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 13 of 16

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Q121.
What does Regulation 12 pertain to?

a.

Returns to be submitted by insurers

b.

Additional information required from insurers

c.

Duty to report extraordinary events in the investment portfolio

d.

Regulatory provisions for investments of insurance companies

Discuss
Answer: (c).Duty to report extraordinary events in the investment portfolio Explanation:Regulation 12 mandates that every insurer shall report to the Authority forthwith the effect or the probable effect of any event coming to his knowledge, which could have a material adverse impact on the investment portfolio and consequently on the security of policyholder benefits or expectations.
Q122.
Who are the mandatory members of the Investment Committee according to Regulation 13 (A)?

a.

Chief Executive Officer, Chief of Finance, and Chief of Investment Division

b.

Two non-executive directors, Chief Executive Officer, Chief of Finance, Chief of Investment Division, and Appointed Actuary (if employed)

c.

Chief Executive Officer, Chief of Investment Division, and Appointed Actuary (if employed)

d.

Chief of Finance, Chief of Investment Division, and Appointed Actuary (if employe

Discuss
Answer: (b).Two non-executive directors, Chief Executive Officer, Chief of Finance, Chief of Investment Division, and Appointed Actuary (if employed) Explanation:According to Regulation 13 (A), every insurer shall constitute an Investment Committee, which shall consist of a minimum of two non-executive directors of the insurer, the Chief Executive Officer, Chief of Finance, Chief of Investment Division, and where an approved actuary is employed, an Appointed Actuary.
Q123.
How is Risk on Investment defined?

a.

Probability of financial gain on investment

b.

Probability of achieving investment goals

c.

Probability of loss of expected return on investment

d.

Probability of short-term market fluctuations

Discuss
Answer: (c).Probability of loss of expected return on investment Explanation:Risk on Investment can be defined as the chance of loss of expected return on investment.
Q124.
Why is marketability/liquidity considered an important factor for investment decisions?

a.

To maximize initial tax benefits

b.

To rectify errors in investment decisions

c.

To reduce the overall risk of investment

d.

To ensure continuing tax benefits

Discuss
Answer: (b).To rectify errors in investment decisions Explanation:Marketability/liquidity is essential for investors to rectify possible errors or mistakes in earlier investment decisions.
Q125.
What are the three types of Tax Benefits associated with investments?

a.

Short-term, medium-term, and long-term benefits

b.

Initial tax benefit, continuing tax benefits, and terminal tax benefits

c.

Personal, corporate, and capital gains tax benefits

d.

Direct and indirect tax benefits

Discuss
Answer: (b).Initial tax benefit, continuing tax benefits, and terminal tax benefits Explanation:Tax Benefits are of three types: Initial tax benefit, Continuing Tax benefits, and Terminal Tax Benefits.
Q126.
What are Government Securities also known as?

a.

High-risk securities

b.

Zero Coupon Bonds

c.

Gilt-edged securities

d.

Variable Coupon Rate Securities

Discuss
Answer: (c).Gilt-edged securities Explanation:Government Securities are also known as gilt-edged securities.
Q127.
What is the recommended reporting structure for the Investment Department in an insurance company?

a.

The Chief Investment Officer (CIO) reports to the CFO (Chief Financial Officer)

b.

The CFO reports to the CEO (Chief Executive Officer)

c.

The Front Office, Mid Office, and Back Office report directly to the CEO

d.

The CFO and CIO report to the Chief Risk Officer

Discuss
Answer: (b).The CFO reports to the CEO (Chief Executive Officer) Explanation:The Front Office headed by the Chief Investment Officer (CIO) reports to the CEO, while the Mid Office and Back Office, with separate responsible officers, are under the supervision and control of the CFO.
Q128.
How is data transfer between Front Office and Back Office recommended to be carried out?

a.

Through manual intervention to ensure accuracy

b.

On a real-time basis without manual intervention

c.

By relying on multiple Data-Entry Systems

d.

Through periodic batch processing

Discuss
Answer: (b).On a real-time basis without manual intervention Explanation:The transfer of data and information from Front Office to Back Office should be electronic without manual intervention, i.e., on a real-time basis.
Q129.
What is emphasized regarding the integration of multiple Data-Entry Systems in investment functions?

a.

Integration is not necessary for efficient operations

b.

Integration should have flaws to ensure flexibility

c.

Integration should be without any fault and without any manual intervention

d.

Integration is required only for the Back Office

Discuss
Answer: (c).Integration should be without any fault and without any manual intervention Explanation:If multiple Data-Entry Systems are in place for carrying out investment functions, all such systems need to be integrated without a flaw or fault and without any manual intervention.
Q130.
What role does the Chief Financial Officer (CFO) play in the reporting structure of the investment department?

a.

The CFO supervises the Front Office and Back Office.

b.

The CFO directly reports to the CEO.

c.

The CFO oversees the entire investment department.

d.

The CFO is responsible for trading guidelines.

Discuss
Answer: (a).The CFO supervises the Front Office and Back Office. Explanation:The Front Office headed by the Chief Investment Officer (CIO) reports to the CEO, while the Mid Office and Back Office are under the supervision and control of the CFO.
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