CHAP 1&2

1. Which of the following is NOT a primary attribute of bank employees?

● A) Responsibility
● B) Service
● C) Trustworthiness
● D) Innovation

2. What is the main function of banks as financial intermediaries?

● A) Accept funds from customers who want to save

● B) Lend funds to customers who want to borrow
● C) Create money in the economy
● D) All of the above

3. Which organization is responsible for regulating banks in Vietnam?

● A) Federal Reserve
● B) State Bank of Vietnam
● C) International Monetary Fund (IMF)
● D) World Bank

4. Which type of bank account offers limited check-writing facilities and

requires a large minimum balance?

● A) Savings Deposit Account

● B) Transaction Deposit Account
● C) Money Market Deposit Account
● D) Certificate of Deposit

5. Which of the following is NOT a competitor to traditional banks?

● A) Credit Unions
● B) Insurance Companies
● C) Real Estate Firms
● D) Mutual Funds

6. In the context of banking, what does CAR stand for?

● A) Capital Adequacy Ratio

● B) Credit Assurance Rate
● C) Cash Allocation Reserve
● D) Customer Assurance Ratio
7. Which department in a bank is responsible for recruiting, training, and
supporting employees?

● A) Consumer Banking
● B) Human Resources
● C) Compliance
● D) Audit and Loan Review

8. What type of loan is typically used by businesses to support ongoing

operations until sufficient cash inflows are generated?

● A) Term Loan
● B) Working Capital Loan
● C) Bullet Loan
● D) Direct Lease Loan

9. What is a repurchase agreement?

● A) An agreement to buy back securities at a specified date and price

● B) A form of personal loan agreement
● C) A type of equity fund offered by banks
● D) A form of real estate mortgage

10. What type of risk measures the possibility that a bank will not be able
to meet its liabilities as they fall due?

● A) Market Risk
● B) Liquidity Risk
● C) Solvency Risk
● D) Credit Risk

11. Which of the following represents off-balance sheet activities in

banking?

● A) Loan commitments and standby letters of credit

● B) Cash reserves
● C) Customer deposits
● D) Bank-owned securities

12. What is the purpose of the discount rate set by the Federal Reserve?

● A) To regulate foreign exchange

● B) To control short-term borrowing by banks
● C) To set mortgage rates for consumers
● D) To monitor insurance funds

13. Which of these trends is expected to shape the future of banking?

 ● A) Increasing government regulation
● B) Growth of smaller, innovative branches
● C) Greater use of online and social media marketing
● D) All of the above
● Which of the following is considered a primary duty of bank employees in
customer interactions?
○ A) Minimize customer interactions to save time
○ B) Provide exceptional personal service and confidentiality
○ C) Focus only on bank policies without customer preferences
○ D) Limit the use of technology in customer interactions
● Why is trustworthiness critical for bank employees?
○ A) It ensures high sales targets.
○ B) It supports business ethics and compliance with the bank’s code of
conduct.
○ C) It enhances employee rewards.
○ D) It helps banks avoid regulations from financial authorities.
● Banks provide which of the following services to fulfill basic customer needs?
○ A) Securities depository and gold trading only
○ B) Cash management and insurance consultancy
○ C) General loan provisions only
○ D) Community support programs only

2. BANKS AS FINANCIAL INTERMEDIARIES

4. What is a primary role of banks in the money creation process within the
economy?
○ A) Increase taxes for federal programs
○ B) Limit credit access to prevent inflation
○ C) Accept deposits and lend funds
○ D) Regulate fiscal policies of the government
5. How does the Central Bank control banks through reserve requirements?
○ A) By allowing unlimited lending from deposits
○ B) By requiring banks to keep a percentage of deposits as reserves
○ C) By limiting the types of loans banks can issue
○ D) By setting a standard interest rate on all loans

3. COMPETITION AND COMPETITORS

6. Which financial institution primarily offers deposit and loan services to a

specific group with a common bond, like employees of the same company?
○ A) Commercial banks
○ B) Brokerage firms
○ C) Credit unions
○ D) Money service businesses
 7. In what way do brokerage firms differ from traditional banks?
○ A) They provide direct loans to customers.
○ B) They manage deposit accounts with high interest.
○ C) They facilitate buying and selling of stocks, bonds, and mutual funds.
○ D) They have no connection with customer financial investments.
8. What defines a finance company’s services compared to a bank’s services?
○ A) They offer interest-free loans.
○ B) They provide high-risk loans to consumers or businesses.
○ C) They are not regulated by any financial authorities.
○ D) They only lend to corporate entities.

