RBA1

According to Little's Law, a positive short-term effect on average completion time is achieved by actions to: A. Reduce non-value added activities B. Invest in a comprehensive programme of training and developing bank staff C. Increase the utilisation rate for all bank staff D. Hire more bank staff who are specialists in banking operations

A

The last stage in the family life cycle is best described as one involving 'wealth transfer'. Which type of bank products is NOT likely to be in demand in this stage of the life cycle? A. Mortgage loans B. Savings products C. Annuities D. Trusts and wills

A

Consider the following statements: 1) When faced with information ambiguity, customers are likely to seek face-to-face contact with bank advisors 2) The internet and social media networks have contributed relatively more to the increase in information flow to consumers, thereby reducing information asymmetry 3) Typically customers face more information ambiguity when choosing savings products compared to mortgage loans Which option comprises correct statements only? A. 1) and 2) only B. 3) only C 1) only D 2) only

A. 1) and 2) only

A customer reports that "bank employees have tried to understand my financial and family situation and make the extra effort to understand my needs". This statement best describes which one of the relational factors of customer service quality? A. Empathy B. Assurance C. Responsiveness D. Tangibles

A. Empathy

A bank branch employee sold a (risky) equity mutual fund to a customer who is in his retirement stage of life. The bank's risk assessment tool shows that the customer has a low tolerance for risk. The employee will receive a bonus for selling this mutual fund but will not receive a bonus for selling a savings product. From an ethical perspective, which of the following statements best describes the action of the bank employee? 1. The bank employee is serving his own financial interest at the expense of meeting the customer's needs 2. The bank employee should have realised that typical risk assessment tools are not reliable 3. The bank employee has the right motive since the customer will benefit from higher returns 4.The bank employee may not have sworn allegiance to a retail banking code of ethic

A. The bank employee is serving his own financial interest at the expense of meeting the customer's needs

In the 3C model of channel strategy for retail banking, customer/market reach is best described by which of the following statements? A. The bank's ability to reach a larger segment of the market at all times B. The bank's ability to identify those channels that will lose customer priority or preference C. The bank's ability to maintain control so as to avoid reputational damage D. The bank's ability to offer convenience in customer service to all customers

A. The bank's ability to reach a larger segment of the market at all times

A branch manager obtains the following information to calculate the minimum loan rate. The treasury rate (cost of funding) is 2.5%, OPEX is 1% of the loan amount, provision as a percentage of the loan amount is 0.5% and the (minimum) target profit margin is 1%. From this information, the branch manager obtains a value for minimum loan rate that is equal to: A. 8% B. 5% C. 2.5% D. 4%

B

For effective sales management, the sales professional, in his dealings with a customer, is advised to match product/service drawbacks by highlighting related benefits so as to reduce the intensity of the drawback or justify its existence. This approach is best described as: A. Compounding B. Coupling C. Contrasting D. Comparing

B

Consider the following statements: 1) The 4P marketing mix model is product-oriented 2) The 4C model associates convenience in retail banking with the location of bank branches 3) The 7P model of market mix adds to the 4P model the following factors: participants, physical evidence and process 4) In the 4C+P model, a bank can differentiate itself from its competitors by effective communication with customers Which option comprises correct statement(s) only? A. 2) and 4) only B. 1) and 3) only C. 1), 2) and 3) only D. 2) and 3) only

B. 1) and 3) only

Which stage in the customer channel-product choice continuum is deemed to be riskiest for the customer in terms of regret suffered from making an incorrect decision? A. Pre-purchase B. Purchase C. Post-purchase D. Referral stage

B. Purchase

A retail bank channels funds from savers to borrowers. This role of a retail bank is best described as: A.Asset transformation B. Money creation C.Financial intermediation D.Proprietary trading

C

Consider the following statements: 1) For a small decrease in organisational complexity, the amount of non-value added activities declines by an even larger proportion 2) Little's Law states that if loan applications arrive at the front office of a retail bank at a rate of 12 per day and the average time bank staff takes to make a final decision is 4 days, then the average number of applications at various stages of the approval process is equal to 3 applications 3) Little's Law is the basis for lean operations Which option comprises correct statement(s) only? A 1) and 2) only B. 2) and 3) only C. 1) and 3) only D. 3) only

