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50 Cards in this Set

  • Front
  • Back
The Capital Adequacy Requirements require banks to hold a minimum level of:
Select one:
a. liquid assets
b. equity capital
c. deposits with the Reserve Bank of Australia
d. Government securities
b. equity capital

Each Australian bank must have a ratio of capital to risk-weighted assets and off-balance sheet items of at least 8%, with at least half being Tier 1 capital.
Which of the following is NOT a function of the Reserve Bank of Australia?

Select one:
a. Control of the $A exchange rate
b. Issue of Australian bank notes
c. Open market operations to influence interest rate movements
d. Research and publications
e. Links with other central banks
a. Control of the $A exchange rate

The currency has been floated since 1983. The RBA might choose to influence the exchange rate by buying or selling in the foreign exchange market but it does not set the rate.
The supervisor of the banking sector is the
Select one:
a. Australian Bankers Association
b. Australian Prudential Regulation Authority
c. Commonwealth Bank of Australia
d. Federal Treasury Department
e. Reserve Bank of Australia
b. Australian Prudential Regulation Authority

APRA has been the regulator since July 1998.
A ______________ is a non-bank financial institution which issues debentures and unsecured notes as an important source of funding.
finance company
Which of the following in NOT correct?
Current regulations that banks must satisfy include
Select one:
a. Capital Adequacy Guidelines for credit risk
b. Capital Adequacy Guidelines for market risk
c. Liquidity Managements Guidelines
d. Non-Callable Deposits
d. Non-Callable Deposits

Non-Callable Deposits were abolished in July, 1999 and replaced by supervisory fees.
Which of the following issued by a bank is core capital?
Select one:
a. Term deposits
b. Ordinary shares
b. Ordinary shares
Unit trusts are identified according to the area in which their funds are invested. Two types of unit trust are __________ and _______________ .
Equity, property, cash management, fixed interest or mortgage
Insurance which requires employers to compensate employees accidentally injured at work is called _________.
Workers compensation insurance or
employers liability insurance.
True or False: The majority of the assets of building societies are their investments in property.
False.

Building societies usually do not make direct investments in property.
True or False: Life insurance claims experience is more predictable than for general insurance.
True.
True or False: Credit unions are primarily involved with the business sector.
False.

Credit unions are mostly involved with their members who are individuals.
Who would take out professional indemnity insurance and what is covered?
Taken out by professionals such as accountants and solicitors.

It covers losses to clients because of the professionals negligence.
True or False: Term insurance pays a benefit if the insured life survives to the end of the term of the policy.
False.

Term insurance pays benefit if insured life dies within the policy term.
A pooled investment fund invested by a manager. It is identified according to the type of assets which can be invested.
Unit trust
The Australian Prudential Regulation Authority is the prudential supervisor of
a. investment banks
b. finance companies
c. credit unions
d. unit trusts
e. securitisation vehicles
c. credit unions
A financial institution which lends to individuals but whose lending is predominantly to business in the form of leasing, factoring etc.
Finance company
A cooperative society whose members have a common bond, such as professional, industry or community.
Credit union
A financial institution offering services to the corporate sector. Specialises in corporate financial advice, mergers and acquisitions, underwriting of new share issues, trading in derivatives markets.
Investment Bank
True or False: General insurance contracts are usually for a short term than life insurance contracts.
True
True or False: Comprehensive motor vehicle insurance is compulsory.
False

CTP is compulsory.
True or False: Whole of life insurance policies comprise a death cover component and an investment component.
True
True or False: In superannuation, managed growth funds are designed to maximise capital.
True
True or False: Industry superannuation funds are defined benefit schemes.
False
True or False: On change of employment, accumulated superannuation contributions may be transferred to a rollover fund.
True
True or False: Most of the assets of life insurance companies relate to their superannuation business.
True
Compulsory Third Party Motor Vehicle Insurance provides
Select one:
a. cover for the loss or damage to vehicles and for damage to the property of others.
b. cover for the bodily injury to persons injured in a motor accident.
b. cover for the bodily injury to persons injured in a motor accident.

The at fault driver is not covered.
True or False: The Superannuation Guarantee Charge requires employers to provide a minimum level of superannuation payments for their employees.
True
Shares issued by a bank are either;

a. Tier 1 capital
b. Tier 2 capital
c. not capital
a. Tier 1 capital
True or False: In superannuation, the Australian Prudential Regulation Authority is the industry regulator.
True
Certificates of Deposit issued by a bank are either;

a. Tier 1 capital
b. Tier 2 capital
c. not capital
c. not capital
A/an _________________________________ superannuation fund pays the total contributions and earnings of the fund, less expenses and taxes.
Accumulation
On change of employment or early retirement superannuation benefits may be transferred to a ______________ fund.
rollover
Units in a listed unit trust are listed on the ___________
ASX.

