Chapter 1 M9A Introduction To Structured Products

95 Questions | Total Attempts: 351

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Structured Product Quizzes & Trivia

Questions and Answers
  • 1. 
    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

  • 2. 
    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

  • 3. 
    10. Structured deposits are issued by:
    • A. 

      Banks

    • B. 

      Lloyds' syndicates

    • C. 

      Insurance companies

    • D. 

      Stock broking houses

  • 4. 
    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

  • 5. 
    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. 

      Rare gems

    • B. 

      Bold investments

    • C. 

      Safe Instruments

    • D. 

      Unworthy investments

  • 6. 
    25. Investors may wish to invest in structured products as they:
    • A. 

      Are highly liquid assets

    • B. 

      Carry low investment risk

    • C. 

      Are simple products to understand

    • D. 

      Provide access to investment markets that are otherwise closed to them

  • 7. 
    30. Structured products:
    • A. 

      Are equity securities

    • B. 

      Are also known as hybrid products

    • C. 

      Carry singled-faceted, non-complex investment risks

    • D. 

      Typically combine traditional investments with property investments

  • 8. 
    37. Investors may wish to invest in structured products as they:
    • A. 

      Have the ability to offer customized exposure

    • B. 

      Are useful as a complement to traditional investments

    • C. 

      Are accessible to retail investors in the same ways that other investment products are

    • D. 

      All of the above

  • 9. 
    39. A structured product manager purchased a zero-coupon bond at S$100 for every S$300 invested in the structured product. The structured product aims to provide a return of the capital portion to investors at maturity. Assuming that the zero-coupon bond matures at the same time as the structured product, what must the maturity value of the zero-coupon bond be, in order for the structured product to meet the return of principal to the investor?
    • A. 

      S$100

    • B. 

      S$200

    • C. 

      S$300

    • D. 

      S$380

  • 10. 
    45. Structured deposits are:
    • A. 

      Capable of generating high returns

    • B. 

      Not considered as investment products

    • C. 

      Included in the Deposit Insurance Scheme in Singapore

    • D. 

      Usually arranged such that the capital is guaranteed by the bank

  • 11. 
    50. Which of the following investment product may provide guaranteed to the principal amount?
    • A. 

      Bond

    • B. 

      Structured Fund

    • C. 

      Structured Deposit

    • D. 

      All of the above

  • 12. 
    3. Which RISK relates to the return component of a structured product?
    • A. 

      Market Volatility

    • B. 

      Interest Rate

    • C. 

      Counterparty defaults

    • D. 

      Credit Risk of the issuer

  • 13. 
    11. Performance participation products offer
    • A. 

      High returns low risk

    • B. 

      full upside potential

    • C. 

      downside protection

    • D. 

      A fixed income instrument for the principal component

  • 14. 
    14. Structured Fund is :
    • A. 

      Issued by a bank

    • B. 

      Issued by an insurance company

    • C. 

      A collective investment scheme

    • D. 

      Principal protected

  • 15. 
    17. Structured Deposits are:
    • A. 

      Issued by fund managers

    • B. 

      Not investment products

    • C. 

      Structured products

    • D. 

      Covered by Deposit Insurance Scheme in Singapore

  • 16. 
    20. Which of the following is NOT TRUE about Structured Products?
    • A. 

      They are unsecured debt securities of the issuer.

    • B. 

      They have equity-like structures and participate in the profits of the issuer.

    • C. 

      They are hybrid products.

    • D. 

      They are more complex products.

  • 17. 
    27. The credit risk of the issuer of the structured product forms a
    • A. 

      Primary risk to principal

    • B. 

      Primary risk to return

    • C. 

      Secondary risk to upside potential

    • D. 

      Secondary risk to downside protection

  • 18. 
    31. Which of the following gives the most capital protection?
    • A. 

      Derivatives

    • B. 

      Coupon Bearing Bonds

    • C. 

      Options

    • D. 

      Real Estate Investment Trusts

  • 19. 
    36. Which of the following best describe reverse convertible bonds?
    • A. 

      Investor has full upside potential

    • B. 

      Use a Put option

    • C. 

      Tracks the performance of underlying asset

    • D. 

      Investor has limited downside protection

  • 20. 
    40. Which of the following statements is FALSE? Structured products deliver return to investors only when:
    • A. 

      Pricing on the structure is reasonable

    • B. 

      Anticipated market view is correct

    • C. 

      Able to attract more than expected fund size

    • D. 

      Strategy or structure to capture market view is appropriate

  • 21. 
    41. Which of the following about callable securities are INCORRECT?
    • A. 

      Issuer is likely to exercise his right to "call" when the interested rate has declined

    • B. 

      They expose investors to high risks and should be avoided at all times

    • C. 

      Cheaper than straight, non-callable securities and pay higher coupons

    • D. 

      May be redeemed before maturity

  • 22. 
    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.

  • 23. 
    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.

  • 24. 
    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

  • 25. 
    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.

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