1. The banking system is:
A. part of the financial markets
B. a system for regulating non-deposit taking institutions
C. part of the financial system
D. A and C
2. A commercial bank will be regulated by:
A. the federal government
B. the securities regulator
C. the central bank
D. the local and state governments
3. Which activity is unlikely to be found in a commercial bank:
A. mortgage lending
B. advice on a merger
C. forward FX hedging
D. credit risk analysis
4. Commercial banks in theory perform:
A. maturity transformation
B. credit creation
C. size transformation
D. A, B and C
5. Capital allocation in a market based economy:
A. is driven by government intervention
B. means businesses that are becoming less productive receive more capital
C. is mainly influenced by the fed funds rate
D. is a key role of the commercial banking industry
6. A Foreign Exchange transaction is:
A. an exchange of an AUD security for a USD security
B. the transfer of CNY into a bank account in Singapore
C. the exchange of a deposit in one currency with the deposit in another currency
D. a series of swap rate payments in a foreign country
7. A Financial Claim is created when:
A. Bruce deposits CNY100 into his account with ICBC
B. Sinopec issues USD 500m of 2-year bonds to fund managers
C. The British Government borrows GBP 1 billion in 6-year government bonds
D. A, B and C
8. Commercial bank compliance departments are concerned with preventing:
A. retail bank staff from wearing different uniforms
B. criminals laundering money through its branches
C. corporate banking relationship managers lending money to weak customers
D. B and C
9. Special asset management departments are set up so they can manage:
A. customers who are going through a short term business downturn
B. engineering firms that are close to defaulting on their bank loan
C. clients that have unique business models
D. intenet-based payment systems
10. A commercial bank is said to be liquid if:
A. investors can efficiently buy shares in the bank
B. the bank can easily refinance its short term liabilities when they become due for repayment
C. it can quickly sell its bad loan portfolio
D. it has fun parties after closing on Friday nights