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

CQIB NZ COMPLETE QUESTIONS AND CORRECT
ANSWERS | GRADED AND THE LATEST SERIES
What is the role of banks?


Ans: Act as a financial intermediary, create products and services, and develop
mechanisms for making payments.


Question: What is financial intermediation?


Ans: Pools funds from savers and provides loans to borrowers.


Question: What is retail banking?


Ans: Taking deposits and lending to individuals.


Question: What is business banking?


Ans: Taking deposits and lending to small or medium sized business enterprises.


Question: What is wholesale banking?


Ans: Borrowing from and lending to corporate clients or other financial
institutions.


Question: What is investment banking?


Ans: Serve high net worth customers in functions of capital market activities, i.e
bonds & shares, trading and mergers and acquisitions.


Question: What are debt capital markets?

, Ans: Where capital is raised through the issue of bonds. Investment banks are
involved to plan, manage and sell the bonds.


Question: What are equity capital markets?


Ans: Where funds are raised by undertaking an Initial Public Offering (IPO),
selling shares to the public for the first time.


Question: What are private placements?


Ans: Plan an offering of bonds with an institutional investor that has lower
regulatory requirements.


Question: What is mergers and acquisitions?


Ans: Companies look to purchase another company and investment banks offer
advice on the process and pricing.


Question: What are Chinese walls?


Ans: Barriers to mitigate exchanges of information that could lead to conflict of
interest.


Question: What is accepting deposits?


Ans: The banks first core function. It is how banks source the majority of their
funds.


Question: What is granting loans?


Ans: The banks second core function.

,Question: What is an overdraft?


Ans: A defined credit limit attached to a bank account that can be drawn
against.


Question: What is a credit card?


Ans: Allows for the purchase of goods and services within a certain limit that
can be paid back later.


Question: What are bills of exchange and promissory notes?


Ans: Specialised instruments, an unconditional order between parties where the
bank purchases the bill amount and on maturity the borrower pays the full amount.


Question: What is equipment leasing and hire purchase?


Ans: Forms of borrowing to finance plant, machinery and vehicles.


Question: What is trade finance?


Ans: Facilitation of import and export transactions e.g lending, letters of credit,
insurance.


Question: What is a short term loan?


Ans: Principal and interest repayments are made over a period of say five
years, e.g for a car.


Question: What is a long term loan?

, Ans: Principal and interest repayments are made over a period of say 25 years,
e.g for a house.


Question: What is Electronic Funds Transfer (ETF)?


Ans: Funds transferred electronically between banks.


Question: What are negotiable instruments?


Ans: Banks drafts, cheques and letters of credit.


Question: What are periodic payments?


Ans: Direct Debits and Standing Orders, where the bank makes payments on
behalf of the customer.


Question: What are periodic collections?


Ans: Direct Credits, where the bank collects payments on behalf of the customer.


Question: What are debit cards?


Ans: Allows for the purchase of goods and services, and, deducts the money
directly from the customers bank account.


Question: What are international money transfers?


Ans: Allows for the transfer of funds overseas.


Question: What are E-Commerce Payment Systems?