of withdrawing a company's permit to operate. This can be due to financial instability, regulatory violations, or other issues that jeopardize the company's ability to operate safely and responsibly.

The ability of banks to provide loans and other financial services to individuals and businesses, driving economic growth and development.

A situation where a company is facing financial distress and may be unable to meet its obligations. This can lead to bankruptcy if not addressed promptly.

The process by which banks create new money through lending. This is a fundamental aspect of the modern banking system.

The core function of banks, accepting deposits from customers and providing various financial services, including loans, payments, and investments.

The ability of a bank to meet its short-term financial obligations when needed, such as paying out deposits or covering unexpected expenses.

The ability of a bank to generate profits from its operations.

The difference between the interest rate a bank charges on loans and the interest rate it pays on deposits.

The ratio of a bank's liquid assets (easily convertible to cash) to its total assets. Measures the bank's ability to meet short-term obligations.

The ratio of a bank's net income to its total assets. Measures the effectiveness of a bank's asset management.

The situation where a bank has both high liquidity and high profitability, allowing it to meet short-term obligations while generating strong returns.

The balance between liquidity and profitability depends on a bank's specific situation, risk tolerance, and strategic goals.

The portion of a bank's deposits that it must hold in reserve, either as cash in the vault or as deposits with the Central Bank. This is mandatory and helps control liquidity and inflation.

Assets that generate income for the bank, such as loans, overdrafts, and mortgages, but carry the risk of default.

Assets that are considered less risky and highly liquid, such as Treasury Bills, Interbank placements, and CBN certificates. They provide stable income but offer lower returns compared to Risk Assets.

Assets that support a bank's operations but don't generate income directly, such as fixed assets (buildings) and intangible assets (software).

Funds borrowed from discount houses or other financial institutions, offering quick liquidity but coming with a price tag.

Money collected by the bank on behalf of customers that hasn't been disbursed yet, such as collected taxes or drafts. This money is not earning interest.

The core source of funding for banks, coming in various forms such as current, savings, and fixed deposits. These funds are used to finance loans and other bank operations.

The cost banks incur to attract deposits, determined by the type of deposit and the interest rate offered. A higher interest rate on deposits means higher expenses for the bank.