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PROFESSIONAL BANKER CERTIFICATE
CHAPTER 1 QUESTIONS WITH DETAILED
VERIFIED ANSWERS
Bank Ans: Comes from Italian word banco meaning bench or table
Oldest bank Ans: Monte dei Paschi di Siena 1472
First sort of banking Ans: 18th century BC in ancient Mesopotamia
Commercial banking Ans: taking deposits and making loans
Taking deposits Ans: effectively borrowing money from the depositor
because it is based on the condition that the money can be returned on
demand
Retail banking Ans: Taking deposits from individuals through a range of
delivery channels
Business banking Ans: Taking deposits from small or medium sized
enterprises
Wholesale banking Ans: Borrowing from and lending to large corporate
clients, other financial institutions, public agencies, and governments
Investment banking Ans: Providing advice, managing corporate mergers
and acquisitions, buying and selling shares, managing customers
investments and share portfolios
Bank's creditors Ans: Customers who deposit money are the banks -----
--, because the bank is effectively borrowing their money
Bank's Debtors Ans: Customers to whom the bank lends money are the
bank's ------, because these customers owe them the money they have
borrowed
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intermediary Ans: the bank functions as a financial intermediary
between borrowers and savers
financial intermediary Ans: process of pooling funds from different
sources and using these to provide loans and make investments
Bancassurance Ans: The development of insurance and life assurance
provision by banks
Bancassurers Ans: Insurance companies that are subsidiaries of banks
and building societies and whose primary market is the customer base of
the bank
Commercial operation Ans: they are banks operated as companies to
generate profit for shareholders, they make money by dealing in money
How banks make money Ans: Lending money and charging interest,
charging fees for products and investing the money deposited by savers
Liquidity Ans: Ability of a debtor to pay their debts as they fall due
Notes and Coins Ans: physical cash held in tills, branch safes and cash
machines
Balances with the Bank of England Ans: There is a statutory requirement
for banks to hold non-operational, non-interest bearing deposits with the
bank of England
Loans and advances to banks Ans: Short term loans made from one
bank to another
Bills Ans: Promises to pay money on a stated date, they are negotiable
which means they can be bought and sold in the market
Investments Ans: Can consist of government stock (gilts) and shares in
other companies, as well as shareholdings in subsidiary companies of the
bank, such as the finance house
Advances Ans: Loans made by the bank to its customers, biggest asset
of a bank
PROFESSIONAL BANKER CERTIFICATE
CHAPTER 1 QUESTIONS WITH DETAILED
VERIFIED ANSWERS
Bank Ans: Comes from Italian word banco meaning bench or table
Oldest bank Ans: Monte dei Paschi di Siena 1472
First sort of banking Ans: 18th century BC in ancient Mesopotamia
Commercial banking Ans: taking deposits and making loans
Taking deposits Ans: effectively borrowing money from the depositor
because it is based on the condition that the money can be returned on
demand
Retail banking Ans: Taking deposits from individuals through a range of
delivery channels
Business banking Ans: Taking deposits from small or medium sized
enterprises
Wholesale banking Ans: Borrowing from and lending to large corporate
clients, other financial institutions, public agencies, and governments
Investment banking Ans: Providing advice, managing corporate mergers
and acquisitions, buying and selling shares, managing customers
investments and share portfolios
Bank's creditors Ans: Customers who deposit money are the banks -----
--, because the bank is effectively borrowing their money
Bank's Debtors Ans: Customers to whom the bank lends money are the
bank's ------, because these customers owe them the money they have
borrowed
, Page | 2
intermediary Ans: the bank functions as a financial intermediary
between borrowers and savers
financial intermediary Ans: process of pooling funds from different
sources and using these to provide loans and make investments
Bancassurance Ans: The development of insurance and life assurance
provision by banks
Bancassurers Ans: Insurance companies that are subsidiaries of banks
and building societies and whose primary market is the customer base of
the bank
Commercial operation Ans: they are banks operated as companies to
generate profit for shareholders, they make money by dealing in money
How banks make money Ans: Lending money and charging interest,
charging fees for products and investing the money deposited by savers
Liquidity Ans: Ability of a debtor to pay their debts as they fall due
Notes and Coins Ans: physical cash held in tills, branch safes and cash
machines
Balances with the Bank of England Ans: There is a statutory requirement
for banks to hold non-operational, non-interest bearing deposits with the
bank of England
Loans and advances to banks Ans: Short term loans made from one
bank to another
Bills Ans: Promises to pay money on a stated date, they are negotiable
which means they can be bought and sold in the market
Investments Ans: Can consist of government stock (gilts) and shares in
other companies, as well as shareholdings in subsidiary companies of the
bank, such as the finance house
Advances Ans: Loans made by the bank to its customers, biggest asset
of a bank
