Chapter 4 M9A - Introduction To Structured Ilp

71 Questions | Total Attempts: 213

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Chapter 4 M9A - Introduction To Structured Ilp

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Questions and Answers
  • 1. 
    (C4 / S1 / Pg69 & Pg70) 36. Which statement on the general features of structured ILPs is FALSE?
    • A. 

      They do not have maturity dates and are renewed at the end of each trading period

    • B. 

      They are usually complex

    • C. 

      They are bought with single premiums

    • D. 

      They are exposed to counterparty and liquidity risks

  • 2. 
    (C4 / S1.2 / Pg72) 37. The Net Asset Value (NAV) of a fund is the
    • A. 

      Total value of the assets in the fund at any point in time

    • B. 

      total value of the assets in the fund less total liabilities

    • C. 

      based on the difference between the highest and lowest price of the day

    • D. 

      based on the highest price of the day

  • 3. 
    (C4 / S1.2 / Pg73) 38. Soft dollars are paid by the fund manager for
    • A. 

      Portfolio analyses

    • B. 

      data and quotation services

    • C. 

      research analyses

    • D. 

      all of the above

  • 4. 
    (C4 / S5.1 / Pg81) 39. The difference between structured ILPs and unit trusts is that
    • A. 

      Structured ILPs are less regulated

    • B. 

      The legal owner of the assets in the ILP fund is the insurer

    • C. 

      unit trusts come with a death benefit but not for a structured ILP

    • D. 

      Structured ILPs do not carry as much risk as would unit trusts

  • 5. 
    (C4 / S6.1a / Pg84-85) 40. What information is NOT found in the Product Summary?
    • A. 

      A list of the ILP sub-funds available for investment

    • B. 

      risk information

    • C. 

      potential accumulation policy value

    • D. 

      return on the ILP sub-fund over the last 1,3,5, 10 years since inception of the ILP sub- fund

  • 6. 
    (C4 / S6.1c / Pg86) 41. What information should NOT be included in the Product Highlights Sheet?
    • A. 

      Key risks of the investments

    • B. 

      Frequency of valuations

    • C. 

      Fees and charges payable

    • D. 

      Disclaimers

  • 7. 
    (C4 / S6.3 / Pg88) 42. Information to be included in the annual policy statement to policy owners include
    • A. 

      Number of units held at the end each month

    • B. 

      number and value of units deducted during the statement period

    • C. 

      risk of the investment

    • D. 

      pricing basis of units

  • 8. 
    (C4 / S5.2 / Pg82) 43. Market risks can be diversified
    • A. 

      Across different asset classes

    • B. 

      across different geographical locations

    • C. 

      using negatively correlated securities

    • D. 

      all of the above

  • 9. 
    (C4/S1) 37. The investment experience of an investment fund of participating policies is ‘smoothed’ so as to
    • A. 

      give the policy owner the maximum upside of the investment returns on his money

    • B. 

      maintain a degree of certainty of stability in the non-guaranteed benefits to policy owners

    • C. 

      give the policy owner a limited downside of the investment returns on his money

    • D. 

      to an average return to policy owners

  • 10. 
    (C4/S1.2) 38. Which of the following charges and fees are NOT included in the expense ratio of a sub-fund?
    • A. 

      Initial sales charges and redemption fees

    • B. 

      custodial expenses and investment management fees

    • C. 

      auditing fees

    • D. 

      legal fees

  • 11. 
    (C4/S1.2) 39. The turnover ratio measures __________________________________ as a percentage of the daily average NAV.
    • A. 

      the highest number of purchases of underlying investments of a fund

    • B. 

      the lowest number of sales of underlying investments of a fund

    • C. 

      the largest volume of transactions of underlying investments of a fund D. the lower of the purchases or sales of underlying investments of a fund

    • D. 

      the lower of the purchases or sales of underlying investments of a fund

  • 12. 
    (C4/S2.2) 40. Structured ILPs have their drawbacks too. One of them is that
    • A. 

