Fins1612 Final Exam 2006

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University of New South Wales
School of Banking and Finance

FINS 1612 Capital Markets and Institutions
Final Examination
Session 1 2006

Instructions:

Time allowed: 2 hours + 10 minutes reading time

During reading time the candidate is not to make any notes.

Total number of questions: 90 (1 mark each)

All questions are to be answered.

This exam constitutes 50% of your grade.

Write and sign your name and student number on the examination question paper.

Also enter your name and registration number in the spaces provided on the multiple choice answer sheet.

All answers must be recorded in pencil on the multiple choice answer sheet provided

The
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B: The deposit base is managed in order to fund loan and other commitments.
C: The ratio of debt to equity is managed to meet capital adequacy requirements.
D: The liability to assets ratio is maintained within Reserve Bank standards.

4. All of the following financial securities are ‘uses of funds’ by the banks EXCEPT:

A: commercial bills
B: credit cards
C: certificates of deposit
D: overdrafts.

Chapter 3:

5. The financial institution that is called a money market corporation and classified under the Financial Corporations Act 1974 but not able to use the word ‘bank’ in its business name is:

A: a credit union
B: a finance company
C: a building society
D: an investment bank.

6. The main difference between project finance and other forms of lending is:

A: lenders base their participation on expected future cash flows and assets of the project
B: lenders take a major equity stake in the project
C: the project company that is set up as a separate legal entity relies heavily on venture capitalists for equity funding as those participating expect
D: the lenders have a claim on the assets of the project as well as the sponsors.

7. Securitisation offers many benefits EXCEPT:

A: securitisation offers a source of funding loans that is less expensive than other sources
B: financial institutions can generate fees from the securitisation process
C: the credit risk

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