Australian Securities Exchange.
A more common name for money market corporations is _______________.
Investment Bank or Merchant Bank
True or False: Workers compensation insurance is issued by a life insurance company.
False.

It is issued by a general insurance company.
True or False: Since financial deregulation in Australia, the total assets of unit trusts have declined as a percentage of the total assets of all financial institutions.
False.

Percentage has increased.
Consider credit unions, finance companies and superannuation funds.

Ranks them in order of size of assets with largest shown first.
Superannuation funds, finance companies, credit unions.

Superannuation funds are largest after banks, credit unions are very small.
Which of the following would have a greater proportion of equity investments?
Select one:
a. Capital Stable Fund
b. Balanced Growth Fund
b. Balanced Growth Fund

Over the long term a portfolio containing equities will give capital appreciation.
Term insurance provides payment of the sum assured
Select one:
a. if the insured life dies within a specified term.
b. if the insured life dies within a specified term or if the insured survives to the end of that specified term.
a. if the insured life dies within a specified term.
Which of the following is NOT general insurance business?
Select one:
a. Comprehensive Motor Vehicle insurance
b. Compulsory Third Party insurance
c. Employer's Liability insurance
d. Trauma insurance
e. Professional Indemnity insurance
d. Trauma insurance
Having regard to the matching principle what types of assets would a life insurance company be least likely to hold?
Select one:
a. Money market securities
b. Equity investments
c. Housing loan mortgages
d. Bonds and debentures
a. Money market securities

Life insurance contracts are longer term so most of the investments will be long term. Money market securities are very short-term.
Superannuation funds that aim to deliver a longer-term income stream and capital appreciation through the acquisition of a diversified asset portfolio across a wider spectrum are categorised as:
Select one:
a. Managed growth funds
b. Capital guaranteed funds
c. Balanced growth funds
d. Capital stable funds
c. Balanced growth funds
Which of the following statements about superannuation is NOT correct?

Select one:
a. The Superannuation Guarantee Charge requires employers to provide a minimum level of superannuation payments for their employees.
b. Superannuation business accounts for only a small part of the assets held by life insurance companies.
c. On change of employment, accumulated superannuation contributions may be transferred to a rollover fund.
d. In a capital guaranteed fund a contributor is guaranteed to receive back as much as was deposited. Incorrect
b. Superannuation business accounts for only a small part of the assets held by life insurance companies.

Superannuation accounts for about 80% of the assets of life insurance companies.
Which of the following statements is NOT correct?
During the last 25 years some developments in the Australian life insurance industry have been:

Select one:
a. a decrease in "conventional" (whole-life and endowment assurance) business Incorrect
b. a increase in disability insurance business
c. a decrease in superannuation business
d. an increase in investment account business
c. a decrease in superannuation business

The introduction of compulsory superannuation has increased superannuation business
Which of the following statements about finance companies is NOT correct?

Select one:
a. Banks own or control several large finance companies
b. Their principal clients are households
c. Most of their lending is in the form of loans and leases
d. Over the last 20 years their assets have represented a decreasing percentage of all financial intermediaries' assets.
b. Their principal clients are households
Which of the following liability types represent an important source of funding for finance companies?

Select one:
a. Fixed term deposits
b. Debentures and unsecured notes
c. Bills of exchange
d. Deposits from members.
b. Debentures and unsecured notes
Which of the following is NOT a function of investment banks?

Select one:
a. Underwriting of new share issues.
b. Advice to companies on mergers and takeovers
c. Foreign exchange transactions
d. Credit card financing, through affiliated merchants
d. Credit card financing, through affiliated merchants
Which of the following institutions raises substantial funds in the money market?
Select one:
a. Building societies
b. Credit unions
c. Finance companies
d. Investment banks
e. Unit trusts
d. Investment banks

Investment banks are sometimes called money market corporations.
Which of the following statements about public unit trusts is NOT correct?
Select one:
a. Deregulation has resulted in a sharp decline in their share of assets of all financial intermediaries.
b. They provide a level of investor protection through the appointment of a trustee
c. They allow small investors access to larger investment opportunities
d. Units in a listed unit trust are listed on the Australian Securities Exchange
a. Deregulation has resulted in a sharp decline in their share of assets of all financial intermediaries.

Public unit trusts are not competing with bank investments as they are medium to long term and invest in growth investments such as equities or property.
The regulator of building societies and credit unions is
Select one:
a. Australian Financial Institutions Commission
b. Australian Prudential Regulation Authority
c. Reserve Bank of Australia
d. State Governments
b. Australian Prudential Regulation Authority

APRA has been the regulator since 1999. Also regulates banks, insurance companies and superannuation funds.