Structured Products Quiz Questions
- 1.1 Which of the following is a similarity between structured product, bond & option?
- A.
The principal is guaranteed.
- B.
Provide stability in returns.
- C.
They have fixed maturity dates.
- D.
They have upside participation.
- 2.2. Which of the following most describe a structured fund?
- A.
It is only distributed by the bank channel.
- B.
The main disclosure document is the factsheet.
- C.
It has low administration cost.
- D.
It has a trust structure.
- 3.3. Which of the following is the PRIMARY RISK relating to the return component of a structured product?
- A.
Market Risk
- B.
Interest Rate Risk
- C.
Counterparty Risk
- D.
Liquidity Risk
- 4.4. Which of the following best describe Bonus Certificate and Airbag Certificate?
- A.
Bonus certificate may be knocked-out only at maturity.
- B.
Bonus certificate's investor bears full downside of the underlying asset.
- C.
Airbag certificate has limited upside potential.
- D.
Airbag certificate was created to reduce the impact of price decline.
- 5.5. Which of the following applies to a structured ILP fund?
- A.
Banking Act
- B.
Company Act
- C.
Deposit Insurance Act
- D.
Code on Collective Investment Scheme
- 6.6. Which of the following cannot be use to mitigate liquid risk of a portfolio bond?
- A.
Invest in publicly traded products.
- B.
Invest in shares with high trading volume.
- C.
Ask counterparty for margin.
- D.
Invest in shares that are high in demand.
- 7.7. When institution has insufficient cash to meet it cash flow obligations, the institution has problem with its
- A.
Liquidity
- B.
Credit worthiness
- C.
Interest rate
- D.
Structure
- 8.8. Which of the following cannot be use to mitigate counterparty risk of a portfolio bond?
- A.
Invest in publicly traded derivative products.
- B.
Go into private negotiation with counterparty for collaterals
- C.
Invest via the subsidiaries of the counterparty
- D.
All of the above.
- 9.9. The additional amount required to restore the account is called...
- A.
Initial Margin
- B.
Margin Call
- C.
Variation Margin
- D.
Maintenance Margin
- 10.10. There are 2 main types of market participants in the future market — hedgers and speculators. For the hedgers, their objective is...
- A.
To profit from the rising prices.
- B.
To profit from the falling prices.
- C.
Achieve protection against unfavourable price changes.
- D.
All of the above.
- 11.11. Which of the following describe a non-standardised contract?
- A.
Forward contract traded over the counter
- B.
Commodity future contracts
- C.
Financial future contracts
- D.
All of the above.
- 12.12. The strike price of the put option is $10. The market price is $15. The intrinsic value of the put option is...
- A.
In-the-money
- B.
At-the-money
- C.
Out-of-the-money
- D.
Under-the-money
- 13.13. John long a put option, he is..
- A.
Bullish about the market.
- B.
bearish about the market.
- C.
neutral about the market.
- D.
intending to hold the stock.
- 14.14. The following statements are true for call option:
- A.
The seller of call option pays the premium.
- B.
The holder of call option has the right to buy.
- C.
The buyer of the call option has unlimited downside.
- D.
The seller decides on the exercise price.
- 15.• 15. A swap will not result in the change in
- A.
Cash flow
- B.
Ownership
- C.
Level of risk
- D.
Credit risk
- 16.16. A 5-year structured ILP has the following features: 1. Death Benefit = 102% of initial investment 2. Maturity Benefit = 100% of initial investment 3. Maturity Payout = 20% if the 3 of the stock as listed went up by 10% from the initial stock price The product is likely to comprise of:
- A.
Bond + Insurance
- B.
Fixed deposit + Insurance
- C.
Bond + Derivative + Insurance
- D.
Equity + Bond + Insurance
- 17.17. Which of the following best described price which units of portfolio bond are subscribed?
- A.
Forward pricing
- B.
Offer price
- C.
Bid price
- D.
Historic pricing
- 18.18. John invest in a US$ structured product issue by Bank A with a credit rating of AA. The fund size is US$8mil. John is concern about getting his money when he needs, he is most concern about which of the risk?
- A.
Foreign exchange risk
- B.
Interest rate risk
- C.
Liquidity risk
- D.
Credit risk
- 19.19. Which of the following applies to portfolio rebalancing?
- A.
It can only be performed by fund managers.
- B.
It can be done in portfolio bond.
- C.
It can only be done on a quarterly basis.
- D.
The desired level of performance is not adversely affected
- 20.20. Which of the following has the least impact on the price of the derivatives?
- A.
The current spot price of the underlying asset.
- B.
The number of investor for the underlying asset.
- C.
The market demand for the underlying asset.
- D.
The volatility of the underlying asset.
- 21.21. The coefficient of correlation of 2 securities that are not correlated is
- A.
. +0.5
- B.
0
- C.
-0.5
- D.
1
- 22.22. Hoi Seng is thinking about investing in stocks but he is not expecting the market to move much in either direction. What strategy should he adopt?
- A.
Bull straddle
- B.
Bear straddle
- C.
Long put
- D.
Long call
- 23.23. Which of these least describe an issuer-specific risk?
- A.
Internal operation of Company A
- B.
Regulatory impact on the industry which Company B is in
- C.
Down grade in credit rating of Company C
- D.
Exchange rate of the securities in which Company D is traded in
- 24.24. Which will track the opposite direction of an index?
- A.
Bonds
- B.
Derivatives
- C.
Fixed Income instruments
- D.
D Warrants
- 25.25. Which is true about Structure ILP's death benefit?
- A.
Death benefit is the same amount as the single premium invested
- B.
Death benefit is more than the single premium invested
- C.
Death benefit is lower than the single premium invested
- D.
Death benefit is capped at 110% of the single premium invested
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