Question 1

Which of the following statements is true?

Accepted Answer

A)  Long-tail loss refers to a series of claims made after an initial claim has been made. 
B)  Long-tail loss refers to a claim that is made some time after a policy was written. 
C)  Short-tail loss refers to a series of claims made after an initial claim has been made. 
D)  Short-tail loss refers to a claim that is made some time after a policy was written. 
A)  Long-tail loss refers to a series of claims made after an initial claim has been made. 
B)  Long-tail loss refers to a claim that is made some time after a policy was written. 
C)  Short-tail loss refers to a series of claims made after an initial claim has been made. 
D)  Short-tail loss refers to a claim that is made some time after a policy was written.

Question 2

Which of the following statements is true?

Accepted Answer

A)  Life insurance allows individuals and their beneficiaries to protect against loss in income through premature death. 
B)  Life insurance allows individuals and their beneficiaries to protect against loss in income through premature retirement. 
C)  Life insurance allows individuals and their beneficiaries to protect against loss in income through unforeseen accidents. 
D)  Life insurance allows individuals and their beneficiaries to protect against loss in income through premature death and life insurance allows individuals and their beneficiaries to protect against loss in income through premature retirement. 
A)  Life insurance allows individuals and their beneficiaries to protect against loss in income through premature death. 
B)  Life insurance allows individuals and their beneficiaries to protect against loss in income through premature retirement. 
C)  Life insurance allows individuals and their beneficiaries to protect against loss in income through unforeseen accidents. 
D)  Life insurance allows individuals and their beneficiaries to protect against loss in income through premature death and life insurance allows individuals and their beneficiaries to protect against loss in income through premature retirement.

Question 3

Which of the following statements is true?

Accepted Answer

A)  Policy reserves are a liability item for insurers that reflects their worst-case payment commitments on existing policy contracts. 
B)  Policy reserves are an asset item for insurers that reflects their best-case payment inflows on existing policy contracts. 
C)  Policy reserves are an asset item for insurers that reflects their expected payment inflows on existing policy contracts. 
D)  Policy reserves are a liability item for insurers that reflects their expected payment commitments on existing policy contracts. 
A)  Policy reserves are a liability item for insurers that reflects their worst-case payment commitments on existing policy contracts. 
B)  Policy reserves are an asset item for insurers that reflects their best-case payment inflows on existing policy contracts. 
C)  Policy reserves are an asset item for insurers that reflects their expected payment inflows on existing policy contracts. 
D)  Policy reserves are a liability item for insurers that reflects their expected payment commitments on existing policy contracts.

Question 4

Variable universal life insurance policies:

Accepted Answer

A)  have fixed premiums and a fixed benefit payout. 
B)  have fixed premiums, but allow the benefit payout to vary with investment returns. 
C)  have a fixed benefit payout, but allow the premium to vary with investment returns. 
D)  allow both the premium and benefit payout to vary with investment returns. 
A)  have fixed premiums and a fixed benefit payout. 
B)  have fixed premiums, but allow the benefit payout to vary with investment returns. 
C)  have a fixed benefit payout, but allow the premium to vary with investment returns. 
D)  allow both the premium and benefit payout to vary with investment returns.

Question 5

Adverse selection is a situation where customers who most need insurance are more likely to apply for insurance.

Accepted Answer

A) True 
 B)False

Question 6

To support risk assessment in insurance firms APRA introduced PAIRS. PAIRS stands for:

Accepted Answer

A)  Policy and Insurance Ratification System. 
B)  Policy and Insurance Rating System. 
C)  Probability and Impact Ratification System. 
D)  Probability and Impact Rating System. 
A)  Policy and Insurance Ratification System. 
B)  Policy and Insurance Rating System. 
C)  Probability and Impact Ratification System. 
D)  Probability and Impact Rating System.

Question 7

What were the major incentives provided by the government to increase savings contributions to superannuation funds? Why is the superannuation Industry an important and vibrant part of the Australian financial sector?

Accepted Answer

Over the past 20 years, Australian gover

Question 8

Which of the following statements is true?

Accepted Answer

A)  Net asset value refers to the book value of assets in a managed fund portfolio divided by the number of shares outstanding. 
B)  Net asset value refers to the book value of assets in a managed fund portfolio multiplied by the number of shares outstanding. 
C)  Net asset value refers to the market value of assets in a managed fund portfolio multiplied by the number of shares outstanding. 
D)  None of the listed options are correct. 
A)  Net asset value refers to the book value of assets in a managed fund portfolio divided by the number of shares outstanding. 
B)  Net asset value refers to the book value of assets in a managed fund portfolio multiplied by the number of shares outstanding. 
C)  Net asset value refers to the market value of assets in a managed fund portfolio multiplied by the number of shares outstanding. 
D)  None of the listed options are correct.

