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40 Cards in this Set
- Front
- Back
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To be a well capitalized bank under the federal bank, a bank must have a __________ of at least 6%. |
Tier One Ratio |
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On the bank balance sheet the assets include |
Loans, investments, fed funds sold, and cash |
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As interest rates rise, bond prices rise |
False (always an inverse relationship) |
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Banks make money by |
Charging interest on loans and fees for services |
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Not a characteristic of the credit underwriting process |
To entirely eliminate potential for loan losses |
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All commercial loans require a minimum of two identifiable sources of repayment |
True (Usually need three) Examples: income, cash flow, collateral, personal guarantee |
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Commercial credit process |
Does not eliminate need for good bankers Does not overcome good in/good out syndrome All of the above |
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In regard to risk versus return, the bank takes low risk or low return venture capital is opposite-high risk high return |
True |
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6 Cs of credit |
1. Character 2. Capacity 3. Capital 4. Conditions 5. Common Sense 6. Collateral |
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When obtaining a commercial loan, a borrower should provide the bank with |
Historical financial statements |
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Regarding checking accounts, you are limited in amount of withdrawals per month |
False |
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Cashiers check funds are guaranteed by a bank |
True - used when buying a car for cash etc |
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Advantages of having a debit card do not include |
Buy now, pay later |
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Skim fishing and pretexting are all means of identity theft |
True |
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Two common consumer loan types |
Term Loan and Line of Credit |
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Two most important financial factors credit bureaus use in determining credit score |
Payment history and amounts owed |
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Debt to income ratios are calculated by |
Dividing the total amount of monthly payments by the total amount of gross monthly income |
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Banks use risk based pricing in determining the interest rate charged on a loan |
Length of loan, collateral being pledged, and credit score |
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Two regulations banks are governed by are fair credit in lending and truth in lending |
True |
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What is the recommended max loan to value for home equity loan? |
80% (will lend up to 80% of equity) |
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Compound Interest |
Earning interest on interest (option C) |
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Emergency Fund |
3 months |
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Lenders can charge points as part of their cost to make a loan. One point equals 10% of mortgage loan amount and money is due up front. |
False (One point is 1%) |
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Three Major Credit Bureaus |
1. Experian 2. TransUnion 3. Equifax |
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Annual Free Credit Report Website |
annualcreditreport.com |
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Long term loan for property and buildings on property is called |
Mortgage Loan |
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Professionals typically involved in home buying process |
All of the Above (realtor, banker, attorney, etc) |
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Max conforming loan amount |
$417,000 |
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Basic Principle of Personal Finance |
Spend less than you earn |
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During budgeting process you should assess cash flow by |
knowing what you earn, knowing what you spend, track what you spend |
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Financial goals should follow smart model |
Specific Measurable Action Oriented/Achievable Realistic Timely |
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Four Walls of Personal Finance |
1. Housing 2. Food 3. Clothing 4. Transportation |
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Budget is estimation of income and expenses over specified period of time which is commonly referred to as |
Road map |
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Role of life insurance includes |
Paying off debt Maintaining financial support for dependents College Expenses for kids |
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Which of the following is not part of the road report? |
Royalty income |
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Due to the stable nature of touring loans they are easy for artists to obtain |
False - depends who it is |
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The money a tour manager starts out with on the road is called |
Front Money |
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One advantage of an IRA is that you can defer paying taxes on earning and grow savings |
True (recommended Roth IRA because you do not have to pay taxes on earnings) |
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Better to receive $250,000 today or penny that doubles in value everyday for a month? |
Penny |
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With investing, the rule of 72 is a simplified way to determine |
How long it takes to double investment |