C

Consider the following statements: 1) In Islamic banking, the charging of interest (riba) is prohibited 2) Banks may face reputational risk when offering third-party products 3) Over the family life cycle, the tolerance for risk taking increases. Which option comprises correct statement only? A. 1), 2) and 3) B. 1) only C. 1) and 2) only D. 3) only

C

In a poll of 1000 customers who transacted with the bank over the last month, the bank's statistics department obtained 400 responses. Of these 400 responses, 100 were promoters and 80 were detractors. A bank professional makes the following assertions: 1) 55% of the respondents are categorised as 'passive' 2) The net promoter score is +5% 3) 20% of the respondents are categorised as 'promoters' Which option comprises correct assertions(s) only? A. 2) only B. 1) and 3) only C. 1) and 2) only D. 3) only

C

Senior management of a retail bank want to report higher profits at the upcoming quarterly reporting date so as to serve shareholder interests. You are the manager of a bank branch and are asked by your boss to aggressively sell a bank product that is expected to earn high margins. But currently the bank has a declared public policy of being customer-centric and you have tried to always match customer needs with the right bank products. What potential ethical conflict do you face? A.Interests of shareholders are in conflict with your interest as a bank manager B.The bank is customer-centric only when it is convenient to senior management C.The product with higher profitability serves shareholders' interests but may not match customers' needs Keeping your word to customers is at risk

C

Which of the following statements is incorrect? A. Wholesale funding is a relatively unstable source of funding for retail banks B. In a repo, the seller of collateral is a borrower of cash C.For an initial deposit of €100 in a retail bank, the maximum amount of deposits created for a reserve ratio of 6%, is €600 D.When a bank converts short-term deposits into longer-term loans, it faces interest rate risk.

C

"A customer may want the 'peace of mind' of a fixed rate mortgage but the bank staff may think that the customer is persuaded by low mortgage rates, which give rise to more rate volatility". This statement best describes which type of service gap? A. Standards gap B. Delivery gap C. Customer gap D. Communication gap

C. Customer gap

Which statement is incorrect? A. A Unique Selling Proposition (USP) conveys a unique benefit for consumers B. One of the three steps in the development of a marketing strategy is to determine a suitable marketing mix C. In conducting marketing research, the bank professional may seek information that is available in the public domain - this type of research is called 'quantitative surveys' D. A SWOT analysis helps bank professionals to identify an optimal market position for the bank

C. In conducting marketing research, the bank professional may seek information that is available in the public domain - this type of research is called 'quantitative surveys'

The following information is obtained from the income statement of a retail bank. All monetary values are stated in millions of dollars. Total income from all sources = 1150 Operating expense = 600 Charges for bad debts = 150 Taxes = 25 From this information, the cost income ratio is closest to: A. 65% B. 48% C. 67% D. 52%

D

The statement that "salespeople or frontline staff must be able to react promptly to customers' requirements" describes which of the following factors of the 4I model of internet marketing? Interaction Integration that is information driven Intensity-use Identification or Immediacy

D

Which statement is incorrect? A. Improved process efficiency can lead to lower cost income ratio and hence higher profitability B. When employees are utilised at a very high level that is approaching 100%, the likelihood of errors and mistakes increases C. The Basel II definition of operational risk places emphasis on the role of people, process and systems failure D. The main objective of a six-sigma programme in a bank is to create lean bank processes

D

The marketing manager of a retail bank has taken actions to train and develop bank staff so as to reduce the variability of its service delivery to bank customers. Which one of the four attributes of bank products/services will be mostly affected by the actions taken by the marketing manager? A. Intangibility B. Simultaneity C. on-storability D. Heterogeneity

D. Heterogeneity

To optimally serve customer needs, the bank's portfolio of channels should accomplish which of the following: a) deliver customer service quality across all channels b) fully integrate all bank channels to obtain an integrated view of all customers c) provide full access to all employees (especially front line employees) to identical and timely information on all customers d) provide customers with full information on all bank products and services Choose one of the following: I: a), b) and c) only II: a) only III: a), b), c) and d) IV: b) and c) only

III: a), b), c) and d)

Consider the following statements regarding the 4P marketing mix framework: a) It is product-focused b) It is customer-focused c) Booms and Bitner added three more Ps - participants, process and physical evidence d) Judd added one more P (people) to the 4P model Which of the following is a correct option? I: b) and d) only II: a) only III: a), c) and d) only IV: b).c) and d) only

