European Banking Exam Questions PDF

1. Which of the following is not an investment service? Execution of orders on behalf of clients Collecting deposits from the public and making loans Reception and transmission of orders in relation to one or more financial instruments 2. Emergency liquidity assistance can b...

1. Which of the following is not an investment service? Execution of orders on behalf of clients Collecting deposits from the public and making loans Reception and transmission of orders in relation to one or more financial instruments 2. Emergency liquidity assistance can be defined as: An increase of capital carried out with money provided by the government The supply of liquidity to banks provided by the central bank The supply of liquidity by the ministry of finance 3. Which of the following is not correct with reference to Tier 2 capital instruments? They are more loss-absorbing items than those included in Tier 1 capital They are less loss-absorbing items than those included in Tier 1 capital They also include specific hybrid instruments and subordinated debt instruments 4. Once an entity is authorized as a credit institution, is the competent authority in the condition to revoke its authorization? No, unless particular risk for the stability of the financial system is assessed by the competent judicial authority Yes, subject to the issue of an opinion by EBA Yes 5. Which of the following is not a component of the European System of Financial Supervision? The European Parliament The European Systemic Risk Board The European Supervisory Agencies 6. With regard to closed-end investment funds, which of the following sentences is wrong? They can invest in illiquid assets Investors can sell their participation back to the fund at any time Their assets may be locked up for a fixed period 7. With regard to the Single Supervisory Mechanism Regulation, a credit institution: If established in a European Union Member State, is subject to the supervision of the Single Resolution Board If established outside the European Union, is subject to the supervision of the European Central Bank If established in a Banking Union participating country, is subject to the supervision of the Single Supervisory Mechanism 8. Which of the following is not a condition for resolution under the BRRD? Institution being failing or likely to fail Institution having liabilities exceeding €30 billion Resolution action being in the public interest 9. Which of the following are not plans adopted in the "preparation" phase of crisis management under the BRRD? Liquidation plans Resolution plans Recovery plans 10. With reference to the sale of business tool under the BRRD, which of the following definitions is correct? It is the transfer of all/part of assets/liabilities to asset management vehicles(s) controlled by public authorities It is the transfer of shares or of all/part of assets/liabilities to a bridge institution It is the transfer of shares or of all/part of assets/liabilities to a purchaser on commercial terms 11. An alternative investment fund (AIF) is: A collective investment undertaking which: (i) raises capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors, and (ii) does not require authorization pursuant to the UCITS Directive An investment service A UCITS scheme 12. With reference to the BRRD, which of the following is not a resolution tool? Bail-in Asset separation tool Bail-out 13. Which of the following is not a pillar of the Banking Union? European harmonized bank insolvency proceedings Single Resolution Mechanism Single Supervisory Mechanism 14. Which of the following criteria is not relevant to distinguish between significant institutions and less significant institutions within the Banking Union? Number of branches exceeding 2000 Ratio of total assets to GDP of the home country exceeding 20% (unless this value is below €5 billion)  Assets exceeding €30 billion 15. With reference to the banking sector, the "mutual recognition" principle: Implies that the banking activity is equally recognized both inside and outside the European Union Implies that an authorization to a credit institution issued by the competent national authority would be valid throughout the European Union Severely hinders the creation of an integrated European banking market 16. The three pillars of the Banking Union are: European Central Bank (ECB), Single Resolution Board (SRB), and Deposit Guarantee Schemes (DGSs) Single Supervisory Mechanism (SSM), Single Resolution Mechanism (SRM), and European Deposit Insurance Scheme (EDIS) None of the others 1. Which of the following is an investment service? Portfolio management ( Correct) Managing UCITS None of the others 2. With regard to investment firms, which of the following sentences is correct? Investment firms are legal persons whose regular occupation or business is the provision of one of the investment services or activities Investment firms are legal persons whose regular occupation or business is the provision of one or more investment services or activities ( Correct) None of the others 3. Which of the following is not correct with reference to TIER2 capital instruments? They are less loss-absorbing items than those included in Tier 1 capital They are more loss-absorbing items than those included in Tier 1 capital ( Correct) They also include specific hybrid instruments and subordinated debt instruments 4. With reference to the BRRD, which of the following is not a resolution tool? Asset separation tool Bail-in Bail-out ( Correct) 5. With regard to the