FIN 420 EXAMINERS SET ANSWERS AND QUESTIONS
SET A+
✔✔In order to combat Fraud - ✔✔small-value payments, debit filters and blocks are
used
-these restrict the use of stolen routing transit number\account number info.
✔✔Wire Payments - ✔✔- Used by companies to facilitate major transactions that are
time sensitive (special care is required)
- Multistep process which is costly
✔✔RTGS Systems (Real-Time Gross Settlement) - ✔✔clearing and settlement of each
transaction during the processing day occur continuously
✔✔CHIPS (Clearing House Interbank Payments System) - ✔✔US based privately
(bank) owned wire transfer system (large $) that settles its transaction through the Fed.
✔✔CLS (Continuous Linked Settlement) - ✔✔multicurrency FX settlement service that
allows a simultaneous exchange of payments for both sides of the underlying financial
transactions
✔✔Credit Card - ✔✔•is issued against a line of credit that a bank, financial service
company, or merchant has extended.
• either open looped (accepted anywhere) or closed loop
✔✔Processor Fees - ✔✔fees charged to process the transaction on the merchant's
behalf. These fees are based on the expected transaction volume of a given merchant
and is the only negotiable merchant fee.
✔✔ Maintain Liquidity - ✔✔can you meet your financial obligations
✔✔Optimize Cash Resources - ✔✔Is excess cash available? If so, what policies are in
place to invest it. Or should debt be paid down?
, ✔✔Maintain Access to Short-Term Financing - ✔✔helps to finance investments in
working capital
✔✔Manage Investments - ✔✔preservation of principal is the primary investment
objective
✔✔Payment iteration - ✔✔occurs when a payment instruction is entered into the
payment system
✔✔Average collected bank balances are calculated by taking - ✔✔average ledger
amount minus average deposit loan
✔✔Merchant Acquirer - ✔✔The bank that provides the merchant with the credit card
terminals and maintains a deposit account through which the credit card payments
settle
✔✔Assessment Fees - ✔✔The fees that Visa and Mastercard charge merchants to
reimburse themselves for their services
✔✔What is the diligence that banks do when on-boarding new customers called? -
✔✔Know your Customer (KYC)
✔✔Counterparty Risk - ✔✔The risk of the other party faltering
✔✔Congress enacts legislation and - ✔✔the regulatory agencies develop regulations
based on that legislation.
✔✔At the federal level, bank supervision is shared by the - ✔✔OCC (Office of the
Comptroller of the Currency), the Board of Governors of the Federal Reserve System
and the FDIC (Federal Deposit Insurance Corp)
✔✔The Board of Governors of the Federal Reserve System oversees - ✔✔The Federal
Reserve Banks
✔✔FDIC - ✔✔- Independent agency of the federal government established to protect
depositors from losses due to bank insolvency
- Has direct authority of state-chartered banks that are not members of the Fed
- Can act as a trustee in the event of bank failures
- Administers DIF (Deposit Insurance Fund) which covers checking and savings
deposits up to 250K
✔✔FSOC (Financial Stability Oversight Council) - ✔✔- Charged with monitoring (and
preventing) systemic risk in the financial system and making recommendations to other
regulatory entities.
SET A+
✔✔In order to combat Fraud - ✔✔small-value payments, debit filters and blocks are
used
-these restrict the use of stolen routing transit number\account number info.
✔✔Wire Payments - ✔✔- Used by companies to facilitate major transactions that are
time sensitive (special care is required)
- Multistep process which is costly
✔✔RTGS Systems (Real-Time Gross Settlement) - ✔✔clearing and settlement of each
transaction during the processing day occur continuously
✔✔CHIPS (Clearing House Interbank Payments System) - ✔✔US based privately
(bank) owned wire transfer system (large $) that settles its transaction through the Fed.
✔✔CLS (Continuous Linked Settlement) - ✔✔multicurrency FX settlement service that
allows a simultaneous exchange of payments for both sides of the underlying financial
transactions
✔✔Credit Card - ✔✔•is issued against a line of credit that a bank, financial service
company, or merchant has extended.
• either open looped (accepted anywhere) or closed loop
✔✔Processor Fees - ✔✔fees charged to process the transaction on the merchant's
behalf. These fees are based on the expected transaction volume of a given merchant
and is the only negotiable merchant fee.
✔✔ Maintain Liquidity - ✔✔can you meet your financial obligations
✔✔Optimize Cash Resources - ✔✔Is excess cash available? If so, what policies are in
place to invest it. Or should debt be paid down?
, ✔✔Maintain Access to Short-Term Financing - ✔✔helps to finance investments in
working capital
✔✔Manage Investments - ✔✔preservation of principal is the primary investment
objective
✔✔Payment iteration - ✔✔occurs when a payment instruction is entered into the
payment system
✔✔Average collected bank balances are calculated by taking - ✔✔average ledger
amount minus average deposit loan
✔✔Merchant Acquirer - ✔✔The bank that provides the merchant with the credit card
terminals and maintains a deposit account through which the credit card payments
settle
✔✔Assessment Fees - ✔✔The fees that Visa and Mastercard charge merchants to
reimburse themselves for their services
✔✔What is the diligence that banks do when on-boarding new customers called? -
✔✔Know your Customer (KYC)
✔✔Counterparty Risk - ✔✔The risk of the other party faltering
✔✔Congress enacts legislation and - ✔✔the regulatory agencies develop regulations
based on that legislation.
✔✔At the federal level, bank supervision is shared by the - ✔✔OCC (Office of the
Comptroller of the Currency), the Board of Governors of the Federal Reserve System
and the FDIC (Federal Deposit Insurance Corp)
✔✔The Board of Governors of the Federal Reserve System oversees - ✔✔The Federal
Reserve Banks
✔✔FDIC - ✔✔- Independent agency of the federal government established to protect
depositors from losses due to bank insolvency
- Has direct authority of state-chartered banks that are not members of the Fed
- Can act as a trustee in the event of bank failures
- Administers DIF (Deposit Insurance Fund) which covers checking and savings
deposits up to 250K
✔✔FSOC (Financial Stability Oversight Council) - ✔✔- Charged with monitoring (and
preventing) systemic risk in the financial system and making recommendations to other
regulatory entities.