III: a), c) and d) only

In which of the following cases does a bank face less price competition in relation to its offers? a) High customer switching cost b) A positive customer-bank relationship c) High customer service quality Which option comprises correct statements only? I: a) only II: a) and b) only III: c) only IV: a), b) and c)

IV: a), b) and c)

The main purpose of market research is to obtain information so that the bank professional can make decisions with respect to: a) Marketing mix b) Market opportunities c) Strength of competition d) Forecasting consumer current and future needs Which option is correct? I: a) only II: b), c) and d) only III: a) and d) only IV: a), b), c) and d)

IV: a), b), c) and d)

The CEO of a retail bank is considering expanding its branch network in a new international market. He advises that bank staff upon entering the new market must be aware that "ethical behaviour should be evaluated in a way that depends on the frame of reference in the new market - maybe culture or social norms". This statement best describes which of the following theory of ethics? 1. Teleology 2.Virtue ethics 3. Deontology 4. Relativism

Relativism

The statement that a credit card 'provides a way to borrow for short periods without going through an application/approval process for each purchase' is best described as providing a (an): A. Rational benefit B. Rational drawback C. Emotional benefit D. Emotional drawback

a

Which of the following steps in the development of a marketing strategy is associated with differentiation and positioning? a) Developing the bank's unique selling proposition (USP) b) Conducting a SWOT analysis c) Determine the target customer segments d) Determine the marketing mix

a) Developing the bank's unique selling proposition (USP)

Which attribute of financial services is relatively people-dependent? a) Heterogeneity b) Perishability c) Intangibility d) Inseparability

a) Heterogeneity

Which of the following dimensions of service quality is not a relational factor? a) Reliability b) Assurance c) Tangible d) Empathy

a) Reliability

Which channel will likely be most preferred by customers if they have all the information needed to make a purchasing decision but are highly uncertain about some of the jargon used? a) Self-service channel b) Bank branch c) Call centre d) Bank's website

a) Self-service channel

Which statement is incorrect? a) The service recovery paradox states that first-time errors are not critical for customer service quality. b) Academic research demonstrates that customer loyalty has a positive effect on the bank's reputation. c) The halo effect refers to the importance of both outcome, and the dominance of customer experience in evaluating customer service quality. d) Reliability is a core dimension of customer service quality.

a) The service recovery paradox states that first-time errors are not critical for customer service quality.

The definition of customer service quality is based on the principle of disconfirmation. This means that customers compare: a) Their perceived service quality with their expected service quality b) Their perceived service quality with management's benchmark of best in class c) Their expected service quality with prior experience of service quality d) Their expected service quality with word-of-mouth referrals of service quality

a) Their perceived service quality with their expected service quality

Beckett et al (2000) stated that there are three additional characteristics that differentiate financial services from other services. These are (a) transparency of performance, (b) uncertainty of outcome and (c) poor comparability. Which one of these additional characteristics is described as: "the availability of information presented by the bank, and consumers' ability to make evaluations based on that information" a) Transparency of performance b) Uncertainty of outcome c) Poor comparability

a) Transparency of performance

A successful channel strategy is based on the 3Cs. These are: a) customer/market reach; cannibalisation; control b) customer/market reach; cannibalisation; convenience c) customer service quality; customer/market reach; control d) customer service quality; cannibalisation; control

a) customer/market reach; cannibalisation; control

Mortgage applications arrive at a rate of 25 per day and there are 100 mortgage applications at various stages in the approval process. By Little's Law, the average time to complete one mortgage application is: a) 0.25 day b) 4 days c) 5 days d) 0.20 day

b) 4 days

The income statement of a bank shows the following information with all monetary values stated in millions of euro. Total sources of income =1000; total operating cost = 620 and addition to loan loss provisions = 80. The cost income ratio is: a) 70 percent b) 62 percent c) 8 percent d) None of the above

b) 62 percent

With respect to the 4C model proposed by Lauterborn, convenience in the case of a retail bank is mostly associated with: a) Location of bank branches b) A wide set of channels with easy accessibility c) A product that best matches customer needs d) A price that is competitive

b) A wide set of channels with easy accessibility

A retail bank incurs a relatively high degree of leverage if a) Loan to value ratio is high b) Assets to deposits ratio is high c) Net interest spread is low d) Volatility of net earnings is low

