CCP Mock Exam Paper 1: Trivia Quiz!

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.

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.

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.

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.

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.

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.

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).