Chapter 1 M9A Introduction To Structured Products
- 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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