#1
What does the 'Know Your Customer' (KYC) policy aim to achieve in financial institutions?
To identify and verify the identity of clients
ExplanationKYC ensures proper client identification to mitigate risks.
#2
Which entity is responsible for setting accounting standards in the United States?
Financial Accounting Standards Board (FASB)
ExplanationFASB sets and updates accounting standards for the U.S. financial industry.
#3
What is the primary purpose of the Financial Crimes Enforcement Network (FinCEN)?
To combat money laundering and financial crimes
ExplanationFinCEN works to prevent money laundering and other financial crimes.
#4
Which regulatory body oversees the regulation of investment advisers and broker-dealers in the United States?
Securities and Exchange Commission (SEC)
ExplanationSEC regulates and supervises investment advisers and broker-dealers.
#5
Which entity issues Generally Accepted Accounting Principles (GAAP) in the United States?
Financial Accounting Standards Board (FASB)
ExplanationFASB issues and updates GAAP for the U.S. financial industry.
#6
Which regulatory body oversees the Securities Exchange Act of 1934 in the United States?
Securities and Exchange Commission (SEC)
ExplanationSEC oversees the act to ensure fair and efficient securities markets.
#7
What is the purpose of the Dodd-Frank Wall Street Reform and Consumer Protection Act?
To reform the financial regulatory system
ExplanationDodd-Frank aims to enhance financial stability and protect consumers.
#8
What is the primary function of the Financial Industry Regulatory Authority (FINRA)?
To regulate the conduct of broker-dealers
ExplanationFINRA ensures fair practices and investor protection in broker-dealer activities.
#9
Which regulatory body oversees the implementation of the Sarbanes-Oxley Act in the United States?
Securities and Exchange Commission (SEC)
ExplanationSEC enforces Sarbanes-Oxley to enhance corporate governance and transparency.
#10
What is the primary objective of the International Financial Reporting Standards (IFRS)?
To standardize financial reporting globally
ExplanationIFRS aims for consistent and comparable financial reporting worldwide.
#11
What is the purpose of the Volcker Rule?
To restrict banks from making certain speculative investments
ExplanationThe Volcker Rule prohibits certain high-risk trading activities by banks.
#12
What does the term 'fiduciary duty' refer to in finance?
A duty to act in the best interest of clients
ExplanationFiduciary duty requires prioritizing clients' best interests in financial transactions.
#13
Which of the following is NOT a component of Basel III regulations?
Credit rating agencies oversight
ExplanationBasel III does not include direct oversight of credit rating agencies.
#14
Which of the following is NOT a requirement of the Basel II Accord?
Consumer protection regulations
ExplanationBasel II focuses on capital adequacy and risk management, not consumer protection.
#15
Which of the following is NOT a principle of the General Data Protection Regulation (GDPR)?
Confidentiality
ExplanationConfidentiality is a fundamental principle, contrary to GDPR's core principles.
#16
Which entity is responsible for overseeing the implementation of the Foreign Account Tax Compliance Act (FATCA)?
Internal Revenue Service (IRS)
ExplanationIRS oversees the implementation of FATCA to prevent tax evasion.
#17
Which of the following is NOT a component of operational risk in banking?
Market risk
ExplanationOperational risk in banking does not include market risk.