4. BANK REGULATORS AND BANKING LAWS

9. Which banking law in Vietnam primarily governs lending transactions with

customers?
○ A) Banking Operations Law
○ B) Circular on Lending Transactions of Credit Institutions
○ C) Central Bank Regulations Act
○ D) Law on Domestic Transactions
10. What is the purpose of the Decree on Banking E-transactions in Vietnam?
● A) To regulate traditional banking operations only
● B) To standardize procedures for online banking transactions
● C) To provide detailed loan guidelines
● D) To monitor cash transactions at bank branches

5. THE FUTURE OF BANKING

11. Which factor is NOT expected to impact the future of banking?

● A) Technological innovations in customer service
● B) Increased government regulation
● C) Reduced competition from non-bank entities
● D) Expansion of banking services and product offerings
12. How will technological advances impact banking operations?
● A) By completely removing the need for physical branches
● B) By increasing automation in service delivery and operational tasks
● C) By reducing customer interaction options
● D) By limiting investment in digital platforms

6. BANK ORGANIZATIONAL STRUCTURE AND FUNCTIONS

13. Which bank department is responsible for monitoring compliance with legal
standards and banking regulations?
 ● A) Human Resources
● B) Compliance Department
● C) Marketing Department
● D) Wealth Management
14. What role does the Funds Management Department play in a bank?
● A) Ensuring adherence to banking laws
● B) Managing liquidity, income, and safety of bank funds
● C) Creating new loan products for corporate clients
● D) Overseeing international banking transactions
15. Which department focuses on delivering banking services to individual
consumers?
● A) Commercial Banking
● B) Consumer Banking
● C) Compliance
● D) Audit and Loan Review

7. TYPES OF DEPOSIT ACCOUNTS

16. A Negotiable Order of Withdrawal (NOW) account is characterized by:

● A) Allowing check-writing with no interest
● B) Offering both interest and check-writing features, with a minimum balance
requirement
● C) Being solely for business use without any interest
● D) Having high withdrawal fees to discourage frequent use
17. What type of account is most suitable for customers wanting to save funds for
a set period without withdrawing?
● A) Savings Account
● B) Checking Account
● C) Certificate of Deposit (CD)
● D) Money Market Deposit Account
18. Which account type offers higher liquidity than a Certificate of Deposit but
often requires a high minimum balance?
● A) Transaction Deposit
● B) Money Market Deposit Account
● C) Negotiable CD
● D) Automatic Transfer Service

8. LOANS AND BORROWED FUNDS

19. What distinguishes a bullet loan from other types of loans?

● A) Regular payments are made on both interest and principal.
● B) Only interest is paid periodically, with the principal repaid at the end.
● C) It is designed exclusively for consumer purchases.
● D) The loan requires no collateral.
 20. In which type of loan does a bank not legally commit to providing funds but
allows a borrower to access funds up to a limit?
● A) Term Loan
● B) Revolving Credit Loan
● C) Informal Line of Credit
● D) Direct Lease Loan
21. What is the federal funds rate?
● A) The interest rate for loans between consumers and banks
● B) The rate charged in the federal funds market for short-term borrowing among
banks
● C) The interest rate set by the Federal Reserve for all commercial loans
● D) The discount rate applied to customer savings accounts

9. BANK INCOME AND EXPENSES

22. What is the primary source of a bank’s income?

● A) Government funding
● B) Service fees and commissions
● C) Interest earned on loans and investments
● D) Revenue from real estate sales
23. Which of the following would be considered an operating expense for a bank?
● A) Interest on loans
● B) Deposit interest expense
● C) Customer service fees
● D) Investment income

