Which of the following statements is true regarding the lessee's ability to purchase the leased property?

If the lessor allows the lessee to purchase the property at the end of the lease term, the purchase price must be disclosed in the initial disclosure statement.

The lessor must allow the lessee to purchase the leased property either during the lease term or at the end of the term.

If the lessor allows the lessee to purchase the property at the end of the lease term, the lessor may not charge more than the equivalent of 12 monthly payments for the property.

If the lessor allows the lessee to purchase the property at the end of the lease term, the purchase price must be disclosed in the initial disclosure statement.

The purchase price of the leased property must be mutually agreed on by the lessor and the lessee.

With regard to standards for wear and use of leased property, which of the following statements is true?

A lessor must provide a notice of wear and use standards on motor vehicle leases.

A lessor must adhere to the manufacturer's standards for wear and use of the leased property.

A lessor must develop and disclose its own standards for wear and use of leased property.

A lessor must provide a notice of wear and use standards on motor vehicle leases.

A lessor need not provide a notice of wear and use standards on motor vehicle leases if the lessor imposes an automatic, standardized charge.

In evaluating the coverage of a bank's Regulation U compliance for loans to purchase or carry margin stocks, which of the following securities is NOT covered in the regulatory definition of 'margin stock'?

A security issued by an investment company that is licensed under the Small Business Administration Act

A warrant or right to subscribe to, or purchase, a margin stock

An equity security registered, or having unlisted trading privileges, on a national exchange

For purposes of insider lending laws and regulations, what is the definition of the term executive officer?

Anyone who has the authority to participate in major policymaking functions at the bank NOTES

All bank officers at or above the level of executive vice president

Anyone who has the authority to participate in major policymaking functions at the bank NOTES

Anyone who has the authority to participate in lending decisions at the bank

All bank officers at or above the level of assistant vice president

When may a bank pay an overdraft of $5,000 created by an executive officer of the bank?

When the officer has previously signed an overdraft protection credit agreement in an amount sufficient to cover the overdraft.

When the officer is at the level of a vice president or lower.

When the officer has previously signed an overdraft protection credit agreement in an amount sufficient to cover the overdraft.

When the officer has enough funds in another account to cover the overdraft.

When the bank pays the overdrafts for other good customers in the ordinary course of business.

How may a bank limit the definition of executive officer?

By passing a board of directors resolution setting forth the bank's definition of an executive officer

By strictly defining, in writing, the duties and responsibilities of the officers to be excluded from the definition

By passing a board of directors resolution setting forth the bank's definition of an executive officer

By requiring that those officers to be excluded from the definition not attend loan committee meetings or loan review meetings

By limiting the amount of confidential information given to those officers to be excluded from the definition

First National Bank has an employee benefit program whereby all bank employees who meet the bank's credit underwriting standards may obtain consumer loans for major purchases or expenses at a rate that is less than the bank's prime rate. Can the bank allow its executive officers to borrow under this program?

Yes. Provided the program is available to everyone at the bank as an employee benefit, executive officers may also participate.

No. Executive officers may not have preferential interest rates under any circumstances.

No. However, the related interests of the executive officers may take advantage of it.

Yes. However, executive officers must secure their loans with collateral valued at 100 percent of the loan balance or more.

Yes. Provided the program is available to everyone at the bank as an employee benefit, executive officers may also participate.

Which of the following is true regarding extensions of credit to executive officers, directors, and principal shareholders?

Must be approved in advance by the board of directors if the aggregate credit is more than the greater of either $25,000 or 5 percent of the bank's capital and surplus, not exceeding $500,000

Must be approved in advance by the board of directors if the credit is greater than $50,000 or 5 percent of the bank's capital and surplus

May not exceed $100,000 in the aggregate, regardless of approvals

May not exceed $250,000 in the aggregate, regardless of approvals

First National Bank would like to adopt a recordkeeping system that complies with the requirements of Regulation O. Which of the following best describes the recordkeeping system required by Regulation O?

A system that surveys insiders of First National annually and requires each insider to disclose his or her related interests

A system in which the bank annually surveys all executive officers of First National and its affiliates to determine the insiders' related interests

A system in which the bank asks all borrowers as loans are made whether the borrower is a related interest of an insider

A system that surveys insiders of First National annually and requires each insider to disclose his or her related interests

A system that requires an annual survey of affiliate insiders

Which of the following does an extension of credit NOT include?

An advance against accrued salary

An advance by means of an overdraft or cash item

The making or renewal of any loan or granting of a line of credit

An advance against accrued salary

An acquisition of a note on which an insider is a maker, drawer, or guarantor

Which of the following transactions is subject to the provisions of Regulation O?

