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 2 of 16

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Q11.
What does Par Value refer to in the context of bonds?

a.

Market value of the bond

b.

The value of the bond at the time of issue

c.

The promised face value of the bond at maturity

d.

The interest payable to the bondholder

Discuss
Answer: (c).The promised face value of the bond at maturity Explanation:Par Value refers to the face value of the bond and the amount the issuer promises to pay at the time of maturity.
Q12.
What is Coupon Rate in the context of bonds?

a.

The market interest rate

b.

The rate of return on investment

c.

The rate of interest payable to the bondholder

d.

The rate of tax on bond income

Discuss
Answer: (c).The rate of interest payable to the bondholder Explanation:Coupon Rate refers to the rate of interest payable to the bondholder.
Q13.
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.
Q14.
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).
Q15.
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).
Q16.
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.
Q17.
What is the requirement mentioned in Regulation 7 (c) of IRDA (Registration of Indian Insurance Companies) Regulations 2000 related to internal control of investment functions?

a.

To outsource all investment functions for efficiency

b.

To segregate functions and operations of Front, Mid, and Back office

c.

To perform internal audits of investment functions

d.

To invest in equity shares and debt instruments

Discuss
Answer: (b).To segregate functions and operations of Front, Mid, and Back office Explanation:Regulation 7 (c) of IRDA (Registration of Indian Insurance Companies) Regulations 2000 requires insurers to ensure proper internal control of investment functions and operations by clearly segregating the functions and operations of Front, Mid, and Back office.
Q18.
What is the significance of the primary data server for investment management?

a.

It should be outsourced to ensure efficiency

b.

It should be located outside the country for security reasons

c.

It should remain within the country for proper internal control

d.

None of the above

Discuss
Answer: (c).It should remain within the country for proper internal control Explanation:The primary data server of the computer application used for investment management shall remain within the country to ensure proper internal control.
Q19.
When is the applicable NAV determined for applications received with local cheques, cash, or demand drafts?

a.

The closing NAV of the same day for applications received before Cut-off Time (3.00pm)

b.

The closing NAV of the next business day for applications received after Cut-off Time (3.00pm)

c.

The closing NAV of the day on which the cheque or demand draft is realized for outstation cheques or demand drafts

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The applicable NAV for applications received with local cheques, cash, or demand drafts depends on whether they are received before or after Cut-off Time (3.00pm) on a business day. For outstation cheques or demand drafts, the closing NAV of the day on which the cheque or demand draft is realized shall be applied.
Q20.
When does Maturity date of a bond occur?

a.

At the time of issue

b.

After the bondholder receives interest payments

c.

When the principal amount is payable by the borrower to the bondholder

d.

On the date of purchase

Discuss
Answer: (c).When the principal amount is payable by the borrower to the bondholder Explanation:Maturity date refers to the date when the principal amount of borrowings is payable by the borrower to the bondholder.
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