Topic 3

Question 1

What is the conduct of a business

Answer 1

the way in which a business is run

Question 2

Who enforces the conduct of business regulation

Answer 2

FCA

Question 3

What is deleveraging

Answer 3

reducing the amount of debt in relation to assets

Question 4

What is an example of deleveraging

Answer 4

paying of credit cards

Question 5

What is economic stability

Answer 5

ensuring economic activity is carried out in a way that ensures it can continue in the long term

Question 6

What is environmental stability

Answer 6

Reducing the negative impacts of human activity on the environment so that natural resources can be sustained

Question 7

What is an example environmental stability

Answer 7

using renewable resource

Question 8

What are equator principles

Answer 8

a set of ethical benchmarks for banks to follow when taking decisions to finance infrastructure

Question 9

give an example of an equator principle

Answer 9

dams

Question 10

What is ethical lending

Answer 10

lending money to companies with good ethics

Question 11

What is an example of ethical lending

Answer 11

Lending money to a company that invests in green technology

Question 12

what is financial contagion

Answer 12

where debt works its way through the global financial system

Question 13

what is an impact of financial contagion

Answer 13

threats to confidence and sustainability of financial systems

Question 14

what is leverage

Answer 14

the amount of borrowing a company has in relation to its assets

Question 15

what is liquid assets

Answer 15

cash or assets that can easily be converted into cash without losing value

Question 16

what is liquidation

Answer 16

the process by which a company or a part of is brought to an end

Question 17

what happens to the assets and property of a company when forced into liquidation

Answer 17

they are redistributed

Question 18

what is a moral hazard

Answer 18

a situation in which there is lack of incentive to guard against risk because the risk take believes that they will be protected from negative consiquences

Question 19

what is an example of a moral hazard

Answer 19

banks believing that the government would bail them out if they got into any financial difficulty

Question 20

what the mortgage market review

Answer 20

reforms made to the mortgage market to ensure it is sustainable and works better for consumers

Question 21

when was the reforms made to the mortgage market

Answer 21

april 2014

Question 22

what is perilous debt

Answer 22

a situation in which someone is spending more than half of their monthly income on debt repayments

Question 23

what is provider sustainabilty

Answer 23

a company with a sustainable business model

Question 24

what is an example of provider sustainability

Answer 24

a bank willing to take less risk even if it means giving up the chance to make additional profits

Question 25

what is prudential regulation

Answer 25

regulation that is designed to ensure financial services providers do not fail and if they do fail, they failure does not impact the wider financial system

Question 26

what is social sustainability

Answer 26

a concern with creating communities that foster well being, peace security and justice for the people who live in them

Question 27

what are speculators

Answer 27

People who buy and sell the shares of many companies in order to make quick profits on the deals

Question 28

what are stakeholders groups

Answer 28

the groups of people upon whom financial services providers have an impact

Question 29

what is sustainable development

Answer 29

development that meets the needs of the present without compromising the ability of future generations to meet their own needs

Question 30

what is a sustainable financial product

Answer 30

a financial product that is designed to meet the long-term requirements of the who buy it

Question 31

what is a sustainable financial system

Answer 31

a system in which financial services are delivered in a way that means they can continue to be delivered and meets the needs of customers over the long term

Question 32

what is systemic risk

Answer 32

risk that affects an entire system

Question 33

what are systemically important financial institutions

Answer 33

the large firms within the financial services sector that would cause serious problems for the whole economy if they fail

Question 34

what is 'too big to fail'

Answer 34

believing that the consequences of one or more of the big banks failing would be too great for any government to allow it to happen

Question 35

what are the 3 pillars of sustainability

Answer 35

environmental, social, economic

Question 36

systemic risk is highest when the financial providers are...

Answer 36

large companies

Question 37

what were the banks placed in when the government purchased failed banks in 2007/08

Answer 37

temporary public ownership

Question 38

what is the procedure that takes place when a bank is in trouble

Answer 38

resolution

Question 39

what a failing bank may receive since regulations were put in place

Answer 39

help from the government and bank of england but may be allowed to fail

Question 40

what are directors

Answer 40

those who make the company's strategic decisions

Question 41

what is a sustainable financial product designed to meet

Answer 41

long term consumer requirments

Question 42

What is self-insurance

Answer 42

regularly setting aside a sum of money to cover unexpected events

Question 43

What do people do when deleveraging

Answer 43

stop spending and start saving to pay of existing debts

Question 44

Who is fully responsible for assessing whether a potential mortgage customer can afford the loan and verify there income as a result of the mortgage market review

Answer 44

the lender