Question 1

A capital guaranteed fund guarantees that contributors will receive at least the value of the contributions and future earnings of the fund.

Accepted Answer

A) True 
 B)False  False

Question 2

If an individual retires early but wants to retain their superannuation entitlements in a favourable taxation environment,they can hold their eligible superannuation funds in a:

Accepted Answer

A)  single-premium scheme. 
B)  growing annuity scheme. 
C)  rollover scheme. 
D)  termination scheme. 
A)  single-premium scheme. 
B)  growing annuity scheme. 
C)  rollover scheme. 
D)  termination scheme. C

Question 3

An investor is considering different methods of investment,including a public unit trust.Which of the following is NOT a function of a public unit trust?

Accepted Answer

A)  Acting as a vehicle for the pooling of investor funds 
B)  Providing a level of investor protection though the appointment of a trustee 
C)  Allowing small investors access to larger investment opportunities 
D)  Locking in a trust unit price by listing on the Australian Securities Exchange 
A)  Acting as a vehicle for the pooling of investor funds 
B)  Providing a level of investor protection though the appointment of a trustee 
C)  Allowing small investors access to larger investment opportunities 
D)  Locking in a trust unit price by listing on the Australian Securities Exchange D

Question 4

Life insurance companies:

Accepted Answer

A)  are significant investors in equities. 
B)  invest mainly in debt, which is generally in the form of debentures. 
C)  are not important suppliers of equity funding. 
D)  do not match any of these answers. 
A)  are significant investors in equities. 
B)  invest mainly in debt, which is generally in the form of debentures. 
C)  are not important suppliers of equity funding. 
D)  do not match any of these answers.

Question 5

Finance companies generally:

Accepted Answer

A)  issue shares and use the proceeds to buy bonds. 
B)  raise funds in financial markets to lend to households and companies. 
C)  raise funds from banks to lend to households and companies. 
D)  issue bonds and use the proceeds to buy shares. 
A)  issue shares and use the proceeds to buy bonds. 
B)  raise funds in financial markets to lend to households and companies. 
C)  raise funds from banks to lend to households and companies. 
D)  issue bonds and use the proceeds to buy shares.

Question 6

In relation to Australian managed funds,superannuation funds currently have the largest amount of funds under management.

Accepted Answer

A) True 
 B)False

Question 7

A developer is promoting a large new suburban shopping centre and decides to establish a publicly listed unit trust to attract investors.Which type of unit trust would likely be established?

Accepted Answer

A)  A mortgage trust 
B)  A property trust 
C)  An equity trust 
D)  A cash management trust 
A)  A mortgage trust 
B)  A property trust 
C)  An equity trust 
D)  A cash management trust

Question 8

Venture capital is:

Accepted Answer

A)  funding provided for a new start-up business by a group of investors. 
B)  providing advice to companies on the raising of new capital. 
C)  short-term funding provided by banks. 
D)  placement of securities to institutional investors. 
A)  funding provided for a new start-up business by a group of investors. 
B)  providing advice to companies on the raising of new capital. 
C)  short-term funding provided by banks. 
D)  placement of securities to institutional investors.

Question 9

A ________ is a financial intermediary that deals mainly in the flow of funds between members.Membership is generally derived from some common bond.

Accepted Answer

A)  savings bank 
B)  superannuation fund 
C)  credit union 
D)  merchant bank 
A)  savings bank 
B)  superannuation fund 
C)  credit union 
D)  merchant bank

Question 10

Superannuation funds that aim at delivering a longer term income stream and capital appreciation by acquiring a diversified asset portfolio across a wider risk spectrum are classified as:

Accepted Answer

A)  managed growth funds. 
B)  capital guaranteed funds. 
C)  balanced growth funds. 
D)  capital stable funds. 
A)  managed growth funds. 
B)  capital guaranteed funds. 
C)  balanced growth funds. 
D)  capital stable funds.

Question 11

Managed fund managers:

Accepted Answer

A)  invest funds according to their fund's trust deed. 
B)  generally reinvest income and any capital gains in the fund. 
C)  will usually maintain a diversified portfolio of assets within the asset classes. 
D)  all of the given answers. 
A)  invest funds according to their fund's trust deed. 
B)  generally reinvest income and any capital gains in the fund. 
C)  will usually maintain a diversified portfolio of assets within the asset classes. 
D)  all of the given answers.

Question 12

Export Finance and Insurance Corporation's function is:

Accepted Answer

A)  solely to lend directly to small- or medium-sized businesses involved in export trade. 
B)  solely to guarantee trade finance to small- or medium- sized businesses involved in export trade. 
C)  to encourage export trade by providing trade insurance and financial services. 
D)  solely to provide insurance for Australian suppliers of goods and services against non-payment. 
A)  solely to lend directly to small- or medium-sized businesses involved in export trade. 
B)  solely to guarantee trade finance to small- or medium- sized businesses involved in export trade. 
C)  to encourage export trade by providing trade insurance and financial services. 
D)  solely to provide insurance for Australian suppliers of goods and services against non-payment.

