Question 1

Which of the following is true of off-balance-sheet activities?

Accepted Answer

A)  They involve generation of fees without exposure to any risk. 
B)  They include contingent activities recorded in the current balance sheet. 
C)  They invite regulatory costs and additional 'taxes.' 
D)  They have both risk-reducing as well as risk-increasing attributes. 
A)  They involve generation of fees without exposure to any risk. 
B)  They include contingent activities recorded in the current balance sheet. 
C)  They invite regulatory costs and additional 'taxes.' 
D)  They have both risk-reducing as well as risk-increasing attributes.

Question 2

The Probability and Impact Rating System (PAIRS):

Accepted Answer

A)  determines the response ASIC should make to the outcomes of PAIRS ratings. 
B)  determines the response the RBA should make to the outcomes of bank failures. 
C)  determines the response the RBA should make to the outcomes of financial crisis. 
D)  None of the listed options are correct. 
A)  determines the response ASIC should make to the outcomes of PAIRS ratings. 
B)  determines the response the RBA should make to the outcomes of bank failures. 
C)  determines the response the RBA should make to the outcomes of financial crisis. 
D)  None of the listed options are correct.

Question 3

A financial institution is an institution that performs financial intermediary services and/or services requiring transactions in the capital markets.

Accepted Answer

A) True 
 B)False

Question 4

Customer loans are classified on a DI's balance sheet as:

Accepted Answer

A)  liabilities, because the customer may default on the loan. 
B)  assets, because the DI earns servicing fees on the loan. 
C)  liabilities, because the DI must transfer funds to the borrower at the initiation of the loan. 
D)  assets, because DIs originate and monitor loan portfolios. 
A)  liabilities, because the customer may default on the loan. 
B)  assets, because the DI earns servicing fees on the loan. 
C)  liabilities, because the DI must transfer funds to the borrower at the initiation of the loan. 
D)  assets, because DIs originate and monitor loan portfolios.

Question 5

The main features of the local banking industry over the two decades to 2010 have been an increase in concentration. This has occurred due to mergers and acquisitions motivated by the desire to:

Accepted Answer

A)  be competitive in global markets. 
B)  protect against takeover by foreign competitors. 
C)  increase efficiency in terms of economies of scale and scope. 
D)  All of the listed options are correct. 
A)  be competitive in global markets. 
B)  protect against takeover by foreign competitors. 
C)  increase efficiency in terms of economies of scale and scope. 
D)  All of the listed options are correct.

Question 6

Which of the following statements is true?

Accepted Answer

A)  The majority of players in terms of asset value as a percentage of GDP in the Australian financial system are credit unions. 
B)  The majority of players in terms of asset value as a percentage of GDP in the Australian financial system are building societies. 
C)  The majority of players in terms of asset value as a percentage of GDP in the Australian financial system are banks. 
D)  The majority of players in terms of asset value as a percentage of GDP in the Australian financial system are superannuation funds. 
A)  The majority of players in terms of asset value as a percentage of GDP in the Australian financial system are credit unions. 
B)  The majority of players in terms of asset value as a percentage of GDP in the Australian financial system are building societies. 
C)  The majority of players in terms of asset value as a percentage of GDP in the Australian financial system are banks. 
D)  The majority of players in terms of asset value as a percentage of GDP in the Australian financial system are superannuation funds.

Which of the following is true of off-balance-sheet activities?

The Probability and Impact Rating System (PAIRS):

A financial institution is an institution that performs financial intermediary services and/or services requiring transactions in the capital markets.

Customer loans are classified on a DI's balance sheet as:

The main features of the local banking industry over the two decades to 2010 have been an increase in concentration. This has occurred due to mergers and acquisitions motivated by the desire to:

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 is true of off-balance-sheet activities?

The Probability and Impact Rating System (PAIRS):

A financial institution is an institution that performs financial intermediary services and/or services requiring transactions in the capital markets.

Customer loans are classified on a DI's balance sheet as:

The main features of the local banking industry over the two decades to 2010 have been an increase in concentration. This has occurred due to mergers and acquisitions motivated by the desire to:

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