b) Assets to deposits ratio is high

Consider the following indicator statement: "My dealings with bank staff shows that they are competent, with significant experience in banking." This statement indicates which of the five dimensions of customer service quality? a) Reliability b) Assurance c) Responsiveness d) Tangibles e) Empathy

b) Assurance

Kenrick et al criticised Maslow's theory of hierarchy of needs on the grounds that: a) Needs should not be categorised as high order (e.g., self-actualisation) and low order (e.g., physiological, safety, belonging and esteem) b) Consumer needs exist at all levels and even when satisfied may reappear later when environmental cues dictate c) Maslow's theory is too ethnocentric and omits the role of cross-cultural differences d) Customers have more than needs, hence Maslow's theory is incomplete

b) Consumer needs exist at all levels and even when satisfied may reappear later when environmental cues dictate

Which of the following is a more direct measure of operational efficiency? a) Net promoter score b) Cost-income ratio c) Net interest margin d) Net interest spread

b) Cost-income ratio

During a sales conversation the sales person says: "I know that you have to pay a monthly maintenance fee for your current account, but in return you get one percent cashback on bill payments, a three percent interest rate, free annual subscription to the fashion magazine of your choice, and a custom card design." This is an approach used to minimise the effect of a product drawback. Which approach is this? a) Compounding b) Coupling c) Contrasting d) Comparing

b) Coupling

Which of the following bank products is used by customers mostly for payments? a) Term deposit b) Current (checking) account c) Sweep account d) Savings account

b) Current (checking) account

When the internal management view of customer expectations differs from the customer expectations, a gap exists. This gap is called: a) Standards gap b) Customer gap c) Delivery gap d) Communication gap

b) Customer gap

There are five steps in the marketing process. The most complex step is to: a) Analyse the market (SWOT) b) Develop a marketing strategy c) Create a marketing plan d) Execute the plan

b) Develop a marketing strategy

Which statement is incorrect? a) Deposits are priced on a relative basis - relative to a benchmark rate. b) In Islamic banking, financial products must be Sharia-compliant. This means that gambling is not permitted, although speculation by derivatives is permitted. c) Mortgages are secured loans. d) Credit cards are revolving unsecured loans

b) In Islamic banking, financial products must be Sharia-compliant. This means that gambling is not permitted, although speculation by derivatives is permitted.

Risk management, capital and provisioning activities, compliance and ethical issues in a retail bank are typically associated with: a) Front office b) Middle office c) Back office d) None of the above

b) Middle office

Which bank product will likely present the highest level information ambiguity for a typical consumer? a) Line of Credit b) Mortgage Loans c) Personal Loans d) Current Accounts

b) Mortgage Loans

Which statement is incorrect? a) A lean process is closely associated with the implications of Little's Law. b) Six Sigma actions are intended to deliver uniform customer service. c) The Pareto Principle states that the occurrence of non-value added activities is symmetrical. d) The theory of constraints implies that managers must deal with local bottlenecks.

b) Six Sigma actions are intended to deliver uniform customer service

Which of the following is typically used by SMEs only for cash management? a) Current account b) Sweep account c) Credit line d) Savings account

b) Sweep account

Which statement is incorrect? a) Channels have two essential dimensions - the point of contact with the bank and the media by which the communication is made b) When dealing with a bank branch channel, transaction confirmation is shown to be important to customers c) There is some research which suggests that face-to-face communication is a natural way of communication among people. d) Home banking was heralded as a replacement for branch banking during the late 1980s, when personal computer penetration rates among the banking public hovered around five percent

b) When dealing with a bank branch channel, transaction confirmation is shown to be important to customers

Which of the following statements is incorrect? a) The Pareto Principle implies that 20 percent of customers create 80 percent of non-valueadded activities. b) When work in process (WIP) increases, the amount of non-value activities increases in the same proportion. c) Non-value-added activities add cost but produce no reward. d) Reputational risk is highlighted in terms of other risk types

b) When work in process (WIP) increases, the amount of non-value activities increases in the

Which statement is correct? One of the drawbacks of ROE as a financial metric is that: a) it is not suitable for use at the bank level. b) it is not risk-adjusted. c) it only captures the profit earned from the banking book. d) it only captures the profit earned from the trading book.

b) it is not risk-adjusted.

