M9A Quiz Mock Exam 3 CMFAS
- 1.C1/S1) 1 Structured products are ___________ of the issuer.
- A.
Unsecured debt securities
- B.
Financial derivatives
- C.
Fixed income instruments
- D.
Equity-like products
- 2.(C1/S1) 2 A structured product can be a combination of
- A.
Bond and a financial derivative
- B.
Bond and an option
- C.
Note and an option
- D.
All of the above
- 3.(C1/S2.1) 3 To mitigate the credit risk of the fixed income instrument used in structured products, the issuer of the structured product may
- A.
Provide a guarantee by itself
- B.
Provide a guarantee by a 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.(C2/S3) 4 When an institute is exposed to liquidity risk,
- A.
Its financial position and resulting credit standing are inevitably affected
- B.
It is a permanent problem
- C.
It has sufficient cash to meet cash flow requirements
- D.
It indicate that there is a systemic issue
- 5.(C3/S2.5) 5 What does Contango mean?
- A.
The future price is higher than the spot price
- B.
The future price is lower than the spot price
- C.
The future price is equal to the spot price
- D.
The spot price is higher than the futures price
- 6.(C1/S3.3) 6 A __________ is one of the few structured products that may have no expiry date.
- A.
Tracker certificate
- B.
Bonus certificate
- C.
Discount certificate
- D.
Airbag certificate
- 7.(C2/S2) 7 _____________ is/are commonly used to reduced counterparty risk to BOTH OTC and exchange-traded products.
- A.
Collaterals
- B.
Payment netting
- C.
CFDs
- D.
Publicly traded derivatives
- 8.(C1/S3) 8 A structured product which is linked to a certain basket of market indices is
- A.
Interest rate-linked
- B.
Equity-linked
- C.
Credit-linked
- D.
Market-linked
- 9.(C2/S1) 9 Which of the following can cause price fluctuation in the market price of a security?
- A.
Interest rates
- B.
Inflation rates
- C.
Exchange rates
- D.
All of the above
- 10.(C3/S1) 10 Which of the following is TRUE? Derivative contracts
- A.
Are not useful hedging tools
- B.
Can have underlying assets based on anything
- C.
Cannot be used as risk management tools
- D.
Owners own the underlying assets
- 11.(C3/S2.6) 11 The broker issues a ______________ when the initial margin is eroded with losses.
- A.
Margin top-up
- B.
Margin call
- C.
Variation margin
- D.
Maintenance margin
- 12.(C1/S1.2) 12 A structured product that is excluded from the Deposit Insurance Scheme in Singapore. This description best describes:
- A.
A structured deposit
- B.
A structured ILP
- C.
A structured note
- D.
A structured fund
- 13.(C1/S4.3) 13 In the event of liquidation, owners of __________ have highest priority for repayment.
- A.
Senior bonds
- B.
Subordinated bonds
- C.
Company stocks
- D.
Senior tranches of subordinated bonds
- 14.(C1/S4.4) 14 To ensure liquidity, SGX requires at least __________ of the securities must be spread out to a minimum of 100 investors in the case of ETNs and certificates.
- A.
55%
- B.
65%
- C.
75%
- D.
85%
- 15.(C3/S1) 15 ABC Pte Ltd plans to issue bonds. It intends to use interest rate futures to control its exposure to the interest rate risk, before the bonds are issued, ABC Pte Ltd is using derivatives as a
- A.
Risk profiling tool
- B.
Risk diversification tool
- C.
Risk management tool
- D.
Risk elimination tool
- 16.(C2/S3) 16 Liquidity from an investor’s perspective refers to
- A.
Having insufficient cash to meet cash flow requirements
- B.
Having lock-up period
- C.
The ease of converting his investments into cash
- D.
The ability to borrow money
- 17.(C1/S1) 17 A structured product __________.
- A.
Is guaranteed by issuers
- B.
Is possible to mirror equity-like returns using a fixed income structure
- C.
Is simpler to understand than a traditional investment
- D.
Is an equity security
- 18.(C3/S1) 18 Underlying assets of a derivative contract may include
- A.
Market indices
- B.
Prices of oil
- C.
Interest rate
- D.
All of the above
- 19.(C2/S1) 19 What is market risk?
- A.
The price volatility that comes from the fluctuation in market prices of the underlying assets
- B.
The default risk of counterparty
- C.
The statistical measurement of how market prices of 2 securities move in relation to each other
- D.
The potential loss arising from the uncertainty of bankruptcy
- 20.(C1/S3.2) 20 Reserve convertible bonds are constructed by using ___________.
- A.
A bond and a put option
- B.
A call option and a down-and-out option
- C.
A bond and an interest rate swap
- D.
A bond and an equity
- 21.(C2/S6.5) 21 Under which of the following situations would automatic / mandatory redemption NOT occur?
- A.
Default of bond issuer
- B.
Derivative counterparty defaulting
- C.
The pledging of collaterals for a loan
- D.
When a callable bond is called
- 22.(C3/S2.4) 22 A commodity-linked structured product is linked to the performance of:
- A.
Interest rates such as LIBOR
- B.
Foreign exchange such as the US Dollar
- C.
Market indices such as the Hang Seng Index
- D.
Precious metals such as gold
- 23.(C3/S1) 23 Underlying assets of a derivative contract may include financials, such as the following, except
- A.
Equity
- B.
Bond
- C.
Unit trust
- D.
Currency
- 24.(C3/S2.5) 24 The difference between the spot price and the futures price is known as the _____________.
- A.
Difference
- B.
Amount
- C.
Basis
- D.
Strike price
- 25.(C1/S1.2) 25 ____________ are only available through banks.
- A.
Structured deposits
- B.
Structured notes
- C.
Structured funds
- D.
Structured ILPs
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