Ontario
             An Association of Business Students

									Competency-Based
									Competitive Events
									   *Written Exam*

									Test Number 821

Financial Services
Management

INSTRUCTIONS:  

This is a timed, comprehensive exam for the occupational area identified above.  
Do not open this booklet until instructed to do so by the testing monitor.  

You will have 75 minutes to complete all questions.

	This comprehensive exam was developed by the MarkED Resource Center.  Items have been randomly selected from the MarkED Resource Center's Test-Item Bank and represent a variety of instructional areas.  Competencies for this exam are at the prerequisite, career-sustaining, and marketing specialist levels.  A descriptive test key, including question sources and answer rationale, has been provided the state DECA advisor.
	All test items are copyrighted and are the exclusive property of the MarkED Resource Center.  No item may be reproduced in any manner, with the following exception:  State DECA advisors or their designees are authorized to duplicate tests, as needed, for one-time use in state-sponsored competitive events prior to May 1, 2005.  Duplication after this date or for other purposes is expressly prohibited.

Copyright © 2005 by Marketing Education Resource Center®, Columbus, Ohio

 1. 	Which of the following is a factor that has affected the development and growth of the financial services industry:
		A.	Intense competition		C.	Improved planning
		B.	Increased regulation		D.	Internal management

 2.	Which of the following is an advantage to a financial services business of buying from only a few vendors:
		A.	Expanded variety		C.	Better vendor management
		B.	Increased publicity		D.	Good vendor relationships

 3.	Which of the following terms is used to describe the process of creating goods and services:
		A.	Marketing		C.	Resources
		B.	Consumption		D.	Production

 4.	When preparing a profit-and-loss statement, what does the business subtract from gross profit to determine net profit or loss?
		A.	Cost of goods sold		C.	Sales returns
		B.	Operating expenses		D.	Total purchases

 5.	What does electronic banking allow financial institutions to do quickly?
		A.	Transfer funds between accounts		C.	Prepare certificates of deposit
		B.	Process applications for traveler's checks	D.	Monitor regular savings accounts

 6.	What are the main components of a budget?
		A.	Profit and loss 		C.	Income and expense
		B.	Assets and liabilities 		D.	Cash flow and net worth

 7.	One reason why many financial institutions maintain automatic teller machines in convenient locations such as malls is to
		A.	set limits on daily cash withdrawals.		C.	protect customers from robbery situations.
		B.	sell a variety of negotiable instruments.		D.	make cash available during nonbanking hours.

 8.	A bank employee needs to send an e-mail message to a coworker that he received from his supervisor.  The most efficient way for the employee to communicate the information to his coworker is by
		A.	posting the message in a secured e-mail folder. 
		B.	sending the message by clicking on the reply box.
		C.	forwarding the message to the coworker's e-mail address. 
		D.	printing the message and handing the copy to the coworker.

 9.	Which one of the following speculative risks would most likely increase a credit union's income:
		A.	Hiring a security guard		C.	Introducing a new product
		B.	Implementing a safety program		D.	Buying liability insurance

10.	In which of the following situations is a mortgage company that spends $700 a year to insure office equipment paying too high a premium:
		A.	Alternative protection is unavailable.		C.	Insurance is part of a customized plan.
		B.	Equipment has a book value of $2,000.		D.	State requires $700 liability coverage.

11.	When analyzing currency to determine whether a bill is counterfeit or not, the easiest and quickest method is to look at the
		A.	serial numbers.		C.	printing date.
		B.	paper and the ink.		D.	portrait and oval background.

12.	A set of procedures or strategies for attracting your target customer to your savings and loan company that also helps to reduce risk is the __________ plan.
		A.	marketing 		C.	strategic
 		B.	advertising 		D.	long‑range 

13.	Which of the following laws pertains to overtime pay for bank employees:
		A.	Equal Pay Act 		C.	Tax Reform Act
		B.	Fair Labor Standards Act		D.	Equal Employment Opportunity Act

14.	One of the purposes of the Uniform Commercial Code is to regulate
		A.	credit transactions.		C.	economic policies.
		B.	business competition.		D.	product development.

15.	Why must a financial institution follow a deceased individual's will "to the letter" when administering his or her estate?
		A.	It is bound by law to do so.		C.	It will collect larger fees.
		B.	It doesn't want to upset the family.		D.	The estate will pay less in taxes.