You are given the information that probability of default on a loan is 1% and that the recovery rate is 95% for a loan with an outstanding value of $500,000. The expected loss is a. $300 b. $250 c. $500 d. None of the above

b. $250

Kantian moral philosophy is mostly related to which of the following a. Teleology b. Deontology v. Virtue ethics d. Relativism

b. Deontology

Which moral philosophy focuses on the outcome of the business decision making a. Deontology b. Teleology c. Kanlan Moral duty d. Virtue ethics

b. Teleology

A retail banking process for opening an account is structured sequentially as follows: A: Account opened (forms sent by customer) B: Forms received by bank and allocated C: Customer-review process D: Processing of forms E: Account opened F: Customer informed The arrival rate from A to B is 95%; B to C is 91%; C to D is 96%; D to E is 96% and E to F is 97%. The rolled throughput yield is: a) 96% b) 86.8% c) 77.2% d) None of the above

c) 77.2%

If a sales manager in a retail bank does not want sales people employed by the bank to try to increase sales irrespective of customer needs (i.e., mis-selling), a recommended compensation plan should be which of the following? a) Commission only b) A weighted average of salary and commission c) A weighted average of salary and bonus based on NPS d) Salary only

c) A weighted average of salary and bonus based on NPS

Which statement is correct? a) An individual's tolerance for investment risk increases over his/her life-cycle. b) The highest demand for estate planning products occurs in the retirement/transfer stage. c) An individual is likely to take on the highest investment risk in the wealth accumulation stage. d) The three stages of the family life cycle are in the following time sequence - retirement/wealth transfer, wealth consolidation and wealth accumulation.

c) An individual is likely to take on the highest investment risk in the wealth accumulation stage.

Which channel is likely to be where most customer advisory services are conducted? a) Smart phones b) Bank website c) Bank branch d) Call centres

c) Bank branch

Which statement best describes the 'heterogeneity' attribute of bank services? a) Bank services are not storable, leading to problems in capacity planning b) Bank services are intangible and customers may face a risky choice c) Bank services are not standardised and customers may face some level of disappointment d) Bank services are delivered and consumed by the consumer at the same time

c) Bank services are not standardised and customers may face some level of disappointment

Which statement best describes relationship selling as defined by Barclays Bank? a) The interaction between the salesperson and the bank customer is competitive b) The salesperson is thinking only about the next sale c) Developing a relationship between the salesperson and the customer takes priority over the sale d) The sales person is self-interest oriented

c) Developing a relationship between the salesperson and the customer takes priority over the sale

Which statement is incorrect? a) Research has shown that successful salespeople are not necessarily effective sales managers b) Operational efficiencies can lead to effective sales management by providing a competitive price c) Effective sales management is independent of marketing research d) A trusted brand is crucial for effective sales management

c) Effective sales management is independent of marketing research

In what stage of the life cycle would you expect a consumer to be more interested in the transfer of wealth? a) Single and 30 years old b) Married with two children and 35 years old c) Over 65 years old and retired d) Married with no children and 35 years old

c) Over 65 years old and retired

A 3 percent coupon bond is priced to yield 3 percent. This bond is selling at: a) Premium to par b) Discount to par c) Par

c) Par

Banking products cannot be stored. This attribute is described by which of the following: a) Intangibility b) Inseparability c) Perishability d) Heterogeneity

c) Perishability

In the expanded 4P model, Booms and Bitner added three additional Ps. Which refers to the surroundings in which the service is delivered? a) Participants b) Process c) Physical Evidence d) People

c) Physical Evidence

Which statement is incorrect? When adding a new channel, the bank must ensure that it can still: a) Deliver customer service quality across all channels (including the additional channel) b) Fully integrate all bank channels to obtain an integrated view of all customers c) Provide full access especially to back office employees on a timely basis d) Ensure that data travels with the customer as he/she navigates the network of channels

c) Provide full access especially to back office employees on a timely basis

Which statement is incorrect? a) Goodwill may be subject to impairment. b) Net Interest Margin is higher than Net Interest Spread. c) Provision for loan losses is included in the cost income ratio. d) The recent financial crisis has shown that sovereign bonds are not risk-free.

c) Provision for loan losses is included in the cost income ratio.

