M9A Structured Questions

79 Questions | Total Attempts: 253

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  • 1. 
    Structured products are ________ of the issuer
    • A. 

      Unsecured debt securities

    • B. 

      Financial derivativies

    • C. 

      Fixed income instruments

    • D. 

      Equity - like products

  • 2. 
    A structured product is a combination of
    • A. 

      Bond and a financial derivative

    • B. 

      Bond and an option

    • C. 

      Note and option

    • D. 

      All of the above

  • 3. 
    In order to mitigate the credit risk of the fixed income instrument used in structured products, the issuer of the structured product may choose to
    • A. 

      Provid a guarantee by itself

    • B. 

      Provid a guarantee by third party

    • C. 

      Provide a guarantee by itself or a third party

    • D. 

      Use a fixed income issuer with better credit rating than itself

  • 4. 
    One of the few structured products that may have no expiry date is
    • A. 

      Tracker certificate

    • B. 

      Bonus certificate

    • C. 

      Discount certificate

    • D. 

      Airbag certificate

  • 5. 
    A __________ structured product means that it is linked to a certain basket of market indices.
    • A. 

      Interest rate-linked

    • B. 

      Equity-linked

    • C. 

      Credit-linked

    • D. 

      Market-linked

  • 6. 
    A _______ product works like a term insurance plus a structured fund, where the term insurance provides insurance coverage and the other potion provides investment returns.
    • A. 

      A structured note

    • B. 

      A structured fund

    • C. 

      A structured ILP

    • D. 

      A structured deposit

  • 7. 
    ________ are also known as portfolio of investments with an insurance element
    • A. 

      Mutual funds

    • B. 

      Structured funds

    • C. 

      Bond funds

    • D. 

      Portfolio funds

  • 8. 
    A structured ILP with valuation done ________ will pose a higher liquidity risk for investors
    • A. 

      Daily

    • B. 

      Every 2 weeks

    • C. 

      Monthly

    • D. 

      Quarterly

  • 9. 
    The fund seeks daily investments results, before fees and expenses that correspond to twice the inverse of the daily performance of the market benchmark index. This best describles an
    • A. 

      ILP providing regular payments

    • B. 

      ILP linked to index returns

    • C. 

      ILP with capital appreciation potential

    • D. 

      ILP with term insurance component

  • 10. 
    Which of the following is not a drawback of investing in structured ILP?
    • A. 

      A structured ILP has several layers of expenses like front -end charge, bid offer spread and cost of death benefit

    • B. 

      Extra layer of fees and expenses are incurred when insurer choose to invest in specially investment areas managed by external unit trusts

    • C. 

      It takes time for structured ILPs investment performance to make up for expenses charged

    • D. 

      Diversification of the fund minimizes the opportunity cost

  • 11. 
    Which of the following statements is incorrect?
    • A. 

      Returns for structured deposits are generally lower due to cost of providing return of capital

    • B. 

      Design for structured funds are affected by investment restrictions

    • C. 

      Investors of structured notes are secured creditors of the issuer in the event of liquidation

    • D. 

      There is a wide and ready distribution network for structured ILPs

  • 12. 
    Which of the following investors is not suitable to invest in structured ILPs?
    • A. 

      Jane has a medium to high tolerance to loss of capital and aims for capital appreciation.

    • B. 

      Tommy is interested to invest in hedge funds although he has little knowledge to invest in such niche area on his own

    • C. 

      Mary does not fully understand the risk and return trade of the product

    • D. 

      James buys a structured vILPv following the adfvice from his financail adviser.

  • 13. 
    Which of the following is not considered a reason for investing in structured products?
    • A. 

      It is used as part of the asset allocation process to reduce risk exposure of a portfolio

    • B. 

      Structured products may suit investors particular investment needs.

    • C. 

      Structured products are used as an alternative to a direct investment in traditional asset classes.

    • D. 

      Structured products offer no access to exotic asset classes.

  • 14. 
    The defination of structured note Is
    • A. 

      An intermediate term debt security whose interest payments are determined by a formula tied to a movement of a stock, commodity or currency.

    • B. 

      A structured product that is linked to certain market indices

    • C. 

      An investment instrument that combines the characteristic of a zero-coupon bond with a return component

    • D. 

      Structured as a security with an embedded credit default swap

  • 15. 
    Structured products are dependent on their underlying assets, which are subjected to ________ risks.
    • A. 

      Counterparty risk

    • B. 

      Liquidity risk

    • C. 

      Market risk

    • D. 

      All of the above

  • 16. 
    Why should a person choose to invest in structured products?
    • A. 

      Structured products can be issued quickly that enable investor to swiftly respond to market trends

    • B. 

      Structured products can be used as part of the asset allocation process to reduce price volatitly of a portfolio

    • C. 

      Structured products are extremely versatile instruments to deliver specific risk/return profile to suit the investors needs

    • D. 

      Structured products can replicate the performance of market that is closed to foreign investors

  • 17. 
    Insurers who market structured products are subject to the following regulatory framework except the
    • A. 

      Futures act

    • B. 

      Insurance act

    • C. 

      Financial advisory act

    • D. 

      CIS code

  • 18. 
    Below are the deails of a new structured investment linked life insurance policy being introduced: 1) insurer and guarantor = Company XYZ 2) Credit rating = C 3) Currency Used = SGD 4) Tenure = 2 years 4) Maturity = 100 % of initial amount of single premiun 5) Payout = 7 % of initial amount of single premiun per annum. What risk does an investor face when investing in this ILP?
    • A. 

      Currency risk

    • B. 

      Credit risk

    • C. 

      Liquidity risk

    • D. 

      Market risk

  • 19. 
    Structured products are for investors who:
    • A. 

      Have knowledge of investment

    • B. 

      Want a customized product to suit their specific risk return profile

    • C. 

      Want a share of the issuers profit

    • D. 

      Have a demand for high market volatitily

  • 20. 
    How often does the MAS 307 require the structured investment- linked policy sub-funds to be valued?
    • A. 

      Daily

    • B. 

      Weekly

    • C. 

      Monthly

    • D. 

      Yearly

  • 21. 
    Which of the statements about structured deposits is/are true?
    • A. 

      They are issued by banks

    • B. 

      They are a form of wrapper

    • C. 

      They offer loer returns than most other structured products

    • D. 

      All of the above

  • 22. 
    In order to inform the client of the inherent risk and key features of the structured investments linked life policy sub funds, the adviser should provide;
    • A. 

      Product summary sheet

    • B. 

      Benefit illustration

    • C. 

      Product highlight sheet

    • D. 

      Fund report

  • 23. 
    Complete the sentence. Structured deposits :
    • A. 

      Are capable of generating high returns

    • B. 

      Are a form of investment products

    • C. 

      Are covered by deposit insurance scheme

    • D. 

      Generally have their capital guaranteed by an insurance company.

  • 24. 
    Compared to an ILP, a structured ILP
    • A. 

      Has a more complex structure

    • B. 

      Has a higher insurance element

    • C. 

      Is not as heavily regulated

    • D. 

      Is less risky

  • 25. 
    The advantages of investing in a structured ILP may include the following, EXCEPT
    • A. 

      Portfolio diversification

    • B. 

      Access to bulky investments

    • C. 

      Economies of scale

    • D. 

      Low fees and charges

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