Question 1

A managed fund that is established under a trust deed and is managed by a responsible entity is called a:

Accepted Answer

A)  mutual fund. 
B)  trust fund. 
C)  trustee fund. 
D)  investment fund. 
A)  mutual fund. 
B)  trust fund. 
C)  trustee fund. 
D)  investment fund.

Question 2

The ________ is the company in a merger transaction that tries to merge with or acquire another company.

Accepted Answer

A)  target company 
B)  takeover company 
C)  conglomerate company 
D)  hostile company 
A)  target company 
B)  takeover company 
C)  conglomerate company 
D)  hostile company

Question 3

If a car manufacturer were to purchase one of the companies listed below,which purchase would be called a horizontal takeover?

Accepted Answer

A)  A steel mill 
B)  A rival car manufacturer 
C)  A tyre manufacturer 
D)  A finance company 
A)  A steel mill 
B)  A rival car manufacturer 
C)  A tyre manufacturer 
D)  A finance company

Question 4

Cash management trusts are restricted under their trust deed to hold only bank deposits and cash.

Accepted Answer

A) True 
 B)False

Question 5

By the end of the 1990s,there had been a substantial contraction in the building society sector.What is the principal reason for this contraction in building societies?

Accepted Answer

A)  Loss of confidence in building societies by individual investors 
B)  Conversion of building societies to banks 
C)  Increased cost of regulation by the Australian Prudential Regulation Authority (APR
A)  
D)  Rationalisation through the merger of small building societies 
A)  Loss of confidence in building societies by individual investors 
B)  Conversion of building societies to banks 
C)  Increased cost of regulation by the Australian Prudential Regulation Authority (APR
A)  
D)  Rationalisation through the merger of small building societies

Question 6

A hedge fund that takes a short position in equity markets:

Accepted Answer

A)  will sell forward shares. 
B)  will buy a derivative that they expect will increase in price. 
C)  will buy shares. 
D)  is expecting the markets to increase. 
A)  will sell forward shares. 
B)  will buy a derivative that they expect will increase in price. 
C)  will buy shares. 
D)  is expecting the markets to increase.

Question 7

Essentially,superannuation assets provide:

Accepted Answer

A)  indefinite income when employees stop working. 
B)  indefinite income as long as employees continue to work. 
C)  limited income if an employee is injured and unable to work. 
D)  retirement income for employees. 
A)  indefinite income when employees stop working. 
B)  indefinite income as long as employees continue to work. 
C)  limited income if an employee is injured and unable to work. 
D)  retirement income for employees.

Question 8

General insurance companies hold:

Accepted Answer

A)  a smaller number of short-term assets than life insurance companies. 
B)  a greater number of short-term assets than life insurance companies. 
C)  approximately the same number of short-term assets as life insurance companies. 
D)  only long-term assets. 
A)  a smaller number of short-term assets than life insurance companies. 
B)  a greater number of short-term assets than life insurance companies. 
C)  approximately the same number of short-term assets as life insurance companies. 
D)  only long-term assets.

Question 9

The main feature of cash management trusts is:

Accepted Answer

A)  they allow individuals to access the money markets. 
B)  they provide liquidity and access to funds. 
C)  that many are associated with stockbrokers and the electronic purchasing and selling of securities by investors. 
D)  all of the given answers. 
A)  they allow individuals to access the money markets. 
B)  they provide liquidity and access to funds. 
C)  that many are associated with stockbrokers and the electronic purchasing and selling of securities by investors. 
D)  all of the given answers.

Question 10

Recent figures show the largest proportion of assets held by life insurance companies is:

Accepted Answer

A)  Commonwealth securities. 
B)  loans and placements. 
C)  equities and units in trusts. 
D)  land and buildings. 
A)  Commonwealth securities. 
B)  loans and placements. 
C)  equities and units in trusts. 
D)  land and buildings.

Question 11

As investment banks have increased their underwriting activities in recent years,the number of financial assets held by them has similarly increased.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is NOT a feature of public unit trusts?

Accepted Answer

A)  The four main classes of trusts are property, equity, mortgage and fixed interest trusts. 
B)  There was enormous growth in public unit trusts during the 1990s. 
C)  The majority of mortgages held by a mortgage trust are 'first' mortgages. 
D)  Property trusts are generally unlisted as they need notice to sell their physical assets. 
A)  The four main classes of trusts are property, equity, mortgage and fixed interest trusts. 
B)  There was enormous growth in public unit trusts during the 1990s. 
C)  The majority of mortgages held by a mortgage trust are 'first' mortgages. 
D)  Property trusts are generally unlisted as they need notice to sell their physical assets.

Question 13

The superannuation fund where the amount of funds available at retirement consists of past contributions plus earnings less taxes and expenses is called:

Accepted Answer

A)  a defined benefit fund. 
B)  an accumulation fund. 
C)  a defined termination fund. 
D)  a defined payout fund. 
A)  a defined benefit fund. 
B)  an accumulation fund. 
C)  a defined termination fund. 
D)  a defined payout fund.