The matching of channels with bank products is based on the principle that simple products require less direct personal contact. Which of the following products would probably dominate the regular business of a direct (internet) bank? a) Credit cards b) Variable rate mortgage loans c) Savings accounts d) Current Accounts

c) Savings accounts

A bank in calculating the NPS for a business unit over the last quarter, sampled 1000 customers with 600 respondents. There were 150 respondents labeled as advocates and 200 labeled as detractors. The remaining respondents were classified as passive. Which statement is correct? a) The percentage of advocates were 15% b) The NPS score is 5% c) The NPS score indicates negative customer satisfaction d) The percentage of passive respondents is 25%

c) The NPS score indicates negative customer satisfaction

The SIM score for the indicator statement 'bank employees show that they understand my needs and take the time to explain bank offers' is -1.5. Based on this information, which of the following statements is correct? a) The SIM score indicates that customer satisfaction is positive in relation to reliability. b) The SIM score indicates that customer satisfaction is negative with respect to assurance. c) The SIM score indicates that customer experience is negative with respect to empathy. d) The SIM score indicates that customer experience is negative with respect to responsiveness.

c) The SIM score indicates that customer experience is negative with respect to empathy.

Immediacy is one of the factors in the 4I model of digital marketing. This factor refers to: a) The ability of the frontline staff to interact with the customer over his/her life cycle b) The application of data and information for effective marketing c) The ability of bank frontline staff to act on customers' requirements promptly d) Bank staff actively communicating with the customer

c) The ability of bank frontline staff to act on customers' requirements promptly

Which of the following statements is incorrect? a) The net promoter score may be affected by cultural differences of customers. b) A customer's prior experience with bank staff may affect his/her expectations of customer service quality. c) The design of the bank branch is an indicator of one of the dimensions of service quality - responsiveness. d) The quality of the promotional material of the bank is an indicator of one of the dimensions of service quality - tangibles

c) The design of the bank branch is an indicator of one of the dimensions of service quality - responsiveness.

Which is incorrect? a. A high loan to deposit ratio may signal a bank's over reliance on wholesale funding b. The banking book is exposed mainly to credit risk c. A covered bond is an off-balancce sheet item d. A bond issued by a government is called a sovereign

c. A covered bond is an off-balancce sheet item

Research has shown that money laundering comprises 3 stages. 'The process of making it difficult for a bank to identify the illegal source of funds' is a statement which refers to: a: Placement b. Integration c. Layering d. Laundering

c. Layering

Which of the following agency relationships in a retail bank is mitigated by insurance a. Managers and regulators b. Managers and shareholders c. Managers and depositors d. shareholders and debt holders

c. Managers and depositors

A branch manager gets a cost of funding quote from the bank's treasury department of 2 percent. To meet his/her profit target for a loan, a minimum profit margin of 1 percent is required. Operating cost is estimated to be 1.5 percent and the expected loss - which is a cost of doing business - is estimated to be 2.5 percent for this loan. What is the minimum interest rate the branch manager will charge for this loan? a) 4 percent b) 6 percent c) 2 percent d) 7 percent

d) 7 percent

Which of the following statements is incorrect? a) Goodwill is an intangible asset. b) Deposits are a bank liability. c) The Euribor is a euro-priced bank-to-bank lending rate. d) A bank that sells collateral in a repo transaction is a lender.

d) A bank that sells collateral in a repo transaction is a lender.

Which is not one of the three stages of Direct Response Sales? a) Acquisition of a prospect b) Conversion (the matching solutions and needs described in Chapter 1) c) Retention d) Cross-selling

d) Cross-selling

Suppose that cost decreases by 2 percent and income decreases by 1 percent , then the cost income ratio will: a) Increase by 2 percent b) Decrease by 2 percent c) Increase by 1 percent d) Decrease by 1 percent

d) Decrease by 1 percent

Research has shown that in order to integrate marketing and sales functions, it is best to start with: a) Senior management demonstrating the value of collaboration b) Reducing inter-departmental conflict c) Improving communication d) Developing joint market intelligence

d) Developing joint market intelligence

Which statement in relation to Islamic banking is incorrect? a) Interest paid on deposits (riba) is forbidden. b) Speculation is not permitted. c) Investment in certain products such as alcohol is forbidden. d) Investment return is guaranteed

d) Investment return is guaranteed

Which statement is incorrect? a) Information uncertainty is defined as when an individual knows how to carry out a service, but does not have sufficient data to do so b) Equivocality is defined as ambiguity in how to carry out a service c) Information ambiguity is defined as uncertainty in how to carry out a service d) Low levels of information uncertainty require some degree of face-to-face contact

d) Low levels of information uncertainty require some degree of face-to-face contact

A standards gap is reflected in which of the following? a) There is a deficiency in the delivery of bank services. b) Management's view of customer expectations differs from actual customers' expectations. c) The level of service communicated by the bank differs from what customers actually experience. d) Management fails to consider that customers require service quality assurance.

d) Management fails to consider that customers require service quality assurance.

