Question 1

Which of the following statements is true?

Accepted Answer

A)  APRA is responsible for market integrity and consumer protection across the financial system. 
B)  The RBA is responsible for prudential supervision. 
C)  ASIC is responsible for monetary policy and for overall financial system stability. 
D)  None of the listed options are correct. 
A)  APRA is responsible for market integrity and consumer protection across the financial system. 
B)  The RBA is responsible for prudential supervision. 
C)  ASIC is responsible for monetary policy and for overall financial system stability. 
D)  None of the listed options are correct.

Question 2

The major banks' return on equity, a measure of bank profitability has been lower than the regional banks with the gap widening since 2007.

Accepted Answer

A) True 
 B)False

Question 3

APRA's supervisory oversight and response system (SOARS) is designed to assess the:

Accepted Answer

A)  likelihood of FI failure. 
B)  impact of the FI failure. 
C)  impact of FI failure and provide the appropriate supervisory response, which in the case of a low PAIRS probability rating will require restructure. 
D)  impact of FI failure and provide the appropriate supervisory response, which in the case of an extreme PAIRS probability rating will require restructure. 
A)  likelihood of FI failure. 
B)  impact of the FI failure. 
C)  impact of FI failure and provide the appropriate supervisory response, which in the case of a low PAIRS probability rating will require restructure. 
D)  impact of FI failure and provide the appropriate supervisory response, which in the case of an extreme PAIRS probability rating will require restructure.

Question 4

Which of the following is not an off-balance-sheet activity for banks?

Accepted Answer

A)  derivative contracts 
B)  loan commitments 
C)  standby letters of credit 
D)  trust services 
A)  derivative contracts 
B)  loan commitments 
C)  standby letters of credit 
D)  trust services

Question 5

Which of the following statements is true?

Accepted Answer

A)  APRA stands for Australian Prudential Regulation Authority. 
B)  APRA stands for Australian Payments Regulation Association. 
C)  APRA stands for Australian Payments Review Authority. 
D)  None of the listed options are correct. 
A)  APRA stands for Australian Prudential Regulation Authority. 
B)  APRA stands for Australian Payments Regulation Association. 
C)  APRA stands for Australian Payments Review Authority. 
D)  None of the listed options are correct.

Question 6

Which of the following statements is true?

Accepted Answer

A)  Deregulation of the banking system in the 1980s brought greater competition from the banks. 
B)  Deregulation of the banking system in the 1980s resulted in loss of market share by non-bank depository institutions. 
C)  Deregulation of the banking system in the 1980s brought greater competition from the non-bank depository institutions. 
D)  Deregulation of the banking system in the 1980s brought greater competition from the banks and resulted in loss of market share by non-bank depository institutions. 
A)  Deregulation of the banking system in the 1980s brought greater competition from the banks. 
B)  Deregulation of the banking system in the 1980s resulted in loss of market share by non-bank depository institutions. 
C)  Deregulation of the banking system in the 1980s brought greater competition from the non-bank depository institutions. 
D)  Deregulation of the banking system in the 1980s brought greater competition from the banks and resulted in loss of market share by non-bank depository institutions.

Question 7

The term 'spread' refers to the difference between an FI's:

Accepted Answer

A)  assets and liabilities. 
B)  liabilities and equity. 
C)  short-term lending rates and long-term lending rates. 
D)  lending and deposit rates. 
A)  assets and liabilities. 
B)  liabilities and equity. 
C)  short-term lending rates and long-term lending rates. 
D)  lending and deposit rates.

Question 8

Which of the following statements is true?

Accepted Answer

A)  Australia's current financial regulatory system has its origins in the late 1990s' Financial System Inquiry, commonly known as the Campbell Committee. 
B)  Australia's current financial regulatory system has its origins in the late 1990s' Financial System Inquiry, commonly known as the Wallis Committee. 
C)  Australia's current financial regulatory system has its origins in the late 1990s' Financial System Inquiry, commonly known as the Martin Committee. 
D)  Australia's current financial regulatory system has its origins in the late 1990s' Financial System Inquiry, commonly known as the Valentine Committee. 
A)  Australia's current financial regulatory system has its origins in the late 1990s' Financial System Inquiry, commonly known as the Campbell Committee. 
B)  Australia's current financial regulatory system has its origins in the late 1990s' Financial System Inquiry, commonly known as the Wallis Committee. 
C)  Australia's current financial regulatory system has its origins in the late 1990s' Financial System Inquiry, commonly known as the Martin Committee. 
D)  Australia's current financial regulatory system has its origins in the late 1990s' Financial System Inquiry, commonly known as the Valentine Committee.

Question 9

Which of the following statements is true?

