Question 1

In recent times,there had been a substantial expansion in fee-related income for banks.What is the principal reason for this?

Accepted Answer

A)  Increased confidence in banks by individual investors 
B)  Increased off-sheet business (OBS) for banks 
C)  Reduced guidelines by Australian bank supervisor APRA 
D)  Increased deposits in banks 
A)  Increased confidence in banks by individual investors 
B)  Increased off-sheet business (OBS) for banks 
C)  Reduced guidelines by Australian bank supervisor APRA 
D)  Increased deposits in banks

Question 2

If a bank required more short-term funding,it would issue:

Accepted Answer

A)  a certificate of deposit. 
B)  a debenture. 
C)  an unsecured note. 
D)  preference shares. 
A)  a certificate of deposit. 
B)  a debenture. 
C)  an unsecured note. 
D)  preference shares.

Question 3

For a commercial bank's normal day-to-day business,the capital adequacy guidelines for the operational risk it is exposed to fall under:

Accepted Answer

A)  Pillar 1. 
B)  Pillar 2. 
C)  Pillar 3. 
D)  Pillar 4. 
A)  Pillar 1. 
B)  Pillar 2. 
C)  Pillar 3. 
D)  Pillar 4.

Question 4

A large commercial bank operating in the international markets will generally apply to the banks' supervisor to use the _____ to credit risk.

Accepted Answer

A)  advanced internal ratings-based approach 
B)  foundation external ratings-based approach 
C)  standardised approach 
D)  standardised approach with external ratings 
A)  advanced internal ratings-based approach 
B)  foundation external ratings-based approach 
C)  standardised approach 
D)  standardised approach with external ratings

Question 5

Which of the following does NOT apply to Tier 1 capital?

Accepted Answer

A)  Tier 1 capital is described as 'core capital'. 
B)  Tier 1 capital must constitute at least 50% of a bank's capital base. 
C)  Paid-up ordinary shares can be included in Tier 1 capital. 
D)  Cumulative irredeemable APRA-approved preference shares can be included in Tier 1 capital. 
A)  Tier 1 capital is described as 'core capital'. 
B)  Tier 1 capital must constitute at least 50% of a bank's capital base. 
C)  Paid-up ordinary shares can be included in Tier 1 capital. 
D)  Cumulative irredeemable APRA-approved preference shares can be included in Tier 1 capital.

Question 6

Which of the following statements regarding capital adequacy requirements is incorrect?

Accepted Answer

A)  Existing credit-risk guidelines are extended to include market risk arising from a bank's trading activities. 
B)  Regulators focus on credit risk, market risks, operational risk and type of capital held. 
C)  Eligible Tier 1 capital must constitute at least 70% of a bank's capital base. 
D)  Tier 2 capital is divided into upper and lower Tier 2 parts. 
A)  Existing credit-risk guidelines are extended to include market risk arising from a bank's trading activities. 
B)  Regulators focus on credit risk, market risks, operational risk and type of capital held. 
C)  Eligible Tier 1 capital must constitute at least 70% of a bank's capital base. 
D)  Tier 2 capital is divided into upper and lower Tier 2 parts.

Question 7

Which of the following statements is NOT true of term deposits?

Accepted Answer

A)  They are less liquid than a current deposit. 
B)  They usually offer a higher return than a current deposit. 
C)  They are attractive to investors who expect interest rates to fall. 
D)  They are generally negotiable instruments. 
A)  They are less liquid than a current deposit. 
B)  They usually offer a higher return than a current deposit. 
C)  They are attractive to investors who expect interest rates to fall. 
D)  They are generally negotiable instruments.

Question 8

Which of the following statements about bill acceptance facilities is incorrect?

Accepted Answer

A)  When a bank discounts a bill for the issuer, it buys it. 
B)  When a bank that holds a bill rediscounts it the bank onsells it. 
C)  When a bank acts as an acceptor it will pay the face value of the bill to the holder at maturity. 
D)  If interest rates change before a bank bill matures, the bank can change the interest rate on it. 
A)  When a bank discounts a bill for the issuer, it buys it. 
B)  When a bank that holds a bill rediscounts it the bank onsells it. 
C)  When a bank acts as an acceptor it will pay the face value of the bill to the holder at maturity. 
D)  If interest rates change before a bank bill matures, the bank can change the interest rate on it.

Question 9

Within the context of the Corporations Law in Australia,the supervision of financial market integrity and consumer protection is done by:

Accepted Answer

A)  APRA. 
B)  ASIC. 
C)  RBA. 
D)  ACCC. 
A)  APRA. 
B)  ASIC. 
C)  RBA. 
D)  ACCC.

Question 10

As the majority of banks' assets are short-term loans,they are active in the money markets in order to fund part of their lending.

Accepted Answer

A) True 
 B)False

Question 11

The Basel capital adequacy requirements apply to:

Accepted Answer

A)  all financial institutions. 
B)  banks, investment banks and merchant banks only. 
C)  all financial institutions supervised by ASIC. 
D)  all banks registered with APRA and some other financial institutions. 
A)  all financial institutions. 
B)  banks, investment banks and merchant banks only. 
C)  all financial institutions supervised by ASIC. 
D)  all banks registered with APRA and some other financial institutions.

