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1. In the context of digital banking, which of the following best describes
the role of encryption in protecting client data during transactions?
 A) Encryption converts sensitive information into secure codes.
 B) Encryption monitors transaction patterns for fraudulent activity.
 C) Encryption allows for the physical security of banking servers.
 D) Encryption is not relevant to digital banking security.
 Answer: A
 Rationale: Encryption is crucial in digital banking as it converts
sensitive information into secure codes that can only be deciphered by
authorized parties, ensuring client data is protected during transactions.
2. When considering creditor rights in bankruptcy proceedings, which
statement is accurate?
 A) Secured creditors have priority over unsecured creditors in claiming
assets.
 B) Creditors have no say in the reorganization plan of a bankrupt
company.
 C) All creditors receive equal shares of a bankrupt company's remaining
assets.
 D) Bankruptcy laws favor debtor rights over those of creditors.
 Answer: A
 Rationale: In bankruptcy proceedings, secured creditors have legal
priority over unsecured creditors when it comes to claiming assets due to
their collateral backing.
3. Which of the following best exemplifies an agency issue within a
corporation?
 A) Employees demanding higher wages.
 B) Shareholders voting on corporate matters.
 C) Managers pursuing personal interests over shareholder interests.
 D) Government agencies regulating corporate activities.
 Answer: C
 Rationale: An agency issue arises when managers, who are agents to the
shareholders (principals), pursue personal interests that may conflict with
the best interests of the shareholders.
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