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40 Cards in this Set

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  • Back

To be a well capitalized bank under the federal bank, a bank must have a __________ of at least 6%.

Tier One Ratio

On the bank balance sheet the assets include

Loans, investments, fed funds sold, and cash

As interest rates rise, bond prices rise

False (always an inverse relationship)

Banks make money by

Charging interest on loans and fees for services

Not a characteristic of the credit underwriting process

To entirely eliminate potential for loan losses

All commercial loans require a minimum of two identifiable sources of repayment

True (Usually need three)


Examples: income, cash flow, collateral, personal guarantee

Commercial credit process

Does not eliminate need for good bankers


Does not overcome good in/good out syndrome


All of the above

In regard to risk versus return, the bank takes low risk or low return venture capital is opposite-high risk high return

True

6 Cs of credit

1. Character


2. Capacity


3. Capital


4. Conditions


5. Common Sense


6. Collateral

When obtaining a commercial loan, a borrower should provide the bank with

Historical financial statements

Regarding checking accounts, you are limited in amount of withdrawals per month

False

Cashiers check funds are guaranteed by a bank

True - used when buying a car for cash etc

Advantages of having a debit card do not include

Buy now, pay later

Skim fishing and pretexting are all means of identity theft

True

Two common consumer loan types

Term Loan and Line of Credit

Two most important financial factors credit bureaus use in determining credit score

Payment history and amounts owed

Debt to income ratios are calculated by

Dividing the total amount of monthly payments by the total amount of gross monthly income

Banks use risk based pricing in determining the interest rate charged on a loan

Length of loan, collateral being pledged, and credit score

Two regulations banks are governed by are fair credit in lending and truth in lending

True

What is the recommended max loan to value for home equity loan?

80% (will lend up to 80% of equity)

Compound Interest

Earning interest on interest (option C)

Emergency Fund

3 months

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%)

Three Major Credit Bureaus

1. Experian


2. TransUnion


3. Equifax

Annual Free Credit Report Website

annualcreditreport.com

Long term loan for property and buildings on property is called

Mortgage Loan

Professionals typically involved in home buying process

All of the Above


(realtor, banker, attorney, etc)

Max conforming loan amount

$417,000

Basic Principle of Personal Finance

Spend less than you earn

During budgeting process you should assess cash flow by

knowing what you earn, knowing what you spend, track what you spend

Financial goals should follow smart model

Specific


Measurable


Action Oriented/Achievable


Realistic


Timely

Four Walls of Personal Finance

1. Housing


2. Food


3. Clothing


4. Transportation

Budget is estimation of income and expenses over specified period of time which is commonly referred to as

Road map

Role of life insurance includes

Paying off debt


Maintaining financial support for dependents


College Expenses for kids

Which of the following is not part of the road report?

Royalty income

Due to the stable nature of touring loans they are easy for artists to obtain

False - depends who it is

The money a tour manager starts out with on the road is called

Front Money

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)

Better to receive $250,000 today or penny that doubles in value everyday for a month?

Penny

With investing, the rule of 72 is a simplified way to determine

How long it takes to double investment