CQIB COMPREHENSIVE EXAM UPDATED QUESTIONS AND
ANSWERS RATED A+
✔✔What is an overdraft? - ✔✔A defined credit limit attached to a bank account that can
be drawn against.
✔✔What is a credit card? - ✔✔Allows for the purchase of goods and services within a
certain limit that can be paid back later.
✔✔What are bills of exchange and promissory notes? - ✔✔Specialised instruments, an
unconditional order between parties where the bank purchases the bill amount and on
maturity the borrower pays the full amount.
✔✔What is equipment leasing and hire purchase? - ✔✔Forms of borrowing to finance
plant, machinery and vehicles.
✔✔What is trade finance? - ✔✔Facilitation of import and export transactions e.g
lending, letters of credit, insurance.
✔✔What is a short term loan? - ✔✔Principal and interest repayments are made over a
period of say five years, e.g for a car.
✔✔What is a long term loan? - ✔✔Principal and interest repayments are made over a
period of say 25 years, e.g for a house.
✔✔What is Electronic Funds Transfer (ETF)? - ✔✔Funds transferred electronically
between banks.
✔✔What are negotiable instruments? - ✔✔Banks drafts, cheques and letters of credit.
✔✔What are periodic payments? - ✔✔Direct Debits and Standing Orders, where the
bank makes payments on behalf of the customer.
✔✔What are periodic collections? - ✔✔Direct Credits, where the bank collects
payments on behalf of the customer.
✔✔What are debit cards? - ✔✔Allows for the purchase of goods and services, and,
deducts the money directly from the customers bank account.
✔✔What are international money transfers? - ✔✔Allows for the transfer of funds
overseas.
✔✔What are E-Commerce Payment Systems? - ✔✔Allows businesses to accept
electronic payments with settlement on the same day.
,✔✔What is insurance? - ✔✔A contract between two parties, whereby one party agrees
to make payment to another party, who will assume liability should an agreed event
occur.
✔✔What is transfer of risk? - ✔✔A risk management technique whereby risk of loss is
transferred to another party.
✔✔What is wealth management? - ✔✔Investment + Superannuation + Retirement
Products.
✔✔What are safe custody services? - ✔✔The Safekeeping of valuable assets and
documents.
✔✔What is portfolio management? - ✔✔Personalised management of a customer's
investments.
✔✔What are personal advisory services? - ✔✔Private Bank function supplying
specialist advice.
✔✔What are corporate advisory services? - ✔✔Specialist area of banking associated
with raising capital for corporate clients.
✔✔What is liquidity? - ✔✔Bank's ability to meet all of its anticipated expenses including
making payments on debt using only liquid assets.
✔✔What is solvency? - ✔✔Ability of a bank to meet its long term financial obligations.
✔✔What is profitability? - ✔✔Ability to generate earnings compared to its expenses.
✔✔When did banks make an appearance in New Zealand? - ✔✔1800s and early 1900s
✔✔When were bank notes issued in New Zealand? - ✔✔1920
✔✔What was the Great Depression? - ✔✔World Economy crisis in 1930s
✔✔What happened in New Zealand during World War Two? - ✔✔Pastoral Prosperity
✔✔When did Union Bank of Australia and Bank of Australasia merge to form ANZ? -
✔✔1951
✔✔When were trading banks able to operate savings banks? - ✔✔1960
, ✔✔What happened to the New Zealand Economy in the 1970s? - ✔✔Heavily regulated
and the first Oil Shock
✔✔What are the two categories of financial institution in New Zealand? - ✔✔Registered
banks and non-bank financials
✔✔What happened to the New Zealand economy in the 1990s-2000s? - ✔✔Open
economy with many banks which struggled to remain profitable
✔✔What was the Global Financial Crisis? - ✔✔Economic crisis in 2008
✔✔What did RBNZ announce during the Global Financial Crisis? - ✔✔Retail deposit
guarantee
✔✔What was the misconduct in the Banking, Supperannuation and Fincancial Services
Industry in the 2010s? - ✔✔Scandals
✔✔What is the RBNZ Act? - ✔✔Law to modernise how the Reserve Bank operates and
is governed
✔✔What are Primary Markets? - ✔✔Where new issues of shares or securities are
offered to the market for the first time
✔✔What are Secondary Markets? - ✔✔Securities are traded after their initial release,
'second-hand market'
✔✔What are Exchange Traded Markets? - ✔✔Physical or electronic exchange facility
like the New Zealand Stock Exchange (NZX)
✔✔What are Over the Counter Markets? - ✔✔Non-standardised and negotiated
between the parties involved
✔✔What is the Interest Rate or Debt Market? - ✔✔Trading short term and long term
securities like government or corporate bonds
✔✔What is the Foreign Exchange Market? - ✔✔Exchanging one currency for another
✔✔What is the Equities Market? - ✔✔Trading shares in listed companies
✔✔What is the Commodities Market? - ✔✔Trading in raw and primary products
✔✔What is the Derivatives Market? - ✔✔Contract with value derived from one or more
underlying asset or instrument
ANSWERS RATED A+
✔✔What is an overdraft? - ✔✔A defined credit limit attached to a bank account that can
be drawn against.
