CQIB FINAL EXAM – Questions With Complete Solutions
Role of Banks Right Ans - 1. Act as financial intermediary between
savers and borrowers.
2. Facilitates the creation of money.
3. Creates financial products and services.
4. Develops mechanisms for transferring money and making payments.
5. Contributes to the development of the economy.
Debt Capital Markets Right Ans - When a large company or government
wants to finance a project, it may look to issue bonds to raise capital.
An Investment bank would help out in planning/documentation of bond
issuance.
Equity Capital Markets Right Ans - When a company needs more money
in order to grow, they may look at undertaking an initial public
offering(IPO). Where it sells it's shares to the public/investors.
The investment bank will put together a prospectus explaining the terms of
the
offering and the risks it carries, managing the issuance process and helping
the price of the offering.
Private Placements Right Ans - Where customers plan an offering of
bonds with an institutional investor such as
an insurance company or a retirement fund.
Can have be a quicker option as there is lower regulatory requirements.
Mergers and Acquisitions Right Ans - Where a company is looking to
buy another company, investment banks offer
advice on how the company should proceed with the acquisition, including
the pricing of the offer.
, Deposits for a Bank Right Ans - Banks source their funds largely from
deposits.
Savings deposits - wages and salary.
Fixed term deposits - lump sum deposited for a specific period.
Current deposits - business accounts.
Types of Bank Loans Right Ans - 1. Overdraft
2. Credit card
3. Short term money loans
4. Long term loans
5. Bills of exchange and promissory notes
6. Equipment leasing and hire purchase
7. Trade finance
Bills of exchange and promissory notes Right Ans - Specialised
instruments, being an unconditional order in
writing between parties, where the bank purchases the bill amount from
the borrower, deducting charges.
On maturity the bill is presented to the borrower and the full amount is
collected.
Equipment leasing and hire purchase Right Ans - Common forms of
borrowing for the financing of plant,
machinery and vehicles by individuals and businesses.
Taxation benefits are often linked to these forms of debt, making them
popular funding options.
Trade finance Right Ans - Facilitating import and export transactions
including lending, letters of credit, factoring (accounts receivable
financing), export credit and insurance.
Insurance Right Ans - Many banks offer insurance as part of their
products and services. Depending on what is
Role of Banks Right Ans - 1. Act as financial intermediary between
savers and borrowers.
2. Facilitates the creation of money.
3. Creates financial products and services.
4. Develops mechanisms for transferring money and making payments.
5. Contributes to the development of the economy.
Debt Capital Markets Right Ans - When a large company or government
wants to finance a project, it may look to issue bonds to raise capital.
An Investment bank would help out in planning/documentation of bond
issuance.
Equity Capital Markets Right Ans - When a company needs more money
in order to grow, they may look at undertaking an initial public
offering(IPO). Where it sells it's shares to the public/investors.
The investment bank will put together a prospectus explaining the terms of
the
offering and the risks it carries, managing the issuance process and helping
the price of the offering.
Private Placements Right Ans - Where customers plan an offering of
bonds with an institutional investor such as
an insurance company or a retirement fund.
Can have be a quicker option as there is lower regulatory requirements.
Mergers and Acquisitions Right Ans - Where a company is looking to
buy another company, investment banks offer
advice on how the company should proceed with the acquisition, including
the pricing of the offer.
, Deposits for a Bank Right Ans - Banks source their funds largely from
deposits.
Savings deposits - wages and salary.
Fixed term deposits - lump sum deposited for a specific period.
Current deposits - business accounts.
Types of Bank Loans Right Ans - 1. Overdraft
2. Credit card
3. Short term money loans
4. Long term loans
5. Bills of exchange and promissory notes
6. Equipment leasing and hire purchase
7. Trade finance
Bills of exchange and promissory notes Right Ans - Specialised
instruments, being an unconditional order in
writing between parties, where the bank purchases the bill amount from
the borrower, deducting charges.
On maturity the bill is presented to the borrower and the full amount is
collected.
Equipment leasing and hire purchase Right Ans - Common forms of
borrowing for the financing of plant,
machinery and vehicles by individuals and businesses.
Taxation benefits are often linked to these forms of debt, making them
popular funding options.
Trade finance Right Ans - Facilitating import and export transactions
including lending, letters of credit, factoring (accounts receivable
financing), export credit and insurance.
Insurance Right Ans - Many banks offer insurance as part of their
products and services. Depending on what is
