Question 1

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.

Question 2

The growth in off-balance-sheet activities during the two decades from 1990 to 2014 was due, in large part, to the use of derivative contracts.

Accepted Answer

A) True 
 B)False

Question 3

PAIRS provides APRA with a score-card approach to assessing the risk of FI failure and the impact of any failure by detailing the 12 risk elements separately and disclosing the result to the FI being investigated.

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 Australian major banks' 30-year average return on equity (ROE) is:

Accepted Answer

A) -16 % 
B) -5 % 
C) 5 % 
D) 16 % 
A) -16 % 
B) -5 % 
C) 5 % 
D) 16 %

Question 6

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 7

Non-bank depository institutions are also referred to as CUBS.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Following the global financial crisis, banks strengthened their funding and liquidity profiles by:

Accepted Answer

A) reducing their holdings of liquid assets 
B) increasing their holdings of liquid assets 
C) reducing their use of wholesale funds and increasing their holdings of liquid assets 
D) increasing their use of wholesale funds and decreasing their holdings of liquid assets 
A) reducing their holdings of liquid assets 
B) increasing their holdings of liquid assets 
C) reducing their use of wholesale funds and increasing their holdings of liquid assets 
D) increasing their use of wholesale funds and decreasing their holdings of liquid assets

Question 10

Which of the following statements is true?

Accepted Answer

A) On average building societies are larger than credit unions and their total share of the depository institution market has increased since 1992. 
B) On average building societies are smaller than credit unions and their total share of the depository institution market has decreased significantly since 1992. 
C) On average building societies are larger than credit unions and their total share of the depository institution market has decreased significantly since 1992. 
D) On average building societies are smaller than credit unions and their total share of the depository institution market has increased since 1992. 
A) On average building societies are larger than credit unions and their total share of the depository institution market has increased since 1992. 
B) On average building societies are smaller than credit unions and their total share of the depository institution market has decreased significantly since 1992. 
C) On average building societies are larger than credit unions and their total share of the depository institution market has decreased significantly since 1992. 
D) On average building societies are smaller than credit unions and their total share of the depository institution market has increased since 1992.

Question 11

The collapse of Lehman Brothers in 2008 and the impact of the global financial crisis made it difficult for Australian banks to obtain off-shore funding.As a consequence banks pursued more stable sources of funds.These strategies include:

Accepted Answer

A) increased use of wholesale long-term funding 
B) decreased use of wholesale long-term funding 
C) decreased holdings of liquid assets 
D) decreased use of wholesale long-term funding and increased holdings of liquid assets 
A) increased use of wholesale long-term funding 
B) decreased use of wholesale long-term funding 
C) decreased holdings of liquid assets 
D) decreased use of wholesale long-term funding and increased holdings of liquid assets

Question 12

The number of banks has grown steadily since the middle of the 1980s for the following reasons:

Accepted Answer

A) liberalisation of conditions for foreign bank entry by APRA 
B) deregulation of the banking industry, including the relaxation of bank entry requirements 
C) changes to the regulatory regime for non-bank depository institutions favoured conversion from building society to banks 
D) All of the listed options are correct. 
A) liberalisation of conditions for foreign bank entry by APRA 
B) deregulation of the banking industry, including the relaxation of bank entry requirements 
C) changes to the regulatory regime for non-bank depository institutions favoured conversion from building society to banks 
D) All of the listed options are correct.

Question 13

Depository institutions are required by APRA to be responsible for:

Accepted Answer

A) their own liquidity management strategy that must include scenario analysis 
B) their own capital management strategy that must include risk analysis 
C) both their own liquidity, capital management strategies and a business continuity plan 
D) None of the listed options are correct.APRA is responsible for the supervision and oversight of all depository institutions. 
A) their own liquidity management strategy that must include scenario analysis 
B) their own capital management strategy that must include risk analysis 
C) both their own liquidity, capital management strategies and a business continuity plan 
D) None of the listed options are correct.APRA is responsible for the supervision and oversight of all depository institutions.

Question 14

ASIC stands for Australian Society of Inter-bank Cooperation and ASIC is responsible for market integrity and consumer protection across the financial system.

Accepted Answer

A) True 
 B)False

Question 15

Responding to the financial crisis, the Australian government introduced a number of measures to ease liquidity issues and included the following:

Accepted Answer

A) a permanent financial claims scheme (FCS) in October 2008, which explicitly guaranteed bank deposits with a $1 million cap 
B) a semi-permanent financial claims scheme (FCS), which implicitly guaranteed bank deposits 
C) a permanent guarantee scheme for large deposits and wholesale funding which, for a fee, guaranteed bank deposits greater than $1 million 
D) a permanent financial claims scheme (FCS) in October 2008, which explicitly guaranteed bank deposits with a $1 million cap; the guarantee was reduced to $250 000 per depositor from 2012 
A) a permanent financial claims scheme (FCS) in October 2008, which explicitly guaranteed bank deposits with a $1 million cap 
B) a semi-permanent financial claims scheme (FCS), which implicitly guaranteed bank deposits 
C) a permanent guarantee scheme for large deposits and wholesale funding which, for a fee, guaranteed bank deposits greater than $1 million 
D) a permanent financial claims scheme (FCS) in October 2008, which explicitly guaranteed bank deposits with a $1 million cap; the guarantee was reduced to $250 000 per depositor from 2012

Question 16

Which of the following statements is true?