16.	Stock brokerage employees often use simple written reports to provide managers with __________ information.
		A.	routine		C.	in‑depth
		B.	analytical		D.	extensive

17.	When giving directions to a subordinate for completing a job task, the key to being understood is to be as __________ as possible.
		A.	clear		C.	brief
		B.	wordy		D.	formal 

18.	Which of the following is confidential information that would be unethical for an employee to provide to others without permission from the financial services business:
		A.	Posting of available positions		C.	Well-publicized expansion plans
		B.	List of employees who will be promoted	D.	Dates of an upcoming special sale

19.	Which of the following is a type of agreement between a buyer and a seller that the Clayton Act makes illegal:
		A.	Tying contract		C.	Joint venture
		B.	Credit arrangement		D.	Territory assignment

20.	The term used to describe the paths financial goods and services travel as they move from producer to ultimate consumer is 
		A.	marketing.		C.	endless chain.
		B.	demographic segmentation.		D.	channels of distribution.  

21.	What do banks need in order to effectively distribute their financial products to customers?
		A.	Trained employees		C.	Reliable vendors
		B.	Promotional policies		D.	Deposit insurance

22.	Which of the following is an example of a measurable customer-service goal that many bank supply businesses set in order to facilitate the distribution process:
		A.	Prepare orders for shipment
		B.	Organize warehouse to handle orders
		C.	Fill orders within a specified amount of time
		D.	Develop a procedure for invoicing orders quickly

23.	When would it benefit a business to use a bonded warehouse over another type of warehouse?
		A.	To add needed security
		B.	To allow for larger volumes of storage
		C.	To store products that require federal tax
		D.	To move merchandise through the supply chain quickly

24.	What do financial services businesses usually develop to evaluate the effectiveness of their channel members?
		A.	Specific criteria		C.	Marketing plans
		B.	Operating policies		D.	Credit ratings

25.	Which of the following is not considered an economic activity:
		A.	Production		C.	Competition
		B.	Consumption		D.	Distribution 
26.	What is one of the main functions of the Federal Reserve System?
		A.	To regulate the money supply		C.	To advise local governments
		B.	To provide customers with checks		D.	To discipline bank employees

27.	National unions that are grouped together to improve the image of all unions is a(n)
		A.	local union. 		C.	open shop. 
 		B.	independent union. 		D.	federation. 

28.  Determine the amount of government spending that will be included in GDP based on the following 
       information:  $6.5 million in wages to military personnel, $4.8 million to buy equipment, $2.3 million in veterans' 
       benefits, and $1.7 million in welfare payments.
		A.	$10.5 million		C.	$13.6 million
		B.	$11.3 million		D.	$15.3 million

29.	Which of the following situations represents an absolute advantage for the United States:
		A.	Malaysia produces rubber at the same cost as the United States does.
		B.	Germany produces cars at $14,000, while the U.S. produces cars at $12,000.
		C.	Canada produces paper at $3.00 a ream, while the U.S. produces it at $3.25 a ream.
		D.	France produces bottled water at $.80 per gallon, while the U.S. produces bottled water at $.89 per gallon.

30.	More traditional banking institutions are becoming non-banks to gain a competitive edge and avoid federal regulations by dropping
		A.	time deposits or consumer loans.		C.	checking accounts and credit cards.
		B.	demand deposits or commercial loans.		D.	commercial loans and demand deposits.

31.	What is the discount rate if the credit-card transaction charge is 1.31%, the interchange rate is 1.62%, and the transmission cost is 1.73%?
		A.	2.93%		C.	4.66%
		B.	3.35%		D.	5.12%

32.	In accordance with federal rules and guidelines, what must a financial institution give to customers who are applying for a home equity loan?
		A.	List of local credit bureaus		C.	Simple application forms
		B.	Brochure explaining the risks		D.	Tips on planning for retirement

33.	Businesses applying for credit from financial institutions often must prove their ability to 
		A.	sell assets.		C.	take risks.
		B.	prepare budgets.		D.	earn profits.

34.	Determine whether the following statement is true or false:  Credit bureaus rate how good a credit risk a credit applicant will be. 
		A.	True, credit bureaus act in an advisory role.
		B.	   True, the Fair Credit Reporting Act established this system.
		C.	False, they rate how bad a credit risk the applicant will be. 
		D.	False, they collect credit information and report it to clients.  

35.	Before beginning to assess marketing-information needs, a financial services business first needs to accurately
		A.	define the problem.		C.	analyze the data.
		B.	sample the population.		D.	conduct the research.

36.	When a marketing-information system compares financial information from one time period with the financial data from another time period, it provides a picture of the business's 
		A.	sales forecasts.		C.	profits.
		B.	situation analysis.		D.	distribution.

