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Questions and Answers
What is the main issue in the brick and mortar distribution channel?
What is the main issue in the brick and mortar distribution channel?
Wholesale banking involves lending money on a long-term basis.
Wholesale banking involves lending money on a long-term basis.
False
What is the main characteristic of a committed facility in wholesale banking?
What is the main characteristic of a committed facility in wholesale banking?
It has a fixed term up to 7 years and carries a floating rate linked to the interbank market.
A ______________ credit allows drawing down in tranches without losing the availability of the undrawn part.
A ______________ credit allows drawing down in tranches without losing the availability of the undrawn part.
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What is the main concern in retail banking?
What is the main concern in retail banking?
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Revolving credit does not allow re-drawing repaid funds.
Revolving credit does not allow re-drawing repaid funds.
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Match the following types of facilities with their characteristics:
Match the following types of facilities with their characteristics:
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What is the term for a long-term project-related term loan?
What is the term for a long-term project-related term loan?
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What is the traditional banking business of commercial banking?
What is the traditional banking business of commercial banking?
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Merchant banks are only found in the UK.
Merchant banks are only found in the UK.
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What do investment banks help people to do?
What do investment banks help people to do?
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Commercial banking and investment banking are not fully separated activities due to possible overlaps in areas such as _______________.
Commercial banking and investment banking are not fully separated activities due to possible overlaps in areas such as _______________.
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Match the following terms with their descriptions:
Match the following terms with their descriptions:
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Bank failures are a result of concentrated business.
Bank failures are a result of concentrated business.
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What is the source of the graph showing concentrated business?
What is the source of the graph showing concentrated business?
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What is NOT a part of retail banking?
What is NOT a part of retail banking?
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What type of loan is secured on a property and typically has a lower interest rate than unsecured overdrafts or personal loans?
What type of loan is secured on a property and typically has a lower interest rate than unsecured overdrafts or personal loans?
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A personal loan's annual percentage rate takes into account only the nominal interest rate.
A personal loan's annual percentage rate takes into account only the nominal interest rate.
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What is the main difference between a fixed rate mortgage loan and a variable rate mortgage loan?
What is the main difference between a fixed rate mortgage loan and a variable rate mortgage loan?
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Mortgage loans can be transformed into _______________________ (MBS).
Mortgage loans can be transformed into _______________________ (MBS).
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What is one of the services offered by commercial banks?
What is one of the services offered by commercial banks?
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Commercial banks do not offer insurance products.
Commercial banks do not offer insurance products.
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Match the following banking services with their descriptions:
Match the following banking services with their descriptions:
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What is the main purpose of a bank's delivery channels?
What is the main purpose of a bank's delivery channels?
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What is the primary issue with the brick and mortar distribution channel?
What is the primary issue with the brick and mortar distribution channel?
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Wholesale banking involves lending money on a long-term basis.
Wholesale banking involves lending money on a long-term basis.
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What type of loan has a fixed term up to 7 years and carries a floating rate linked to the interbank market?
What type of loan has a fixed term up to 7 years and carries a floating rate linked to the interbank market?
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A ______________ facility allows drawing down in tranches without losing the availability of the undrawn part.
A ______________ facility allows drawing down in tranches without losing the availability of the undrawn part.
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What is the main concern in retail banking?
What is the main concern in retail banking?
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What type of facility has the possibility to re-draw repaid funds?
What type of facility has the possibility to re-draw repaid funds?
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Match the following types of facilities with their characteristics:
Match the following types of facilities with their characteristics:
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What is the term for a long-term project-related term loan?
What is the term for a long-term project-related term loan?
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What is a characteristic of personal loans?
What is a characteristic of personal loans?
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Mortgage loans can be transformed into asset-backed securities (ABS).
Mortgage loans can be transformed into asset-backed securities (ABS).
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What is the main purpose of a bank's delivery channels?
What is the main purpose of a bank's delivery channels?
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Commercial banks offer _______________________ as a service to customers.
Commercial banks offer _______________________ as a service to customers.
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What is a type of loan that is secured on a property?
What is a type of loan that is secured on a property?
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Commercial banks do not offer insurance products.
Commercial banks do not offer insurance products.
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Match the following services with their descriptions:
Match the following services with their descriptions:
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What is the annual percentage rate (APR) on a personal loan?
What is the annual percentage rate (APR) on a personal loan?
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What is the traditional banking business of commercial banking?
What is the traditional banking business of commercial banking?