Accepted Answer

A)  On average building societies are larger than credit unions and their total share of the depository institution market has increased since 1992. 
B)  On average building societies are smaller than credit unions and their total share of the depository institution market has decreased significantly since 1992. 
C)  On average building societies are larger than credit unions and their total share of the depository institution market has decreased significantly since 1992. 
D)  On average building societies are smaller than credit unions and their total share of the depository institution market has increased since 1992. 
A)  On average building societies are larger than credit unions and their total share of the depository institution market has increased since 1992. 
B)  On average building societies are smaller than credit unions and their total share of the depository institution market has decreased significantly since 1992. 
C)  On average building societies are larger than credit unions and their total share of the depository institution market has decreased significantly since 1992. 
D)  On average building societies are smaller than credit unions and their total share of the depository institution market has increased since 1992.

Question 10

Which of the following statements is true?

Accepted Answer

A)  Key performance ratios for credit unions and building societies indicate that from 2005 to 2011 their cost structures were higher than for banks. 
B)  Key performance ratios for credit unions and building societies indicate that from 2005 to 2011 their cost structures were lower than for banks. 
C)  Deposits are a higher proportion of the funding base for banks than for credit unions and building societies. 
D)  Despite credit unions and building societies having higher cost structures over the period 2005-2011 than banks, they have much lower bad debt expenses than banks and hence have navigated the GFC well in terms of their overall performance. 
A)  Key performance ratios for credit unions and building societies indicate that from 2005 to 2011 their cost structures were higher than for banks. 
B)  Key performance ratios for credit unions and building societies indicate that from 2005 to 2011 their cost structures were lower than for banks. 
C)  Deposits are a higher proportion of the funding base for banks than for credit unions and building societies. 
D)  Despite credit unions and building societies having higher cost structures over the period 2005-2011 than banks, they have much lower bad debt expenses than banks and hence have navigated the GFC well in terms of their overall performance.

Question 11

Which of the following is true?

Accepted Answer

A)  All banks are depository institutions and are authorised by APRA to carry out financial intermediation 
B)  All authorised depository institutions are banks. 
C)  All financial intermediaries are authorised depository institutions by APRA to carry out financial intermediation. 
D)  All of the listed options are correct. 
A)  All banks are depository institutions and are authorised by APRA to carry out financial intermediation 
B)  All authorised depository institutions are banks. 
C)  All financial intermediaries are authorised depository institutions by APRA to carry out financial intermediation. 
D)  All of the listed options are correct.

Question 12

Which of the following statements is not correct concerning credit risk?

Accepted Answer

A)  Credit risk is the risk of counterparty default and is usually the single largest risk facing a FI. 
B)  Credit risk occurs when borrowers are unable to repay their loans on time. 
C)  Credit risk decreases when FIs concentrate their loan exposures on a few counterparties and APRA requires that FIs have appropriate polices to manage such risk. 
D)  Credit risk increases when FIs concentrate their loan exposures on a few counterparties. 
A)  Credit risk is the risk of counterparty default and is usually the single largest risk facing a FI. 
B)  Credit risk occurs when borrowers are unable to repay their loans on time. 
C)  Credit risk decreases when FIs concentrate their loan exposures on a few counterparties and APRA requires that FIs have appropriate polices to manage such risk. 
D)  Credit risk increases when FIs concentrate their loan exposures on a few counterparties.

Question 13

APRA's aim is to develop prudential policies that:

Accepted Answer

A)  promote financial safety and efficiency and that enable smaller institutions to put competitive pressures on larger institutions. 
B)  balance financial safety and efficiency, competition contestability and competitive neutrality. 
C)  promote financial system stability and fair interest rates. 
D)  protect consumers from predatory behaviour of financial institutions. 
A)  promote financial safety and efficiency and that enable smaller institutions to put competitive pressures on larger institutions. 
B)  balance financial safety and efficiency, competition contestability and competitive neutrality. 
C)  promote financial system stability and fair interest rates. 
D)  protect consumers from predatory behaviour of financial institutions.

Question 14

The growth in off-balance-sheet activities during the two decades from 1990 to 2010 was due, in large part, to the use of derivative contracts.

Accepted Answer

A) True 
 B)False

Question 15

In response to the GFC and the global liquidity crisis the Australian government introduced the following measure in 2008:

Accepted Answer

A)  A Financial Claims Scheme that provided coverage to all depositors in any financial institution. 
B)  A Financial Claims Scheme that guaranteed bank deposits coverage to depositors up to a million dollars per depositor. 
C)  A Financial Claims Scheme that guaranteed bank deposits coverage to depositors up to a million dollars per depositor and provided a temporary wholesale funding guarantee. 
D)  All of the listed options are correct. 
A)  A Financial Claims Scheme that provided coverage to all depositors in any financial institution. 
B)  A Financial Claims Scheme that guaranteed bank deposits coverage to depositors up to a million dollars per depositor. 
C)  A Financial Claims Scheme that guaranteed bank deposits coverage to depositors up to a million dollars per depositor and provided a temporary wholesale funding guarantee. 
D)  All of the listed options are correct.

Question 16

Which of the following statements are not true?

