Part 2 — Answer key

Compare your answers after you have finished Part 1.

1. In basic banking trivia, what is the main purpose of a standard savings account at a retail bank?
   To hold money and earn interest over time
2. A standard checking account is primarily designed to earn high interest on long term savings.
   False
3. Alex uses a debit card to pay for groceries. For most bank accounts, where does the money for this transaction typically come from?
   The checking account linked to the debit card
4. In the United States, the FDIC insures eligible bank deposits up to a fixed limit per depositor, per insured bank.
   True
5. You want to log in to your online banking as safely as possible. Under normal circumstances, which option is the most secure way to enter your password?
   Only on your bank’s official secure website or mobile app
6. Using two factor authentication on your online banking login can significantly reduce the risk that someone with your password alone can access your account.
   True
7. Maria takes out a fixed-rate mortgage from her bank. A few years later, general market interest rates rise sharply. What happens to her monthly mortgage payment, assuming she does not refinance?
   It stays the same for the remaining term of the loan
8. A country’s central bank is worried about high inflation. Which action is it most likely to take first to help slow inflation through monetary policy?
   Increase its key policy interest rate
9. Arrange these typical steps in the correct order for sending a domestic bank wire transfer from a branch office.
   Correct order: Customer provides recipient and amount details to the bank → Bank verifies the customer’s identity and available funds → Bank sends payment instructions through the wire transfer network → Receiving bank credits the recipient’s account
10. Tyler uses his credit card for everyday purchases but always pays the full statement balance by the due date each month. Under normal credit card terms, how much interest will he usually pay on those purchases?
    No interest on those purchases because he pays in full each cycle
11. Using more than 90 percent of your total credit card limits over time usually improves your credit score because it shows lenders you are comfortable handling large debts.
    False
12. If your total deposits are within the insurance limit and held at an FDIC insured bank, those deposits remain protected even if the bank fails.
    True
13. Sam has a 30-year fixed-rate mortgage and considers refinancing into a 15-year mortgage at the same interest rate. Ignoring closing costs, what is the most accurate effect of switching to the 15-year loan?
    Lower total interest paid but higher monthly payment
14. An investor keeps part of their money in a traditional bank savings account and the rest in a checking account. Which statements describe common features of a savings account compared with a checking account? Select all that apply.
    It usually pays interest on the balance; It is generally intended for short to medium term savings goals; It usually limits the number of withdrawals per month
15. You receive an email saying your bank account is locked and you must click a link in the message to log in and verify your details. What is the safest first step to take?
    Ignore the link and contact the bank using its official phone number or app
16. Noah is comparing two banks for an international transfer. Bank A advertises no transfer fee but uses a poor exchange rate, while Bank B charges a fixed fee but offers a rate close to the market rate. For a large transfer, what should Noah primarily compare to decide which option is cheaper?
    The total amount the recipient will receive after all fees and exchange rate margins
17. A commercial bank funds many long term fixed-rate loans mainly with short term customer deposits that can be withdrawn on demand. Which type of risk is this funding structure most exposed to?
    Liquidity risk