CACS (Client Advisor Competency Standards) Paper 1 Trial Questions Test

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CACS (Client Advisor Competency Standards) Paper 1 Trial Questions Test - Quiz

CACS Paper 1 Trial Questions consist of trial questions based on the Client Advisor Competency Standards Examination. This Trial Question Mock Exam consists of 21 questions based on the IBF's Client Advisor Competency Standards book.


Questions and Answers
  • 1. 

    Who is/are deem as a Covered Person(s)?

    • A.

      Relation Manager

    • B.

      Investment Consultant and Product Specialist

    • C.

      Team Leader of Relationship Manager

    • D.

      D. Relationship Manager, Investment Consultant, Product Specialist, Assistant Relationship Manager and Team Leader

    Correct Answer
    D. D. Relationship Manager, Investment Consultant, Product Specialist, Assistant Relationship Manager and Team Leader
  • 2. 

    Which of the following statements on MAS Guideline on Fit and Proper Criteria is true?

    • A.

      The failure of a Covered Person to meet the “fit and proper” criteria set out in the Guideline may not lead to an automatic revocation of the status of an “appointed representative”

    • B.

      The failure of a Covered Person to meet the “fit and proper” criteria set out in the Guideline will lead to an automatic revocation of the status of an “appointed representative”

    • C.

      The Guideline are only statement of best practice and there is no adverse consequence if a Covered Person does not meet the “fit and proper” criteria

    • D.

      A Covered Entity has no duty to report to the MAS if any of its Covered Person fails to satisfy the Guideline as long as the Covered Entity deals with the non-compliant act based on its internal policies

    Correct Answer
    A. The failure of a Covered Person to meet the “fit and proper” criteria set out in the Guideline may not lead to an automatic revocation of the status of an “appointed representative”
    Explanation
    The correct answer states that the failure of a Covered Person to meet the "fit and proper" criteria set out in the Guideline may not lead to an automatic revocation of the status of an "appointed representative." This means that even if a Covered Person does not meet the criteria, their status as an appointed representative may not be immediately revoked. There may be other factors or considerations that are taken into account before such a decision is made.

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  • 3. 

    What is the main difference between a wholesale and an offshore bank?

    • A.

      A wholesale bank can accept fixed deposits of at least S$250,000 from both residents and non-residents of Singapore but an offshore bank can accept fixed deposits of at least S$250,000 only from non-resident of Singapore

    • B.

      A wholesale bank can accept fixed deposits of at least S$250,000 from only residents of Singapore but an offshore bank can accept fixed deposits of at least S$250,000 from both residents and non-resident of Singapore

    • C.

      A wholesale bank can accept S$ fixed deposits of any amount from both residents and non-residents of Singapore but an offshore bank can only accept fixed deposits of at least S$250,000 non-resident of Singapore

    • D.

      Both wholesale and offshore banks are subject to restrictions when dealing in S$. There is no difference between them

    Correct Answer
    A. A wholesale bank can accept fixed deposits of at least S$250,000 from both residents and non-residents of Singapore but an offshore bank can accept fixed deposits of at least S$250,000 only from non-resident of Singapore
    Explanation
    The main difference between a wholesale bank and an offshore bank is their ability to accept fixed deposits from residents and non-residents of Singapore. A wholesale bank can accept fixed deposits of at least S$250,000 from both residents and non-residents, while an offshore bank can only accept fixed deposits of at least S$250,000 from non-residents. This means that a wholesale bank has a broader customer base and can accept deposits from both local residents and foreigners, whereas an offshore bank can only accept deposits from non-residents.

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  • 4. 

    Which of the following regarding marketing materials are true? I) marketing materials such as product brochures are typically reviewed and approved by the Covered Entity’s legal and compliance department before they are circulated for use by the Covered PersonII) other than the marketing materials approved by the Bank, Covered Persons can prepare their own marketing materials to assist their customers to understand the productsIII) obsolete marketing materials could still be used as long as the clients have been verbally informed of the updated information           IV) email communications with clients are not deemed as marketing materials 

    • A.

      I only

    • B.

      I, II and III

    • C.

      II and IV

    • D.

