Free CIMAPRA17-BA1-1 Exam Braindumps (page: 62)

Page 62 of 118

Central banks fulfill all of the following functions except which?

  1. Holder of bank accounts on behalf of the commercial banks
  2. Lender of liquidity to the commercial banks
  3. Provider of capital and liquidity to the government
  4. Chief advisor to government on taxation policy

Answer(s): D



The central bank can increase liquidity in the banking system, by:

  1. selling government bonds and lowering interest rates
  2. selling government bonds and raising interest rates
  3. buying government bonds and raising interest rates
  4. buying government bonds and lowering interest rates

Answer(s): D



All of the following were contributory causes of the banking crisis of 2008 (the 'credit crunch') except one.
Which ONE is the exception?

  1. Large scale default in the in the US sub-prime mortgage market
  2. Over- capitalization of commercial and investment banks
  3. The bundling of mortgages into collateralized debt obligations which were sold onto banks
  4. Erroneous credit rating of collateralized debt obligations by credit rating agencies

Answer(s): B



All of the following were features of the financial crisis of 2008 except one.
Which ONE is the exception?

  1. A rise in the volume of mortgage defaults
  2. A chronic shortage of liquidity in the banking system
  3. A severe contraction in inter-bank lending
  4. A sharp fall in rate of interest on inter-bank lending

Answer(s): D



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