Extension of credit to a member of the bank's board of directors

Time deposit account held by a director

Travel advance to an executive officer outstanding for less than 30 days

Extension of credit to a director of an unaffiliated, competing, noncorrespondent bank

Extension of credit to a member of the bank's board of directors

In a review of a bank's compliance with the Regulation O overdraft provisions, what should the compliance officer do?

Examine the bank's overdraft reports for a selected time period

Identify the related interests of all directors, executive officers, and principal shareholders

Examine the bank's overdraft reports for a selected time period

Examine the annual FFIEC-004 reports on indebtedness to correspondent banks

Examine the bank's latest report of condition and income

Safe National Bank has a variety of consumer lending products. Among them are debt cancellation contracts that allow for the cancellation of a consumer's debt if certain events happen. The bank solicits sales for these contracts when the consumer makes an in-person loan application. What does Safe National have to do at the time of the application and solicitation?

Give the customer the short-form disclosures orally.

Nothing. Disclosures are required only when the contract is made.

Give the customer the short-form disclosures orally.

Give the customer the short-form disclosures in writing.

Give the customer the long-form disclosures.

ACME National Bank has a Web site that lists the bank's products and services. On its consumer loan page it lists debt cancellation contracts as an available product. What other disclosure must the bank place on this Web page?

None. Because it only lists the product, nothing else is required.

The short-form disclosures must be on the page.

The short-form disclosures must be available by a conspicuous link on the page.

The long-form disclosures must be on the page.

ACME National bank uses telephone solicitations to sell its debt cancellation contracts. The banker explains to the borrower the nature of the contract, gives an oral short form disclosure, receives the customer's affirmative election orally, and sends the written long form disclosures and written affirmative election within three business days. Is the bank in compliance with the telephone solicitation rules as they apply to affirmative elections?

No, the bank also must give the customer 30 days to cancel the contract.

Yes, the bank has fulfilled all of its requirements.

No, oral affirmative elections are not acceptable.

No, the bank also must give the customer 30 days to cancel the contract.

No, telephone solicitations are not allowed for debt cancellation contracts.

Which of the following actions is NOT an adverse action?

Refusal to grant credit on the grounds that the lender does not offer the type of credit requested

Refusal to grant credit on substantially the same terms and conditions as requested by the applicant

Refusal to grant credit on the grounds that the lender does not offer the type of credit requested

Refusal to increase the amount of credit on an existing account after a request

Which of the following statements regarding applications is correct?

Creditors may accept oral applications.

Applications must be signed to be valid.

Creditors may accept oral applications.

Creditors may not develop their own definition for a completed application.

A creditor is not required to attempt to complete incomplete applications.

Which of the following is/are included in the persons covered under Fedwire transfer coverage?

Reserve Banks sending or receiving payment orders

Senders of payments to a Reserve Bank

Banks receiving payments from a Reserve Bank

Reserve Banks sending or receiving payment orders

Senders of payments to a Reserve Bank

Banks receiving payments from a Reserve Bank

In Sender's agreement-12 CFR 210.28 it is clearly mentioned that:

Senders have the right to create overdrafts in their accounts at the Reserve Bank; any overdraft is due and payable, without demand, at the end of the funds transfer day, when the Reserve Bank deems itself to be insecure, or at the time the sender suspends payments or is closed, whichever is earlier

Sender gives the Reserve Bank a security interest in all of sender's assets that are in the possession of the Reserve Bank to secure any obligations to the Reserve Bank, including an overdraft

Reserve Banks have the right to debit payment amounts from accounts of senders with the Reserve Bank

Senders have the right to create overdrafts in their accounts at the Reserve Bank; any overdraft is due and payable, without demand, at the end of the funds transfer day, when the Reserve Bank deems itself to be insecure, or at the time the sender suspends payments or is closed, whichever is earlier

Sender gives the Reserve Bank a security interest in all of sender's assets that are in the possession of the Reserve Bank to secure any obligations to the Reserve Bank, including an overdraft

Senders have 25 calendar days after receiving notice of a payment order to notify a Reserve Bank of an erroneously executed or unauthorized payment order

In Receiver's agreement-12 CFR 210.28 it is clearly mentioned that:

Receiving bank authorizes the Reserve Bank to credit the receiving bank's account

An off-line bank warrants to the Reserve Bank that it does not act as an intermediary bank or a beneficiary's bank for payment orders received for a beneficiary that is a bank, unless the off-line bank notifies the Reserve Bank in writing

Receiving bank authorizes the Reserve Bank to credit the receiving bank's account

An off-line bank warrants to the Reserve Bank that it does not act as an intermediary bank or a beneficiary's bank for payment orders received for a beneficiary that is a bank, unless the off-line bank notifies the Reserve Bank in writing

A Reserve Bank has rights of a creditor to recover an overdraft, including the right of set off

Reserve Banks, when acting as beneficiary's bank, payment order that identifies the beneficiary

Payment to a beneficiary is made at the earlier of the time when:

The payment order is credited to the beneficiary's account or when notice of the credit is sent to the beneficiary

The amount is credited to the receiving bank's account at the Reserve Bank or when the payment order is sent to the receiving bank

The amount is debited to the receiving bank's account at the Reserve Bank or when the payment order is sent to the receiving bank

The payment order is debited to the beneficiary's account or when notice of the credit is sent to the beneficiary

Which of the following primary purpose/s were behind the Electronic Fund Transfer Act (EFTA)?

