QFA INVESTMENTS SAMPLE PAPER 1
QUESTIONS WITH COMPLETE
ANSWERS
In ffrelation ffto ffits ffdealings ffwith ffcustomers ffin ffthe ffUS, ffa ffbusiness ffbased ffin ffIreland
ffis ffdirectly ffsubject ffto ffWHICH ffform ffof ffinvestment ffrisk?
A ffExchange ffrate.
B ffLiquidity.
C ffInterest ffrate.
D ffInflation. ff- ffAnswerA
1.1 ff- ffFinancial ffServices ffMarket ff- ffFunctions
Maturity fftransformation ffin ffrelation ffto fffinancial ffservices ffis:
A ffa ffmethod ffof ffdiversifying ffinvestment ffrisk. ff
B ffturning ffshort ffterm ffdeposits ffand ffsavings ffinto fflonger ffterm ffloans.
C ffa ffform ffof ffregulatory ffintervention.
D ffa fffacility ffto ffallow ffthe ffeasy ffpayment ffof ffbills. ff- ffAnswerB
1.1 ffFunctions
One ffof ffthe ffmain fffunctions ffof ffthe ffEuropean
Central ffBank ff(ECB) ffis:
A ffsetting ffwholesale fflending ffinterest ffrates ffin ffthe ffEurozone ffarea.
B fffixing ffthe ffexchange ffrate ffof ffthe ffEuro ffagainst ffother ffcurrencies.
C ffsetting ffrules fffor fffinancial ffinstitution ffdealings ffwith ffconsumers.
D ffsupervising ffthe ffsolvency ffof fflife ffassurance ffcompanies. ff- ffAnswerA
1.2 ff- ffKey ffparticipants
The ffactivities ffof ffthe ffCentral ffBank ffof ffIreland ffare ffmanaged ffand ffcontrolled ffby ffthe:
A ffEuropean ffCentral ffBank.
B ffEuropean ffCommission.
C ffCentral ffBank ffCommission. ff
D ffMinister fffor ffFinance. ff- ffAnswerC
,1.2 ff- ffKey ffparticipants
Overdrafts ffare ffcharged ffinterest:
A ffonly ffwhen ffthe ffoverdraft fflimit ffhas ffbeen ffexceeded.
B ffwhen ffused.
C ffif ffnot ffused.
D ffonly ffwhen fffully ffdrawn. ff- ffAnswerB
1.3 ff- ffMain fffinancial ffservices ffprovided
Which ffof ffthe fffollowing ffIrish ffStock ffExchange ffmarkets ffis ffNOT ffa ffregulated ffmarket
fffor ffMiFID ffpurposes?
(i)The ffMain ffSecurities ffMarket. ff(ii)The ffEnterprise ffSecurities ffMarket. ff
(iii)The ffGlobal ffExchange ffMarket.
A ff(i) ffonly.
B ff(ii) ffonly.
C ff(i) ffand ff(ii) ffonly. ff
D ff(ii) ffand ff(iii) ffonly. ff- ffAnswerD
1.5.1 ffMarkets
Monetary ffpolicy ffin ffthe ffEU ffcountries ffwho ffare ffmembers ffof ffthe ffEurozone ffis ffunder
ffthe ffcontrol ffof ffthe:
A ffEuropean ffCommission.
B ffEuropean ffCentral ffBank.
C ffNational ffcentral ffbanks ffof ffeach ffindividual ffcountry.
D ffInternational ffMonetary ffFund. ff- ffAnswerB
2.1.1 ff- ffMonetary ffpolicy
The ffcontrol ffof ffinterest ffrates ffis ffwhich fftype ffof ffeconomic ffpolicy?
A ffFiscal.
B ffCapital.
C ffNational.
D ffMonetary. ff- ffAnswerD
2.1.1 ff- ffMonetary ffpolicy
A ffcontinuing ffincrease ffin ffthe ffprice ffof ffgoods ffand ffservices ffis ffcalled:
A ffdeflation.
B ffinflation.
C ffreflation.