Question 14

Explain the role and operation of one of the largest types of managed funds,superannuation funds.

Accepted Answer

Their sources of funds are individuals w

Question 15

Which of the following statements is NOT a feature of finance companies?

Accepted Answer

A)  Finance companies came into existence in response to regulations on interest rates. 
B)  Finance companies sell unsecured notes and use the funds to make loans to borrowers. 
C)  The majority of finance companies' funds are sourced from banks. 
D)  Today the banks own many large finance companies. 
A)  Finance companies came into existence in response to regulations on interest rates. 
B)  Finance companies sell unsecured notes and use the funds to make loans to borrowers. 
C)  The majority of finance companies' funds are sourced from banks. 
D)  Today the banks own many large finance companies.

Question 16

Most corporations will seek advice from a/an ______ on possible mergers and acquisitions.

Accepted Answer

A)  investment broker 
B)  commercial banker 
C)  accounting firm 
D)  investment banker 
A)  investment broker 
B)  commercial banker 
C)  accounting firm 
D)  investment banker

Question 17

Funds under management by managed funds in 2010 have a value of:

Accepted Answer

A)  $345b. 
B)  $500b. 
C)  $1000b. 
D)  $1666b. 
A)  $345b. 
B)  $500b. 
C)  $1000b. 
D)  $1666b.

Question 18

An investor who wishes to save for their retirement in 20 years' time and who has a high propensity for taking risk is likely to invest in a managed fund which invests in government securities and:

Accepted Answer

A)  cash deposits. 
B)  some property. 
C)  debentures. 
D)  foreign equities. 
A)  cash deposits. 
B)  some property. 
C)  debentures. 
D)  foreign equities.

Question 19

Finance companies use their funds to provide:

Accepted Answer

A)  loans to individuals. 
B)  instalment credit to finance retail sales to retail stores. 
C)  lease financing. 
D)  all of the given answers. 
A)  loans to individuals. 
B)  instalment credit to finance retail sales to retail stores. 
C)  lease financing. 
D)  all of the given answers.

Question 20

Which of the following holds the smallest percentage of total assets of financial institutions: finance companies,credit unions,managed funds and permanent building societies?

Accepted Answer

A)  Building societies 
B)  Credit unions 
C)  Finance companies 
D)  Managed funds 
A)  Building societies 
B)  Credit unions 
C)  Finance companies 
D)  Managed funds

Exam 3: Non-Bank Financial Institutions

A managed fund that is established under a trust deed and is managed by a responsible entity is called a:

The ________ is the company in a merger transaction that tries to merge with or acquire another company.

If a car manufacturer were to purchase one of the companies listed below,which purchase would be called a horizontal takeover?

Cash management trusts are restricted under their trust deed to hold only bank deposits and cash.

By the end of the 1990s,there had been a substantial contraction in the building society sector.What is the principal reason for this contraction in building societies?

A hedge fund that takes a short position in equity markets:

Essentially,superannuation assets provide:

General insurance companies hold:

The main feature of cash management trusts is:

Recent figures show the largest proportion of assets held by life insurance companies is:

As investment banks have increased their underwriting activities in recent years,the number of financial assets held by them has similarly increased.

Which of the following statements is NOT a feature of public unit trusts?

The superannuation fund where the amount of funds available at retirement consists of past contributions plus earnings less taxes and expenses is called:

Explain the role and operation of one of the largest types of managed funds,superannuation funds.

Which of the following statements is NOT a feature of finance companies?

Most corporations will seek advice from a/an ______ on possible mergers and acquisitions.

Funds under management by managed funds in 2010 have a value of:

An investor who wishes to save for their retirement in 20 years' time and who has a high propensity for taking risk is likely to invest in a managed fund which invests in government securities and:

Finance companies use their funds to provide:

Which of the following holds the smallest percentage of total assets of financial institutions: finance companies,credit unions,managed funds and permanent building societies?

A Modern Financial System: An Overview

Commercial Banks

The Share Market and the Corporation

Corporations Issuing Equity in the Share Market

Investors in the Share Market

Forecasting Share Price Movements

Mathematics of Finance: An Introduction to Basic Concepts and Calculations

Short-Term Debt

Medium-To-Long-Term Debt

International Debt Markets

Government Debt, monetary Policy and the Payments System

An Introduction to Interest Rate Determination and Forecasting

Interest Rate Risk

Foreign Exchange: The Structure and Operation of the Fx Market

Foreign Exchange: Factors That Influence the Exchange Rate

Foreign Exchange: Risk Identification and Management

An Introduction to Risk Management and Derivatives

Future Contracts and Forward Rate Agreements

Options

Interest Rate Swaps, Cross-Currency Swaps and Credit Default

Filters