Banking Part 1

Cooperative banks

• are owned by the members, with maximum profits as not necessarily their main objective.

• are permanent mutual organisations, collecting small high-street savings and using the money to fund domestic mortgages.

• are entities which use post office to help those without a bank account to pay their bills.

• refer to the banks owned by the state that are not central banks but carry out some public sector activity.

Retail banks mainly make their money by taking deposits or providing a useful service for which banks can charge.

• True

• False

The current account:

• is the principal kind of account offered by the retail bank.

• is a retail bank’s fundamental way of establishing relationship with the customer.

• is the obligation to provide the range of payment services.

• all answers are correct.

Mutual funds are pools of shares run by investment managers and giving the shareholder a spread of risk.

• True

• False

Private banking:

• is a special subset of retail banking.

• is often referred to as ’wealth management’.

• primarily involves advising high-net-worth individuals on how to invest their wealth.

• all answers are correct.

We can divide commercial banking funding into uncommitted facilities and committed facilities.

• False

• True

‘…’ is typically up to 5 years, but may be up to 7. It is:

• term loan

• standby credit

• revolving credit

• overdraft

Revolving credit is the special case of term loan. It has longer duration than the conventional term loan with more complex structure.

• True

• False

The investment funds managers may run:

• pension funds.

• mutual funds.

• all answers are correct.

One way the investment bank can reduce its risk is by forming a syndicate.

• True

• False