Question 1

Off-balance-sheet activities are:

Accepted Answer

A) not shown on the current balance sheet. 
B) not shown on the balance sheet but after the completion of the financial year are recorded on the balance sheet. 
C) not shown on the current balance sheet but are an off-balance-sheet asset/liability, if when a contingent event occurs, the activity moves onto the asset/liability side of the balance sheet. 
D) contingent events which move the asset or liability from the balance sheet to off-balance-sheet. 
A) not shown on the current balance sheet. 
B) not shown on the balance sheet but after the completion of the financial year are recorded on the balance sheet. 
C) not shown on the current balance sheet but are an off-balance-sheet asset/liability, if when a contingent event occurs, the activity moves onto the asset/liability side of the balance sheet. 
D) contingent events which move the asset or liability from the balance sheet to off-balance-sheet. C

Question 2

Which of the following statements is true?

Accepted Answer

A) APRA is responsible for market integrity and consumer protection across the financial system. 
B) The RBA is responsible for prudential supervision. 
C) ASIC is responsible for monetary policy and for overall financial system stability. 
D) None of the listed options are correct. 
A) APRA is responsible for market integrity and consumer protection across the financial system. 
B) The RBA is responsible for prudential supervision. 
C) ASIC is responsible for monetary policy and for overall financial system stability. 
D) None of the listed options are correct. D

Question 3

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. C

Question 4

The major reasons for the shift in the composition of bank lending commitments from the retail market to the commercial market are the:

Accepted Answer

A) introduction of capital adequacy regulations in 1989. 
B) number of non-bank depository institutions that gained banking licences in the early 1990s. 
C) fact that commercial loans paid higher returns than housing loans. 
D) None of the listed options are correct as the shift was from commercial loans to housing loans. 
A) introduction of capital adequacy regulations in 1989. 
B) number of non-bank depository institutions that gained banking licences in the early 1990s. 
C) fact that commercial loans paid higher returns than housing loans. 
D) None of the listed options are correct as the shift was from commercial loans to housing loans.

Question 5

Which of the following observations concerning credit unions is not true?

Accepted Answer

A) They invest heavily in corporate securities. 
B) Member loans constitute a majority of their total assets. 
C) They engage in off-balance-sheet activities. 
D) They focus more on providing services and less on profitability. 
A) They invest heavily in corporate securities. 
B) Member loans constitute a majority of their total assets. 
C) They engage in off-balance-sheet activities. 
D) They focus more on providing services and less on profitability.

Question 6

Which of the following is true?

Accepted Answer

A) All banks are depository institutions and are authorised by APRA to carry out financial intermediation 
B) All authorised depository institutions are banks. 
C) All financial intermediaries are authorised depository institutions by APRA to carry out financial intermediation. 
D) All of the listed options are correct. 
A) All banks are depository institutions and are authorised by APRA to carry out financial intermediation 
B) All authorised depository institutions are banks. 
C) All financial intermediaries are authorised depository institutions by APRA to carry out financial intermediation. 
D) All of the listed options are correct.

Question 7

Which of the following statements is true?

Accepted Answer

A) Authorised depository institutions are those that have been granted an authority by the RBA to operate in Australia. 
B) Authorised depository institutions are those that have been granted an authority by APRA to operate in Australia. 
C) Authorised depository institutions are those that have been granted an authority by the Australian Government to operate in Australia. 
D) Authorised depository institutions are those that have been granted an authority by ASIC to operate in Australia. 
A) Authorised depository institutions are those that have been granted an authority by the RBA to operate in Australia. 
B) Authorised depository institutions are those that have been granted an authority by APRA to operate in Australia. 
C) Authorised depository institutions are those that have been granted an authority by the Australian Government to operate in Australia. 
D) Authorised depository institutions are those that have been granted an authority by ASIC to operate in Australia.

Question 8

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 9

The main features of the local banking industry over the two decades to 2010 have been an increase in concentration.This has occurred due to mergers and acquisitions motivated by the desire to:

Accepted Answer

A) be competitive in global markets. 
B) protect against takeover by foreign competitors. 
C) increase efficiency in terms of economies of scale and scope. 
D) All of the listed options are correct. 
A) be competitive in global markets. 
B) protect against takeover by foreign competitors. 
C) increase efficiency in terms of economies of scale and scope. 
D) All of the listed options are correct.

Question 10

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 11

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

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is true?

Accepted Answer

A) Capital adequacy regulations of banks were introduced in 1989. 
B) Capital adequacy regulations require banks to hold, on average, less capital for low-risk assets such as housing loans compared to higher-risk assets such as commercial loans. 
C) Capital adequacy regulations were abolished in 2000. 
D) Capital adequacy regulations of banks were introduced in 1989 and Capital adequacy regulations require banks to maintain levels of capital adequate for the type of activity undertaken, on average, less capital for low-risk assets such as housing loans compared to higher-risk assets such as commercial loans. 
A) Capital adequacy regulations of banks were introduced in 1989. 
B) Capital adequacy regulations require banks to hold, on average, less capital for low-risk assets such as housing loans compared to higher-risk assets such as commercial loans. 
C) Capital adequacy regulations were abolished in 2000. 
D) Capital adequacy regulations of banks were introduced in 1989 and Capital adequacy regulations require banks to maintain levels of capital adequate for the type of activity undertaken, on average, less capital for low-risk assets such as housing loans compared to higher-risk assets such as commercial loans.

