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The Ultimate How Banks Work Quiz
by Staff
How do banks work? Are they to be trusted? And where is your deposited money right now, anyway? Answer this quiz to find out all about how banks work.

What do banks do with the cash we deposit into our accounts?

  • They leave it in boxes labeled with our names.
  • They invest it in order to make themselves money.
  • They pass it on to government offices for safekeeping.

How are banks good for the economy?

  • They hold money instead of people keeping it stuffed under their mattresses.
  • They generate money by providing loans, and this causes a healthy economy .
  • They mint new money all the time.

Which body determines the amount that banks can lend?

  • the Senate
  • the U.S. Treasury
  • the Federal Reserve

If a bank has a reserve requirement of 10%, how much can it lend out on a $100 deposit?

  • 10
  • 90
  • 110

What does "a run on the bank" refer to?

  • when everyone wants their money back from the bank at the same time
  • when everyone runs to deposit their checks at the same time in the same bank
  • when bank shareholders converge on the bank in a fast sprint

If the bank is insured, then your money will be safeguarded. Who does it need to be insured by?

  • the Federal Deposit Insurance Corporation (FDIC)
  • Nationwide Mutual Insurance Company
  • American International Group (AIG)

Why were commercial banks initially set up?

  • to solve the problems of the private banking system
  • to provide an alternative banking system to the earlier kind of banks
  • to offer banking services for businesses

What market were savings banks intended to serve?

  • low-income workers
  • high-income earners
  • everybody, as long as they had some form of income

In what way are banks like any other business?

  • They hire salaried workers and pay taxes.
  • They're out to make money, like businesses, only the product they "sell" is money.
  • They have open hours like other businesses and are closed on weekends.

If a loan is deemed "risky," what does the bank do regarding the interest rate?

  • They charge a low one.
  • They charge a high one.
  • They waive the interest rate.

Banks have an arrangement with other banks whereby they charge each other for short-term loans. What is this called?

  • loans rate
  • interest rate
  • funds rate

Supposing you wanted to set up a private bank one day, you need partners. They form the:

  • organizing group
  • partner elite
  • chosen few

With regard to a bank, what is the purpose of the state or federal charter?

  • to govern the way that the bank operates
  • to set the interest and loan rates
  • to legalize the transactions within

In the U.S. state of Florida, what is the minimum number of directors you must have to set up a bank?

  • at least four
  • at least five
  • at least eight

How much stock does a bank holding company hold?

  • 0.15
  • 0.25
  • 0.35

In the state of New York, how much capital is required to start a bank in a metropolitan area?

  • $4 million or more
  • $6 million or more
  • $10 million or more

To start a bank, you apply to the Office of the Comptroller of the Currency. If your application is complete, how long does it take to receive a reply?

  • up to 60 days
  • up to 90 days
  • up to 180 days

To start your own bank, how important is the name?

  • Not very, as long as it's catchy.
  • Quite important. It has to differ from other banks' names and be approved.
  • Quite important. It has to come from a designated list of possible bank names.

Most depositors are usually protected by insurance for up to:

  • 50000
  • 100000
  • 500000

How old is the check system of payment?

  • It dates back at least as far as the 16th century.
  • It dates back to the 18th century.
  • It dates back to the 20th century.