Accepted Answer

A)  ACCC is responsible for market integrity and consumer protection across the financial system. 
B)  The RBA is responsible for prudential supervision and the promotion of financial system stability. 
C)  The RBA is responsible for monetary policy and for overall financial system stability. 
D)  APRA is responsible for prudential supervision of the financial services industry and supervises all deposit-taking institutions 
A)  ACCC is responsible for market integrity and consumer protection across the financial system. 
B)  The RBA is responsible for prudential supervision and the promotion of financial system stability. 
C)  The RBA is responsible for monetary policy and for overall financial system stability. 
D)  APRA is responsible for prudential supervision of the financial services industry and supervises all deposit-taking institutions

Question 17

Depository institutions are required by APRA to be responsible for:

Accepted Answer

A)  their own liquidity management strategy that must include scenario analysis. 
B)  their own capital management strategy that must include risk analysis. 
C)  both their own liquidity, capital management strategies and a business continuity plan. 
D)  None of the listed options are correct. APRA is responsible for the supervision and oversight of all depository institutions. 
A)  their own liquidity management strategy that must include scenario analysis. 
B)  their own capital management strategy that must include risk analysis. 
C)  both their own liquidity, capital management strategies and a business continuity plan. 
D)  None of the listed options are correct. APRA is responsible for the supervision and oversight of all depository institutions.

Question 18

Which of the following statements is true?

Accepted Answer

A)  Australian banks' decreased reliance on off-shore funding post GFC led to funding pressures and increased the costs of obtaining funds. 
B)  Australian banks' increased reliance on off-shore funding post GFC led to funding pressures and increased the costs of funding. 
C)  Australian banks reduced their reliance on on-shore funding in an effort to reduce the costs of funding and ease pressure on mortgage interest rates. 
D)  Australian banks increased their reliance on on-shore funding post GFC which led to funding pressures and increased the costs of obtaining funds. 
A)  Australian banks' decreased reliance on off-shore funding post GFC led to funding pressures and increased the costs of obtaining funds. 
B)  Australian banks' increased reliance on off-shore funding post GFC led to funding pressures and increased the costs of funding. 
C)  Australian banks reduced their reliance on on-shore funding in an effort to reduce the costs of funding and ease pressure on mortgage interest rates. 
D)  Australian banks increased their reliance on on-shore funding post GFC which led to funding pressures and increased the costs of obtaining funds.

Question 19

Non-bank depository institutions are also referred to as CUBS.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements is true?

Accepted Answer

A)  Credit unions are mutual cooperative organisations. 
B)  Credit unions provide deposit facilities, personal and housing loans and payments services to their members. 
C)  In case of credit unions the depositors are also members of the society. 
D)  Credit unions are mutual cooperative organisations that provide deposit facilities, personal and housing loans and payments services to their members. 
A)  Credit unions are mutual cooperative organisations. 
B)  Credit unions provide deposit facilities, personal and housing loans and payments services to their members. 
C)  In case of credit unions the depositors are also members of the society. 
D)  Credit unions are mutual cooperative organisations that provide deposit facilities, personal and housing loans and payments services to their members.

Which of the following statements is true?

The major banks' return on equity, a measure of bank profitability has been lower than the regional banks with the gap widening since 2007.

APRA's supervisory oversight and response system (SOARS) is designed to assess the:

Which of the following is not an off-balance-sheet activity for banks?

Which of the following statements is true?

Which of the following statements is true?

The term 'spread' refers to the difference between an FI's:

Which of the following statements is true?

Which of the following statements is true?

Which of the following statements is true?

Which of the following is true?

Which of the following statements is not correct concerning credit risk?

APRA's aim is to develop prudential policies that:

The growth in off-balance-sheet activities during the two decades from 1990 to 2010 was due, in large part, to the use of derivative contracts.

In response to the GFC and the global liquidity crisis the Australian government introduced the following measure in 2008:

Which of the following statements are not true?

Depository institutions are required by APRA to be responsible for:

Which of the following statements is true?

Non-bank depository institutions are also referred to as CUBS.

Which of the following statements is true?

Why Are Financial Institutions Special

The Financial Services Industry: Other Financial 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 2: The Financial Services Industry: Depository Institutions

Which of the following statements is true?

The major banks' return on equity, a measure of bank profitability has been lower than the regional banks with the gap widening since 2007.

APRA's supervisory oversight and response system (SOARS) is designed to assess the:

Which of the following is not an off-balance-sheet activity for banks?

Which of the following statements is true?

Which of the following statements is true?

The term 'spread' refers to the difference between an FI's:

Which of the following statements is true?

Which of the following statements is true?

Which of the following statements is true?

Which of the following is true?

Which of the following statements is not correct concerning credit risk?

APRA's aim is to develop prudential policies that:

The growth in off-balance-sheet activities during the two decades from 1990 to 2010 was due, in large part, to the use of derivative contracts.

In response to the GFC and the global liquidity crisis the Australian government introduced the following measure in 2008:

Which of the following statements are not true?

Depository institutions are required by APRA to be responsible for:

Which of the following statements is true?

Non-bank depository institutions are also referred to as CUBS.

Which of the following statements is true?

Why Are Financial Institutions Special

The Financial Services Industry: Other Financial 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