CQIB STUDY COMPLETE QUESTIONS AND CORRECT ANSWERS | GRADED AND THE LATEST SERIES

CQIB STUDY COMPLETE QUESTIONS AND
CORRECT ANSWERS | GRADED AND THE
LATEST SERIES
Role of Bank


Ans: - Financial intermediary between savers and borrowers
- Creation / expand supply of money, deposit and loans
- Products and services that benefit customers
- Mechanism for transferring and making payments
- Develop economy


Question: Financial Intermediation


Ans: Pooling funds from savers to provide loans to borrowers


Question: Debt capital markets


Ans: - large company or government wants to finance they issue bonds
- Investment bank plans bond issuance, documentation and helps sell the bonds


Question: Equity Capital Markets


Ans: - Company does IPO (Initial Public Offering) to raise funds / expand


Question: Private Placement


Ans: - customer plans an offering of bonds with an institutional investor like
insurance company or retirement fund

,Question: Mergers and Acquisitions


Ans: - Company buys another company
- Investment bank needs Chinese walls to stop insider trading


Question: Accepting Deposits - 3 Types


Ans: - Savings deposits
- Fixed term deposits
- Current deposits


Question: Overdraft - Loan


Ans: negative account balance, interest is charged on overdrawn balance


Question: Credit card - Loan


Ans: paying with borrowed money and paying back later


Question: Short, Medium, Long term Loan Durations


Ans: Short: 12m Medium: 5yr e.g. Car
Long: 5+yrs, e.g. 30yr Home loan


Question: Bills of Exchange and Promissory Notes - Loan


Ans: unconditional order between two parties, bank purchases from bill amount
from borrower, on maturity the borrower gets bill / full amount


Question: Equipment leasing and hire purchase - Loan

,Ans: borrowing for financing of plant, machinery and vehicles, has tax benefits


Question: Trade Finance - Loan


Ans: facilitating import and export transaction, including lending, letter of
credit, factoring (accounts receivable financing), export credit and insurance


Question: Electronic Funds Transfers - Payments


Ans: EFT, electronic transfer between banks


Question: Negotiable Instruments - Payments


Ans: bank drafts, cheques and letters of credit


Question: Periodic Payments - Payments


Ans: direct debits and standing orders, banks make periodic payments on behalf
of the customer


Question: Periodic Collections - Payments


Ans: direct credits, bank collects periodic payments on behalf of customer (e.g.
salary, pension)


Question: Debit Cards - Payments


Ans: purchases with money in account


Question: International Money Transfers

, Ans: transfer money to overseas bank accounts


Question: E-commerce Payment Systems for Merchants


Ans: same day settlement with electronic and EFTPOS payments into business's
accounts


Question: Wealth Management Products and Services


Ans: - Allocated pensions
- Managed funds and superannuation
- Annuity (fixed sum of money paid to someone annually)
- Investment growth bond


Question: Banks Revenue Sources - Two Ways


Ans: - Lending money at higher rate than they pay for deposits, difference is the
spread/net interest income
- Charging fees for products and services
- Largest source is Retail Deposits


Question: Banking Fees in AUS - Household, Business, Merchant


Ans: - For households credit cards are largest component of fees
- For businesses loans are largest component of fees
- Merchant service fee income increases with contactless/credit card payments


Question: Maturity Transformation - Risk