Axa CMFAS M9A Mock 5

50 Questions | Total Attempts: 537

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Axa CMFAS M9A Mock 5


Questions and Answers
  • 1. 
    (C4/S1) 1 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

  • 2. 
    (C4/S2.1) 2 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

  • 3. 
    (C4/S5) 3 For counterparty risk, the counterparty exposure is capped at
    • A. 

      5%

    • B. 

      9%

    • C. 

      10%

    • D. 

      15%

  • 4. 
    (C6/S2.4) 4 Publicly traded investments tend to have ________ over OTC investments.
    • A. 

      Poorer liquidity

    • B. 

      Greater liquidity

    • C. 

      Poorer stability

    • D. 

      Greater stability

  • 5. 
    (C4/S1.1) 5 The payouts under a structured ILP include the following, EXCEPT
    • A. 

      Death benefits

    • B. 

      Maturity benefits

    • C. 

      Cash benefits

    • D. 

      Survival benefits

  • 6. 
    (C6/S2.4) 6 Mary has invested in a structured ILP that invests in a structured fund where 95% of the assets are invested in 4 properties worth $10 million. She should be MOST concerned with _________ if she wants to be able to withdraw cash at any time,
    • A. 

      Market risk

    • B. 

      Counter party risk

    • C. 

      Interest rate risk

    • D. 

      Liquidity risk

  • 7. 
    (C3/S2.3) 7 What does the term ‘basis’ refer to?
    • A. 

      The difference between future price and spot price

    • B. 

      The sum of the spot price and future price

    • C. 

      The difference between the margin and the future price

    • D. 

      The difference between the spot price and the margin

  • 8. 
    (C3/S3) 8 A call option is said to be _________ when the market price is less than the strike price.
    • A. 

      At-the-money

    • B. 

      In-the-money

    • C. 

      Out-of-the-money

    • D. 

      None of the above

  • 9. 
    (C1/S2) 9 In a structured product, derivatives ________.
    • A. 

      Invest in fixed income

    • B. 

      Provide upside potential

    • C. 

      Provide the return of principal

    • D. 

      All of the above

  • 10. 
    (C3/S2.1) 10 The current spot price is $120,000. A forward contract has been purchased at $100,000. The cost of carry is therefore equal to a:
    • A. 

      Discount of $20,000

    • B. 

      Discount of $120,000

    • C. 

      Premium of $20,000

    • D. 

      Premium of $120,000

  • 11. 
    (C3/S3.6) 11 Taking a short position on both a call and a put at the same strike price is called:
    • A. 

      Bull straddle

    • B. 

      Bear straddle

    • C. 

      Bear swap

    • D. 

      Bear swap

  • 12. 
    (C1/S3.6) 12 Structured ILPs can only be issued by ________.
    • A. 

      Insurance companies

    • B. 

      Banks

    • C. 

      Fund managers

    • D. 

      Brokerages

  • 13. 
    (C1/S3.1) 13 The downside protection is only as good as the _________ of the party providing the protection.
    • A. 

      Fund manager

    • B. 

      Reputation

    • C. 

      Credit worthiness

    • D. 

      Performance

  • 14. 
    (C3/S3.6) 14 Which of the following option strategies would be LEAST appropriate if an investor is bullish on a certain stock?
    • A. 

      Long a stock

    • B. 

      Long a call

    • C. 

      Short a call

    • D. 

      Bull straddle

  • 15. 
    (C5/S1.1) 15 Drip feeding is ____________.
    • A. 

      Done to maintain the original level of risk exposure

    • B. 

      Fund switching done in small doses

    • C. 

      Not an option a customer can choose for portfolio bonds

    • D. 

      Is an automatic rebalancing of customer’s portfolio

  • 16. 
    (C3/S3.2) 16 The value of a plain vanilla option is based on the following factors, EXCEPT
    • A. 

      Exercise price

    • B. 

      Time until expiry

    • C. 

      Risk tolerance

    • D. 

      Interest rate

  • 17. 
    (C3/S2.5) 17 What is backwardation?
    • A. 

      Bearish performance in the futures market

    • B. 

      Futures price being the same as the spot price

    • C. 

      Futures price being lower than the spot price

    • D. 

      Futures price being higher than the spot price

  • 18. 
    (C3/S3) 18 Which of the following gives the investor the right to sell the underlying security?
    • A. 

      A call warrant

    • B. 

      A put warrant

    • C. 

      An European style warrant

    • D. 

      An American style warrant

  • 19. 
    (C4/S1.2) 19 Redemption in a structured ILP refers to __________.
    • A. 

      The price at which units are redeemed

    • B. 

      The price at which units are subscribed

    • C. 

      Return of units in ILP sub-fund for cash

    • D. 

      Purchase of units in ILP sub-fund

  • 20. 
    (C3/S5) 20 Contract For Differences are similar to futures and options, EXCEPT that futures and options
    • A. 

      Have expiry dates

    • B. 

      Are more profitable

    • C. 

      Are less risky

    • D. 

      Are not renewable

  • 21. 
    (C4/S4.3) 21 A bank can use ______ to transfer the credit risk of a borrower in exchange for a series of fee payments.
    • A. 

      Currency swaps

    • B. 

      Credit default swaps

    • C. 

      Interest rate swaps

    • D. 

      Equity swap

  • 22. 
    (C5/S3) 22 Portfolio of investments with an insurance element are also known as
    • A. 

      Mutual funds

    • B. 

      Structured funds

    • C. 

      Bond funds

    • D. 

      Portfolio bonds

  • 23. 
    (C1/S3.2) 23 A reverse convertible bond is a/an
    • A. 

      Secured debt instrument

    • B. 

      Unsecured debt instrument

    • C. 

      Secured futures product

    • D. 

      Unsecured futures product

  • 24. 
    (C4/S1) 24 While smoothing process maintains certain degree of __________ in the non-guaranteed benefits, it means that policy owners may not receive the full upside’ downside of investment return on this money.
    • A. 

      Stability

    • B. 

      Benefits

    • C. 

      Profit

    • D. 

      Performance

  • 25. 
    (C1/S1.1) 25 Which of the following products is designed to protect capital?
    • A. 

      Air-bag certificates

    • B. 

      Portfolio bonds

    • C. 

      Equity-linked note

    • D. 

      Reverse convertible bond

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