1. Which of the following is the primary purpose of financial regulation?
A. To maximize profits for financial firms
B. To protect consumers and maintain market confidence
C. To promote free trade across countries
D. To reduce taxation on investments
Answer: B
Explanation: The main goal of regulation is to protect consumers, ensure
market stability, and maintain investor confidence. Profits and taxation are
secondary considerations.
2. Under the FCA’s Principles for Businesses, which principle relates to
treating customers fairly?
A. Principle 2
B. Principle 3
C. Principle 6
D. Principle 9
Answer: C
Explanation: Principle 6: A firm must pay due regard to the interests of its
customers and treat them fairly.
3. What does MiFID II primarily regulate?
A. Insurance companies
B. Investment services and financial markets
C. Banking deposits
D. Real estate transactions
Answer: B
Explanation: MiFID II (Markets in Financial Instruments Directive II)
,regulates investment firms, trading venues, and financial markets in the
EU/UK.
4. Which body oversees anti-money laundering (AML) compliance in the
UK?
A. Bank of England
B. Prudential Regulation Authority (PRA)
C. Financial Conduct Authority (FCA)
D. Serious Fraud Office (SFO)
Answer: C
Explanation: The FCA is responsible for ensuring firms meet AML
obligations, though multiple agencies cooperate (e.g., SFO, NCA).
5. Which is a stage of money laundering?
A. Placement
B. Integration
C. Layering
D. All of the above
Answer: D
Explanation: Money laundering has three stages: Placement → Layering →
Integration.
6. A Suspicious Activity Report (SAR) in the UK must be submitted to:
A. HMRC
B. FCA
C. National Crime Agency (NCA)
D. Bank of England
Answer: C
Explanation: SARs are filed with the NCA, which investigates potential
money laundering or terrorist financing.
7. What is the minimum capital requirement for investment firms under
CRD IV?
,A. €25,000
B. €50,000
C. €125,000
D. €730,000
Answer: D
Explanation: CRD IV requires a minimum capital of €730,000 for investment
firms (depending on activities).
8. The UK Corporate Governance Code applies mainly to:
A. Private limited companies
B. Charities
C. Premium-listed companies
D. Sole traders
Answer: C
Explanation: The UK Corporate Governance Code applies to premium-
listed companies on the London Stock Exchange.
9. What is the objective of Basel III?
A. Increase shareholder value
B. Strengthen bank capital requirements and reduce risk
C. Lower interest rates for borrowers
D. Simplify trading rules
Answer: B
Explanation: Basel III focuses on capital adequacy, liquidity standards, and
risk management to improve banking sector resilience.
10. Which of the following is a Conduct Rule under the FCA’s SMCR?
A. Always maximize shareholder returns
B. Always act with integrity
C. Always follow client instructions without question
D. Always prioritize firm profits
Answer: B
Explanation: Individual Conduct Rule 1: You must act with integrity.
, 11. Which regulation requires key investor information documents
(KIIDs)?
A. UCITS
B. Basel III
C. Dodd-Frank
D. AIFMD
Answer: A
Explanation: UCITS funds must provide KIIDs for retail investors, ensuring
transparency and comparability.
12. Which is a primary goal of insider dealing laws?
A. To encourage speculation
B. To ensure market fairness and integrity
C. To protect firms from bankruptcy
D. To control inflation
Answer: B
Explanation: Insider dealing laws prevent unfair advantages and promote
fair, efficient markets.
13. A firm must perform customer due diligence (CDD) when:
A. Opening an account
B. Carrying out occasional transactions above a set threshold
C. Suspecting money laundering
D. All of the above
Answer: D
Explanation: CDD is required in all these cases under AML directives.
14. The PRA is responsible for:
A. Conduct regulation
B. Prudential regulation of banks, insurers, and major investment firms
C. Taxation of financial services
D. Supervising charities
A. To maximize profits for financial firms
B. To protect consumers and maintain market confidence
C. To promote free trade across countries
D. To reduce taxation on investments
Answer: B
Explanation: The main goal of regulation is to protect consumers, ensure
market stability, and maintain investor confidence. Profits and taxation are
secondary considerations.
2. Under the FCA’s Principles for Businesses, which principle relates to
treating customers fairly?
A. Principle 2
B. Principle 3
C. Principle 6
D. Principle 9
Answer: C
Explanation: Principle 6: A firm must pay due regard to the interests of its
customers and treat them fairly.
3. What does MiFID II primarily regulate?
A. Insurance companies
B. Investment services and financial markets
C. Banking deposits
D. Real estate transactions
Answer: B
Explanation: MiFID II (Markets in Financial Instruments Directive II)
,regulates investment firms, trading venues, and financial markets in the
EU/UK.
4. Which body oversees anti-money laundering (AML) compliance in the
UK?
A. Bank of England
B. Prudential Regulation Authority (PRA)
C. Financial Conduct Authority (FCA)
D. Serious Fraud Office (SFO)
Answer: C
Explanation: The FCA is responsible for ensuring firms meet AML
obligations, though multiple agencies cooperate (e.g., SFO, NCA).
5. Which is a stage of money laundering?
A. Placement
B. Integration
C. Layering
D. All of the above
Answer: D
Explanation: Money laundering has three stages: Placement → Layering →
Integration.
6. A Suspicious Activity Report (SAR) in the UK must be submitted to:
A. HMRC
B. FCA
C. National Crime Agency (NCA)
D. Bank of England
Answer: C
Explanation: SARs are filed with the NCA, which investigates potential
money laundering or terrorist financing.
7. What is the minimum capital requirement for investment firms under
CRD IV?
,A. €25,000
B. €50,000
C. €125,000
D. €730,000
Answer: D
Explanation: CRD IV requires a minimum capital of €730,000 for investment
firms (depending on activities).
8. The UK Corporate Governance Code applies mainly to:
A. Private limited companies
B. Charities
C. Premium-listed companies
D. Sole traders
Answer: C
Explanation: The UK Corporate Governance Code applies to premium-
listed companies on the London Stock Exchange.
9. What is the objective of Basel III?
A. Increase shareholder value
B. Strengthen bank capital requirements and reduce risk
C. Lower interest rates for borrowers
D. Simplify trading rules
Answer: B
Explanation: Basel III focuses on capital adequacy, liquidity standards, and
risk management to improve banking sector resilience.
10. Which of the following is a Conduct Rule under the FCA’s SMCR?
A. Always maximize shareholder returns
B. Always act with integrity
C. Always follow client instructions without question
D. Always prioritize firm profits
Answer: B
Explanation: Individual Conduct Rule 1: You must act with integrity.
, 11. Which regulation requires key investor information documents
(KIIDs)?
A. UCITS
B. Basel III
C. Dodd-Frank
D. AIFMD
Answer: A
Explanation: UCITS funds must provide KIIDs for retail investors, ensuring
transparency and comparability.
12. Which is a primary goal of insider dealing laws?
A. To encourage speculation
B. To ensure market fairness and integrity
C. To protect firms from bankruptcy
D. To control inflation
Answer: B
Explanation: Insider dealing laws prevent unfair advantages and promote
fair, efficient markets.
13. A firm must perform customer due diligence (CDD) when:
A. Opening an account
B. Carrying out occasional transactions above a set threshold
C. Suspecting money laundering
D. All of the above
Answer: D
Explanation: CDD is required in all these cases under AML directives.
14. The PRA is responsible for:
A. Conduct regulation
B. Prudential regulation of banks, insurers, and major investment firms
C. Taxation of financial services
D. Supervising charities