Question 9

Which of the following are key features of the regulatory and supervisory environment of the insurance industry?

Accepted Answer

A)  Life insurance companies are now freed of capital adequacy regulations. 
B)  Life insurance companies have additional reporting requirements. 
C)  Overall, life insurance companies are less regulated than before to enhance innovation in the industry. 
D)  All of the listed options are correct. 
A)  Life insurance companies are now freed of capital adequacy regulations. 
B)  Life insurance companies have additional reporting requirements. 
C)  Overall, life insurance companies are less regulated than before to enhance innovation in the industry. 
D)  All of the listed options are correct.

Question 10

Which of the following statements is true?

Accepted Answer

A)  PAIRS is the basis of APRA's risk-based approach to supervision. 
B)  PAIRS is an internal rating system for scoring each entity in the regulated population of insurance and superannuation entities. 
C)  Due to PAIRS, APRA's supervision can be tailored to the risk profile of an individual entity. 
D)  All of the listed options are correct. 
A)  PAIRS is the basis of APRA's risk-based approach to supervision. 
B)  PAIRS is an internal rating system for scoring each entity in the regulated population of insurance and superannuation entities. 
C)  Due to PAIRS, APRA's supervision can be tailored to the risk profile of an individual entity. 
D)  All of the listed options are correct.

Question 11

Which of the following statements is true?

Accepted Answer

A)  A whole of life insurance has no savings element attached to it. 
B)  Unlike term insurance, in the case of whole of life insurance there is uncertainty regarding a payout by the insurer. 
C)  A whole of life insurance protects the holder over their entire life. 
D)  All of the listed options are correct. 
A)  A whole of life insurance has no savings element attached to it. 
B)  Unlike term insurance, in the case of whole of life insurance there is uncertainty regarding a payout by the insurer. 
C)  A whole of life insurance protects the holder over their entire life. 
D)  All of the listed options are correct.

Question 12

Which of the following statements is true?

Accepted Answer

A)  Australian governments have encouraged national savings through superannuation. 
B)  The government has provided taxation incentives aimed at increasing voluntary contributions to superannuation by both employers and employees. 
C)  The government has introduced legislative requirements forcing employers to contribute to superannuation on behalf of their employees. 
D)  All of the listed options are correct. 
A)  Australian governments have encouraged national savings through superannuation. 
B)  The government has provided taxation incentives aimed at increasing voluntary contributions to superannuation by both employers and employees. 
C)  The government has introduced legislative requirements forcing employers to contribute to superannuation on behalf of their employees. 
D)  All of the listed options are correct.

Question 13

Private placement refers to a securities issue placed:

Accepted Answer

A)  with one or a few large institutional investors. 
B)  in private, that is, without announcing it to the public. 
C)  by a private person. 
D)  with one of the stock exchanges. 
A)  with one or a few large institutional investors. 
B)  in private, that is, without announcing it to the public. 
C)  by a private person. 
D)  with one of the stock exchanges.

Question 14

Which of the following statements is true?

Accepted Answer

A)  The surrender value of a policy is the cash value received from the insurer if a policyholder surrenders the policy prior to maturity. 
B)  The surrender value of a policy is the cash value received from the insurer if a policyholder surrenders the policy at maturity. 
C)  The surrender value of a policy is the cash value received from the policyholder if the insurance company surrenders the policy prior to maturity. 
D)  The surrender value of a policy is the cash value received from the policyholder if the insurance company surrenders the policy at maturity. 
A)  The surrender value of a policy is the cash value received from the insurer if a policyholder surrenders the policy prior to maturity. 
B)  The surrender value of a policy is the cash value received from the insurer if a policyholder surrenders the policy at maturity. 
C)  The surrender value of a policy is the cash value received from the policyholder if the insurance company surrenders the policy prior to maturity. 
D)  The surrender value of a policy is the cash value received from the policyholder if the insurance company surrenders the policy at maturity.

Question 15

In firm commitment underwriting, the investment banker acts as a principal, purchasing securities from the issuer at one price and seeking to place them with public investors at a slightly higher price.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements referring to the loss ratio are true?

Accepted Answer

A)  The loss ratio measures the actual losses incurred on a line of insurance business. 
B)  A common measure of the overall underwriting profitability of a line of insurance business is the loss ratio. 
C)  The loss ratio measures the pure losses incurred on a line of insurance business relative to premiums earned. 
D)  The loss ratio measures the predicted losses incurred on a line of insurance business relative to premiums earned. 
A)  The loss ratio measures the actual losses incurred on a line of insurance business. 
B)  A common measure of the overall underwriting profitability of a line of insurance business is the loss ratio. 
C)  The loss ratio measures the pure losses incurred on a line of insurance business relative to premiums earned. 
D)  The loss ratio measures the predicted losses incurred on a line of insurance business relative to premiums earned.