Question 13

Covered bonds:

Accepted Answer

A) were introduced following the GFC to ease liquidity pressures on the bank's balance sheet. 
B) are issued by a bank, backed by a pool of assets, which remain on the balance sheet of the issuing bank. 
C) are issued by a bank, backed by a pool of assets, which are off-balance-sheet items of the issuing bank. 
D) are issued by the Reserve Bank of Australia to FIs with liquidity problems. 
A) were introduced following the GFC to ease liquidity pressures on the bank's balance sheet. 
B) are issued by a bank, backed by a pool of assets, which remain on the balance sheet of the issuing bank. 
C) are issued by a bank, backed by a pool of assets, which are off-balance-sheet items of the issuing bank. 
D) are issued by the Reserve Bank of Australia to FIs with liquidity problems.

Question 14

Which of the following is a reason for the increase in the number of banks since the mid-1980s?

Accepted Answer

A) Relaxation of entry requirements into the Australian banking industry. 
B) Changes in the regulatory requirements of non-bank depository institutions. 
C) The need for a more sophisticated banking system in Australia. 
D) Relaxation of entry requirements into the Australian banking industry and changes in the regulatory requirements of non-bank depository institutions. 
A) Relaxation of entry requirements into the Australian banking industry. 
B) Changes in the regulatory requirements of non-bank depository institutions. 
C) The need for a more sophisticated banking system in Australia. 
D) Relaxation of entry requirements into the Australian banking industry and changes in the regulatory requirements of non-bank depository institutions.

Question 15

Depository institutions are financial institutions that only take deposits from savers, but do not lend money to borrowers.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is true?

Accepted Answer

A) APRA stands for Australian Prudential Regulation Authority. 
B) APRA stands for Australian Payments Regulation Association. 
C) APRA stands for Australian Payments Review Authority. 
D) None of the listed options are correct. 
A) APRA stands for Australian Prudential Regulation Authority. 
B) APRA stands for Australian Payments Regulation Association. 
C) APRA stands for Australian Payments Review Authority. 
D) None of the listed options are correct.

Question 17

Discuss the factors that contributed to Australia's financial resilience and relatively strong performance during the global financial crisis.

Accepted Answer

The maintenance of high lending standard

Question 18

Which of the following statements is true?

Accepted Answer

A) Deregulation of the banking system in the 1980s brought greater competition from the banks. 
B) Deregulation of the banking system in the 1980s resulted in loss of market share by non-bank depository institutions. 
C) Deregulation of the banking system in the 1980s brought greater competition from the non-bank depository institutions. 
D) Deregulation of the banking system in the 1980s brought greater competition from the banks and resulted in loss of market share by non-bank depository institutions. 
A) Deregulation of the banking system in the 1980s brought greater competition from the banks. 
B) Deregulation of the banking system in the 1980s resulted in loss of market share by non-bank depository institutions. 
C) Deregulation of the banking system in the 1980s brought greater competition from the non-bank depository institutions. 
D) Deregulation of the banking system in the 1980s brought greater competition from the banks and resulted in loss of market share by non-bank depository institutions.

Question 19

Which of the following statements is true?

Accepted Answer

A) Non-bank depository institutions include building societies and credit unions. 
B) A non-bank depository institution meets the legal definition of a bank. 
C) A non-bank depository institution does not meet the legal definition of a bank. 
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 include building societies and credit unions. 
B) A non-bank depository institution meets the legal definition of a bank. 
C) A non-bank depository institution does not meet the legal definition of a bank. 
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 20

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.

Off-balance-sheet activities are:

Which of the following statements is true?

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

The major reasons for the shift in the composition of bank lending commitments from the retail market to the commercial market are the:

Which of the following observations concerning credit unions is not true?

Which of the following is true?

Which of the following statements is true?

Which of the following statements is true?

The main features of the local banking industry over the two decades to 2010 have been an increase in concentration.This has occurred due to mergers and acquisitions motivated by the desire to:

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

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

Which of the following statements is true?

Covered bonds:

Which of the following is a reason for the increase in the number of banks since the mid-1980s?

Depository institutions are financial institutions that only take deposits from savers, but do not lend money to borrowers.

Which of the following statements is true?

Discuss the factors that contributed to Australia's financial resilience and relatively strong performance during the global financial crisis.

Which of the following statements is true?

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:

Why Are Financial Institutions Special

The Financial Services Industry: Other Financial Institutions

Risk 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

Credit Risk I: Individual Loan Risk

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 Risk

Capital Management and Adequacy

Filters

Exam 2: The Financial Services Industry: Depository Institutions

Off-balance-sheet activities are:

Which of the following statements is true?

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

The major reasons for the shift in the composition of bank lending commitments from the retail market to the commercial market are the:

Which of the following observations concerning credit unions is not true?

Which of the following is true?

Which of the following statements is true?

Which of the following statements is true?

The main features of the local banking industry over the two decades to 2010 have been an increase in concentration.This has occurred due to mergers and acquisitions motivated by the desire to:

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

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

Which of the following statements is true?

Covered bonds:

Which of the following is a reason for the increase in the number of banks since the mid-1980s?

Depository institutions are financial institutions that only take deposits from savers, but do not lend money to borrowers.

Which of the following statements is true?

Discuss the factors that contributed to Australia's financial resilience and relatively strong performance during the global financial crisis.

Which of the following statements is true?

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:

Why Are Financial Institutions Special

The Financial Services Industry: Other Financial Institutions

Risk 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

Credit Risk I: Individual Loan Risk

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 Risk

Capital Management and Adequacy

Filters