Grouping and classifying customers based on what they are trying to achieve, is what type of segmentation technique? a) Demographic b) Psychographic c) Past-Purchase Behaviour d) Outcomes-based

d) Outcomes-based

Based on the 4C+P model, a retail bank may most likely differentiate itself from its competitors over the long term on which of the following factors? a) Consumer Value b) Consumer Cost c) Convenience d) People

d) People

Which statement is incorrect? a) Information uncertainty and information ambiguity are two dimensions of information risk b) Customer channel choice depends in part on customer information risk c) Having all transactions conducted on digital channels is cost effective for banks d) Retail banks aspire to sell products in branches only

d) Retail banks aspire to sell products in branches only

Financial services have three additional features over other services. Which of the following is not one of them? a) Transparency of performance b) Uncertainty of performance c) Poor comparability of performance d) Term of performance

d) Term of performance

Which of the following statements regarding retail banking is incorrect? a) Over 90 percent of transactions are conducted on digital channels b) As consumers age, their demand for bank branches changes over time c) Location convenience is a key driver of choice of a retail bank by consumers d) The reduction of bank transactions over time shows a decline of the bank branch as a channel

d) The reduction of bank transactions over time shows a decline of the bank branch as a channel

Which of the following is correct with respect to a positive NPS? a) The percentage of detractors is low. b) The percentage of promoters is high. c) The percentage of passive customers is close to zero. d) the percentage of promoters exceeds the percentage of detractors.

d) the percentage of promoters exceeds the percentage of detractors.

In the four-component structure of a bank, which component is identified with the phrase 'a core set of values, norms and beliefs? a. Tangible b. Infrastructure c. Behaviour d. Culture

d. Culture

A client-related source of compliance risk is which of the following a. Independence of the compliance function b. Employment practices (e.g harassment) c. Receipt of gifts by bank personnel d. Money Laundering

d. Money Laundering

A bank has adopted a corporate purpose whereby it wants to be a leader in ethical banking and corporate social responsibility. This bank's purpose is most closely identified with which of the 4 typologies of the ehtical stance by Johnson and Scholes? a. Short-term sharedholder intersts b. Long-term shareholder interests c. Multiple stakeholder interests d. Shaper of society

d. Shaper of society

You are given the following statemns a. Assets = Liabilities + Shareholder Equity b. Deposits are part of a bank's assets c. Loan loss reserve is set aside to cover unexpected loan loss Which of the following options is correct? i. Only a is correct ii. Only c is correct iii Statements a and b are correct iv. All statements are correct

i. Only a is correct

Consider the following scenario: A bank is currently paying a 15% commission to its salespeople to sell indexed variable annulties and a 5% commission to sell single premium fixed annuities. The variable annuities are indxed to a stock market index but the choice of the index is made by the customer. Consider the following statements: a. The salespeople will most likely assume that the company supports the indexed variable annuity product since it is paying three times more commission compared to the fixed rate annuity. b. Salespeople will sell only the variable rate annuity product. c. The purely self-interested salesperson will try to sell mostly the variable annuity product d. Ethical salespeople will sell only the fixed rate annuity product. Choose the option which comprises statements that are mostly likely to describe salespeople's behaviour. i. a and c only ii. a and b only iii. b only iv a,b,c and d v. a and d only

i. a and c only

Agency Theory, a. Deals with issues that arise in the principal agent model b. Describes the problems that arise when there is a separation between ownership and control c. Shows how some agents may act in their own self-interest Choose one of the following: i: a only ii. a,b,c iii c only iv b only

ii. a,b,c

Consider the following statements a. Game theory shows that a trusting relationship based on interpersonal contact that goes beyond the immediate transaction can lead to optimal results b.Commission-based selling may lead to unethical actions by salespeple c. The prisoner's Dillemma business game demonstrates that ethical egolsm is suboptimal for all staekholders d. Information asymmetry likely exists between bank functional specialists and senior bank executives which option comprises only correct statement(s)? i. a only ii c only iii a and c only iv a,b,c and d v. a,b and c only

iv a,b,c and d