Quizzes RMB
Week 1
1. With a reserve requirement of 30%, how much is the money
multiplier?
a. 30
b. 70%
c. 70
d. 30%
Money multiplier = 1/ reserve requirement = 1/ 30% = 3.33
2. Describe the three types of products typically offered by banks
Collecting deposits (liabilities), arranging payments (services to third
parties) & underwriting loans (assets)
3. Correspondent banks are a type of what bank?
a. Bank holding company
b. Private bank
c. Wholesale bank
d. Cooperative bank
4. A bank struggles to follow specific rules and engages in money
laundering occurring in the management board. What type of risk is
this?
a. Reputational risk
b. Compliance risk
c. Systematic risk
d. Business risk
5. Describe the difference between macroprudential and
microprudential supervision
Macroprudential = oversight of banking system as a whole
Microprudential = review every bank independently
6. The net income of banks is calculated as the difference between:
a. A bank’s interest income and a bank’s interest expense
b. A bank’s income and a bank’s expenses
c. None of the answers is correct
d. A bank’s assets and a bank’s liabilities
7. Long-term deposits are part of a bank’s:
a. Retained earnings
b. Paid-in capital
c. Assets
d. Liabilities
8. Describe the difference between the management and the
supervisory boards
, Management board = board of directors, oversight over managers
Supervisory board = sent by central bank, how well the bank does,
manages the management board
Week 2
1. Describe the different types of borrowers
Retail borrowers (individuals), corporate borrowers (companies),
public borrowers (local authorities & municipalities) & sovereign
borrowers (governments)
2. What are the commitment specifications a bank does not arrange
when it lends money?
a. Maturity terms
b. Facility fees
c. Cost of funds
d. Commitment fees
3. A bank would not lend money if the loan exceeds 75% to 80% the
client’s initial capital. What type of collateral is the bank using?
a. Property
b. Debenture
c. Cash
d. Loan-to-value
4. Choose the correct answer based on the statements below:
Statement 1: Large and financially strong companies usually issue
long-term, unsecured notes, called commercial papers
Statement 2: Asset-based lending is provided to both retail and
wholesale customers
Statement 3: To finance office building and factories, a firm needs to
take a residential mortgage
Statement 1 is false, statement 2 is true & statement 3 is false
5. Describe the steps of the credit process
1. Identify credit opportunity, 2. Evaluate prospective borrower
(risks), 3. Make credit decision, 4. Disburse credit, 5. Monitor
credit
6. If in 2023, a corporation defaults and it had initially borrowed 5
million euro from a bank and still owed 1.2 million plus 150.000 in
interest, what is its expected loss, given a probability of default of
1% and a recovery rate of 90%?
a. 1.315 million
b. 113.500
c. 1350
d. 1023 million
Week 1
1. With a reserve requirement of 30%, how much is the money
multiplier?
a. 30
b. 70%
c. 70
d. 30%
Money multiplier = 1/ reserve requirement = 1/ 30% = 3.33
2. Describe the three types of products typically offered by banks
Collecting deposits (liabilities), arranging payments (services to third
parties) & underwriting loans (assets)
3. Correspondent banks are a type of what bank?
a. Bank holding company
b. Private bank
c. Wholesale bank
d. Cooperative bank
4. A bank struggles to follow specific rules and engages in money
laundering occurring in the management board. What type of risk is
this?
a. Reputational risk
b. Compliance risk
c. Systematic risk
d. Business risk
5. Describe the difference between macroprudential and
microprudential supervision
Macroprudential = oversight of banking system as a whole
Microprudential = review every bank independently
6. The net income of banks is calculated as the difference between:
a. A bank’s interest income and a bank’s interest expense
b. A bank’s income and a bank’s expenses
c. None of the answers is correct
d. A bank’s assets and a bank’s liabilities
7. Long-term deposits are part of a bank’s:
a. Retained earnings
b. Paid-in capital
c. Assets
d. Liabilities
8. Describe the difference between the management and the
supervisory boards
, Management board = board of directors, oversight over managers
Supervisory board = sent by central bank, how well the bank does,
manages the management board
Week 2
1. Describe the different types of borrowers
Retail borrowers (individuals), corporate borrowers (companies),
public borrowers (local authorities & municipalities) & sovereign
borrowers (governments)
2. What are the commitment specifications a bank does not arrange
when it lends money?
a. Maturity terms
b. Facility fees
c. Cost of funds
d. Commitment fees
3. A bank would not lend money if the loan exceeds 75% to 80% the
client’s initial capital. What type of collateral is the bank using?
a. Property
b. Debenture
c. Cash
d. Loan-to-value
4. Choose the correct answer based on the statements below:
Statement 1: Large and financially strong companies usually issue
long-term, unsecured notes, called commercial papers
Statement 2: Asset-based lending is provided to both retail and
wholesale customers
Statement 3: To finance office building and factories, a firm needs to
take a residential mortgage
Statement 1 is false, statement 2 is true & statement 3 is false
5. Describe the steps of the credit process
1. Identify credit opportunity, 2. Evaluate prospective borrower
(risks), 3. Make credit decision, 4. Disburse credit, 5. Monitor
credit
6. If in 2023, a corporation defaults and it had initially borrowed 5
million euro from a bank and still owed 1.2 million plus 150.000 in
interest, what is its expected loss, given a probability of default of
1% and a recovery rate of 90%?
a. 1.315 million
b. 113.500
c. 1350
d. 1023 million