To provide disclosures to consumers who use electronic fund transfer (EFT) systems

To provide consumers with limitations on liability for unauthorized electronic fund transfers

Implemented by_______________, EFTA is intended to provide certain rights to individual consumers using EFT payment systems. It also places responsibilities on financial institutions whose accounts are affected by EFTs.

Regulation E (Electronic Fund Transfers)

Regulation F (Electronic Fund Transfers)

Regulation T (Electronic Fund Transfers)

Regulation A (Electronic Fund Transfers)

EFT provides consumers with limitations on liability for unauthorized electronic fund transfers. It includes the following types of funds transfers EXCEPT:

Automated teller machine (ATM) transfers

Withdrawals of funds, including merchant transactions where no electronic terminal is involved, if the customer's account is debited

Initial disclosure under Electronic funds transfer act includes:

A summary of the consumer's liability for unauthorized transfers

The type of EFT the consumer may make and any limitations on EFTs

A summary of institution's liability to consumer for failure to make or stop transactions

A summary of the consumer's liability for unauthorized transfers

Telephone number and address of person or office to be notified in case of any authorized transfer

The type of EFT the consumer may make and any limitations on EFTs

A summary of institution's liability to consumer for failure to make or stop transactions

Under Unauthorized transfers-12 CFR 205.6 prerequisites for consumer liability are all of the following EXCEPT:

Increased liability for the consumer

If an access device was used, it must have been an accepted access device

Institution must have provided a means of identifying the consumer to whom the device was issued (for example, by electronic means (PIN), photograph, or fingerprint)

Increased liability for the consumer

Institution must have provided the following in writing to the consumer * A summary of consumer's liability for unauthorized transfers * Telephone number and address of person or office to be notified * in case of unauthorized transfer * Institution's business days

Which of the following is/are NOT limitations on liability in EFT?

$150 liability limit if consumer notifies the institution within two business days of discovery of loss or theft of access device, not including the day the consumer learns of the loss or theft

Extenuating circumstances (such as hospital confinements, travel, and so forth) may extend the liability time periods

$150 liability limit if consumer notifies the institution within two business days of discovery of loss or theft of access device, not including the day the consumer learns of the loss or theft

If state law has more generous limitations of liability for the consumer, the state laws will govern

Full liability (up to the amount of the unauthorized transfer) may be imposed if the consumer does not notify the institution within 30 days of the institution's transmission of the statement on which the first unauthorized transfer appears (to raise the liability limit, the institution must first establish that the unauthorized transfers would not have occurred if the consumer had notified the institution within the 30 days). The unlimited liability applies only to the transactions that occur after the 30-day time period

Extenuating circumstances (such as hospital confinements, travel, and so forth) may extend the liability time periods

An error in EFT includes any of the following:

The omission from a periodic statement of an EFT that should have been included

A consumer's request for documentation required to be given on receipts or statements or for clarification of information (does not include routine inquiries about account balances)

There is no error in an error in EFT when there is situation as:

The reversal of a direct deposit made in error is not considered an unauthorized EFT if the deposit was made to the wrong customer's account, a duplicate was made to the customer's account, or a credit was made in the wrong amount

A request for duplicate copies of statements

The reversal of a direct deposit made in error is not considered an unauthorized EFT if the deposit was made to the wrong customer's account, a duplicate was made to the customer's account, or a credit was made in the wrong amount

A request for duplicate copies of statements

The failure to receive a receipt from an electronic terminal when the transaction amount is $25 or more

A returning request for information for tax or recordkeeping purposes

During a EFT, if the institution determines that no error has occurred or that an error occurred in a manner or amount different than the alleged error, it:

Must notify the consumer in writing of the date and amount of the debit to account and the fact that the institution will continue to honor checks and preauthorized transfers payable to third parties for seven business days

Must promptly provide on request copies of documentation on which institution relied on to determined that no error occurred

Must pay only items that the institution would have paid if the provisionally credited funds had not been debited

Must notify the consumer in writing of the date and amount of the debit to account and the fact that the institution will continue to honor checks and preauthorized transfers payable to third parties for seven business days