      Some investments are issued in large sizes, making it difficult for investors to have the financial means

    • B. 

      the portfolio is spread out in too many different assets and asset classes which investors may not be knowledgeable about

    • C. 

      there is an element of opportunity costs as non-performing assets in the portfolio reduces the gains from those that are performing well

    • D. 

      there are transaction costs to be incurred

  • 13. 
    (C4/S2.4a) 41. Which of the following statements describe a structure ILP that provides regular payments?
    • A. 

      They have the same risk profile as ordinary bonds

    • B. 

      The regular payouts, at the stated level, are made annually to provide the investor with an annual income

    • C. 

      The capital invested is guaranteed at maturity

    • D. 

      The insurer is not obligated to make good at maturity if the investments don’t deliver

  • 14. 
    42. A structured ILP linked to index return uses derivatives to track the performance of a selected index. To protect the downside, it uses
    • A. 

      Equities

    • B. 

      fixed income instruments

    • C. 

      options

    • D. 

      swaps

  • 15. 
    (C4/S6.1c) 43. Which of the following is a requirement/s that must be met in preparing the Product Highlights Sheet?
    • A. 

      There must be at least 4 pages, including glossary and diagrams

    • B. 

      The text should be a font size of at least 10-point Times New Roman

    • C. 

      Disclaimers must be included

    • D. 

      Technical jargon should be used for greater clarity

  • 16. 
    44. When switching of ILP sub-funds is allowed free of charge, the switch is done on a
    • A. 

      Offer-to-bid basis

    • B. 

      bid-to-offer basis

    • C. 

      offer-to-offer basis

    • D. 

      lowest bid basis

  • 17. 
    (C4/S5) 45. Structured ILPs have to comply with various requirements, regulations, guidelines and codes set out under the
    • A. 

      Financial Advisers Act (Cap 110)

    • B. 

      Insurance Act (Cap 142)

    • C. 

      Code on Collective Investment Scheme

    • D. 

      All of the above

  • 18. 
    (C4/S2.4) 26 The fund aims to provide long-term capital appreciation and to achieve the best possible result. This best describes an _____________.
    • A. 

      ILP providing regular payments

    • B. 

      ILP linked to index returns

    • C. 

      ILP with capital appreciation potential

    • D. 

      ILP with term insurance component

  • 19. 
    (C4/S1.2) 27 What is expense ratio?
    • A. 

      The number of times that a dollar of assets is reinvested in a given year

    • B. 

      The price at which units are subscribed

    • C. 

      The ratio of the sub-fund’s operating expenses to the daily average NAV

    • D. 

      Total value of fund assets, less total liabilities

  • 20. 
    (C4/S6.3) 33 The Semi-Annual Report or Relevant Audit Report may exclude the reporting of the following funds, EXCEPT
    • A. 

      Newly launched funds

    • B. 

      Funds that are going to be terminated

    • C. 

      Funds reaching maturity soon

    • D. 

      Poor performing funds

  • 21. 
    (C4/S7.1) 34 Fair value is the price that the fund can reasonably expect to receive upon the current sale of the asset, determined __________.
    • A. 

      By auditors

    • B. 

      With due care and good faith

    • C. 

      By due diligence

    • D. 

      By fund managers

  • 22. 
    (C4/S6) 38 The policy document of an ILP should include the following information, EXCEPT
    • A. 

      Potential of funds

    • B. 

      Minimum holding amount

    • C. 

      Pricing basis

    • D. 

      Dealing deadline

  • 23. 
    C4/S2.2) 41 Disadvantages of investing in a structured ILP may include the following, EXCEPT
    • A. 

      Several layers of fees and charges

    • B. 

      Loss of investment control

    • C. 

      Opportunity cost

    • D. 

      Inaccessibility to bulky investments

  • 24. 
    (C4/S5) 49 The investment restrictions imposed by the Code on CIS includes the following, except
    • A. 

      Liquidity risk

    • B. 

      Concentration risk

    • C. 

      Credit risk

    • D. 

      Guarantee capital risk

  • 25. 
    (C4/S2.1) 25 Which of the following is a disadvantage of investing in structured ILPs?
    • A. 

      Access to bulky investments

    • B. 

      Fees and charges

    • C. 

      Economies of scale

    • D. 

      Portfolio diversification

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