SIE Exam Unit 1 (Knowledge of Capital Markets): Updated Solution: Questions & Answers

Why was the FDIC created (Ans- It was created in response to widespread bank failures and massive losses to bank customers. Federal Dept. insurance corporation How are the funds for this agency created? (FDIC) (Ans- Premiums are paid by all participating institutions In the event of the failure of a member financial institution, what does the FDIC do? (Ans- A customer deposits and loans of the failed institution are sold to another institution. This way they become new customers of that institution The FDIC provides deposit insurance up to how much? (Ans- up to $250,000 for each deposit ownership category in each insured bank What does the FDIC cover? (Ans- Covers traditional types of bank deposit accounts (checking, savings, money markets, CDs and self directed IRAs) What is not covered FDIC? (Ans- Investment products, mutual funds, life insurances, stocks, bonds, annuities Investor (Ans- Someone who provides money or resources for an enterprise such as a corporation Retail investor (Ans- an individual who makes investments such as the purchase of securities for their own personal accounts