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Reading Comprehension
Read the following passage carefully and answer the questions given below it:
Banks in Australia have a certain upside-down quality to them. Their share prices broke free from the pull that dragged down their international rivals during the 2008 financial crisis. In recent years, they have soared as others have sagged. Now that big banks on other rich countries are regaining their poise, as in most of the global economy, it is the turn of Australia‘s to slide. This topsy-turvy behaviour may yet continue given its worsening outlook. Serving a buoyantdomestic economy with none-too-fierce competition, Australia‘s big four lenders: Common wealth Banks, National Australia Bank (NAB), ANZand Westpacused to delight shareholders with bumper dividends.
However, concerns over their balance-sheets and exposure to Australia‘s housing market have caused their shares to dip. Investors fear that the exceptional circumstances underpinning the vibrant returns of recent years are coming to an end. The commodity super-cycle‖ that boosted both Australia and its banks has fizzled .Unemployment is creeping up.The biggest concern is the health of bank‘s mortgagebooks.Home loans have been fabulously lucrative for Australian banks but this is changing. According to analysts, returns on them top 50%, which would make even pre-crisis Wall Street bankers happy. No wonder, then, that domestic home loans now represent 40-60% of Australian banks’ assets up from 15-30% in the early 1990s. Mortgages in New Zealand account for another 5-10%. A growing number of loans are going to property speculators or to homeowners paying back only the interest on their loan. Recent stress test suggested that a property downturn would ravage banks.
Regulators fret about the lack of diversification in banks especially given their dependence on foreign money for funding. They want banks to curb growth in the riskiest mortgages and to finance them with more equality and less debt. A government inquiry into the Australian financial system called for banks to be better capitalised. Collectively, Australian banks may need as much as a $40 billion in fresh capital to meet regulators demands. The big four are still highly profitable and their returns will remain better than most despite all the new equity. They will have to raise after all. Banks around the world are being forced to fund themselves with more equity.Aussie borrowers are less likely to default on mortgages than American ones, as lenders have a claim on all their assets, not just the property in question, but there are other concerns as well.
In fact, credit growth in Australia is slowing and expansion into crowded Asian market seems difficult which leaves little scope for diversification. If they cannot make banks less dependent on mortgages, regulators will have to find other ways to make them safer.
1. What is the author’s view of the global economy at present?
(a) The global economy is unlikely to recover as economic reforms are not stringent.
(b) Rich economies have yet to recover while emerging markets are thriving.
(c) The economy is in turmoil as large Asian economies are experiencing a crisis.
(d) Many European countries are in debt and likely to default on their loans.
(e) Other than those given as options.
2. Choose the word which is most nearly the OPPOSITE in meaning to the word DIP given in bold as used in the passage.
(a) immense
(b) equal
(c) rise
(d) dry
(e) decline
3. Which of the following is the most appropriate definition of the word BUOYANT as used in the passage
(a) to support/form the basis of an argument a claim etc.
(b) to gradually become less successful and end in a disappointing way.
(c) to gradually increase in amount price, etc.
(d) to increase/stay at a high level, usually showing financial success.
(e) to change so that there is great variety.
4. Choose the word which is most nearly the SAME in meaning as the word RAVAGE given in bold as used in the passage?
(a) steal
(b) attack
(c) invade
(d) devastate
(e) scam
5. According to the passage, which of the following factors was responsible for the Australian economy‘s performance during the 2008 global crisis?
(a) Australian banks should adopt American hedge funds.
(b) Australia inexperienced a commodity base.
(c) Lack of investment in emerging markets.
6. Which of the following is the central idea of the passage?
(a) Restructuring of Australia‘s banks has been very successful.
(b) Australia‘s housing sector is enjoying a boom.
(c) The powers of Australia‘s banking regulator should be curtailed.
(d) Australia is the best forming of all advanced economies at present.
(e) Australia’s banking sector is vulnerable and headed for difficulty
7. Choose the word which is most nearly the SAME meaning as the word BUMPER given in bold as used in the passage.
(a) buffer
(b) impact
(c) adequate
(d) frequent
(e) huge
8. Which of the following is the most appropriate definition of the word FIZZLED as used in the passage?
(a) to support/form the basis of an argument a claim etc.
(b) to gradually become less successful and end in a disappointing way.
(c) to gradually increase in amount price, etc.
(d) to increase/stay at a high level, usually showing financial success.
(e) to change so that there is great variety.
9. Choose the word which is most nearly the OPPOSITE in meaning to the word FABULOUSLY given in bold as used in the passage.
(a) terrifically
(b) insignificantly
(c) gravely
(d) harshly
(e) easily
10. Decide if each of the following statements is true or false as per the context of the given article justifying your answer with evidence from the text.
(a) Australia‘s banks are still struggling to recover from the 2008 crisis. ()
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(b) Unemployment in Australia is on rise. ()
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(c) Regulators are unwilling to enforce strict reforms on the banking sector. ()
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(d) Australian banks have a surplus of capital according to regulators. ( )
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11. What do the assets regarding assets of Australia citied in the passage convey?
(a) Bank assets are heavily concentrated in the housing sector.
(b) Australian banks have invested too heavily in property markets of other countries.
(c) The four banks are in imminent danger of collapse.
(d) Australian banks are safe and are growing from strength to strength.
(e) Australian banks have a huge number of defaulters.
12. Which of the following best describes the regulator’s view of Australia’s economy?
(a) Australian banks should adopt American system of mortgage to safeguard the economy.
(b) Australia should withdraw from risky emerging markets.
(c) There is a need for some corrections and reforms to be implemented.
(d) Australia has insulated itself from foreign markets, and this has hampered growth.
(e) Its economy is soaring and recapitalisation and diversification reforms may be withdrawn.
People look back at economic bubbles and wonder how the individuals involved were so easily swayed to spend their money on the product or company. In a four-paragraph essay (400 words) discuss the qualities or aspects of human nature that you think make that kind of deception possible.
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1. Use the following five words in any form of their derivations to write a paragraph (50 words) on a topic of your choice.
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2. Use the following five words in any form of their derivations to write a paragraph (50 words) on a topic of your choice.
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