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 6 of 16

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Q51.
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.
Q52.
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.
Q53.
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.
Q54.
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.
Q55.
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.
Q56.
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.
Q57.
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.
Q58.
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.
Q59.
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.
Q60.
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.
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