Insurance and Risk Management 13

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Objective Questions and Answers of MBA: Insurance and Risk Management 13

Subject: Objective Questions and Answers of MBA: Insurance and Risk Management 13

Part 13: Objective questions and answers of Insurance and Risk Management

 

Q1. The 'clean price' of a bond is:

a) The price when it is first issued

b) The price including the interest which has accrued since the last coupon payment

c) The price excluding accrued interest

d) The price excluding the broker's commission

e) The price net of tax

 

Q2. The banking systems of Nordic countries are remarkable for their:

a) Instability

b) Economies of scale

c) Mortgage lending

d) Securities dealing

e) Degree of market concentration

 

Q3. The conversion of building societies to PLC status allowed them:

a) To raise funds by bond issues

b) To raise capital by share issues

c) To make personal loans

d) To expand by merger

e) To accept wholesale deposits

 

Q4. The essential characteristic that any monetary asset must possess is:

a) Stable value

b) Convenience

c) Acceptability in exchange

d) Classification as legal tender

e) Divisibility

 

Q5. The German banking system can be divided into 'specialized credit institutions' and:

a) Co-operative bank

b) 'Universal' banks

c) Mortgage banks

d) Foreign banks

e) Savings banks

 

Q6. The interest yield on the Treasury bill in question 2 is:

a) 4.7%

b) 0.8%

c) 4.75%

d) 8%

e) 0.806%

 

Q7. The largest item in the asset portfolio of German households in 2006 was:

a) Bonds

b) Insurance policies

c) Unit trust certificates

d) Company shares

e) Bank deposits and currency

 

Q8. The ownership of ordinary company shares gives shareholders:

a) A share in the management of the company

b) A strong claim on the firm's assets in the event of insolvency

c) A guaranteed rate of return

d) The right to vote on specified issues concerning the firm

e) The right to receive dividends

 

Q9. The real rate of interest required by investors is 3% p.a., inflation for the next year is expected to be 4% and the liquidity premium is 1% for every year to maturity. If the rate quoted on a two year loan is 11%, the risk premium must be:

a) 9%

b) 2%

c) 4%

d) 3%

e) 7%

 

Q10. The rescue of insolvent banks inevitably raises problems of:

a) Cost

b) Insurance

c) Ownership

d) Moral hazard

 

Q11. The risk free rate of interest is 5% while the whole market return is 16%. According to the CAPM, the rate of return required on an asset with a β-coefficient of 1.1 is:

a) 17.1%

b) 67.1%

c) 17.6%

d) 22.6%

e) 22.1%

 

Q12. The Swedish banking system is dominated by:

a) Universal banks

b) Large banks

c) Specialist banks

d) Mortgage banks

e) Co-operative banks

 

Q13. The yields on government bonds are usually less than yields on corporate bonds of similar maturity because:

a) Corporate bonds have a shorter maturity than government bonds

b) Government bonds are less risky than corporate bonds

c) Corporate bonds have a longer maturity than government bonds

d) Governments are non-profit-making institutions

e) Government bonds are riskier than corporate bonds

 

Q14. Using the symbols of Chapter 11, a reduction in the riskiness of a company's earnings, other things being equal, will be reflected in:

a) A reduction in the market risk premium (Km- Krf)

b) A rise in D

c) A rise in the beta-coefficient

d) A reduction in the beta-coefficient

e) A reduction in g

 

Q15. Which of the following are characteristics of the US financial system?

a) It has been dominated by large New York banks

b) Modern firm's raise funds largely through the stock market

c) It has had a history of bank collapses

d) All banks are licensed by the Federal Reserve Board

 

Q16. Which of the following are generally characteristics of bonds?

a) Zero default risk and fixed coupon payments

b) Fixed coupon payments and no fixed period to maturity

c) No fixed period to maturity and variable coupon payments

d) Zero capital risk and bi-annual coupons

e) Prior claim on the assets of issuers and a fixed period to maturity

 

Q17. Which of the following is an ‘AFB’ bank?

a) BNP-Paribas

b) MONEP

c) Credit Mutuel

d) Credit Municipal

 

Q18. Which of the following is not a member of the European Monetary Union?

a) Finland

b) Denmark

c) Norway

d) Sweden

 

Q19. Which of the following statements are false?

a) The Single European Act had little significance for the Italian financial system

b) Because the savings ratio in Italy has been falling, there has been little growth in investment funds there

c) The ownership of banks in Italy is more concentrated than is suggested by the number of banks

d) The profits of Italian banks remain relatively low

e) The Bank of Italy is not an independent central bank

 

Q20. Why were the charters of the First Bank of the United States and the Second Bank of the United States not renewed?

a) Because they operated inflationary monetary policies

b) Because their profit rates were too low

c) Because they conflicted with American democratic ideals

d) Because they gave too much power to the Federal Reserve System

e) Because they collapsed in bank panics

 

Part 13: Objective questions and answers of Insurance and Risk Management

 

Q1. Answer c

 

Q2. Answer e

 

Q3. Answer b

 

Q4. Answer c

 

Q5. Answer b

 

Q6. Answer c

 

Q7. Answer b

 

Q8. Answer a

 

Q9. Answer d

 

Q10. Answer d

 

Q11. Answer a

 

Q12. Answer a

 

Q13. Answer b

 

Q14. Answer a

 

Q15. Answer c

 

Q16. Answer e

 

Q17. Answer a

 

Q18. Answer c

 

Q19. Answer a, b ,d

 

Q20. Answer c

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