Investment of Insurance Companies And IRDA Regulations MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Investment of Insurance Companies And IRDA Regulations, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Investment of Insurance Companies And IRDA Regulations MCQs are designed to help you grasp the core concepts and excel in solving problems.

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Investment of Insurance Companies And IRDA Regulations MCQs | Page 1 of 16

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Q1.
What is the purpose of the Investment Policy mentioned in Regulation 13 (B)?

a.

To guide the insurer in marketing its investment products

b.

To ensure compliance with SEBI regulations only

c.

To establish a model code of conduct for investment operations

d.

To guide the insurer in making investment decisions and ensure compliance with various regulations and guidelines

Discuss
Answer: (d).To guide the insurer in making investment decisions and ensure compliance with various regulations and guidelines Explanation:The Investment Policy is drawn up to guide the insurer in making investment decisions. It ensures compliance with various regulations, including SEBI regulations, and addresses issues related to liquidity, prudential norms, exposure limits, stop-loss limits, and other internal controls of investment operations.
Q2.
What does the Board of Directors review on a quarterly basis according to Regulation 13 (B-iv)?

a.

The investment policy of both life and non-life insurers

b.

The monitoring of fund-wise and product-wise performance

c.

The compliance with SEBI regulations

d.

The insider trading prevention measures

Discuss
Answer: (b).The monitoring of fund-wise and product-wise performance Explanation:The Board shall review on a quarterly basis the monitoring of fund-wise and product-wise performance as per Regulation 13 (B-iv).
Q3.
What is the primary function of investment activity in insurance companies?

a.

Covering administrative expenses

b.

Generating revenue from premiums

c.

Compensating underwriting losses

d.

Funding marketing initiatives

Discuss
Answer: (c).Compensating underwriting losses Explanation:Investment activity in insurance companies primarily serves to compensate for underwriting losses incurred in the competitive market.
Q4.
Why are investment departments in insurance companies managed by experts and experienced personnel?

a.

To minimize marketing costs

b.

To enhance customer service

c.

To make strategic business decisions

d.

To analyze and manage investments effectively

Discuss
Answer: (d).To analyze and manage investments effectively Explanation:Investment departments in insurance companies are managed by experts and experienced personnel to analyze and manage investments effectively, considering the complexities of share markets and money market operations.
Q5.
What factors are involved in the analysis and research work for investment activities in insurance companies?

a.

Risk and return only

b.

Selection of alternatives, risk, return, and identification of financial markets

c.

Portfolio management process only

d.

Disclosure of investments in financial statements only

Discuss
Answer: (b).Selection of alternatives, risk, return, and identification of financial markets Explanation:The analysis and research work for investment activities involves factors like the selection of the best alternatives, measuring risk, understanding the relationship between risk and return, identification of different types of financial markets, and stages in portfolio management process.
Q6.
How is investment income typically utilized in insurance companies?

a.

Funding marketing initiatives

b.

Compensating underwriting losses

c.

Covering administrative expenses

d.

Enhancing customer service

Discuss
Answer: (b).Compensating underwriting losses Explanation:Investment income in insurance companies is typically utilized to compensate for underwriting losses incurred in the competitive market.
Q7.
How are financial assets defined?

a.

Tangible assets like commercial property

b.

Claims in paper or electronic form on the issuer

c.

Government securities only

d.

Investment in public provident funds

Discuss
Answer: (b).Claims in paper or electronic form on the issuer Explanation:Financial assets are defined as claims in paper or electronic form on the issuer, such as corporate bodies or the government.
Q8.
Which of the following is considered a real asset?

a.

Equity shares

b.

Corporate bonds

c.

Agriculture farm

d.

Mutual Fund Investment

Discuss
Answer: (c).Agriculture farm Explanation:Real assets include tangible assets like commercial property, land and building, agriculture farm, gold, and precious stones.
Q9.
How often does the Board review the Investment policy and its implementation according to Regulation 13 (B-v)?

a.

Annually

b.

Quarterly

c.

Half-yearly

d.

Biennially

Discuss
Answer: (c).Half-yearly Explanation:The Board shall review the Investment policy and its implementation on a half-yearly basis or at such short intervals as it may decide, as per Regulation 13 (B-v).
Q10.
What responsibility does the Board have regarding investments?

a.

To directly manage all investment functions

b.

To lay down clear norms for investing in 'Other Investments'

c.

To outsource all investment functions to ensure efficiency

d.

To perform internal audits of investment functions

Discuss
Answer: (b).To lay down clear norms for investing in 'Other Investments' Explanation:The Board shall lay down clear norms for investing in 'Other Investments' as specified under sections 27A(2) and 27B(3) of the Insurance Act 1938 by the Investment Committee.
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