Question 1

Which of the following did not occur in the life insurance industry during the most recent financial crisis?

Accepted Answer

A) Low equity values reduced asset-based fees on separate account assets. 
B) Asset-based fees declined on products such as variable annuities and pension fund assets that were tied to equity returns. 
C) Low interest rates and harsh economic conditions caused many policyholders to terminate or surrender their policies. 
D) Policy premium increased as more households and small businesses attempted to transfer risk to insurance companies. 
A) Low equity values reduced asset-based fees on separate account assets. 
B) Asset-based fees declined on products such as variable annuities and pension fund assets that were tied to equity returns. 
C) Low interest rates and harsh economic conditions caused many policyholders to terminate or surrender their policies. 
D) Policy premium increased as more households and small businesses attempted to transfer risk to insurance companies.

Question 2

Which of the following is an adequate definition of liability insurance?

Accepted Answer

A) Liability insurance protects commercial firms against perils similar to home-owners' multiple peril insurance. 
B) Liability insurance protects against theft or damage of commercial vehicles. 
C) Liability insurance protects against liabilities relating to business operations of firms. 
D) Liability insurance protects commercial firms against perils similar to home-owners' multiple peril insurance and protects against liabilities relating to business operations of firms. 
A) Liability insurance protects commercial firms against perils similar to home-owners' multiple peril insurance. 
B) Liability insurance protects against theft or damage of commercial vehicles. 
C) Liability insurance protects against liabilities relating to business operations of firms. 
D) Liability insurance protects commercial firms against perils similar to home-owners' multiple peril insurance and protects against liabilities relating to business operations of firms.

Question 3

Superannuation funds manage funds saved throughout an employee's working life with the aim of providing the employee with a retirement income.

Accepted Answer

A) True 
 B)False

Question 4

Investments in ... are restricted to more wealthy clients.

Accepted Answer

A) superannuation funds 
B) hedge funds 
C) managed funds 
D) trusts 
A) superannuation funds 
B) hedge funds 
C) managed funds 
D) trusts

Question 5

What is a common rationale for a managed fund?

Accepted Answer

A) the need for more diversity in investment products 
B) the opportunity for retail investors to achieve superior diversification 
C) the potential for retail investors to achieve superior returns 
D) the opportunity for retail investors to achieve superior diversification and the potential for retail investors to achieve superior returns 
A) the need for more diversity in investment products 
B) the opportunity for retail investors to achieve superior diversification 
C) the potential for retail investors to achieve superior returns 
D) the opportunity for retail investors to achieve superior diversification and the potential for retail investors to achieve superior returns

Question 6

Which of the following statements is true?

Accepted Answer

A) PAIRS is the basis of APRA's risk-based approach to supervision. 
B) PAIRS is an internal rating system for scoring each entity in the regulated population of insurance and superannuation entities. 
C) Due to PAIRS, APRA's supervision can be tailored to the risk profile of an individual entity. 
D) All of the listed options are correct. 
A) PAIRS is the basis of APRA's risk-based approach to supervision. 
B) PAIRS is an internal rating system for scoring each entity in the regulated population of insurance and superannuation entities. 
C) Due to PAIRS, APRA's supervision can be tailored to the risk profile of an individual entity. 
D) All of the listed options are correct.

Question 7

Insurance policy benefits are classified on an insurance company's balance sheet as:

Accepted Answer

A) liabilities, because the insurance company may have to pay out the benefits 
B) assets, because policy benefits are valuable to the company 
C) liabilities, because customers may fall behind on their premium payments 
D) assets, because policy benefits are fully covered by premium payments 
A) liabilities, because the insurance company may have to pay out the benefits 
B) assets, because policy benefits are valuable to the company 
C) liabilities, because customers may fall behind on their premium payments 
D) assets, because policy benefits are fully covered by premium payments

Question 8

Insurance companies are not subject to regulatory capital adequacy rules.

Accepted Answer

A) True 
 B)False

Question 9

From 1997 to 2013, total superannuation assets in Australia increased from $0.3 trillion (58% of GDP) to:

Accepted Answer

A) $0.5 trillion (60% of GDP) 
B) $1 trillion (82% of GDP) 
C) $1.6 trillion (106% of GDP) 
D) $2.2 trillion (151% of GDP) 
A) $0.5 trillion (60% of GDP) 
B) $1 trillion (82% of GDP) 
C) $1.6 trillion (106% of GDP) 
D) $2.2 trillion (151% of GDP)

Question 10

Insurance services offered by FIs protect individuals and businesses (policyholders) from the financial impact of adverse events.

