CCP Mock Exam Paper 1: Trivia Quiz!

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CCP Mock Exam Paper 1: Trivia Quiz! - Quiz

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Questions and Answers
  • 1. 

    "Indirect Credit" means

    • A.

      Direct financing of facility/ loan given by a bank to a customer

    • B.

      Future spending against present income

    • C.

      A credit facility granted by a trader to a customer

    • D.

      Financing expenditures against future repayment

    Correct Answer
    C. A credit facility granted by a trader to a customer
    Explanation
    "Indirect Credit" refers to a credit facility granted by a trader to a customer. This means that the trader provides the customer with the ability to make purchases on credit, allowing them to buy goods or services and pay for them at a later date. It is different from direct financing by a bank, as it is provided by a trader rather than a financial institution.

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  • 2. 

    A general relationship between credit and economic growth can be shown using the income version of the Quantity Theory of Money. The theory can be expressed by a formula. Which one of the formula below is correct?

    • A.

      QV = PI

    • B.

      QT = Py

    • C.

      MV = Py

    • D.

      MT = Py

    Correct Answer
    C. MV = Py
    Explanation
    The correct formula is MV = Py. This formula represents the Quantity Theory of Money, where M represents the money supply, V represents the velocity of money (how quickly money circulates in the economy), P represents the price level, and y represents real output or income. The formula states that the money supply multiplied by the velocity of money is equal to the price level multiplied by real output or income. This relationship suggests that an increase in the money supply or the velocity of money can lead to inflation or an increase in the price level, which can impact economic growth.

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  • 3. 

    If credit growth is excessive, the money supply will be high and with TWO likely results. Indicate the two from below: I.   higher aggregate demand and inflationary pressure if the output is not able to meet the higher      aggregate demand II.   lenders become reluctant to lend as there is too much money chasing too few goods III.  high inflation demands a higher interest rate; discourages investment and reduces the real         income of the population IV. borrowers will continue to demand more credit despite the high-interest rate charged by      the banks

    • A.

      I & III

    • B.

      II & III

    • C.

      I & IV

    • D.

      II & IV

    Correct Answer
    A. I & III
    Explanation
    If credit growth is excessive, it will lead to a high money supply. This can result in two likely outcomes. Firstly, if the output is not able to meet the higher aggregate demand, it can lead to higher inflationary pressure. Secondly, high inflation demands a higher interest rate, which in turn discourages investment and reduces the real income of the population. Therefore, the correct answer is I & III.

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  • 4. 

    This rule on banking secrecy is not absolute. There are exceptions whereby disclosers may be permitted. Which are the exceptions: I.   when the information is exchanged casually among bankers II.  when the information has already been made lawfully available to the public III. when the information is accidentally given away IV. disclosure to BNM, or its director, officer or employee or any person appointed by it and       to any persons rendering professional services to BNM but written consent is first obtained      from BNM, and disclosure has been consented to in writing by the customer, or his      personal representative

    • A.

      I & III

    • B.

      II & III

    • C.

      I & IV

    • D.

      II & IV

    Correct Answer
    D. II & IV
    Explanation
    The exceptions to banking secrecy include when the information has already been made lawfully available to the public (II) and when disclosure is made to BNM or its director, officer, employee, or any person appointed by it, and written consent is obtained from BNM, and disclosure has been consented to in writing by the customer or his personal representative (IV). This means that if the information is already public or if it is disclosed to BNM with proper consent, banking secrecy can be waived. Therefore, the correct answer is II & IV.

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  • 5. 

    Under BNM/ GP 3, non-performing loans are classified into three categories. Which one of the following is INCORRECT?

    • A.

      Special Mention

    • B.

      Sub-standard

    • C.

      Doubtful

    • D.

      Bad

    Correct Answer
    A. Special Mention
    Explanation
    Under BNM/ GP 3, non-performing loans are classified into three categories: Sub-standard, Doubtful, and Bad. "Special Mention" is not one of the categories.

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  • 6. 

    Some of the definitions of a non-resident controlled company (NRCC) are illustrated below. Which one of the following is NOT TRUE?

    • A.

      Receiving deposits for deposit accounts

    • B.

      Provision of finance

    • C.

      Providing consultancy and advisory services relating to corporate and investment matters

    • D.

      Providing current accoutn facilities

    Correct Answer
    D. Providing current accoutn facilities
    Explanation
    The correct answer is "Providing current account facilities". This means that it is not true that a non-resident controlled company provides current account facilities.

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  • 7. 

    In extending credit facilities to a NRCC, a banking institution is subject to certain conditions. Which of the following conditions below are applicable?I.    Short-term trade financing facilities of any amount in foreign currenciesII.   Less than 50% of short-term trade financing, irrespective of whether in ringgit or foreign      currencyIII.  More than 50% of other types of credit facilitiesIV. Credit facilities in ringgit, other than short-term trade financing, up to an aggregate limit of      RM 50 million

    • A.

      I & III

    • B.

      II & III

    • C.

      I & IV

    • D.

      II & IV

    Correct Answer
    C. I & IV
    Explanation
    The correct answer is I & IV. This means that in extending credit facilities to a NRCC (non-resident credit corporation), a banking institution is subject to the condition of providing short-term trade financing facilities of any amount in foreign currencies (condition I) and credit facilities in ringgit, other than short-term trade financing, up to an aggregate limit of RM 50 million (condition IV).

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  • Current Version
  • Mar 20, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Mar 11, 2009
    Quiz Created by
    Cpfun

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