1.
1. A structured Investment-linked Life Insurance policy has the following features: Issuer = Company A Credit Rating of issuer = AA+ Tenure = 2 years Structure of the product Annual payout plan Maturity value = 100% of the initial amount of single premium Payout = 1% of the initial amount of single premium per annum Early redemption clause = Yes, if the underlying outperforms the benchmark by 20% at the end of any trading day. Which one of the following risk will be of LEAST concern to an investor based on the above- mentioned information?
A. 
B. 
C. 
D. 
2.
2. Which one of the following about participation products is True?
A. 
Participation products participate in the price performance of the underlying assets and offer full upside potential with full downside protection.
B. 
Participation products are legally secured debentures.
C. 
They are commonly marketed under the name of 'certificates' or 'notes'.
D. 
Derivatives contracts and bonds are used for both the principal and return
3.
3. Which of the following regulatory instrument(s) must a structured Investment-linked Life Insurance policies comply with?
A. 
B. 
C. 
D. 
4.
4. The forward price of a barrel of oil is S$150. The current spot price is S$120. The cost of carry is therefore equal to a:
A. 
B. 
C. 
D. 
5.
5. The sub-fund's operating expenses to the daily average Net Asset Value is :
A. 
B. 
C. 
D. 
6.
6. Which one of the following statements relating to structured Investment-linked Life Insurance policies (ILPs) is TRUE?
A. 
All structured ILPs are homogenous in nature
B. 
A structured ILP is designed purely as a protection product
C. 
The buyer of a structured ILP is not exposed to any form of risk
D. 
The structured ILP's sub-funds are valued less frequently compared to other ILP sub-funds
7.
7 Which one of the following statements about portfolio rebalancing is TRUE?
A. 
Portfolio rebalancing is adopted in all portfolio bonds
B. 
Portfolio rebalancing maintains the desired level of risk exposure
C. 
Fund managers use portfolio rebalancing to increase risk exposure
D. 
The return of the portfolio will improve after rebalancing
8.
8. Structured products are:
A. 
A. Secured debt securities of the issuer
B. 
Created by combining traditional investments with financial derivatives
C. 
C. Entitled to share the issuer's profits
D. 
Equity securities that give higher return as compared to traditional products
9.
9. Structured Investment-linked Life Insurance policy is less than traditional Investment-linked Life Insurance policy.
A. 
B. 
C. 
D. 
10.
10. Structured deposits are issued by:
A. 
B. 
C. 
D. 
11.
11. A structured Investment-linked Insurance policy (ILP) has the following features:
Issuer = Insurer A
Underlying Asset = Basket of 6 stocks
Tenure = 2 years
Maturity Value = Initial capital amount + Guaranteed 1% of the capital
Bonus payout = 2% of the initial capital every year if the price of all 6 stocks has increased by 10% on maturity as compared to the price on the start date of the investment.
Assume that an investor invests S$50,000 in this structured ILP
Calculate the total amount that the investor will receive at the end of the 2 years under the WORST possible market performance scenario.
A. 
B. 
C. 
D. 
12.
12. John expects the Gold market to have big movement in the near future but unsure which direction. He can apply the following strategy to capture the market:
A. 
B. 
C. 
D. 
13.
13. The counterparty to the derivative contract default, it may cause:
A. 
Total loss of principal amount of the investment
B. 
Early redemption of the investment
C. 
Lesser redemption amount for the investment
D. 
14.
14. An investor placed $100,000 in Australia (AUD) investment when AUD was S$1.40. The AUD has since depreciated against the S$ and is now worth only S$1.20. On the other hand, the AUD investment has appreciated by 10% in AUD terms.
What is the investor's nest gain / loss on the investment, as measured in S$?
A. 
B. 
C. 
D. 
15.
15. Which of the following option strategies would be MOST appropriate if Sally is bullish about a stock but does not want to own it?
A. 
B. 
C. 
D. 
16.
16. Performance participation structured products:
A. 
Are secured debt instruments
B. 
Carry lower degrees of investment risk
C. 
Share in the profits of the participating funds
D. 
Typically offer unlimited upside potential with no downside protection
17.
17. Derivatives are financial instruments that are generally used for:
A. 
B. 
Betting of the price movement of the underlying assets.
C. 
Hedging against unwanted price movements
D. 
Serve all the above functions
18.
18. John decides to invest S$100,000 in the following investment:
Prosperity Fund issued by Smarty Bank and distributed by Brilliant Bank. This fund seeks yearly investment returns, (before fees and expenses) that correspond to 150% of the returns of the yearly performance of the Japan Index fund.
What is / are the risk(s) that the above investor is subject to?
A. 
B. 
C. 
Credit risk of Smarty Bank
D. 
19.
19. Jane, a Singaporean, invests in an exchange-traded portfolio fund issued by AAA+ rating bank, denominated in US$. Which ONE of the following risks should Jane be most concerned?
A. 
B. 
C. 
D. 
20.
20. Which ONE of the following methods may be used to mitigate counterparty default risk?
A. 
Investing only in listed companies
B. 
Using non-publicly traded securities
C. 
Asking for collateral from the counterparty
D. 
Dealing in the same foreign currency
21.
21. Which of the following statements regarding derivatives is FALSE?
A. 
Derivatives come in many different varieties
B. 
Holders of derivative contracts own the underlying assets
C. 
Derivative contracts are an integral part of structured products
D. 
The underlying assets of derivative contracts can be non-financial
22.
22. Portfolio bonds are:
A. 
Less complex and risky as compared to Investment-linked Life Insurance policies
B. 
C. 
D. 
Portfolios of investments with no insurance element
23.
23. Those investments that carry a low probability of loss of principal while offering a high probability of potential returns can be said to be:
A. 
B. 
C. 
D. 
24.
24. What is a portfolio of investments with an insurance element called?
A. 
B. 
C. 
D. 
25.
25. Investors may wish to invest in structured products as they:
A. 
B. 
Carry low investment risk
C. 
Are simple products to understand
D. 
Provide access to investment markets that are otherwise closed to them