Accepted Answer

A) True 
 B)False

Question 11

.... held the largest proportion of superannuation assets in 2013, rising from 11% in 1997 to 32% as at June 2013.

Accepted Answer

A) Small funds 
B) Industry funds 
C) Corporate funds 
D) Retail funds 
A) Small funds 
B) Industry funds 
C) Corporate funds 
D) Retail funds

Question 12

Which of the following statements are true in the context of general insurance?

Accepted Answer

A) Loss rates on all general property policies are adversely affected by unexpected increases in inflation. 
B) Long-tail losses arise where the peril occurs during a coverage period but a claim is not made until many years later. 
C) Long-tail losses arise where the peril occurs during a coverage period but a claim is not made until many years later and loss rates are more predictable on low-severity high-frequency lines than on high-severity low-frequency lines. 
D) Loss rates on all general property policies are adversely affected by unexpected increases in inflation; long-tail losses arise where the peril occurs during a coverage period but a claim is not made until many years later and loss rates are more predictable on low-severity high-frequency lines than on high-severity low-frequency lines. 
A) Loss rates on all general property policies are adversely affected by unexpected increases in inflation. 
B) Long-tail losses arise where the peril occurs during a coverage period but a claim is not made until many years later. 
C) Long-tail losses arise where the peril occurs during a coverage period but a claim is not made until many years later and loss rates are more predictable on low-severity high-frequency lines than on high-severity low-frequency lines. 
D) Loss rates on all general property policies are adversely affected by unexpected increases in inflation; long-tail losses arise where the peril occurs during a coverage period but a claim is not made until many years later and loss rates are more predictable on low-severity high-frequency lines than on high-severity low-frequency lines.

Question 13

Investments in hedge funds are restricted to more wealthy clients.

Accepted Answer

A) True 
 B)False

Question 14

Reinsurance companies sell insurance products directly to the customer.

Accepted Answer

A) True 
 B)False

Question 15

Reinsurance is insurance purchased by insurers from other insurers to limit the total loss an insurer would experience in case of a disaster.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is true?

Accepted Answer

A) A closed-end investment company is a specialised firm that invests in securities and assets of other firms. 
B) A closed-end investment company is a specialised firm that invests in securities and assets of other firms but has a fixed supply of shares outstanding itself. 
C) A closed-end investment company is a specialised firm that invests in securities and assets of other firms but has a variable supply of shares outstanding itself. 
D) A closed-end investment company has a variable supply of shares outstanding itself. 
A) A closed-end investment company is a specialised firm that invests in securities and assets of other firms. 
B) A closed-end investment company is a specialised firm that invests in securities and assets of other firms but has a fixed supply of shares outstanding itself. 
C) A closed-end investment company is a specialised firm that invests in securities and assets of other firms but has a variable supply of shares outstanding itself. 
D) A closed-end investment company has a variable supply of shares outstanding itself.

Question 17

Which of the following are reasons for underwriting risk to result?

Accepted Answer

A) Generated premiums are insufficient to cover claims incurred insuring a particular peril. 
B) Generated premiums are insufficient to cover the administrative expenses of providing that insurance after taking into account the investment income generated between the time premiums are received and the time claims are paid. 
C) Generated premiums are insufficient to cover ordinary business expenses. 
D) Generated premiums are insufficient to cover claims incurred insuring a particular peril and generated premiums are insufficient to cover the administrative expenses of providing that insurance after taking into account the investment income generated between the time premiums are received and the time claims are paid. 
A) Generated premiums are insufficient to cover claims incurred insuring a particular peril. 
B) Generated premiums are insufficient to cover the administrative expenses of providing that insurance after taking into account the investment income generated between the time premiums are received and the time claims are paid. 
C) Generated premiums are insufficient to cover ordinary business expenses. 
D) Generated premiums are insufficient to cover claims incurred insuring a particular peril and generated premiums are insufficient to cover the administrative expenses of providing that insurance after taking into account the investment income generated between the time premiums are received and the time claims are paid.

Question 18

Which of the following statements is true?

Accepted Answer

A) Long-tail loss refers to a series of claims made after an initial claim has been made. 
B) Long-tail loss refers to a claim that is made some time after a policy was written. 
C) Short-tail loss refers to a series of claims made after an initial claim has been made. 
D) Short-tail loss refers to a claim that is made some time after a policy was written. 
A) Long-tail loss refers to a series of claims made after an initial claim has been made. 
B) Long-tail loss refers to a claim that is made some time after a policy was written. 
C) Short-tail loss refers to a series of claims made after an initial claim has been made. 
D) Short-tail loss refers to a claim that is made some time after a policy was written.