D ffregression. ff- ffAnswerB
, 2.2.1 ff- ffInflation ff& ffdeflation
Joan ffworks ffin ffthe fftourist ffsector ffof ffthe ffeconomy. ffShe ffis fflaid ffoff ffeach ffOctober
ffuntil ffthe fffollowing ffMarch.
When ffJoan ffbecomes ffunemployed ffin ffOctober, ffthis ffis ffan ffexample ffof ffWHICH fftype
ffof ffunemployment?
A ffDiscretionary. ff
B ffFrictional.
C ffSeasonal.
D ffStructural. ff- ffAnswerC
2.3 ffUnemployment
Which ffone ffof ffthe fffollowing ffwould ffbe ffconsidered ffto ffoffer ffinvestors ffthe ffHIGHEST
fflevel ffof ffprotection ffagainst ffinflation, ffover ffthe fflonger ffterm?
A ffDeposits.
B ffCorporate ffbonds.
C ffSavings ffCertificates.
D ffEquities. ff- ffAnswerD
3.1 ff- ffMain ffinvestment ffasset ffclasses
Which ffone ffof ffthe fffollowing ffinvestments ffwould ffbe ffconsidered ffto ffoffer ffinvestors
ffthe ffLOWEST fflevel ffof ffliquidity?
A ffDeposits.
B ffCorporate ffbonds.
C ffShares fflisted ffon ffa ffstock ffmarket. ff
D ffProperty. ff- ffAnswerD
3.1 ff- ffMain ffinvestment ffasset ffclasses
Which ffone ffof ffthe fffollowing ffinvestment fftypes ffhas ffshown ffthe ffHIGHEST fflevel ffof
ffvolatility ffof ffreturns ffover ffthe fflonger ffterm?
A ffDeposits.
B ffCorporate ffbonds.
C ffEquities.
D ffGovernment ffbonds. ff- ffAnswerC
3.2 ff- ffHistoric ffReturns
Another ffterm ffused ffto ffdescribe ffinvestment ffrisk ffis:
A ffvolatility.
B ffcorrelation.
C ffconcentration. ff
D ffmaximisation. ff- ffAnswerA
QUESTIONS WITH COMPLETE
ANSWERS
In ffrelation ffto ffits ffdealings ffwith ffcustomers ffin ffthe ffUS, ffa ffbusiness ffbased ffin ffIreland
ffis ffdirectly ffsubject ffto ffWHICH ffform ffof ffinvestment ffrisk?
A ffExchange ffrate.
B ffLiquidity.
C ffInterest ffrate.
D ffInflation. ff- ffAnswerA
1.1 ff- ffFinancial ffServices ffMarket ff- ffFunctions
Maturity fftransformation ffin ffrelation ffto fffinancial ffservices ffis:
A ffa ffmethod ffof ffdiversifying ffinvestment ffrisk. ff
B ffturning ffshort ffterm ffdeposits ffand ffsavings ffinto fflonger ffterm ffloans.
C ffa ffform ffof ffregulatory ffintervention.
D ffa fffacility ffto ffallow ffthe ffeasy ffpayment ffof ffbills. ff- ffAnswerB
1.1 ffFunctions
One ffof ffthe ffmain fffunctions ffof ffthe ffEuropean
Central ffBank ff(ECB) ffis:
A ffsetting ffwholesale fflending ffinterest ffrates ffin ffthe ffEurozone ffarea.
B fffixing ffthe ffexchange ffrate ffof ffthe ffEuro ffagainst ffother ffcurrencies.
C ffsetting ffrules fffor fffinancial ffinstitution ffdealings ffwith ffconsumers.
D ffsupervising ffthe ffsolvency ffof fflife ffassurance ffcompanies. ff- ffAnswerA
1.2 ff- ffKey ffparticipants
The ffactivities ffof ffthe ffCentral ffBank ffof ffIreland ffare ffmanaged ffand ffcontrolled ffby ffthe:
A ffEuropean ffCentral ffBank.
B ffEuropean ffCommission.