37.	Which of the following is information about customers that banks often monitor in order to make pricing decisions:
		A.	Buying behavior		C.	Credit rating
		B.	Personal character		D.	Supplemental income

38.	Which of the following is a good source of information about a mortgage company's purchases:
		A.	Receiving log		C.	Sales record
		B.	Balance sheet		D.	Customer record

39.	One reason why bank chains conduct location feasibility studies before opening a new branch is to determine if the site 
		A.	is adjacent to a large distribution facility.
		B.	will be appealing to a wide variety of vendors.
		C.	is in an area that has architectural controls.  
		D.	will generate the appropriate amount of business.

40.  One of the reasons why financial services businesses analyze and interpret the marketing information 
        contained in databases is to prepare
		A.	reports.		C.	graphs.
		B.	surveys.		D.	orders.

41.	Based on the following frequency table in a savings and loan company's marketing report, determine how many of the company's 1,500 regular customers make deposits to their savings accounts four times a year:

# of Deposits

     6								
     5								
     4								
     3								
     2								
     1								

				                       0            5            10          15           20           25           30              35 					                                                     (Percent of Customers)

		A.	450		C.	500
		B.	475		D.	525

42.	What three cultural factors make international trade more challenging than doing business at home?
		A.	Complex trade laws, tariffs, quotas
		B.	Infrastructure, taxes, standard of living
		C.	Language barriers, social etiquette, gift giving
		D.	Exchange rate, unstable government, quality of labor force

43.	One of the main reasons for developing a marketing plan is to identify the strategies necessary to achieve the marketing
		A.	functions.		C.	mix.
		B.	objectives.		D.	share.

44.	An investment business that examines all aspects of its marketing effort with the intention of identifying problems and ways to improve its performance is conducting a 
		A.	random check.		C.	marketing audit.  
		B.	trend analysis.		D.	corporate study.

45.	What type of financial products do commercial banks often target to businesses?
		A.	Secured loans		C.	Treasury notes
		B.	Travelers' checks		D.	Passbook accounts

46.	What should you do to demonstrate a customer-service mindset in the following situation:  An irate bank customer yells at you because of a billing error.
		A.	Get as upset as the customer.		C.	Make sure the mistake is corrected.
		B.	Blame the billing department.		D.	Call the person's supervisor to complain about
								the customer's attitude.

47.	What type of conflict usually involves a person's emotions and feelings of self-worth?
		A.	Ego		C.	Real
		B.	Simple		D.	Group

48.	Which of the following is often an effective way of resolving disputes raised by bank customers:
		A.	Offer choices		C.	Blame others
		B.	Criticize products		D.	Provide excuses

49.  Which of the following would be considered an ethical dilemma in the personnel department of an investment 
        company:
		A.	Whether the business should donate $25,000 to an animal shelter or to an orphanage
		B.	Whether the business should hold its retirement party at a local restaurant or at a neighboring city's banquet hall
		C.	Whether the business should pay men and women different salaries if it is operating in a country where equal pay laws don't apply
		D.	Whether the company should provide business cards for all of its associates or make them purchase business cards with their own money

50.	Why is it important for credit union supervisors to plan and organize the work of their employees?
		A.	To follow procedures		C.	To meet business goals
		B.	To set minimum standards		D.	To establish schedules

51.	What do savings and loan companies often consider when identifying future hiring needs?
		A.	Recruitment process		C.	Interview length
		B.	Selection technique		D.	Estimated turnover

52.	Exit interviews can be conducted in each of the following ways except by
		A.	third-party.		C.	interview.
		B.	questionnaire.		D.	phone survey.

53.	One of the major objectives of employee orientation is to
		A.	determine training needs. 		C.	evaluate the hiring decision. 
 		B.	increase employee turnover.		D.	reduce anxiety for new employees. 

54.	Bank managers can help to increase productivity for the entire organization by
 		A.	closely monitoring employees' actions.		C.	placing their careers first. 
		B.	increasing the productivity of subordinates. 	D.	focusing on their own productivity.  

55.	If a two-year service contract costs $2,900 and can be renewed for the same price and a four-year service contract costs $4,150, how much will a bank save by purchasing the four-year contract rather than renewing the two-year contract? 
		A.	$1,250		C.	$1,650
		B.	$1,450		D.	$1,950

56.	Calculate the amount a small investment business can save in payroll expense for a four-week period by hiring four part-time employees who each work five hours a day, five days a week, for $8.50 an hour to replace two full-time employees who each earn $475 a week.
		A.	$375		C.	$550
		B.	$400		D.	$800

57.	The objectives that managers develop for a financial services business to attain are also intended to serve as operating 
		A.	standards.		C.	regulations.
		B.	guidelines.		D.	requirements.