Question 17

Superannuation funds manage funds saved throughout an employee's working life with the aim of providing the employee with a retirement income.

Accepted Answer

A) True 
 B)False

Question 18

Annuities are the reverse of life insurance in that they are different means of liquidating a fund.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following did not occur in the life insurance industry during the most recent financial crisis?

Accepted Answer

A)  Low equity values reduced asset-based fees on separate account assets. 
B)  Asset-based fees declined on products such as variable annuities and pension fund assets that were tied to equity returns. 
C)  Low interest rates and harsh economic conditions caused many policyholders to terminate or surrender their policies. 
D)  Policy premium increased as more households and small businesses attempted to transfer risk to insurance companies. 
A)  Low equity values reduced asset-based fees on separate account assets. 
B)  Asset-based fees declined on products such as variable annuities and pension fund assets that were tied to equity returns. 
C)  Low interest rates and harsh economic conditions caused many policyholders to terminate or surrender their policies. 
D)  Policy premium increased as more households and small businesses attempted to transfer risk to insurance companies.

Question 20

The problem of adverse selection:

Accepted Answer

A)  implies that many people who do not need insurance coverage have it through group plans. 
B)  means that those people who apply for insurance are the least likely to need insurance coverage. 
C)  causes insurance underwriters to alter the health statistics of the general population when determining appropriate premiums. 
D)  creates a savings element along with the insurance component of the premium and policy. 
A)  implies that many people who do not need insurance coverage have it through group plans. 
B)  means that those people who apply for insurance are the least likely to need insurance coverage. 
C)  causes insurance underwriters to alter the health statistics of the general population when determining appropriate premiums. 
D)  creates a savings element along with the insurance component of the premium and policy.

Which of the following statements is true?

Which of the following statements is true?

Which of the following statements is true?

Variable universal life insurance policies:

Adverse selection is a situation where customers who most need insurance are more likely to apply for insurance.

To support risk assessment in insurance firms APRA introduced PAIRS. PAIRS stands for:

What were the major incentives provided by the government to increase savings contributions to superannuation funds? Why is the superannuation Industry an important and vibrant part of the Australian financial sector?

Which of the following statements is true?

Which of the following are key features of the regulatory and supervisory environment of the insurance industry?

Which of the following statements is true?

Which of the following statements is true?

Which of the following statements is true?

Private placement refers to a securities issue placed:

Which of the following statements is true?

In firm commitment underwriting, the investment banker acts as a principal, purchasing securities from the issuer at one price and seeking to place them with public investors at a slightly higher price.

Which of the following statements referring to the loss ratio are true?

Superannuation funds manage funds saved throughout an employee's working life with the aim of providing the employee with a retirement income.

Annuities are the reverse of life insurance in that they are different means of liquidating a fund.

Which of the following did not occur in the life insurance industry during the most recent financial crisis?

The problem of adverse selection:

Why Are Financial Institutions Special

The Financial Services Industry: Depository Institutions

Risk of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Managing Interest Rate Risk Using Off Balance Sheet Instruments

Credit Risk I: Individual Loan Risk

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risk

Capital Management and Adequacy

Filters

Exam 3: The Financial Services Industry: Other Financial Institutions

Which of the following statements is true?

Which of the following statements is true?

Which of the following statements is true?

Variable universal life insurance policies:

Adverse selection is a situation where customers who most need insurance are more likely to apply for insurance.

To support risk assessment in insurance firms APRA introduced PAIRS. PAIRS stands for:

What were the major incentives provided by the government to increase savings contributions to superannuation funds? Why is the superannuation Industry an important and vibrant part of the Australian financial sector?

Which of the following statements is true?

Which of the following are key features of the regulatory and supervisory environment of the insurance industry?

Which of the following statements is true?

Which of the following statements is true?

Which of the following statements is true?

Private placement refers to a securities issue placed:

Which of the following statements is true?

In firm commitment underwriting, the investment banker acts as a principal, purchasing securities from the issuer at one price and seeking to place them with public investors at a slightly higher price.

Which of the following statements referring to the loss ratio are true?

Superannuation funds manage funds saved throughout an employee's working life with the aim of providing the employee with a retirement income.

Annuities are the reverse of life insurance in that they are different means of liquidating a fund.

Which of the following did not occur in the life insurance industry during the most recent financial crisis?

The problem of adverse selection:

Why Are Financial Institutions Special

The Financial Services Industry: Depository Institutions

Risk of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Managing Interest Rate Risk Using Off Balance Sheet Instruments

Credit Risk I: Individual Loan Risk

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risk

Capital Management and Adequacy

Filters