CERTIFIED BANKING PROFESSIONAL
(CBP) QUESTION AND CORRECT
ANSWERS (VERIFIED ANSWERS) PLUS
RATIONALES 2026 Q&A INSTANT
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1. Which function is a primary role of commercial banks?
A. Manufacturing goods
B. Providing insurance underwriting
C. Accepting deposits and extending credit
D. Regulating monetary policy
Rationale: Commercial banks primarily accept deposits from the public
and provide loans and other credit facilities.
2. The main objective of bank capital adequacy requirements is to:
A. Increase bank profitability
B. Encourage lending growth
C. Absorb losses and protect depositors
D. Reduce operational costs
Rationale: Capital adequacy ensures banks can absorb losses and
safeguard depositors and the financial system.
3. Which account is typically used for daily transactions?
A. Fixed deposit account
B. Savings account
C. Current (checking) account
D. Money market account
, Rationale: Current accounts are designed for frequent deposits and
withdrawals.
4. Liquidity risk refers to a bank’s inability to:
A. Earn profits
B. Meet regulatory requirements
C. Meet short-term financial obligations when due
D. Maintain capital ratios
Rationale: Liquidity risk arises when a bank cannot meet its immediate
cash needs.
5. The central bank primarily influences money supply through:
A. Fiscal policy
B. Taxation
C. Monetary policy tools
D. Trade policy
Rationale: Central banks control money supply using monetary policy
instruments.
6. Which of the following is a liability on a bank’s balance sheet?
A. Loans to customers
B. Cash reserves
C. Customer deposits
D. Investments in securities
Rationale: Deposits represent obligations owed to customers.
7. The prime rate is best described as:
A. The lowest possible lending rate
B. A benchmark interest rate for preferred customers
C. The rate set by the central bank
D. The inflation rate
Rationale: Prime rate is the rate banks charge their most creditworthy
customers.
, 8. What does KYC primarily aim to prevent?
A. Liquidity shortages
B. Interest rate risk
C. Money laundering and fraud
D. Credit expansion
Rationale: Know Your Customer procedures help prevent financial crimes.
9. A fixed deposit account is characterized by:
A. Unlimited withdrawals
B. Funds locked in for a specified period
C. No interest earnings
D. Daily transactions
Rationale: Fixed deposits require funds to remain for a set term.
10.Credit risk is the risk that:
A. Interest rates will fluctuate
B. A borrower will fail to repay a loan
C. The bank will run out of cash
D. Exchange rates will change
Rationale: Credit risk relates to borrower default.
11.Which ratio measures a bank’s ability to meet short-term obligations?
A. Capital adequacy ratio
B. Profit margin
C. Liquidity ratio
D. Return on equity
Rationale: Liquidity ratios assess short-term financial strength.
12.Basel III primarily focuses on:
A. Increasing bank profits
B. Strengthening bank capital and liquidity standards
C. Reducing competition
D. Eliminating credit risk
(CBP) QUESTION AND CORRECT
ANSWERS (VERIFIED ANSWERS) PLUS
RATIONALES 2026 Q&A INSTANT
DOWNLOAD PDF
1. Which function is a primary role of commercial banks?
A. Manufacturing goods
B. Providing insurance underwriting
C. Accepting deposits and extending credit
D. Regulating monetary policy
Rationale: Commercial banks primarily accept deposits from the public
and provide loans and other credit facilities.
2. The main objective of bank capital adequacy requirements is to:
A. Increase bank profitability
B. Encourage lending growth
C. Absorb losses and protect depositors
D. Reduce operational costs
Rationale: Capital adequacy ensures banks can absorb losses and
safeguard depositors and the financial system.
3. Which account is typically used for daily transactions?
A. Fixed deposit account
B. Savings account
C. Current (checking) account
D. Money market account
, Rationale: Current accounts are designed for frequent deposits and
withdrawals.
4. Liquidity risk refers to a bank’s inability to:
A. Earn profits
B. Meet regulatory requirements
C. Meet short-term financial obligations when due
D. Maintain capital ratios
Rationale: Liquidity risk arises when a bank cannot meet its immediate
cash needs.
5. The central bank primarily influences money supply through:
A. Fiscal policy
B. Taxation
C. Monetary policy tools
D. Trade policy
Rationale: Central banks control money supply using monetary policy
instruments.
6. Which of the following is a liability on a bank’s balance sheet?
A. Loans to customers
B. Cash reserves
C. Customer deposits
D. Investments in securities
Rationale: Deposits represent obligations owed to customers.
7. The prime rate is best described as:
A. The lowest possible lending rate
B. A benchmark interest rate for preferred customers
C. The rate set by the central bank
D. The inflation rate
Rationale: Prime rate is the rate banks charge their most creditworthy
customers.
, 8. What does KYC primarily aim to prevent?
A. Liquidity shortages
B. Interest rate risk
C. Money laundering and fraud
D. Credit expansion
Rationale: Know Your Customer procedures help prevent financial crimes.
9. A fixed deposit account is characterized by:
A. Unlimited withdrawals
B. Funds locked in for a specified period
C. No interest earnings
D. Daily transactions
Rationale: Fixed deposits require funds to remain for a set term.
10.Credit risk is the risk that:
A. Interest rates will fluctuate
B. A borrower will fail to repay a loan
C. The bank will run out of cash
D. Exchange rates will change
Rationale: Credit risk relates to borrower default.
11.Which ratio measures a bank’s ability to meet short-term obligations?
A. Capital adequacy ratio
B. Profit margin
C. Liquidity ratio
D. Return on equity
Rationale: Liquidity ratios assess short-term financial strength.
12.Basel III primarily focuses on:
A. Increasing bank profits
B. Strengthening bank capital and liquidity standards
C. Reducing competition
D. Eliminating credit risk