Accepted Answer

A) Non-bank depository institutions exclude building societies and credit unions. 
B) A non-bank depository institution meets the legal definition of a bank. 
C) Building societies are the same as credit unions. 
D) A non-bank depository institution may be a building society or a credit union and a non-bank depository institution undertakes many of the same activities of a bank without meeting the legal definition of a bank. 
A) Non-bank depository institutions exclude building societies and credit unions. 
B) A non-bank depository institution meets the legal definition of a bank. 
C) Building societies are the same as credit unions. 
D) A non-bank depository institution may be a building society or a credit union and a non-bank depository institution undertakes many of the same activities of a bank without meeting the legal definition of a bank.

Question 17

The term 'spread' refers to the difference between an FI's:

Accepted Answer

A) assets and liabilities 
B) liabilities and equity 
C) short-term lending rates and long-term lending rates 
D) lending and deposit rates 
A) assets and liabilities 
B) liabilities and equity 
C) short-term lending rates and long-term lending rates 
D) lending and deposit rates

Question 18

Explain the Post Wallis Inquiry regulatory framework in Australia.

Accepted Answer

Australia's current financial regulatory

Question 19

In case of credit unions, the members are usually linked to the society by some common bond such as employer or profession.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements is true?

Accepted Answer

A) Building societies are depository institutions. 
B) Building societies usually operate on a cooperative basis. 
C) In case of building societies the depositors are also members of the society. 
D) All of the listed options are correct. 
A) Building societies are depository institutions. 
B) Building societies usually operate on a cooperative basis. 
C) In case of building societies the depositors are also members of the society. 
D) All of the listed options are correct.

Which of the following statements is true?

The growth in off-balance-sheet activities during the two decades from 1990 to 2014 was due, in large part, to the use of derivative contracts.

PAIRS provides APRA with a score-card approach to assessing the risk of FI failure and the impact of any failure by detailing the 12 risk elements separately and disclosing the result to the FI being investigated.

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

The Australian major banks' 30-year average return on equity (ROE) is:

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

Non-bank depository institutions are also referred to as CUBS.

The Probability and Impact Rating System (PAIRS):

Following the global financial crisis, banks strengthened their funding and liquidity profiles by:

Which of the following statements is true?

The collapse of Lehman Brothers in 2008 and the impact of the global financial crisis made it difficult for Australian banks to obtain off-shore funding.As a consequence banks pursued more stable sources of funds.These strategies include:

The number of banks has grown steadily since the middle of the 1980s for the following reasons:

Depository institutions are required by APRA to be responsible for:

ASIC stands for Australian Society of Inter-bank Cooperation and ASIC is responsible for market integrity and consumer protection across the financial system.

Responding to the financial crisis, the Australian government introduced a number of measures to ease liquidity issues and included the following:

Which of the following statements is true?

The term 'spread' refers to the difference between an FI's:

Explain the Post Wallis Inquiry regulatory framework in Australia.

In case of credit unions, the members are usually linked to the society by some common bond such as employer or profession.

Which of the following statements is true?

Why Are Financial Institutions Special

The Financial Service Industry: Other Financial 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 2: The Financial Service Industry: Depository Institutions

Which of the following statements is true?

The growth in off-balance-sheet activities during the two decades from 1990 to 2014 was due, in large part, to the use of derivative contracts.

PAIRS provides APRA with a score-card approach to assessing the risk of FI failure and the impact of any failure by detailing the 12 risk elements separately and disclosing the result to the FI being investigated.

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

The Australian major banks' 30-year average return on equity (ROE) is:

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

Non-bank depository institutions are also referred to as CUBS.

The Probability and Impact Rating System (PAIRS):

Following the global financial crisis, banks strengthened their funding and liquidity profiles by:

Which of the following statements is true?

The collapse of Lehman Brothers in 2008 and the impact of the global financial crisis made it difficult for Australian banks to obtain off-shore funding.As a consequence banks pursued more stable sources of funds.These strategies include:

The number of banks has grown steadily since the middle of the 1980s for the following reasons:

Depository institutions are required by APRA to be responsible for:

ASIC stands for Australian Society of Inter-bank Cooperation and ASIC is responsible for market integrity and consumer protection across the financial system.

Responding to the financial crisis, the Australian government introduced a number of measures to ease liquidity issues and included the following:

Which of the following statements is true?

The term 'spread' refers to the difference between an FI's:

Explain the Post Wallis Inquiry regulatory framework in Australia.

In case of credit unions, the members are usually linked to the society by some common bond such as employer or profession.

Which of the following statements is true?

Why Are Financial Institutions Special

The Financial Service Industry: Other Financial 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