      None of the above

    Correct Answer
    A. I only
    Explanation
    Marketing materials such as product brochures are typically reviewed and approved by the Covered Entity's legal and compliance department before they are circulated for use by the Covered Person. This ensures that the materials are in compliance with applicable laws and regulations. Therefore, statement I is true. On the other hand, statement II is not true as Covered Persons cannot prepare their own marketing materials without approval from the Bank. Statement III is also not true as obsolete marketing materials should not be used, even if clients have been verbally informed of the updated information. Lastly, statement IV is not true as email communications with clients can be considered as marketing materials.

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  • 5. 

    Which of the following about introducing activities is false?

    • A.

      The introducer refers clients to an appointed representative of the Covered Entity

    • B.

      The introducer provides factual information about investment products to the clients

    • C.

      The introducer provides advice on investment products to the clients

    • D.

      The introducer adheres to the script provided by the Covered Entity when carrying out introducing activities

    Correct Answer
    C. The introducer provides advice on investment products to the clients
    Explanation
    The correct answer is that the introducer provides advice on investment products to the clients. This is false because the role of the introducer is to refer clients to an appointed representative of the Covered Entity, provide factual information about investment products, and adhere to the script provided by the Covered Entity. The introducer is not authorized to provide advice on investment products to the clients.

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  • 6. 

    Which of the following regarding cross-border activities are true? I) as long as the Covered Entity and Covered Person are licensed in Singapore to offer financial advisory services, they are allowed to conduct similar activities in other countriesII) a Covered Person should consult his legal and compliance department for guidance on the “dos” and don’ts” when conducting cross-border activitiesIII) cross-border activities include providing account-opening documentation or account statements to clients in another countryIV) cross-border activities may trigger local licensing or regulatory requirements in the countries where these activities are undertaken

    • A.

      I and II

    • B.

      II and III

    • C.

      II, III and IV

    • D.

      I and III

    Correct Answer
    C. II, III and IV
  • 7. 

    What is/are the objective(s) for gathering a client’s non-financial personal/family information?I) to have proper identification of the individual beneficial owner and account holderII) to understand the segmentation of primary and secondary client relationships within the family in order to determine who the key decision makers of the family areIII) so that the Covered Persons will know what gifts to get for the clients and their family members on social occasionsIV) to appreciate the evolving individual/family values and social behavior that shapes the hierarchy and various personal relationships of family members, for the purpose of supporting family wealth succession and continuity

    • A.

      All of the above

    • B.

      II only

    • C.

      I and II

    • D.

      I, II and III

    Correct Answer
    D. I, II and III
    Explanation
    The objective for gathering a client's non-financial personal/family information is to have proper identification of the individual beneficial owner and account holder (I), to understand the segmentation of primary and secondary client relationships within the family in order to determine who the key decision makers of the family are (II), and to know what gifts to get for the clients and their family members on social occasions (III). This information is important for building a strong client relationship and providing personalized services.

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  • 8. 

    What are the requirements the Covered Entity and Covered Person must comply with when executing a cross-border wire transfer for their customer?

    • A.

      Identify the wire transfer originator and verify his identity as well as record adequate details of the wire transfer so as to permit its reconstruction

    • B.

      The Covered Entity cannot include the customer’s personal details in the payment instruction even with the customer’s consent as this will be a breach of Section 47 of the Banking Act

    • C.

      There are no regulatory requirements when executing a cross-border wire transfer with a value of less than S$10,000

    • D.

      The Covered Entity, which is an ordering institution in a cross-border wire transfer, is only required to include the name of the remitter in the payment instruction for a transfer amount that exceeds $S2,000

    Correct Answer
    A. Identify the wire transfer originator and verify his identity as well as record adequate details of the wire transfer so as to permit its reconstruction
    Explanation
    The correct answer states that the Covered Entity and Covered Person must identify the wire transfer originator, verify their identity, and record adequate details of the wire transfer in order to permit its reconstruction. This requirement ensures that there is transparency and accountability in cross-border wire transfers, helping to prevent fraud, money laundering, and other illicit activities. By identifying the originator and verifying their identity, it becomes easier to track and investigate any suspicious or illegal transactions. Additionally, recording adequate details of the wire transfer allows for proper documentation and auditing purposes.