✔✔What is a credit card? - ✔✔Allows for the purchase of goods and services within a
certain limit that can be paid back later.
✔✔What are bills of exchange and promissory notes? - ✔✔Specialised instruments, an
unconditional order between parties where the bank purchases the bill amount and on
maturity the borrower pays the full amount.
✔✔What is equipment leasing and hire purchase? - ✔✔Forms of borrowing to finance
plant, machinery and vehicles.
✔✔What is trade finance? - ✔✔Facilitation of import and export transactions e.g
lending, letters of credit, insurance.
✔✔What is a short term loan? - ✔✔Principal and interest repayments are made over a
period of say five years, e.g for a car.
✔✔What is a long term loan? - ✔✔Principal and interest repayments are made over a
period of say 25 years, e.g for a house.
✔✔What is Electronic Funds Transfer (ETF)? - ✔✔Funds transferred electronically
between banks.
✔✔What are negotiable instruments? - ✔✔Banks drafts, cheques and letters of credit.
✔✔What are periodic payments? - ✔✔Direct Debits and Standing Orders, where the
bank makes payments on behalf of the customer.
✔✔What are periodic collections? - ✔✔Direct Credits, where the bank collects
payments on behalf of the customer.
✔✔What are debit cards? - ✔✔Allows for the purchase of goods and services, and,
deducts the money directly from the customers bank account.
✔✔What are international money transfers? - ✔✔Allows for the transfer of funds
overseas.
✔✔What are E-Commerce Payment Systems? - ✔✔Allows businesses to accept
electronic payments with settlement on the same day.
,✔✔What is insurance? - ✔✔A contract between two parties, whereby one party agrees
to make payment to another party, who will assume liability should an agreed event
occur.
✔✔What is transfer of risk? - ✔✔A risk management technique whereby risk of loss is
transferred to another party.
✔✔What is wealth management? - ✔✔Investment + Superannuation + Retirement
Products.
✔✔What are safe custody services? - ✔✔The Safekeeping of valuable assets and
documents.
✔✔What is portfolio management? - ✔✔Personalised management of a customer's
investments.
✔✔What are personal advisory services? - ✔✔Private Bank function supplying
specialist advice.
✔✔What are corporate advisory services? - ✔✔Specialist area of banking associated
with raising capital for corporate clients.
✔✔What is liquidity? - ✔✔Bank's ability to meet all of its anticipated expenses including
making payments on debt using only liquid assets.
✔✔What is solvency? - ✔✔Ability of a bank to meet its long term financial obligations.
✔✔What is profitability? - ✔✔Ability to generate earnings compared to its expenses.
✔✔When did banks make an appearance in New Zealand? - ✔✔1800s and early 1900s
✔✔When were bank notes issued in New Zealand? - ✔✔1920
✔✔What was the Great Depression? - ✔✔World Economy crisis in 1930s
✔✔What happened in New Zealand during World War Two? - ✔✔Pastoral Prosperity
✔✔When did Union Bank of Australia and Bank of Australasia merge to form ANZ? -
✔✔1951
✔✔When were trading banks able to operate savings banks? - ✔✔1960
, ✔✔What happened to the New Zealand Economy in the 1970s? - ✔✔Heavily regulated
and the first Oil Shock
✔✔What are the two categories of financial institution in New Zealand? - ✔✔Registered
banks and non-bank financials
✔✔What happened to the New Zealand economy in the 1990s-2000s? - ✔✔Open
economy with many banks which struggled to remain profitable
✔✔What was the Global Financial Crisis? - ✔✔Economic crisis in 2008
✔✔What did RBNZ announce during the Global Financial Crisis? - ✔✔Retail deposit
guarantee
✔✔What was the misconduct in the Banking, Supperannuation and Fincancial Services
Industry in the 2010s? - ✔✔Scandals
✔✔What is the RBNZ Act? - ✔✔Law to modernise how the Reserve Bank operates and
is governed
✔✔What are Primary Markets? - ✔✔Where new issues of shares or securities are
offered to the market for the first time
✔✔What are Secondary Markets? - ✔✔Securities are traded after their initial release,
'second-hand market'
✔✔What are Exchange Traded Markets? - ✔✔Physical or electronic exchange facility
like the New Zealand Stock Exchange (NZX)
✔✔What are Over the Counter Markets? - ✔✔Non-standardised and negotiated
between the parties involved
✔✔What is the Interest Rate or Debt Market? - ✔✔Trading short term and long term
securities like government or corporate bonds
✔✔What is the Foreign Exchange Market? - ✔✔Exchanging one currency for another
✔✔What is the Equities Market? - ✔✔Trading shares in listed companies
✔✔What is the Commodities Market? - ✔✔Trading in raw and primary products
✔✔What is the Derivatives Market? - ✔✔Contract with value derived from one or more
underlying asset or instrument
