Part 2 — Answer key

Compare your answers after you have finished Part 1.

1. On a U.S. check, what does the 9 digit routing number identify?
   The bank or credit union
2. APY reflects the effect of compounding on interest you earn.
   True
3. Which payment method is most associated with batch processing and payroll direct deposit in the U.S.?
   ACH transfer
4. A debit card purchase is the same thing as an ACH transfer.
   False
5. Your debit purchase posts and your balance goes negative, but the bank pays it anyway. What fee do people most often see in that situation?
   Overdraft fee
6. A bank wire is typically faster and harder to reverse than an ACH transfer.
   True
7. When you take out a consumer loan or credit card, which disclosure is meant to standardize borrowing costs like APR and finance charges?
   Truth in Lending disclosure
8. Deposits at a federally insured credit union are insured by which agency?
   NCUA
9. FDIC insurance covers stocks and mutual funds you buy through a bank.
   False
10. In an interest calculation, what does “principal” mean?
    The original amount borrowed or deposited
11. With simple interest, interest is calculated only on the original principal, not on previously earned interest.
    True
12. A bank can place a hold that delays when deposited check funds are available to spend.
    True
13. Debit cards and credit cards are primarily governed by the same federal rule for billing disputes, Regulation Z.
    False
14. Which is a classic example of an ACH payment?
    Payroll direct deposit
15. SWIFT is a messaging network commonly used for international wire transfers.
    True
16. You see “4.30% APY” on a savings account and “22% APR” on a credit card. Which one is designed to describe interest you earn on a deposit?
    APY
17. Two savings accounts both advertise a 4.25% interest rate, but one compounds daily and the other compounds monthly. All else equal, which tends to have the higher APY?
    Daily compounding
18. APR on a loan is always higher than the stated interest rate.
    False
19. You have two single owner savings accounts at the same FDIC insured bank, each with $200,000. How much of the $400,000 total is FDIC insured?
    $250,000
20. Taylor and Jordan have a joint checking account with $480,000 at one FDIC insured bank and no other joint accounts there. How much is FDIC insured?
    $480,000
21. Which group in the United States sets monetary policy targets like the federal funds rate?
    Federal Open Market Committee
22. Open market operations are carried out by commercial banks to change the money supply.
    False
23. You report an unauthorized debit card charge and want the bank to investigate under federal electronic transfer protections. Which regulation is most directly associated with this process?
    Regulation E
24. You need $150,000 to arrive for a home closing the same morning, and the title company will not accept “it will get there tomorrow.” Which payment rail is most typical?
    Wire transfer
25. ACH transfers are typically processed in batches rather than individually in real time.
    True
26. Your bank tells you a check deposit will not be fully available for a few days because of funds availability rules. Which rule is most closely associated with check funds availability in the U.S.?
    Regulation CC
27. A cashier’s check is guaranteed, so it can never be returned unpaid.
    False
28. In the U.S., a Currency Transaction Report (CTR) is generally triggered by cash transactions totaling more than which amount in a business day?
    $10,000
29. A bank is allowed to tell a customer that it filed a Suspicious Activity Report (SAR) about them.
    False
30. You have $250,000 in a single owner savings account at Bank A and $250,000 in a single owner savings account at Bank B, and both banks are FDIC insured. How much is FDIC insured in total?
    $500,000
31. Loan A charges 9.5% interest plus a $400 origination fee on a $10,000 loan. Loan B charges 9.8% interest with no fee. Which number is designed to capture the fee effect so you can compare the loans more fairly?
    APR
32. A company runs payroll for 200 employees at many different banks and wants a low cost, standardized bank account to bank account method. Which rail is most typical?
    ACH credit
33. Under Basel based capital rules, which ratio measures a bank’s core equity capital relative to risk weighted assets?
    CET1 ratio
34. A bank’s assets become much safer, but regulators still worry it is too big relative to its capital. Which metric is designed to ignore risk weights and focus on simple size versus capital?
    Leverage ratio
35. A European beneficiary asks you to include an identifier that combines country, bank, and account details in one standardized string. What are they asking for?
    IBAN
36. When is a credit card grace period on purchases usually available?
    After paying the statement balance in full
37. Which product usually has a variable rate and lets you borrow, repay, and borrow again using home equity as collateral?
    HELOC
38. All at the same FDIC insured bank, Alex has a single owner savings account with $240,000, a joint checking account with Sam holding $400,000 total, and a revocable trust account owned by Alex with two beneficiaries holding $600,000. Assuming standard FDIC rules, how much is insured?
    $1,140,000
39. A loan quotes 12% nominal interest compounded monthly, with no fees. About what is the effective annual rate?
    12.68%
40. In a typical card purchase, who ultimately funds the interchange fee that ends up going to the card issuer?
    Merchant
41. A bank replaces risky corporate loans with the same dollar amount of U.S. Treasuries. Which regulatory measure can stay roughly unchanged because it does not rely on risk weights?
    Leverage ratio