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  • 9. 

    Which of the following statement is true?

    • A.

      Only commercial banks are required to comply with MAS Notice 626 on the Prevention of Money Laundering is only Countering the Financing of Terrorism

    • B.

      Customer Due Diligence is only required to be performed for the customer and not their beneficial owners

    • C.

      Customer Due Diligence is only required to be performed for on-boarding new customer. Once the business relationship has been established, there is no requirement to perform on-going Customer Due Diligence

    • D.

      Additional KYC requirements have to be applied when dealing with Politically Exposed Persons

    Correct Answer
    D. Additional KYC requirements have to be applied when dealing with Politically Exposed Persons
    Explanation
    Additional KYC (Know Your Customer) requirements have to be applied when dealing with Politically Exposed Persons (PEPs). PEPs are individuals who hold prominent public positions or have held such positions in the past. Due to their potential higher risk for involvement in money laundering or corruption, financial institutions are required to conduct enhanced due diligence when dealing with PEPs. This includes gathering additional information about the source of their wealth and funds, as well as monitoring their transactions more closely to mitigate the risk of illicit activities.

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  • 10. 

    What should a Covered Person take into consideration when providing recommendations for an investment product to clients?

    • A.

      The amount of commissions the product would generate for the bank and for the Covered Person

    • B.

      The client’s financial objectives, risk tolerance, financial situation and current investment portfolio

    • C.

      Products which offer rebates to clients

    • D.

      The networth of the client

    Correct Answer
    B. The client’s financial objectives, risk tolerance, financial situation and current investment portfolio
    Explanation
    When providing recommendations for an investment product to clients, a Covered Person should take into consideration the client's financial objectives, risk tolerance, financial situation, and current investment portfolio. This ensures that the recommendation aligns with the client's specific needs and goals, taking into account their risk appetite and financial circumstances. Considering these factors helps the Covered Person provide suitable investment options that are tailored to the client's individual requirements.

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  • 11. 

    When describing dual currency investment in any marketing material materials and/or product disclosure statements, which of the following information must be made available? I) Dual currency investment is a structured depositII) Nature and mechanics of dual currency investmentIII) Appropriate risk warningsIV) Appropriate illustrations to show how foreign exchange rate movements could result in the principal amount being repaid in the alternate currency, which could in turn result in the client receiving less than the principal amount initial invested when the amount in the alternate currency is converted back to the base currency

    • A.

      All of the above

    • B.

      II, III and IV

    • C.

      II and III

    • D.

      II and IV

    Correct Answer
    B. II, III and IV
    Explanation
    The correct answer is II, III and IV. This means that when describing dual currency investment in marketing materials and/or product disclosure statements, the following information must be made available: the nature and mechanics of dual currency investment, appropriate risk warnings, and appropriate illustrations to show how foreign exchange rate movements could result in the principal amount being repaid in the alternate currency, which could result in the client receiving less than the principal amount initially invested when the amount in the alternate currency is converted back to the base currency.

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  • 12. 

    Which of the following statement(s) is/are true with respect to providing recommendations on structured deposits?I) Representatives should explain to the investors that structured deposits are the same as normal fixed deposits since investors will receive the full principal amount upon maturity.II) Some clients may not require any recommendation from a Financial Adviser (FA) of its representatives on their selection of a structured deposit. In such cases, appropriate warnings should be made to such clients highlighting that they may wish to seek advice from a FA before making a commitmentIII) Disclose the benefits that are likely to be derived from the structured deposit, the amount and timing for benefits and whether the benefits are guaranteed or non-guaranteed. Benefits payable in the case of early redemption by the deposit taking institution should be clearly disclosedIV) Structured deposit is an insured deposit 

    • A.

      All of the above

    • B.

      II and III

    • C.

      II only

    • D.

      IV only

    Correct Answer
    A. All of the above
    Explanation
    The answer "All of the above" is correct because all of the statements mentioned in options I, II, III, and IV are true with respect to providing recommendations on structured deposits. Option I states that representatives should explain to investors that structured deposits are the same as normal fixed deposits. Option II states that some clients may not require a recommendation from a Financial Adviser (FA) on selecting a structured deposit, but appropriate warnings should be given to them. Option III states that the benefits, amount, timing, and guarantee of the structured deposit should be disclosed. Option IV states that structured deposits are insured.