10. BANK PERFORMANCE EVALUATION

24. What does a high capital adequacy ratio (CAR) indicate about a bank?
● A) It has a low level of loan assets.
● B) It has a strong capital base to absorb potential losses.
● C) It primarily relies on short-term borrowing.
● D) It operates with high leverage on deposits.
25. A low ratio of non-performing loans to total loans suggests:
● A) High levels of credit risk
● B) Strong credit quality and effective loan management
● C) Poor loan repayment rates
● D) High operational expenses in lending

1. BANK COMPETITORS

1. What differentiates credit unions from traditional banks?

○ A) They are for-profit institutions.
○ B) They only serve customers with high credit scores.
 ○ C) They are nonprofit associations serving members with a common bond.
○ D) They primarily offer investment accounts.
2. Which financial institution provides loans primarily to high-risk borrowers and
is funded by borrowing from the open market or other financial institutions?
○ A) Commercial banks
○ B) Insurance companies
○ C) Credit unions
○ D) Finance companies
3. Which type of competitor to banks only invests in short-term instruments,
such as certificates of deposit and Treasury bills?
○ A) Mutual funds
○ B) Money market funds
○ C) Brokerage firms
○ D) Mortgage companies

2. DEPOSIT ACCOUNT

4. What is a key characteristic of a transaction deposit account?

○ A) Allows check writing and is a source of funds for banks.
○ B) Provides high interest rates with limited withdrawals.
○ C) Only allows electronic transactions.
○ D) Requires a large minimum balance with high liquidity.
5. Which of the following best describes a savings deposit account?
○ A) Offers both check writing and high interest.
○ B) Limits check writing but attracts savers with small funds.
○ C) Provides interest on a daily basis with a large minimum balance.
○ D) Can only be accessed through ATMs.
6. Which deposit account type is most suitable for businesses needing frequent
transactions and a source of funds?
○ A) Certificate of Deposit
○ B) Transaction Deposit Account
○ C) Money Market Deposit Account
○ D) Savings Deposit Account

3. TIME DEPOSITS

7. What is the primary feature of a time deposit account?

○ A) High liquidity with daily access to funds
○ B) Funds are available at any time without penalties
○ C) Funds cannot be withdrawn until a specified maturity date
○ D) High interest rates with flexible withdrawal options
8. Which of the following describes a negotiable certificate of deposit (CD)?
○ A) It is offered only to small-scale savers with no minimum balance.
○ B) It has a fixed maturity, requires a large minimum balance, and is tradable.
 ○ C) It is used for checking purposes with daily withdrawals allowed.
○ D) It is a short-term loan with a fixed interest rate but no specified maturity.
9. Which type of time deposit allows businesses to invest with a minimum
deposit of $100,000 and a short-term maturity?
○ A) Personal Savings Account
○ B) Demand Deposit Account
○ C) Negotiable Certificate of Deposit
○ D) Callable CD

4. CERTIFICATE OF DEPOSIT

10. What is a common characteristic of a retail certificate of deposit (CD)?

● A) Requires a minimum deposit for a specified period and may have fixed or variable
rates.
● B) Offers a flexible maturity period that can be changed without penalties.
● C) Allows check writing and daily transactions.
● D) Can be withdrawn at any time without any penalties.
11. Which feature distinguishes a callable CD from other types of certificates of
deposit?
● A) It has a variable interest rate.
● B) It can be redeemed by the bank before maturity.
● C) It requires a high minimum balance.
● D) It allows unlimited withdrawals with no fees.
12. What is a secondary market for negotiable certificates of deposit (NCDs)?
● A) A market where NCDs can be sold and bought before maturity
● B) A loan system for business capital investments
● C) A private savings account with high interest
● D) A separate savings account with special benefits

