Question 1

For motor vehicle insurance,a third party policy means:

Accepted Answer

A)  the policy covers damage to the named vehicle plus any damage to any third party vehicle or party. 
B)  the policy covers damage to both parties. 
C)  the policy covers damage or loss to a third party or property only. 
D)  the policy covers damage to the named vehicle plus any theft. 
A)  the policy covers damage to the named vehicle plus any damage to any third party vehicle or party. 
B)  the policy covers damage to both parties. 
C)  the policy covers damage or loss to a third party or property only. 
D)  the policy covers damage to the named vehicle plus any theft.

Question 2

The task of the investment bank in a public issue of new shares is to:

Accepted Answer

A)  offer interim financing to the firm. 
B)  invest the funds raised in the capital markets. 
C)  provide advice in designing and pricing a share issue. 
D)  act as a trustee of the funds raised. 
A)  offer interim financing to the firm. 
B)  invest the funds raised in the capital markets. 
C)  provide advice in designing and pricing a share issue. 
D)  act as a trustee of the funds raised.

Question 3

A private superannuation fund to which an individual makes recurring,predetermined payments for a given number of years into the plan is called a/an:

Accepted Answer

A)  approved deposit scheme. 
B)  superannuation savings plan. 
C)  standard superannuation scheme. 
D)  single premium scheme. 
A)  approved deposit scheme. 
B)  superannuation savings plan. 
C)  standard superannuation scheme. 
D)  single premium scheme.

Question 4

Since the early 1990s,public unit trusts have seen the largest growth in assets in:

Accepted Answer

A)  cash and deposits. 
B)  long-term government securities. 
C)  equities and units in trusts. 
D)  land and buildings. 
A)  cash and deposits. 
B)  long-term government securities. 
C)  equities and units in trusts. 
D)  land and buildings.

Question 5

In a/an _____ insurance policy,there is no savings component.

Accepted Answer

A)  term 
B)  variable 
C)  whole 
D)  endowment 
A)  term 
B)  variable 
C)  whole 
D)  endowment

Question 6

General insurance companies hold more liquid assets than life insurance companies because:

Accepted Answer

A)  they have a legal requirement to do so. 
B)  events such as fires and earthquakes are difficult to predict. 
C)  more people try to get payouts from them by fraud. 
D)  there are more items covered under a general insurance policy so there are more payouts to the insured. 
A)  they have a legal requirement to do so. 
B)  events such as fires and earthquakes are difficult to predict. 
C)  more people try to get payouts from them by fraud. 
D)  there are more items covered under a general insurance policy so there are more payouts to the insured.

Question 7

Under deregulation,building societies lost market share to other financial institutions.Their response included:

Accepted Answer

A)  mergers with other building societies. 
B)  expenditure on technology. 
C)  expanding their range of products. 
D)  all of the given answers. 
A)  mergers with other building societies. 
B)  expenditure on technology. 
C)  expanding their range of products. 
D)  all of the given answers.

Question 8

The amount of financial assets held by insurance companies has _______ over the past 20 years.

Accepted Answer

A)  decreased 
B)  remained stable 
C)  increased slowly 
D)  increased dramatically 
A)  decreased 
B)  remained stable 
C)  increased slowly 
D)  increased dramatically

Question 9

Which of the following features is NOT generally true of project finance in Australia?

Accepted Answer

A)  Guarantees provided by sponsors to lenders usually do not cover all the risks involved in the project. 
B)  A project company is usually established as a separate legal entity. 
C)  Lenders rely mainly on the expected future cash flows and the assets of the project. 
D)  Finance is usually established on a non-recourse basis. 
A)  Guarantees provided by sponsors to lenders usually do not cover all the risks involved in the project. 
B)  A project company is usually established as a separate legal entity. 
C)  Lenders rely mainly on the expected future cash flows and the assets of the project. 
D)  Finance is usually established on a non-recourse basis.

Question 10

Life insurance offices are providers of superannuation products which make up ______ per cent of the assets of life insurance offices' statutory funds.

Accepted Answer

A)  57 
B)  67 
C)  77 
D)  87 
A)  57 
B)  67 
C)  77 
D)  87

Question 11

In Australia,the prudential supervisor of life insurance offices is:

Accepted Answer

A)  ASIC. 
B)  APRA. 
C)  the Reserve Bank of Australia. 
D)  PSLI. 
A)  ASIC. 
B)  APRA. 
C)  the Reserve Bank of Australia. 
D)  PSLI.

Question 12

On average,the value of a balanced growth fund is subject to less market fluctuation than that of a capital growth fund.

