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Banking Terms Quiz

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Questions and Answers

What is the purpose of a credit score?

To determine the processing fee for a loan

To determine the eligibility for a loan or credit card (correct)

To determine the amount of collateral required for a loan

To determine the interest rate on a loan

What is the purpose of collateral in a loan?

To reduce the risk for the lender in case of default (correct)

To increase the interest rate on the loan

To determine the fixed rate of the loan

To increase the processing fee for the loan

What is the difference between a fixed rate and a floating rate loan?

Fixed rate loans have a constant interest rate throughout the loan tenure, while floating rate loans have interest rates that change (correct)

Fixed rate loans require collateral, while floating rate loans do not

Floating rate loans have a higher interest rate than fixed rate loans

Fixed rate loans have a higher interest rate than floating rate loans

What is the purpose of a documentation fee?

To determine the credit worthiness of the customer Signup and view all the answers

What is the purpose of an MICR code?

To identify the bank and branch where the cheque was issued Signup and view all the answers

What is the primary purpose of the National Electronic Funds Transfer (NEFT) system?

To transfer funds between different banks or within the same bank Signup and view all the answers

Which of the following statements about the base rate is correct?

It is the minimum rate at which a bank can lend to its customers Signup and view all the answers

What is the primary purpose of a linked account?

To facilitate fund transfers between accounts within the same bank Signup and view all the answers

What is the purpose of a balance transfer in the context of credit cards?

To transfer the outstanding balance from one credit card to another Signup and view all the answers

What is the purpose of a credit history?

To record a customer's past behavior regarding loans Signup and view all the answers