C Multiple choice questions

Write the following questions in your notebook.

1 Who sets the bank’s base rate?

a the building societies;

b the National Westminster Bank (foreign department);

c each individual commercial bank;

d the Chancellor of the Exchequer.

2 Who sets the interest rate that influences most financial institutions?

a the commercial banks;

b the lending institutions;

c the main finance houses;

d the merchant banks;

e the Bank of England.

3 How would a business organization normally raise capital for its everyday use?

a from money lenders;

b from the directors;

c from the commercial banks, as an overdraft;

d by raising a personal loan;

e by selling some of its raw materials.

4 Which of the following kinds of account does not pay interest?

a a Post Office savings account;

b a building society account;

c a commercial bank deposit account;

d a commercial banks current account;

e deposits made with financial institutions.

5 If you had a regular payment to make, for example a monthly mortgage payment, which would be the most convenient way of paying it?

a by sending cash to the building society;

b by sending postal orders to the building society;

c by banker’s standing order;

d by cheques to the building society;

e by calling in to the building society every month and making a payment.

6 Personal loans are made to customers of banks and repaid in the following way:

a by making fixed payments every month;

b by making payment which are convenient to the customer;

c by making payments which are convenient to the bank;

d by paying the interest first and the loan later;

e by making arrangements with the bank manager to ‘overdraw’.

7 Interest charged on an overdraft is charged in the following way:

a at the end of the month at a fixed rate;

b only on the amount owed to the bank at the end of each financial period;

c at an increasing monthly rate;

d after a three year period.

8 Which one of the following methods of saving does not quarantee the investor a return on his investment?

a National Savings Certificates;

b Premium Bonds;

c Trustee Savings Bank deposits;

d building society deposits.

9 Which of the following is a service supplied by most commercial banks?

a arranging hire purchase finance;

b issuing foreign currency and travelers’ cheques;

c arranging hotel accommodation for good customers;

d giving a good commission for regular investors;

e sending a regular statement of share prices to every customers.

10 If a commercial bank wanted to pay a sum of money to another commercial bank it would use a particular method. Which of the following would it use?

a a regular banker’s order;

b a banker’s statement;

c an uncrossed cheque;

d a Bank of England cheque;

e a bill of exchange.