C ffCentral ffBank ffCommission. ff
D ffMinister fffor ffFinance. ff- ffAnswerC
,1.2 ff- ffKey ffparticipants
Overdrafts ffare ffcharged ffinterest:
A ffonly ffwhen ffthe ffoverdraft fflimit ffhas ffbeen ffexceeded.
B ffwhen ffused.
C ffif ffnot ffused.
D ffonly ffwhen fffully ffdrawn. ff- ffAnswerB
1.3 ff- ffMain fffinancial ffservices ffprovided
Which ffof ffthe fffollowing ffIrish ffStock ffExchange ffmarkets ffis ffNOT ffa ffregulated ffmarket
fffor ffMiFID ffpurposes?
(i)The ffMain ffSecurities ffMarket. ff(ii)The ffEnterprise ffSecurities ffMarket. ff
(iii)The ffGlobal ffExchange ffMarket.
A ff(i) ffonly.
B ff(ii) ffonly.
C ff(i) ffand ff(ii) ffonly. ff
D ff(ii) ffand ff(iii) ffonly. ff- ffAnswerD
1.5.1 ffMarkets
Monetary ffpolicy ffin ffthe ffEU ffcountries ffwho ffare ffmembers ffof ffthe ffEurozone ffis ffunder
ffthe ffcontrol ffof ffthe:
A ffEuropean ffCommission.
B ffEuropean ffCentral ffBank.
C ffNational ffcentral ffbanks ffof ffeach ffindividual ffcountry.
D ffInternational ffMonetary ffFund. ff- ffAnswerB
2.1.1 ff- ffMonetary ffpolicy
The ffcontrol ffof ffinterest ffrates ffis ffwhich fftype ffof ffeconomic ffpolicy?
A ffFiscal.
B ffCapital.
C ffNational.
D ffMonetary. ff- ffAnswerD
2.1.1 ff- ffMonetary ffpolicy
A ffcontinuing ffincrease ffin ffthe ffprice ffof ffgoods ffand ffservices ffis ffcalled:
A ffdeflation.
B ffinflation.
C ffreflation.
D ffregression. ff- ffAnswerB
, 2.2.1 ff- ffInflation ff& ffdeflation
Joan ffworks ffin ffthe fftourist ffsector ffof ffthe ffeconomy. ffShe ffis fflaid ffoff ffeach ffOctober
ffuntil ffthe fffollowing ffMarch.
When ffJoan ffbecomes ffunemployed ffin ffOctober, ffthis ffis ffan ffexample ffof ffWHICH fftype
ffof ffunemployment?
A ffDiscretionary. ff
B ffFrictional.
C ffSeasonal.
D ffStructural. ff- ffAnswerC
2.3 ffUnemployment
Which ffone ffof ffthe fffollowing ffwould ffbe ffconsidered ffto ffoffer ffinvestors ffthe ffHIGHEST
fflevel ffof ffprotection ffagainst ffinflation, ffover ffthe fflonger ffterm?
A ffDeposits.
B ffCorporate ffbonds.
C ffSavings ffCertificates.
D ffEquities. ff- ffAnswerD
3.1 ff- ffMain ffinvestment ffasset ffclasses
Which ffone ffof ffthe fffollowing ffinvestments ffwould ffbe ffconsidered ffto ffoffer ffinvestors
ffthe ffLOWEST fflevel ffof ffliquidity?
A ffDeposits.
B ffCorporate ffbonds.
C ffShares fflisted ffon ffa ffstock ffmarket. ff
D ffProperty. ff- ffAnswerD
3.1 ff- ffMain ffinvestment ffasset ffclasses
Which ffone ffof ffthe fffollowing ffinvestment fftypes ffhas ffshown ffthe ffHIGHEST fflevel ffof
ffvolatility ffof ffreturns ffover ffthe fflonger ffterm?
A ffDeposits.
B ffCorporate ffbonds.
C ffEquities.
D ffGovernment ffbonds. ff- ffAnswerC
3.2 ff- ffHistoric ffReturns
Another ffterm ffused ffto ffdescribe ffinvestment ffrisk ffis:
A ffvolatility.
B ffcorrelation.
C ffconcentration. ff
D ffmaximisation. ff- ffAnswerA