58.	Successful bank managers and supervisors usually move up the career ladder as a result of beginning their employment as
		A.	interns.		C.	tellers.
		B.	volunteers.		D.	apprentices.

59.	Job applicants often list on their résumés the names, positions, and addresses of several people who are willing to serve as
		A.	references.		C.	associates.
		B.	companions.		D.	colleagues.

60.	Which of the following skills will most likely help a person to obtain a better job in the field of financial services marketing:
		A.	Ability to use technology		C.	Management skills
		B.	Good interpersonal skills		D.	Ability to negotiate

61.	The determination of an exchange figure acceptable to both the buyer and the seller of a financial good or service is called
		A.	pricing.		C.	place decision.
		B.	promotion.		D.	product decision.

62.	Price discrimination is legal in all of the following situations except when
		A.	buyers are not competitors.		C.	prices do not limit competition.
		B.	prices inhibit competition.		D.	price differs to meet competitors prices.

63.	A financial services business serving a market in which products are similar and price is a key purchasing consideration should use ___________ pricing.
		A.	demand‑based 		C.	cost‑based 
		B.	competition‑based		D.	profit‑based 

64.	An invoice dated June 5 states that the terms of sale are 4/10 net 30.  If the invoice amount is $800 and the purchaser pays the invoice on July 2, the final cost to the purchaser is
		A.	$720.		C.	$768.
		B.	$760.		D.	$800.

65.	A bank that offers a savings account to children for one price and the same type of savings account to senior citizens for a different price is using __________ pricing.
		A.	product-form		C.	time-of-day
		B.	location-oriented		D.	customer-segmented

66.	Which of the following is an important factor that financial institutions should consider when pricing their services:
		A.	Managers' bonus system		C.	Stockholders' investment
		B.	Employees' benefit package		D.	Customers' perceived value

67.	What process do investment businesses follow in order to direct and control all phases in the life of a financial good or service?
		A.	Growth marketing		C.	Concept testing 
 		B.	Idea positioning		D.	Product managing

68.	Which of the following is designed to protect consumers in any dealings they may have with collection agencies: 
		A.	Fair Credit Billing Act 		C.	Truth‑in‑Lending Act  
		B.	Fair Debt Collection Act 		D.	Fair Credit Reporting Act 

69.	An individual financial good, service, or idea that a credit union offers for sale is a product
		A.	line.		C.	mix.
		B.	item.		D.	market.

70.	All of the following are examples of popular financial services except
		A.	safe-deposit boxes.		C.	payroll and accounting services.
		B.	financial-planning services.		D.	business security and surveillance.

71.	One way that a retirement planner's product gains a competitive advantage over a competitor's similar product is by providing a
		A.	unique value.		C.	matching trait.
		B.	like benefit.		D.	standard image.

72.	Which of the following is a technique that banks can use to monitor their clients' satisfaction with the services provided:
		A.	Apologize for making mistakes		C.	Correct problems as quickly as possible
		B.	Promise to do whatever a client wants		D.	Develop relationships to encourage feedback

73.	Communication activities that are designed to inform consumers about financial goods and services to achieve a desired outcome is called
		A.	pricing. 		C.	marketing. 
 		B.	promotion. 		D.	distribution. 

74.	Which of the following is an example of a general business magazine:
		A.	Fortune		C.	Newsweek
		B.	American Banker		D.	TV Guide 

75.	Advances in technology make it possible for banks to produce direct-response advertising that is
		A.	competitive.		C.	guaranteed.
		B.	understandable.		D.	personalized.

76.	When testing a web site, it is important for a savings and loan company to
		A.	use low screen resolutions.		C.	be sure that all graphics are included.
		B.	have all the links installed.		D.	test from different browsers and operating
								systems.
77.	Where might a well-known investment company decide to place an ad to reach a large, nationwide audience? 
		A.	Weekend, late news show		C.	Late-fringe, weekday movie
		B.	Early morning weather report		D.	Prime-time network program

78.	Which of the following is a guideline for writing a news release:
		A.	Be objective in presenting facts			C.	Use several pages to tell the complete story
		B.	Close with a summary of the main points		D.	Allow the media to correct spelling and grammar

79.	A credit union's offer of a camera to each new customer is an example of a __________ premium. 
		A.	sales‑lead		C.	direct‑sales 
		B.	self‑liquidating		D.	point‑of‑purchase  

80.	Which of the following is an example of a socially responsible promotion:
		A.	Announcing upcoming sales		C.	Explaining business policies
		B.	Supporting worthwhile causes		D.	Describing recent renovations

81.	The overall objectives of an investment firm's promotional plan are to stimulate product demand and
		A.	expand the promotional mix.		C.	create a positive image.
		B.	reinforce channel members' attitudes.		D.	identify consumers' personal values.