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  • 13. 

    When must the Covered Entity send the contract note to the client?

    • A.

      Not later than the business day immediately following the sale of the shares

    • B.

      As soon as practicable

    • C.

      No later than 7 calendar days immediately following the sale of the shares

    • D.

      No later than 3 calendar days immediately following the sale of the shares

    Correct Answer
    A. Not later than the business day immediately following the sale of the shares
    Explanation
    The correct answer is "Not later than the business day immediately following the sale of the shares." This means that the Covered Entity must send the contract note to the client no later than the next business day after the sale of the shares. This ensures that the client receives the contract note in a timely manner and can review the details of the transaction. Sending the contract note promptly also helps to maintain transparency and accountability in the transaction process.

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  • 14. 

    When selling an unlisted debenture, which of the following should be disclosed and explained to investor? I) The time frame for the investor to reconsider his purchaseII) The terms and procedures for exercising his right to cancel his purchaseIII) The risk of any fall in value of the unlisted debenture during the cancellation period would have to be borne by the clientIV) No disclosure is required

    • A.

      IV only

    • B.

      I and II

    • C.

      I, II and III

    • D.

      I and III

    Correct Answer
    C. I, II and III
    Explanation
    When selling an unlisted debenture, it is important to disclose and explain certain information to the investor. This includes: I) The time frame for the investor to reconsider his purchase, as this allows the investor to make an informed decision and have a chance to change his mind if needed. II) The terms and procedures for exercising his right to cancel his purchase, ensuring that the investor understands the process and can exercise his rights if necessary. III) The risk of any fall in value of the unlisted debenture during the cancellation period would have to be borne by the client, informing the investor about the potential risks involved. Therefore, the correct answer is I, II and III.

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  • 15. 

    When executing securities transactions for client, which of the following should a Covered Entity / Cover Person comply with? I) The Covered Entity and Covered Person should not withhold or withdraw a client’s order from the market for the benefit of the Covered Entity / Covered PersonII) The Covered Person must give priority to the client’s outstanding orders over his own tradesIII) The Covered Entity must provide a contract note to the clientIV) The Covered Entity must act as the principal to these trades

    • A.

      I, II and III

    • B.

      I and II

    • C.

      I, II and IV

    • D.

      All of the above

    Correct Answer
    A. I, II and III
    Explanation
    A Covered Entity/Cover Person should comply with the following when executing securities transactions for a client: I) They should not withhold or withdraw a client's order from the market for their own benefit. II) The Covered Person must prioritize the client's outstanding orders over their own trades. III) The Covered Entity must provide a contract note to the client. Therefore, the correct answer is I, II, and III.

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  • 16. 

    Under the MAS Notice on Misconduct of Representative, Cover Entities are required to report which of the following types of misconduct committed by the Cover Person? I) Act involving fraud and DishonestyII) Acts involving inappropriate advice, misrepresentation or inadequate disclosure of informationIII) A serious breach of the Covered Entities’ internal policy or code of conductIV) The failure to meet the continuing education requirement

    • A.

      I, II and III

    • B.

      I and II

    • C.

      I, II and IV

    • D.

      All of the above

    Correct Answer
    A. I, II and III
    Explanation
    Cover Entities are required to report acts involving fraud and dishonesty (I), acts involving inappropriate advice, misrepresentation, or inadequate disclosure of information (II), and a serious breach of the Covered Entities' internal policy or code of conduct (III) committed by the Cover Person. The failure to meet the continuing education requirement (IV) is not mentioned as a type of misconduct that needs to be reported. Therefore, the correct answer is I, II, and III.

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  • 17. 

    Under which of the following circumstance are the Covered Entities and Covered Persons allowed to disclose any information given by a client? I) When the client has given his consent to the Covered Entity to disclose the informationII) When the information is disclosed to the spouse of the clientIII) When the information is disclosed to the MAS in accordance with the provisions in the Banking ActIV) No disclosure is allowed

    • A.