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Merchant banks are only found in the UK.
Merchant banks are only found in the UK.
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What do investment banks help people to do?
What do investment banks help people to do?
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Commercial banking and investment banking are not fully separated activities due to possible overlaps in areas such as _______________.
Commercial banking and investment banking are not fully separated activities due to possible overlaps in areas such as _______________.
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Match the following services with their descriptions:
Match the following services with their descriptions:
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What is a result of concentrated business in commercial banking?
What is a result of concentrated business in commercial banking?
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What is the source of the graph showing concentrated business?
What is the source of the graph showing concentrated business?
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Commercial banks offer insurance products.
Commercial banks offer insurance products.
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Study Notes
Commercial Banking
- Commercial banking involves traditional banking business of accepting deposits and granting loans.
- Key retail banking issues include:
- Capital strength
- Liquidity
- Risk management
- Executive pay
- Competition
- Cost control
- Sale of non-banking products
- Use of IT
Wholesale Banking
- Uncommitted facilities include:
- Overdrafts for corporates
- Lines of credit
- Banker's acceptances
- Committed facilities include:
- Term loans with a fixed term up to 7 years and a floating rate linked to the interbank market
- Standby credit with the possibility to draw down in tranches without losing the availability of the undrawn part
- Revolving credit with the possibility to redraw
- Project Finance, a long-term project-related term loan
Terminology
- Commercial banking and investment banking are not fully separated activities and may overlap in areas such as:
- Interbank borrowing
- Discounting bills of exchange
- Forex
- Investment banking is not uniquely defined globally and may be referred to as merchant banking in the UK, which is involved in takeover and merger activities
Retail Banking
- Retail banking involves:
- Money banking (handling money, deposits)
- Loans
- Advice
- Loans include:
- Personal loans with a specific amount and period, set sum monthly repayments, and an annual percentage rate that takes into account the timing of repayments and costs
- Mortgage loans secured on property, with fixed or variable rates, and Loan to Value (LTV) ratios
Services
- Services offered by commercial banks include:
- Securities purchases (as a broker or agent)
- Securities custody (from unregistered bearer format to dematerialized securities)
- Mutual funds (own product range can be extended through open architecture)
- Insurance products (life insurance and property and casualty insurances)
- Advice
- Safe deposit boxes
- Foreign exchange (exchange and transfer services)
Delivery Channels
- Delivery channels refer to how banks interact with customers, including:
- Branch network
- Telephone banking
- Internet banking
- Mobile banking driven by data science and artificial intelligence
Commercial Banking
- Commercial banking involves traditional banking business of accepting deposits and granting loans.
- Key retail banking issues include:
- Capital strength
- Liquidity
- Risk management
- Executive pay
- Competition
- Cost control
- Sale of non-banking products
- Use of IT
Wholesale Banking
- Uncommitted facilities include:
- Overdrafts for corporates
- Lines of credit
- Banker's acceptances
- Committed facilities include:
- Term loans with a fixed term up to 7 years and a floating rate linked to the interbank market
- Standby credit with the possibility to draw down in tranches without losing the availability of the undrawn part
- Revolving credit with the possibility to redraw
- Project Finance, a long-term project-related term loan
Terminology
- Commercial banking and investment banking are not fully separated activities and may overlap in areas such as:
- Interbank borrowing
- Discounting bills of exchange
- Forex
- Investment banking is not uniquely defined globally and may be referred to as merchant banking in the UK, which is involved in takeover and merger activities
Retail Banking
- Retail banking involves:
- Money banking (handling money, deposits)
- Loans
- Advice
- Loans include:
- Personal loans with a specific amount and period, set sum monthly repayments, and an annual percentage rate that takes into account the timing of repayments and costs
- Mortgage loans secured on property, with fixed or variable rates, and Loan to Value (LTV) ratios
Services
- Services offered by commercial banks include:
- Securities purchases (as a broker or agent)
- Securities custody (from unregistered bearer format to dematerialized securities)
- Mutual funds (own product range can be extended through open architecture)
- Insurance products (life insurance and property and casualty insurances)
- Advice
- Safe deposit boxes
- Foreign exchange (exchange and transfer services)
Delivery Channels
- Delivery channels refer to how banks interact with customers, including:
- Branch network
- Telephone banking
- Internet banking
- Mobile banking driven by data science and artificial intelligence
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Description
This quiz covers key concepts in retail banking, including distribution channels, banking services, and risk management, as well as the introduction to financial markets.
