Chapter 4 M9A - Introduction To Structured Ilp
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- 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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