CACS Exam Questions: Quiz!

24 Questions | Total Attempts: 1375

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CACS Exam Quizzes & Trivia

Are you familiar with Khinloke CACS-Paper? Do you know what causes a nation’s currency to appreciate on the foreign market, what happens with bonds when they approach maturity, how to calculate the current yield of a bond, and how to do essential business calculations, and how to solve complex word problems. According to our calculations, you will pass this quiz with flying colors.


Questions and Answers
  • 1. 
    The client’s portfolio has a standard deviation of 18%.
    • A. 

      The standard deviation is a figure that measures the absolute volatility of the fund

    • B. 

      The standard deviation is a risk measure that measures only the downside volatility of the fund

    • C. 

      The standard deviation measures the extent to which the portfolio has deviated from its intended allocation

    • D. 

      The standard deviation measures the extent to which the portfolio has deviated from its benchmark

  • 2. 
    Henry applied for 100,000 shares of XYZ Company during its IPO at $0.50 per share. He was allocated 10,000 shares. On the first day of trading, he sold all his shares at $0.63 each. What was his return? 
    • A. 

      30%

    • B. 

      26%

    • C. 

      23%

    • D. 

      20%

  • 3. 
    Which one of the following factors is most likely to cause a nation’s currency to appreciate on the foreign exchange market?
    • A. 

      An increase in exports relative to imports

    • B. 

      An increase in real interest rates in other countries

    • C. 

      An increase in the nation’s foreign investments (assets purchased from foreigners)

    • D. 

      Rapid domestic inflation

  • 4. 
    According to the CAPM (Capital Asset Pricing Model):
    • A. 

      In a perfect market, all systematic risk can be eliminated through diversification

    • B. 

      Investors are not willing to pay for unsystematic risk

    • C. 

      The beta of an individual security is affected by a number of factors such as economic growth rate and change in inflation rate

    • D. 

      The beta of a market depends on the slope of Securities Market Line

  • 5. 
    Assume that the beta for Stock A is 1.20. Given a risk-free rate of 3 percent and an expected market return of 8 percent, the required rate of return for Stock A is:
    • A. 

      9.00%

    • B. 

      9.60%

    • C. 

      11.00%

    • D. 

      11.60%

  • 6. 
    A major step in assets allocation is:
    • A. 

      Assessing the investor’s risk tolerance

    • B. 

      Analyzing the company’s financial statements

    • C. 

      Estimating the security’s beta

    • D. 

      Identifying market anomalies

  • 7. 
     As bonds approach maturity, call premium will tend to:
    • A. 

      Increase

    • B. 

      Decrease

    • C. 

      Remain constant

    • D. 

      Vary depending on market interest rate

  • 8. 
    An investment in a coupon bond will provide the investor with a return equal to the bond’s Yield to maturity at the time of purchase if:
    • A. 

      The bond is not call for redemption at a price that exceeds its par value

    • B. 

      All sinking funds payment are met in a prompt and timely fashion over the life of the issue

    • C. 

      The reinvestment rate is the same as the bonds Yield to maturities

    • D. 

      None of the above

  • 9. 
    A semiannual bond with a par value of $1,000 bears a coupon rate of 5% and is currently selling at $950. What is its current yield?
    • A. 

      3.26%

    • B. 

      2.63%

    • C. 

      5.26%

    • D. 

      6.23%

  • 10. 
    The ________ of the call option has the right to _______ the underlying securities at the strike price.
    • A. 

      Buyer, buy

    • B. 

      Buyer, sell

    • C. 

      Writer, buy

    • D. 

      Writer, sell

  • 11. 
    Which futures contracts are more likely to be cash-settled at maturity?
    • A. 

      Oil and Gas futures

    • B. 

      Gold futures

    • C. 

      S&P Index futures

    • D. 

      Corn futures

  • 12. 
    The spot AUD/USD is quoted with 1.0970/80 and the 3 months forward is 1.1150/70. What are the forward points?
    • A. 

      18/19

    • B. 

      180/190

    • C. 

      190/200

    • D. 

      200/210

  • 13. 
    An investor invests $850,000 in a “Worst of” Equity Linked Note (ELN) in Company A, B, and C at a discounted price of 85.  At maturity, you are given the following information: Company A share closed at 20% above its strike price, Company B's share closed at 15% above its strike price and Company C's share closed at 10% below its strike price. The note is cash-settled. If the note is not converted then the investor should receive $1,000,000 cash at maturity. Calculate the Profit/loss of the investor.
    • A. 

      $150,000

    • B. 