authorization of credit institutions established in Member States participating in the Banking Union: The ECB does not release the authorization, but the EBA does The national competent authority does not release the authorization, but the ECB does The ECB does not release the authorization, but the national competent authority does ( Correct) 6. Which of the following is not a requirement for the authorization to carry out banking activity? Collection of deposits from the public for an amount at least equal to the minimum initial capital of the credit institution ( Correct) Qualification and competence of individuals performing administrative and managerial functions Adequacy of the structural organization 7. "Bail-in" is a resolution tool allowing resolution authorities to restore the capital of the failing or likely to fail institution by: Write down of the claims of creditors and/or their conversion into equity instruments ( Correct) Rescue by the competent government using taxpayers’ money Conversion of liabilities into units of collective investment schemes managed by the same credit institution 8. With reference to the rules on credit institutions' risk management, which of the following sentences is not correct? The risk management function is a credit institution unit whose task is to ensure that all risks are accurately identified, measured, and reported The risk management unit must operate autonomously from other operational functions and is to be granted economic resources in carrying out its activity None of the others ( Correct) 9. Which of the following sentences is correct with reference to the scope of the BRRD? The recovery and resolution system arranged by BRRD applies to institutions, where "institutions" does not include credit institutions The recovery and resolution system arranged by BRRD applies to institutions, where "institutions" include credit institutions and investment firms ( Correct) The recovery and resolution system arranged by BRRD only applies to investment firms 10. With reference to the rules on the credit institutions' nomination committee, which of the following sentences is correct? The nomination committee has the responsibility of periodically assessing the knowledge, skills, and diversity of the management body, collectively and individually ( Correct) The nomination committee is a credit institution unit whose task is to ensure that all risks are accurately identified, measured, and reported The nomination committee cannot review the policy of the management body on the choice and appointment of senior management 11. Which of the following sentences is correct with reference to the scope of the BRRD? Rules for rules regarding access to the activity of credit institutions Rules for managing the resolution of institutions failing or likely to fail ( Correct) Rules at managing the liquidation and winding up of distressed credit institutions 12. Which of the following is not a component of the European System of Financial Supervision? The European Supervisory Agencies The European Parliament ( Correct) The European Systemic Risk Board 13. One of the main principles related to the cross-border activity of credit institutions, as regulated in the Banking Directives, is that: Credit institutions are free to provide their services in any Member State, directly from their country of origin ( Correct) Credit institutions are not authorized to provide their services through the establishment of branches in other Member States Credit institutions may provide their services only in their country of origin 14. Investment advice is: The provision of personal recommendations to a client, either upon its request or at the initiative of the investment firm, in respect of one or more transactions relating to financial instruments ( Correct) Acting to conclude agreements to buy or sell one or more financial instruments on behalf of clients and includes the conclusion of agreements to sell financial instruments Managing alternative investment funds 13.One of the main principles related to the cross-border activity of credit institutions is that: Ratio of total assets to GDP of the home country exceeding 20% (unless this value is below 5 billion) Liabilities exceeding €50 million Credit institutions are authorized to provide their services in other Member States, through the establishment of branches or other means of providing services. 14.With regard to closed-end investment funds, which of the following sentences is WRONG? They can invest in liquid assets Their assets may be locked up for a fixed period Investors can sell their participation back to the fund at any time. 15. With regard to the authorization of credit institutions established in Member States participating in the... The ECB releases the authorization The ECB does not release the authorization, but the national competent authority does. The national competent authority does not release the authorization, but the ECB does. 16.Investment advice is: Acting to conclude agreements to buy or sell one or more financial instruments on behalf of clients and includes the conclusion of agreements 1 to buy or sell, either upon its request or at the initiative of the investment firm, in respect of those instruments. The provision of personal recommendations to one or more financial instruments on behalf of clients and includes the conclusion of agreements to buy or sell, either upon its request or at the initiative of the investment firm, in respect of those instruments. Managing alternative investment funds