82.	Financial services businesses often coordinate their promotional activities in order to attract customers and
		A.	increase sales.		C.	collect data.
		B.	survey opinions.		D.	conduct research.

83.	Methods for post-testing advertisements to evaluate their effectiveness often include which of the following:
		A.	Observation and handling objections		C.	Focus groups and recall testing
		B.	Cold canvassing and blind prospecting		D.	Test-marketing and random sampling

84.	Customers who arrange for a financial institution to administer their assets for the benefit of their children are establishing a(n)
		A.	estate.              B.   guardianship		C.	will.		D.	trust.

85.	Which of the following is an attitude that would help a stockbroker to build a clientele:
		A.	Sincerity           B.   Artfulness		C.	Superiority		D.	Self-centeredness

86.	A financial services business establishes rules for appropriate and acceptable salesperson behavior in selling situations.  The universal term for the rules is often referred to as the
		A.	code of ethics.  		C.	charter of selling behavior.
		B.	corporate bylaws.		D.	principles of moral conduct.

87.	For which of the following reasons do financial institutions make mortgage loans to customers:
		A.	To consolidate debt		C.	To buy furniture
		B.	To purchase property		D.	To secure credit

88.	Which of the following is one characteristic of savings bonds that makes them good investment options:
		A.	Low commission rate		C.	Mature very quickly
		B.	No penalty for early redemption		D.	Backed by the government

89.	What is one of the reasons why it is important for financial services salespeople to prepare for sales presentations?
		A.	Builds confidence		C.	Develops feedback
		B.	Promotes understanding		D.	Establishes contact

90.	An example of a greeting approach used to open the sale is
		A.	"May I help you, sir?" 		C.	"Good morning, Mrs. Jones." 
 		B.	"I'll be right with you."		D.	"That is a free checking account."

91.	To determine if a customer requires help in making buying decisions, the financial services salesperson should
		A.	use high‑pressure sales techniques. 		C.	question the customer. 
 		B.	wait for the customer to ask for assistance. 	D.	describe the product.

92.  What type of financial product might an investment company recommend to a business that is establishing a 
        retirement program for its employees?
		A.	Mutual funds		C.	Demand deposits
		B.	Certified checks		D.	Promissory notes

93.	Suggestion selling benefits the financial services business by
 		A.	reducing ill will.		C.	increasing profits.
		B.	reducing expenses.		D.	increasing commissions.

94.	Why do successful bank supply salespeople follow up after the sales presentation? 
		A.	To ensure customer satisfaction 		C.	To exercise good sales techniques
 		B.	To increase the size of the sale 		D.	To develop a professional sales presentation 

95.	Explaining how to use the check stubs or register, describing what happens with uncollected funds, and explaining bank-by-mail are all activities that a bank employee should do when
		A.	opening new accounts.		C.	training customers to ask questions.
		B.	closing long-term accounts.		D.	discouraging customers from banking
								elsewhere.

96.	One way to verify a customer's identification is to compare the customer's signature with the signature on a piece of official identification in order to be sure that the
		A.	identification signature is in ink.		C.	strokes in the signatures look the same.
		B.	letters are all absolutely identical.		D.	same pressure has been applied in both cases.

97.	What method of prospecting involves asking every prospect to whom you make a presentation to give you the names of others who might be interested in your financial products? 
		A.	Bird dogs		C.	Cold calls 
		B.	Endless chain		D.	Center of influence  

98.	Calculate the amount of interest a bank will pay a customer in three months on $1,500 deposited in a savings account that pays 5% interest compounded quarterly.
		A.	$15.50		C.	$18.75
		B.	$16.25		D.	$20.00

99.	What type of information do financial services businesses usually want salespeople to include in sales reports?
		A.	Amount of profit minus expenses		C.	Overall quotas for each territory
		B.	Time required to complete reports		D.	Customer transactions in dollar amounts

100.	One of the ways that sales training benefits an investment business is by
		A.	eroding the level of sales.		C.	reducing salesperson turnover.
		B.	increasing the need for supervision.		D.	making salespeople more dependent.