      $100,000

    • C. 

      $50,000

    • D. 

      -$100,000

  • 14. 
    A structured note with the Constant Proportion Portfolio Insurance technics allocates between a commodity fund and 5 years US treasury. Given that on day 1, the cushioning value of the note is 15% and the crush size of the commodity fund in one allocation period is 33.3%. Calculate the percentage allocation to the 5 years US treasury on day 1
    • A. 

      55%

    • B. 

      100%

    • C. 

      75%

    • D. 

      33.3%

  • 15. 
    Which of the following product is suitable for a conservative investor who does not want to risk his principal investment?
    • A. 

      Credit linked note (CLN)

    • B. 

      Dual Currency Investment (DCI)

    • C. 

      Range accrual note

    • D. 

      Accumulators

  • 16. 
    Which of the following sentence describe the expense ratio?
    • A. 

      It is an expression of the total operating expenses charged to the fund expressed as a percentage of the fund’s average asset for the year

    • B. 

      It is the measurement of the invested return over the expenses charged to the fund for the accounting year

    • C. 

      It is an expression of the ex-cost of the fund over total expense charge to the fund of the whole year

    • D. 

      It is the ratio of the sale charge and performance fees over the total expenses charged to the fund for the year

  • 17. 
    What does the tracking error of portfolio measures?
    • A. 

      The percentage of return that is not attributable to movements in the bench mark index

    • B. 

      The volatility of a portfolio’s return

    • C. 

      The volatility of the difference between the portfolio return and the bench mark return

    • D. 

      The relative volatility of a portfolio compare to the bench mark

  • 18. 
    Which of the following is a responsibility of the trustee?
    • A. 

      Ensuring that the fund manager manages the fund in accordance with the investment objective and restrictions states in the trust deed

    • B. 

      Manage the fund on behalf of the unit holders

    • C. 

      Creates factsheets and marketing material of the fund

    • D. 

      Ensure that the fund manager takes legal ownership of the fund

  • 19. 
    The main objective of REIT investment is to enable investors to achieve returns from:
    • A. 

      Capital preservation of the properties

    • B. 

      Recurring rental income

    • C. 

      Leverage efficiency

    • D. 

      Cost efficient

  • 20. 
    An investor does not wish to top up any cash during the investment phase. Which of the following products is likely to be unsuitable then?
    • A. 

      Private equity

    • B. 

      Hedge funds

    • C. 

      Oil futures

    • D. 

      Stocks

  • 21. 
    Your client has never invested overseas and is seeking your help on how he can dedicate part of his portfolio to international investments. He has no immediate liquidity needs for this dedicated portion of his portfolio. However, he would like to remain in SGD as his investment currency of denomination. He would like to know which of the following investments/combination of investments are suitable for him.  
    1. ETFs listed on SGX that mimic foreign broad markets indices e.g. S&P500 & FT100
    2. Stocks listed on SGX with significant foreign exposure
    3. Foreign stocks with dual listing in SGX
    4. ADRs trading on SGX
    • A. 

      He can invest in a combination of I and II

    • B. 

      He can invest in a combination of II and III

    • C. 

      He can invest in a combination of II and III

    • D. 

      He can invest in a combination of I, II, III and IV

  • 22. 
    Covered Persons can encourage sophisticated HNW individual to use lending and credit facility by:
    • A. 

      Providing the lowest interest rate available or even zero financing charges so as to ensure that client increase the amount invested

    • B. 

      Offering capital protection, or guaranty or a derivative investment, which will lower the risk of financing

    • C. 

      Highlighting the potential of using financing for incremental funding to make a healthy spread over borrowing cost, to invest in products which are optimistic about return even after factoring in the borrowing costs

    • D. 

      Providing clean financing, that is allowing client to borrow without having any collateral to secured the loan extended

  • 23. 
    The following criteria limit specifically the valuation of the collateral used in financing investment. For assets to be used as collateral for investment in Singapore, it must be:
    • A. 

      Of higher in value than the value of the investment which it secured

    • B. 

      Be liquid, unencumbered, assessable and of good credit quality

    • C. 

      Denominated in a major international currencies (USD, EUR, GBP, CHF and JPY)

    • D. 

      Back by guarantees of other financial institutions

  • 24. 
    To establishing the size of the lending facility for an existing client, it is absolutely critical to establish:
    • A. 

      The client’s personal net worth and personal objective to investing

    • B. 

      The health and exposure of the client current businesses

    • C. 

      The amount of excess, idle cash that is held by the client

    • D. 

      The amount and quality of the collateral the client is willing to place

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