      IV only

    • B.

      I, II and III

    • C.

      I and III

    • D.

      I only

    Correct Answer
    C. I and III
    Explanation
    Covered Entities and Covered Persons are allowed to disclose information given by a client under two circumstances: when the client has given consent to the Covered Entity to disclose the information (I), and when the information is disclosed to the MAS (Monetary Authority of Singapore) in accordance with the provisions in the Banking Act (III). This means that the client's consent and legal requirements are the only situations in which disclosure is allowed. The answer is I and III.

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  • 18. 

    Which of the following statement is false?

    • A.

      A covered Entity should implement and maintain proper procedures to preserve the confidentiality of any information it receives from a client

    • B.

      A covered Entity should have in place adequate procedures and processes for handling complaints

    • C.

      When a misconduct has been committed by a Covered Person, the Covered Entity has to report the misconduct to MAS no later than 21 days after the discovery of the misconduct

    • D.

      A Covered Entity has to ensure that its Covered Persons meets continuing education requirements

    Correct Answer
    C. When a misconduct has been committed by a Covered Person, the Covered Entity has to report the misconduct to MAS no later than 21 days after the discovery of the misconduct
    Explanation
    The given statement is false because a Covered Entity is not required to report misconduct to MAS (Monetary Authority of Singapore) within 21 days after discovery. The correct answer is that a Covered Entity does not have to report the misconduct within that specific timeframe.

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  • 19. 

    Where is the trust resident?

    • A.

      Singapore because this is stated in the trust document

    • B.

      Indonesia because your client is an Indonesian citizen

    • C.

      It depends on where the wife and children and domiciled

    • D.

      Singapore because all the assets in the trust are in Singapore

    Correct Answer
    A. Singapore because this is stated in the trust document
    Explanation
    The correct answer is Singapore because it is stated in the trust document. The trust document is a legally binding agreement that outlines the terms and conditions of the trust, including the jurisdiction in which it is established. Therefore, if the trust document specifies that the trust is resident in Singapore, then it is legally recognized as such.

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  • 20. 

    Your client wants to be involved in the decision making and have a final say in the investment and distribution of the trust assets. What would you advise your client?

    • A.

      Inform the client that this is not possible as only appointed trustee can have a say in the investment and distribution of the trust assets

    • B.

      The client can state in his letter of wishes that he wishes to be consulted on all appointments and distributions. Also, the terms of the trust can provide for a protector and your client can be appointed as the protector

    • C.

      Inform the client that a Singapore Trust does not allow for the settler to reserve full investment power for himself

    • D.

      The client can be appointed as the protector to be consulted on matters relating to the investment of the trust. However, the final decision rests with the appointed trustee

    Correct Answer
    B. The client can state in his letter of wishes that he wishes to be consulted on all appointments and distributions. Also, the terms of the trust can provide for a protector and your client can be appointed as the protector
    Explanation
    The client can have a say in the investment and distribution of the trust assets by stating their wishes in a letter of wishes and appointing themselves as the protector in the terms of the trust. While the appointed trustee ultimately has the final decision, the client can still be consulted and have some influence over the decisions made.

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  • 21. 

    Your client informed you that both he and his business partner are worried that the business might be affected should any one of them pass away. Which of the following might be a possible solution to this concern?

    • A.

      Purchase life insurance policy to protect against the financial loss. The death benefit payout from the policy could be used to fund operating cash flow needs

    • B.

      Establish a vista Trust

    • C.

      Establish a Business Continuity Plan

    • D.

      Buy a term life policy as the policy can be surrendered at any time and the cash value can be used to fund operating cash flow needs

    Correct Answer
    A. Purchase life insurance policy to protect against the financial loss. The death benefit payout from the policy could be used to fund operating cash flow needs
    Explanation
    The suggested solution of purchasing a life insurance policy is a possible solution to the concern of the business being affected by the death of either partner. By purchasing a life insurance policy, the business can protect itself against the financial loss that may occur in the event of a partner's death. The death benefit payout from the policy can be used to fund the operating cash flow needs of the business, ensuring its continuity and stability. This solution provides a financial safety net for the business and helps mitigate the potential risks associated with the partners' demise.

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