International banking module MCQ practice
International Banking MCQ Quiz
Test your knowledge of international banking principles with this comprehensive multiple-choice quiz. Covering essential topics such as financial intermediaries, regulation, and monetary policy, this quiz is designed for anyone looking to deepen their understanding of banking systems.
- 50 carefully crafted questions
- Immediate feedback on your answers
- Learn as you go with detailed explanations
Are deposits to banks from customers a liability or an asset for the bank?
Asset
Liability
Are Commercial loans issued by the bank an asset or liability?
Asset
Liability
Are government debt securities held by a bank an asset or a liability?
Asset
Liability
Is equity issued by a bank an asset or a liability?
Asset
Liability
Which best describes the preference of lenders?
High liquidity, high risk
Low liquidity, high risk
Low liquidity, low risk
High liquidity, low risk
Which best describes preference of projects and borrowers?
Low liquidity, high risk
Low, liquidity, low risk
High liquidity, high risk
High liquidity, low risk
How do banks help with liquidity among economic agents?
Enable agents to access stored deposits on demand.
Enable agents to sell financial assets.
Enable agents to borrow through loans
All of the above
How do banks reduce risk?
Diversify lending
Increase their exposure to loans
Invest only in "safe" assets
Decrease their money reserve
Which best describes Maturity transformation
Converting long term deposits into loans
Conversion of short-term deposits into loans of longer maturity
Investing in long term assets
What is the primary economic role of the financial system?
To provide investment oppurtunties
To facilitate the transfer of funds from savers to borrowers
To facilitate the transfer of funds from lenders to borrowers
What is an example of a country with a bank-based system?
UK
USA
Japan
What is the primary purpose of a financial intermediary?
To find lending opportunities
Reduce transaction costs for borrowers and lenders
Which of the following is a deposit-taking institution
Investment Bank
Building society
Plus 500
A financial institution that assists in the sale of securities in the primary market
Retail Bank
Commercial Bank
Building society
Investment bank
Which of the following is a feature of retail banking?
Investment in shares
Variable returns
Interest rate risk management
When banks engage in activities such as accepting deposits, asset management and investment advice they are known as?
Retail bank
Universal Bank
Investment Bank
Commercial Bank
What is an example of a challenger bank?
Lloyds
HSBC
TSB
Monzo
Which best defines a challenger bank?
A bank that is financially innovative
A large competitor HSBC and Lloyds
A small recently launched retail bank
An online only Bank
Central bank monetary policy influences?
The money supply
Availability of credit
Both
What is not a function of the bank of England?
Setting the Base rate
Produce Bank notes
Setting Tax rates
Regulate/Oversee the financial system
The minutes of each MPC meeting are published to the public.
True
False
Inflation is the sustained general increase of?
Interest rate
Prices
Costs
Exchange rate
What is NOT a tool of monetary policy?
Interest rates
Changing reserve requirements
Purchase of government securities
Government spending
Typically when the FED wants to inject reserves into the system they...
Print more money
Purchase government securities
Sell government securities
Raise interest rates
The discount rate is?
The interest rate that the central bank charges on loans to banks
The rate that banks take off loans to credit worthy borrowers
The change in interest rate for ESG conscious firms
The rate at which you discount future value
The bank of England's lender of last resort function causes?
Adverse Selection
Confidence in the financial system
Financial innovation
Moral Hazard
Which best describes regulation?
Banks taking proactive action to ensure they don't default
Increasing reserve requirements
The setting of specific rules and behaviours that banks must abide by
Which is NOT a reason for regulating banks?
Reduce exposure to risk
To increase Banks liquidity
To ensure that banks bottom line is positive
To decrease the likelihood of bank failure
An externality that arises from banking?
Information contagion
Credit rationing
Interconnectivity of banking institutions
All of the above
What is systemic regulation?
Regulation concerned with the market risk
Regulation concerned with individual banks risk
Regulation concerned with the safety of the whole regulatory system
All of the above
What is an example of Prudential regulation
Setting capital requirements
Setting exposure limits
Setting liquidity requirements
All of the above
Who is responsible for undertaking prudential regulation?
The Bank of England
The Government
Financial conduct Authority
Prudential regulatory authority
What is meant by liquidity risk?
A bank becoming insolvent
A banks liabilities are larger than its assets
A solvent bank is temporarily unable to meet its short-term obligations
All of the above
Deposit protection insurance causes?
Adverse selection
Moral hazard
Smaller profits for banks
All of the above
What is agency capture?
When regulators are funded by the firms themselves
Producers using the regulatory process for their own gains
When regulators are run by the government
When regulators do not have strict rules
What minimum amount of equity tier 1 capital should banks hold?
7.2%%
5%
2.6%
4.5%
What model of regulation is used in the UK?
Twin peaks
Institutional
Functional
Unitary/Integrated
What is deregulation?
The increase of financial inclusion
A decrease in the interest rate
The removal of some or all regulation
The setting of new rules for Banks
What is financial innovation?
Banks making smart decisions and making more money
Financial intermediaries opening online services
The act of creating and popularising new financial products
Adjustable rate mortgages
An advantage of financial innovation is?
Causes economic growth
Creates new securities and increases the availability of credit
Reduces the cost of credit
All of the above
A disadvantage of financial innovation is?
It makes makes challenger banks more likely
It weakens banks asset to liability ratio
It can be a source of systemic risk
All of the above
Securitisation is the process?
Of Investment banks buying and selling securities on the primary market
Of transforming otherwise illiquid assets into marketable securities
Of Commercial banks creating new loans
Of retail banks issuing new mortgages to those who did not have good credit causing the 2008 crisis
Financial innovation helps to reduce agency costs, facilitate risk sharing and improve allocative efficiency.
True
False
Financial innovation contributed towards the 2008 financial crisis.
True
False
Fintech does NOT improve financial inclusion?
True
False
Which of the following are the reasons given for the negative impact of CSR on financial return?
CSR raises costs
CSR produces unclear and conflicting incentives
Both
Behavioural models of corporate decision-making purpose that CSR and credit default risk have?
Negative short term relationship
Positive short term relationship
Positive long term relationship
Negative long term relationship
Value investors believe that banks should consider social and environmental outcomes because?
ESG factors have a significant impact on the risks of investments
ESG companies are likely to provide superior returns in the long term
They are important irrespective of their influence on credit default risk
ESG factors are likely to impact credit default risk
According to behaviourists how should banks change the interest rate if cooperate social performance is better?
Lower it
Raise it
Keep it the same
It shouldn't come into this decesion
What is CSR disclosure score?
A score to show how well companies do in ESG factors
A score to shows how much firms care about ESG factors
A score to measure the amount of CSR information published by a firm
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