5. MONEY MARKET DEPOSIT ACCOUNT

13. Which of the following best describes a Money Market Deposit Account
(MMDA)?
● A) Offers high liquidity and check writing but has no minimum balance requirement.
● B) Allows limited check writing with higher returns than traditional savings accounts.
● C) Provides a flexible maturity date and unlimited transactions.
● D) Requires no minimum balance and is used for long-term investments.
14. What feature differentiates MMDAs from regular savings accounts?
● A) MMDAs offer no interest on balances.
● B) MMDAs require a large minimum balance and provide limited check-writing
facilities.
● C) MMDAs are restricted to single individuals only.
● D) MMDAs offer higher interest rates but require a fixed maturity date.
 15. Why might customers choose a Money Market Deposit Account over a
Certificate of Deposit?
● A) MMDAs are more liquid and offer limited check-writing abilities.
● B) MMDAs have no minimum balance requirements.
● C) MMDAs guarantee higher interest than all CDs.
● D) MMDAs provide a longer commitment period for savers.

6. BORROWED FUNDS

16. Which type of short-term borrowing is often used by banks to meet immediate
liquidity needs?
● A) Repurchase Agreements
● B) Certificate of Deposit
● C) Federal Funds Purchased
● D) Eurodollar Loans
17. What does the federal funds rate represent?
● A) The interest rate for individual consumer loans
● B) The rate charged by the Federal Reserve for all deposits
● C) The rate at which banks borrow from each other in the federal funds market
● D) The discount rate for retail bank accounts
18. Federal funds purchased represent a liability to the borrowing bank because:
● A) They require no repayment
● B) They are backed by customer deposits
● C) They are short-term funds borrowed from other institutions
● D) They are offered at fixed interest rates without terms

7. BORROWING FROM THE FEDERAL RESERVE BANK

19. What is the primary purpose of the Federal Reserve’s discount window?
● A) To offer long-term loans to commercial banks
● B) To provide short-term loans to banks facing liquidity shortages
● C) To help individuals with personal loans
● D) To fund new banking branches
20. What is a discount rate in the context of Federal Reserve lending?
● A) The interest rate set by the market for all loans
● B) The rate banks earn on savings deposits
● C) The rate charged on loans made by the Federal Reserve through the discount
window
● D) The standard rate for mortgages provided by banks
21. Why might a bank choose to borrow from the Federal Reserve instead of the
federal funds market?
● A) To obtain longer-term funding options
● B) To access lower rates set by the Federal Reserve
● C) Because federal funds market loans are not backed by collateral
 ● D) Because the discount rate is more predictable than the federal funds rate

8. REPURCHASE AGREEMENT

22. In a repurchase agreement, what is the borrower agreeing to do?

● A) Sell securities without a buyback option
● B) Lend funds to a government agency
● C) Repurchase securities previously sold at a specified future date and price
● D) Invest in a foreign market
23. Which type of collateral is typically used in a repurchase agreement
transaction?
● A) Real estate properties
● B) Government securities
● C) Private company bonds
● D) Foreign currency reserves
24. Why might a bank use a repurchase agreement instead of a federal funds loan?
● A) Repurchase agreements are longer-term investments.
● B) Repurchase agreements are backed by collateral, making them less risky.
● C) Repurchase agreements require no specified repayment.
● D) Repurchase agreements are only available to individuals, not banks.

9. BANK CAPITAL

25. What does primary bank capital consist of?

● A) Short-term borrowings and repurchase agreements
● B) Government bonds and corporate loans
● C) Common and preferred stock and retained earnings
● D) Fixed assets and customer deposits
26. How does a high Capital Adequacy Ratio (CAR) benefit a bank?
● A) It minimizes the interest banks earn on loans.
● B) It helps banks absorb potential financial losses.
● C) It reduces a bank’s operational costs.
● D) It guarantees the bank’s profitability.
27. Which of the following best describes Tier 1 Capital in banking?
● A) Funds generated from long-term loans
● B) Primary capital, including common equity and disclosed reserves
● C) Capital derived from government bonds
● D) Secondary sources of capital like subordinated debt