Question 13

A fund that aims to achieve high investment returns by using exotic financial products is called a:

Accepted Answer

A)  a hedge fund. 
B)  project fund. 
C)  money market fund. 
D)  leverage fund. 
A)  a hedge fund. 
B)  project fund. 
C)  money market fund. 
D)  leverage fund.

Question 14

Underwriting is when a/an:

Accepted Answer

A)  broker places new share issues with selected financial institutions. 
B)  investment bank gives advice to a company about a merger. 
C)  broker or a financial institution guarantees prices on a security issue for a company. 
D)  investment bank finds funding for a company. 
A)  broker places new share issues with selected financial institutions. 
B)  investment bank gives advice to a company about a merger. 
C)  broker or a financial institution guarantees prices on a security issue for a company. 
D)  investment bank finds funding for a company.

Question 15

The main advantage of a listed trust over an unlisted unit trust is that a listed trust:

Accepted Answer

A)  has a trustee but an unlisted trust does not. 
B)  can be sold at any time by the unit holder in the marketplace. 
C)  invests in equities, while an unlisted trust invests only in fixed interest. 
D)  invests in equities, while an unlisted trust invests in property. 
A)  has a trustee but an unlisted trust does not. 
B)  can be sold at any time by the unit holder in the marketplace. 
C)  invests in equities, while an unlisted trust invests only in fixed interest. 
D)  invests in equities, while an unlisted trust invests in property.

Question 16

In Australia permanent building societies are supervised by:

Accepted Answer

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

Question 17

When an employee makes regular contributions equal to 7% of their salary and their employer also contributes the equivalent of 14% of salary to a superannuation fund that is an accumulation scheme:

Accepted Answer

A)  the final payout benefit is stated when the member joins the fund. 
B)  the final payout depends upon the investment performance of the fund. 
C)  payment is specified under the superannuation guarantee legislation. 
D)  the benefit is paid in the form of a life annuity. 
A)  the final payout benefit is stated when the member joins the fund. 
B)  the final payout depends upon the investment performance of the fund. 
C)  payment is specified under the superannuation guarantee legislation. 
D)  the benefit is paid in the form of a life annuity.

Question 18

Explain the operation of cash management trusts.

Accepted Answer

A cash management trust invests the majo

Question 19

A credit union differs from most other financial institutions because:

Accepted Answer

A)  it accepts deposits mainly from members. 
B)  its assets are mainly loans to members. 
C)  there are stringent requirements to hold prime liquid assets. 
D)  all of the given answers are correct. 
A)  it accepts deposits mainly from members. 
B)  its assets are mainly loans to members. 
C)  there are stringent requirements to hold prime liquid assets. 
D)  all of the given answers are correct.

Question 20

Which of the following is NOT an important result of the compulsory guarantee charge implemented in July 1992?

Accepted Answer

A)  The amount of superannuation funds in Australia has increased significantly. 
B)  The employer contribution SGC increased to 9% from July 2002. 
C)  The vast majority of retirement savings are invested in superannuation funds. 
D)  The SGC represents a penalty taxation charge on employers. 
A)  The amount of superannuation funds in Australia has increased significantly. 
B)  The employer contribution SGC increased to 9% from July 2002. 
C)  The vast majority of retirement savings are invested in superannuation funds. 
D)  The SGC represents a penalty taxation charge on employers.

Exam 3: Non-Bank Financial Institutions

A capital guaranteed fund guarantees that contributors will receive at least the value of the contributions and future earnings of the fund.

If an individual retires early but wants to retain their superannuation entitlements in a favourable taxation environment,they can hold their eligible superannuation funds in a:

An investor is considering different methods of investment,including a public unit trust.Which of the following is NOT a function of a public unit trust?

Life insurance companies:

Finance companies generally:

In relation to Australian managed funds,superannuation funds currently have the largest amount of funds under management.

A developer is promoting a large new suburban shopping centre and decides to establish a publicly listed unit trust to attract investors.Which type of unit trust would likely be established?

Venture capital is:

A ________ is a financial intermediary that deals mainly in the flow of funds between members.Membership is generally derived from some common bond.

Superannuation funds that aim at delivering a longer term income stream and capital appreciation by acquiring a diversified asset portfolio across a wider risk spectrum are classified as:

Managed fund managers:

Export Finance and Insurance Corporation's function is:

A fund that aims to achieve high investment returns by using exotic financial products is called a:

Underwriting is when a/an:

The main advantage of a listed trust over an unlisted unit trust is that a listed trust:

In Australia permanent building societies are supervised by:

When an employee makes regular contributions equal to 7% of their salary and their employer also contributes the equivalent of 14% of salary to a superannuation fund that is an accumulation scheme:

Explain the operation of cash management trusts.

A credit union differs from most other financial institutions because:

Which of the following is NOT an important result of the compulsory guarantee charge implemented in July 1992?

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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