Question 19

Which of the following statements is true with regard to the regulation of money market corporations?

Accepted Answer

A) Money market corporations are unregulated. 
B) APRA is the primary regulator for money market corporations. 
C) ASIC is the primary regulator for money market corporations. 
D) The ACCC is the primary regulator for money market corporations. 
A) Money market corporations are unregulated. 
B) APRA is the primary regulator for money market corporations. 
C) ASIC is the primary regulator for money market corporations. 
D) The ACCC is the primary regulator for money market corporations.

Question 20

Which of the following statements is true?

Accepted Answer

A) The proceeds of life insurance policies are tax free after they have been in force for at least five years. 
B) The proceeds of life insurance policies are tax free after they have been in force for at least 10 years. 
C) The proceeds of life insurance policies are tax free after they have been in force for at least 15 years. 
D) The proceeds of life insurance policies are always taxed. 
A) The proceeds of life insurance policies are tax free after they have been in force for at least five years. 
B) The proceeds of life insurance policies are tax free after they have been in force for at least 10 years. 
C) The proceeds of life insurance policies are tax free after they have been in force for at least 15 years. 
D) The proceeds of life insurance policies are always taxed.

Which of the following did not occur in the life insurance industry during the most recent financial crisis?

Which of the following is an adequate definition of liability insurance?

Superannuation funds manage funds saved throughout an employee's working life with the aim of providing the employee with a retirement income.

Investments in ... are restricted to more wealthy clients.

What is a common rationale for a managed fund?

Which of the following statements is true?

Insurance policy benefits are classified on an insurance company's balance sheet as:

Insurance companies are not subject to regulatory capital adequacy rules.

From 1997 to 2013, total superannuation assets in Australia increased from $0.3 trillion (58% of GDP) to:

Insurance services offered by FIs protect individuals and businesses (policyholders) from the financial impact of adverse events.

.... held the largest proportion of superannuation assets in 2013, rising from 11% in 1997 to 32% as at June 2013.

Which of the following statements are true in the context of general insurance?

Investments in hedge funds are restricted to more wealthy clients.

Reinsurance companies sell insurance products directly to the customer.

Reinsurance is insurance purchased by insurers from other insurers to limit the total loss an insurer would experience in case of a disaster.

Which of the following statements is true?

Which of the following are reasons for underwriting risk to result?

Which of the following statements is true?

Which of the following statements is true with regard to the regulation of money market corporations?

Which of the following statements is true?

Why Are Financial Institutions Special

The Financial Service Industry: Depository Institutions

Risks 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

Managing Interest Rate Risk Using Securitisation

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 Risks

Capital Management and Adequacy

Filters

Exam 3: The Financial Service Industry: Other Financial Institutions

Which of the following did not occur in the life insurance industry during the most recent financial crisis?

Which of the following is an adequate definition of liability insurance?

Superannuation funds manage funds saved throughout an employee's working life with the aim of providing the employee with a retirement income.

Investments in ... are restricted to more wealthy clients.

What is a common rationale for a managed fund?

Which of the following statements is true?

Insurance policy benefits are classified on an insurance company's balance sheet as:

Insurance companies are not subject to regulatory capital adequacy rules.

From 1997 to 2013, total superannuation assets in Australia increased from $0.3 trillion (58% of GDP) to:

Insurance services offered by FIs protect individuals and businesses (policyholders) from the financial impact of adverse events.

.... held the largest proportion of superannuation assets in 2013, rising from 11% in 1997 to 32% as at June 2013.

Which of the following statements are true in the context of general insurance?

Investments in hedge funds are restricted to more wealthy clients.

Reinsurance companies sell insurance products directly to the customer.

Reinsurance is insurance purchased by insurers from other insurers to limit the total loss an insurer would experience in case of a disaster.

Which of the following statements is true?

Which of the following are reasons for underwriting risk to result?

Which of the following statements is true?

Which of the following statements is true with regard to the regulation of money market corporations?

Which of the following statements is true?

Why Are Financial Institutions Special

The Financial Service Industry: Depository Institutions

Risks 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

Managing Interest Rate Risk Using Securitisation

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 Risks

Capital Management and Adequacy

Filters