Accepted Answer

A) True 
 B)False

Question 13

The financial institution that is a specialist provider of financial and advisory services to companies is a/an:

Accepted Answer

A)  credit union. 
B)  finance company. 
C)  building society. 
D)  investment bank. 
A)  credit union. 
B)  finance company. 
C)  building society. 
D)  investment bank.

Question 14

Which of the following statements with regard to life insurance companies is true?

Accepted Answer

A)  Life insurance companies are more likely to acquire short-term assets than long-term securities, for liquidity reasons. 
B)  Life insurance companies are more likely to acquire long-term assets because their liabilities are long-term in nature. 
C)  Life insurance companies tend to acquire short-term assets because they have relatively predictable inflows and outflows. 
D)  The Reserve Bank of Australia regulates life insurance companies. 
A)  Life insurance companies are more likely to acquire short-term assets than long-term securities, for liquidity reasons. 
B)  Life insurance companies are more likely to acquire long-term assets because their liabilities are long-term in nature. 
C)  Life insurance companies tend to acquire short-term assets because they have relatively predictable inflows and outflows. 
D)  The Reserve Bank of Australia regulates life insurance companies.

Question 15

An important source of funds for credit unions is:

Accepted Answer

A)  cheque accounts. 
B)  loan interest. 
C)  interest from government securities. 
D)  financial support from the organisations that employ its members. 
A)  cheque accounts. 
B)  loan interest. 
C)  interest from government securities. 
D)  financial support from the organisations that employ its members.

Question 16

What are the principal assets of a finance company?
 How have these been affected in recent years?

Accepted Answer

The main assets are loans to i

Question 17

Which of the following statements about life insurance companies is false?

Accepted Answer

A)  As inflows of funds are relatively predictable, they have a very stable level of liabilities. 
B)  Life insurance companies have greatly increased their assets over the past decade. 
C)  Life insurance companies sell contracts that offer financial cover against premature death. 
D)  Life insurance companies have large amounts of short-term liquid securities. 
A)  As inflows of funds are relatively predictable, they have a very stable level of liabilities. 
B)  Life insurance companies have greatly increased their assets over the past decade. 
C)  Life insurance companies sell contracts that offer financial cover against premature death. 
D)  Life insurance companies have large amounts of short-term liquid securities.

Question 18

In relation to insurance for term-life policies with a stepped premium over time,the policy holder pays premiums:

Accepted Answer

A)  based on current market rates. 
B)  that increase gradually over time. 
C)  based on increases in inflation. 
D)  based on indexing the sum insured. 
A)  based on current market rates. 
B)  that increase gradually over time. 
C)  based on increases in inflation. 
D)  based on indexing the sum insured.

Question 19

Life insurance companies attract a large proportion of their funds through regular premiums from policy holders.In regard to the matching principle,what types of assets would an insurance company hold the smallest proportions of?

Accepted Answer

A)  Equity investments 
B)  Debentures and notes 
C)  Housing loan mortgages 
D)  Money market securities 
A)  Equity investments 
B)  Debentures and notes 
C)  Housing loan mortgages 
D)  Money market securities

Question 20

Unlike commercial banks,investment banks only accept deposits from large corporations.

Accepted Answer

A) True 
 B)False

Exam 3: Non-Bank Financial Institutions

For motor vehicle insurance,a third party policy means:

The task of the investment bank in a public issue of new shares is to:

A private superannuation fund to which an individual makes recurring,predetermined payments for a given number of years into the plan is called a/an:

Since the early 1990s,public unit trusts have seen the largest growth in assets in:

In a/an _____ insurance policy,there is no savings component.

General insurance companies hold more liquid assets than life insurance companies because:

Under deregulation,building societies lost market share to other financial institutions.Their response included:

The amount of financial assets held by insurance companies has _______ over the past 20 years.

Which of the following features is NOT generally true of project finance in Australia?

Life insurance offices are providers of superannuation products which make up ______ per cent of the assets of life insurance offices' statutory funds.

In Australia,the prudential supervisor of life insurance offices is:

On average,the value of a balanced growth fund is subject to less market fluctuation than that of a capital growth fund.

The financial institution that is a specialist provider of financial and advisory services to companies is a/an:

Which of the following statements with regard to life insurance companies is true?

An important source of funds for credit unions is:

What are the principal assets of a finance company? How have these been affected in recent years?

Which of the following statements about life insurance companies is false?

In relation to insurance for term-life policies with a stepped premium over time,the policy holder pays premiums:

Life insurance companies attract a large proportion of their funds through regular premiums from policy holders.In regard to the matching principle,what types of assets would an insurance company hold the smallest proportions of?

Unlike commercial banks,investment banks only accept deposits from large corporations.

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

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