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.

In this section, you'll find a wide range of Investment of Insurance Companies And IRDA Regulations mcq questions that explore various aspects of Investment of Insurance Companies And IRDA Regulations problems. Each MCQ is crafted to challenge your understanding of Investment of Insurance Companies And IRDA Regulations principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Investment of Insurance Companies And IRDA Regulations MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

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Investment of Insurance Companies And IRDA Regulations MCQs | Page 14 of 16

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Q131.
What is the purpose of the Authority Matrix?

a.

To control access to financial data

b.

To document all suggestions and directives of fund managers

c.

To facilitate communication between Front Office and Back Office

d.

To outline the investment policy

Discuss
Answer: (b).To document all suggestions and directives of fund managers Explanation:The investment department is required to document all suggestions and directives of the fund managers and dealers through the Authority Matrix as a Standard Operating Procedure.
Q132.
What is the purpose of the Maker/Checker procedure?

a.

To facilitate communication between Front Office and Back Office

b.

To review the investment policy

c.

To document suggestions and directives of fund managers

d.

To ensure accuracy and verification in investment operations

Discuss
Answer: (d).To ensure accuracy and verification in investment operations Explanation:There must be an adequate Maker/Checker procedure in place and mapped in their Standard Operating System of Investment Operations to ensure accuracy and verification. This procedure shall be subject to review by Internal or Concurrent Auditor.
Q133.
What is the role of the Cash Management System (CMS) in managing liquidity risks?

a.

Determine the availability of funds for investment

b.

Forecast portfolio returns

c.

Validate and accept commitments beyond fund availability

d.

Monitor changes in instrument ratings

Discuss
Answer: (a).Determine the availability of funds for investment Explanation:The Cash Management System (CMS) determines the funds available for investment at a particular point in time after considering all claim settlement obligations, other payments, and redemptions. The system should not allow validation or accepting any commitment beyond the availability of funds.
Q134.
What is the purpose of the System in monitoring and controlling Inter Fund Transfer transactions?

a.

To facilitate communication between Front Office and Back Office

b.

To determine fund-wise daily NAV

c.

To identify and manage credit risks

d.

To monitor and control transactions within funds

Discuss
Answer: (d).To monitor and control transactions within funds Explanation:The System should monitor and control Inter Fund Transfer transactions as per IRDA Circular ref IRDA-FA-02-10-2003-04. The Investment Committee may fix the Cut-off time for such transfers within the fund.
Q135.
What types of risks are associated with investments?

a.

Market risks and Operational risks

b.

Liquidity risks and Market risks

c.

Credit risks and Operational risks

d.

Market risks, Liquidity risks, and Credit risks

Discuss
Answer: (d).Market risks, Liquidity risks, and Credit risks Explanation:Risks associated with investments can be broadly divided into Market risks, Liquidity Risks, and Credit risks.
Q136.
What is the significance of the System capturing and considering Instrument Ratings?

a.

To forecast portfolio returns

b.

To facilitate communication between Front Office and Back Office

c.

To identify and manage credit risks

d.

To ensure accuracy in investment operations

Discuss
Answer: (c).To identify and manage credit risks Explanation:To identify, analyze, and manage Credit Risks, the system should capture and consider Instrument Ratings. The system should generate statements of Downgraded Investments and automatically monitor various Regulatory limits on exposure and ratings.
Q137.
Why is the periodic credit review necessary for investee companies?

a.

To forecast portfolio returns

b.

To monitor and control Inter Fund Transfer transactions

c.

To ensure compliance with regulatory requirements

d.

To validate and accept commitments beyond fund availability

Discuss
Answer: (c).To ensure compliance with regulatory requirements Explanation:The investment department is required to make periodic credit reviews for investee companies in the portfolio and keep track of the classification of Approved and Other investments to ensure compliance with regulatory requirements.
Q138.
What role does the System play in compliance with regulatory requirements?

a.

To facilitate communication between Front Office and Back Office

b.

To forecast portfolio returns

c.

To provide and specify regulatory limits

d.

To monitor changes in instrument ratings

Discuss
Answer: (c).To provide and specify regulatory limits Explanation:The Investment Operation System should have the ability to provide and specify regulatory limits to ensure compliance with all regulatory requirements.
Q139.
What is the purpose of the facility to upload transactions like Stock Splits, Dividend Receipts, etc., in the System?

a.

To monitor and control Inter Fund Transfer transactions

b.

To ensure compliance with regulatory requirements

c.

To compute NAV and portfolio valuation

d.

To identify and manage credit risks

Discuss
Answer: (c).To compute NAV and portfolio valuation Explanation:The System is required to have the facility to upload certain important transactions like Stock Splits, Dividend Receipts, Right Issue, Buy Back, Bonus Issue, etc., for computation of NAV and portfolio valuation.
Q140.
What is the significance of maintaining NAV history in the system?

a.

To ensure accuracy in investment operations

b.

To facilitate communication between Front Office and Back Office

c.

To forecast portfolio returns

d.

To compare NAV with the service provider's computation

Discuss
Answer: (d).To compare NAV with the service provider's computation Explanation:The Investment Accounting and Monitoring system must maintain NAV history (Fund-wise) from the Start Date to the current Date and should have the capacity to compare it with the NAV computed by the service provider, if outsourced.
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