Question 12

The Australian institution APRA is responsible for the regulatory supervision of financial institutions such as banks and credit unions.APRA stands for:

Accepted Answer

A)  Australian Practice and Regulatory Association. 
B)  Australian Prudential Regulation Authority. 
C)  Australian Prudential Rule Authority. 
D)  Australian Practice and Regulatory Authority. 
A)  Australian Practice and Regulatory Association. 
B)  Australian Prudential Regulation Authority. 
C)  Australian Prudential Rule Authority. 
D)  Australian Practice and Regulatory Authority.

Question 13

The interest rate BBSW refers to:

Accepted Answer

A)  the reference rate for medium-term funding. 
B)  a rate calculated each day from the offer rate of the last daily sale in the bank bill market. 
C)  the average mid-point of the bid and offer rates in the bank bill market. 
D)  the bank bill security rate. 
A)  the reference rate for medium-term funding. 
B)  a rate calculated each day from the offer rate of the last daily sale in the bank bill market. 
C)  the average mid-point of the bid and offer rates in the bank bill market. 
D)  the bank bill security rate.

Question 14

Call deposits are funds lodged in a bank account for a specified short-term period.

Accepted Answer

A) True 
 B)False

Question 15

Off-balance-sheet business for a bank refers to:

Accepted Answer

A)  a bank's income. 
B)  a bank's contingent liabilities. 
C)  assets that will appear on the forthcoming balance sheet. 
D)  transactions recorded on the previous balance sheet. 
A)  a bank's income. 
B)  a bank's contingent liabilities. 
C)  assets that will appear on the forthcoming balance sheet. 
D)  transactions recorded on the previous balance sheet.

Question 16

Which of the following statements is true for off-balance-sheet business for banks?

Accepted Answer

A)  Off-balance-sheet business is a small part of a bank's income. 
B)  Off-balance-sheet business is recorded on a bank's statement of income and expense. 
C)  Off-balance-sheet business represents fee-based income. 
D)  Off-balance-sheet business records deposits that do not fit on the balance sheet. 
A)  Off-balance-sheet business is a small part of a bank's income. 
B)  Off-balance-sheet business is recorded on a bank's statement of income and expense. 
C)  Off-balance-sheet business represents fee-based income. 
D)  Off-balance-sheet business records deposits that do not fit on the balance sheet.

Question 17

The requirement and observation of standards designed to ensure the stability and soundness of a financial system is called:

Accepted Answer

A)  fiscal policy. 
B)  monetary policy. 
C)  prudential supervision. 
D)  the Basel accord. 
A)  fiscal policy. 
B)  monetary policy. 
C)  prudential supervision. 
D)  the Basel accord.

Question 18

Describe how a bill acceptance facility works.

Accepted Answer

If a company with a good credit record i

Question 19

A bank may seek to obtain funds by issuing unsecured notes with a collaterised floating charge over its deposits.

Accepted Answer

A) True 
 B)False

Question 20

A major difference between a bank's term deposit and a certificate of deposit is:

Accepted Answer

A)  a term deposit represents an asset for a bank, while a certificate of deposit is a liability. 
B)  a certificate of deposit does not pay interest until maturity. 
C)  a certificate of deposit is illiquid when compared with a term deposit. 
D)  a certificate of deposit is a high-credit-risk instrument when compared with a term deposit. 
A)  a term deposit represents an asset for a bank, while a certificate of deposit is a liability. 
B)  a certificate of deposit does not pay interest until maturity. 
C)  a certificate of deposit is illiquid when compared with a term deposit. 
D)  a certificate of deposit is a high-credit-risk instrument when compared with a term deposit.

Exam 2: Commercial Banks

In recent times,there had been a substantial expansion in fee-related income for banks.What is the principal reason for this?

If a bank required more short-term funding,it would issue:

For a commercial bank's normal day-to-day business,the capital adequacy guidelines for the operational risk it is exposed to fall under:

A large commercial bank operating in the international markets will generally apply to the banks' supervisor to use the _____ to credit risk.

Which of the following does NOT apply to Tier 1 capital?

Which of the following statements regarding capital adequacy requirements is incorrect?

Which of the following statements is NOT true of term deposits?

Which of the following statements about bill acceptance facilities is incorrect?

Within the context of the Corporations Law in Australia,the supervision of financial market integrity and consumer protection is done by:

As the majority of banks' assets are short-term loans,they are active in the money markets in order to fund part of their lending.

The Basel capital adequacy requirements apply to:

The Australian institution APRA is responsible for the regulatory supervision of financial institutions such as banks and credit unions.APRA stands for:

The interest rate BBSW refers to:

Call deposits are funds lodged in a bank account for a specified short-term period.

Off-balance-sheet business for a bank refers to:

Which of the following statements is true for off-balance-sheet business for banks?

The requirement and observation of standards designed to ensure the stability and soundness of a financial system is called:

Describe how a bill acceptance facility works.

A bank may seek to obtain funds by issuing unsecured notes with a collaterised floating charge over its deposits.

A major difference between a bank's term deposit and a certificate of deposit is:

A Modern Financial System: An Overview

Non-Bank Financial Institutions

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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