Podcast
Questions and Answers
What is the main concern associated with the remuneration arrangements in the financial advisory sector?
What is the main concern associated with the remuneration arrangements in the financial advisory sector?
- Reducing advisor-client trust
- Prioritizing ST profits over LT consequences (correct)
- Encouraging unethical behavior among clients
- Failing to offer competitive financial products
How does moral hazard manifest in the context of insurance and protection against burglary?
How does moral hazard manifest in the context of insurance and protection against burglary?
- People take excessive risks when they are insured (correct)
- People become overly cautious when they have no insurance
- Insurance encourages responsible behavior in all situations
- Insurance leads people to protect their property effectively
What role do regulators play in mitigating moral hazard in the financial system?
What role do regulators play in mitigating moral hazard in the financial system?
- Encouraging lenders to take on more risk
- Promoting reckless behavior among borrowers
- Providing insurance coverage to borrowers
- Imposing penalties or restrictions on risky financial institutions (correct)
How can the system ensure that incentives are appropriately managed?
How can the system ensure that incentives are appropriately managed?
What is a key aspect of professional bodies' requirements for their members in the financial sector?
What is a key aspect of professional bodies' requirements for their members in the financial sector?
Why is it important for financial institutions to have a fiduciary duty to their customers?
Why is it important for financial institutions to have a fiduciary duty to their customers?
What is one key factor that should be present for fair and efficient decision making in financial systems?
What is one key factor that should be present for fair and efficient decision making in financial systems?
Which party plays a crucial role in pooling funds and allocating them to different borrowers or investments?
Which party plays a crucial role in pooling funds and allocating them to different borrowers or investments?
What is an example of a reliable financial instrument or service that can increase the efficiency of a financial system?
What is an example of a reliable financial instrument or service that can increase the efficiency of a financial system?
Why is pooling funds important for achieving economies of scale?
Why is pooling funds important for achieving economies of scale?
What role do new and reliable financial instruments, services, and operating systems play in the competitiveness of financial systems?
What role do new and reliable financial instruments, services, and operating systems play in the competitiveness of financial systems?
Which technology increases access to financial services, decreases costs, and provides new investment opportunities?
Which technology increases access to financial services, decreases costs, and provides new investment opportunities?
What is the primary reason investors require higher compensation in the form of increased expected returns?
What is the primary reason investors require higher compensation in the form of increased expected returns?
What does the 'spread' refer to in the context of the liquidity of shares?
What does the 'spread' refer to in the context of the liquidity of shares?
How does a smaller spread in the bid-ask prices of shares encourage trading of securities?
How does a smaller spread in the bid-ask prices of shares encourage trading of securities?
What is the relationship between the credit spread and the risk premium for different rated securities?
What is the relationship between the credit spread and the risk premium for different rated securities?
What is the relationship between the credit worthiness of a bond issuer and the credit spread on their bonds?
What is the relationship between the credit worthiness of a bond issuer and the credit spread on their bonds?
Which of the following is NOT mentioned in the text as a way to measure risk and risk premiums?
Which of the following is NOT mentioned in the text as a way to measure risk and risk premiums?
What was the primary contributing factor that caused the financial crisis to become global?
What was the primary contributing factor that caused the financial crisis to become global?
Which of the following is an example of asymmetric information in the context of the financial crisis?
Which of the following is an example of asymmetric information in the context of the financial crisis?
What do brokers earn a commission on in exchange organised markets?
What do brokers earn a commission on in exchange organised markets?
Which of the following is an example of an incentive problem that contributed to the financial crisis?
Which of the following is an example of an incentive problem that contributed to the financial crisis?
In order driven markets, what does the term 'limit price' refer to?
In order driven markets, what does the term 'limit price' refer to?
What was the purpose of the Royal Commission established in Australia in December 2017?
What was the purpose of the Royal Commission established in Australia in December 2017?
What happens to limit orders that have not resulted in a trade in exchange organised markets?
What happens to limit orders that have not resulted in a trade in exchange organised markets?
Which of the following best describes the role of investment advisors during the financial crisis?
Which of the following best describes the role of investment advisors during the financial crisis?
Why have automated trading systems replaced open-outcry in exchange organised markets?
Why have automated trading systems replaced open-outcry in exchange organised markets?
What key factor contributes to the transparency of exchange organised markets?
What key factor contributes to the transparency of exchange organised markets?
According to the information provided, which statement about Wall Street banks is true?
According to the information provided, which statement about Wall Street banks is true?
In exchange organised markets, what is the main function of brokers for their clients?
In exchange organised markets, what is the main function of brokers for their clients?
