Page 166 - CAPE Financial Services Syllabus Macmillan_Neat

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18. Which of the following is NOT a principle of Corporate Governance?

(A) Rights of Shareholders
(B) Board responsibility
(C) Auditors' accountability and remuneration
(D) Risk management and Internal Control

19. From an organizational strategy perspective, firms may establish various units for the
purpose of monitoring and controlling risks such as

I. Compliance Department
II. Credit Department
III. Internal Audit
IV. Audit Committee

(A) I, II and III only
(B) I, II, and IV only
(C) I, III, and IV only
(D) II, III and IV only

20. Despite having a good compliance programme in an organization, failures can still occur
in its implementation such as

(A) Failure to identify and manage activities of interests
(B) Reluctance to reduce the number of rules required
(C) The inability to attract new clients with good standing
(D) Failure to delegate responsibilities and authorities

Item 21 refers to the following statement.

Flower County's Treasurer used the Flower County Investment Pool's resources to invest
in a significant amount of derivative securities, namely "structured notes" and "inverse
floaters". Subsequently, interest rates increased, the rates on these derivatives securities
declined along with the market value of those notes. This resulted in a $1.7 billion loss to
the Flower County Investment Pool.

21. Which of the following risks is exemplified in the statement above?

(A) Political Risk
(B) Credit Risk
(C) Liquidity Risk
(D) Market Risk

02269010/SPEC2016

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