Insurance and Risk Management
241. The 'clean price' of a bond is:
- The price when it is first issued
- The price including the interest which has accrued since the last coupon payment
- The price excluding accrued interest
- The price excluding the broker's commission
- The price net of tax
Correct answer: (C)
The price excluding accrued interest
242. The ability of central banks to influence short-term interest rates rests upon:
- Government policy
- Their role as lenders of last resort
- Their supervisory role
- Sales of government bonds
- Mandatory reserve ratios
Correct answer: (B)
Their role as lenders of last resort
243. The banking systems of Nordic countries are remarkable for their:
- Instability
- Economies of scale
- Mortgage lending
- Securities dealing
- Degree of market concentration
Correct answer: (E)
Degree of market concentration
244. The Caisses d'Epargne are:
- Mutual banks providing services to local authorities
- Private commercial banks
- Co-operative savings banks
- Mutual banks linked to particular economic activities
Correct answer: (C)
Co-operative savings banks
245. The conversion of building societies to PLC status allowed them:
- To raise funds by bond issues
- To raise capital by share issues
- To make personal loans
- To expand by merger
- To accept wholesale deposits
Correct answer: (B)
To raise capital by share issues
246. The demand for insurance derives from the fact that people want:
- The certainty of a good return
- To reduce the risk of accidents
- The possibility of a large loss to the certainty of a small one
- The possibility of generous compensation
Correct answer: (D)
The possibility of generous compensation
247. The essential characteristic that any monetary asset must possess is:
- Stable value
- Convenience
- Acceptability in exchange
- Classification as legal tender
- Divisibility
Correct answer: (C)
Acceptability in exchange
248. The federal insurance of deposits is:
- Compulsory for thrifts
- Compulsory for all banks
- Compulsory for nationally-chartered banks
- Voluntary for all banks
- Compulsory for state-chartered banks
Correct answer: (C)
Compulsory for nationally-chartered banks
249. The German banking system can be divided into 'specialised credit institutions' and:
- Co-operative banks
- 'Universal' banks
- Mortgage banks
- Foreign banks
- Savings banks
Correct answer: (B)
'Universal' banks
250. The Glass-Steagall Act:
- Set up the Federal Reserve system
- Prevented national banks from opening branches
- Made national banks subject to the same branching restrictions as applied to national banks
- Established the Federal Deposit Insurance Corporation (FDIC)
- Required commercial and investment banks to be kept separate
Correct answer: (D, E)
Established the Federal Deposit Insurance Corporation (FDIC)
Required commercial and investment banks to be kept separate