[wattatops] Upjfa Finance Academy 52.2 Final Exam
![[wattatops] Upjfa Finance Academy 52.2 Final Exam - Quiz](/quiz-school/images/description/Miscellaneous/4.jpg "[wattatops] Upjfa Finance Academy 52.2 Final Exam - Quiz")
Choose the best answer to the following questions. Good luck!
- 1.
April is a working student who earns ₱15,000 monthly. As a quick and simple rule of thumb, how much money would you recommend for her to allocate for her savings, needs, and wants respectively?
- A.
7500, 4500, 3000
- B.
4000, 9000, 1000
- C.
7500, 7500, 0
- D.
3000, 7500, 4500
Correct Answer
D. 3000, 7500, 4500 -
- 2.
If you are 18 right now, what is the best age for you to begin investing?
- A.
18
- B.
21
- C.
25
- D.
35
Correct Answer
A. 18 -
- 3.
Which of the following choices can be considered as something attributable more to an investor’s risk tolerance rather than their risk capacity?
- A.
Investor's Experience
- B.
Time Horizon of Investment
- C.
Income
- D.
Age
Correct Answer
A. Investor's Experience -
- 4.
Alexa is a 58-year old mother who has been investing for over 20 years now. She wants to be able to save enough money to buy a house before she retires in 2 years time. Which among the following are factors used to estimate Alexa’s risk capacity?
- A.
Both of these factors
- B.
Alexa will retire in 2 years
- C.
Alexa wants to save enough money to buy a house
- D.
Neither of these factors
Correct Answer
A. Both of these factors -
- 5.
Which of the following best exemplifies a want expense?
- A.
Eating steak everyday
- B.
Purchasing an affordable house to live in
- C.
Replacing a broken phone
- D.
Purchasing a second hand car
Correct Answer
A. Eating steak everyday -
- 6.
Andrea’s financial goal for her investments is capital preservation. Given this, what investment should she have mainly purchased?
- A.
On January 25, Andrea invested in a 90-day T-Bill which generated around 2% return to counter the effects of inflation.
- B.
Andrea bought land in BGC 3 years ago, and was very happy to see that the price of the land increased by around P2M from the date of purchase.
- C.
Andrea is currently investing in bonds with average yields of around 8% annually.
- D.
Andrea bought 100 shares of JFC (stock) at the price of P243 per share. The current stock price of JFC is P265.
Correct Answer
A. On January 25, Andrea invested in a 90-day T-Bill which generated around 2% return to counter the effects of inflation. -
- 7.
The price of a fried chicken meal is Php50 in 2020 and Php55 in 2021. Assuming that this meal is the only thing people buy, what is the inflation rate from 2020 to 2021?
- A.
10.00
- B.
5.00
- C.
9.09
- D.
4.88
Correct Answer
A. 10.00 -
- 8.
Php1,000.00 is placed in a savings account compounded semiannually with a stated annual rate of 2%. Its value one year from now and two years from now, respectively, is:
- A.
Php1,020.10, Php1,040.60
- B.
Php1,020.00, Php1,040.00
- C.
Php1,020.00, Php1,040.40
- D.
Php1,020.10, Php1,040.00
Correct Answer
A. Php1,020.10, Php1,040.60 -
- 9.
Php1,000.00 is placed in a savings account compounded semiannually with an effective annual rate of 2%. Its value one year from now and two years from now, respectively, is:
- A.
Php1,020.00, Php1,040.40
- B.
Php1,020.10, Php1,040.60
- C.
Php1,020.00, Php1,040.00
- D.
Php1,020.10, Php1,040.00
Correct Answer
A. Php1,020.00, Php1,040.40 -
- 10.
Emily is an investment banker for IMG based in the Netherlands. In IMG’s policies, she is restricted from investing in speculative bonds. For this purpose, Emily makes it a point to check and monitor changes in credit ratings of Standard & Poor’s, Moody’s Investors Service, and Fitch Ratings. Which among the following countries is Emily most likely to not invest in or buy bonds from?
- A.
Greece, whose credit ratings last updated by S&P to be BB- with positive outlook, BB with positive outlook for Fitch’s and B1 with stable outlook for Moody’s
- B.
Denmark, whose credit rating remained at AAA for S&P and Fitch, and at Aaa for Moody’s, all with a stable outlook
- C.
USA, whose credit rating was last downgraded by S&P to AA+ from AAA last 2011 due to concerns of budget deficits
- D.
Philippines, whose credit rating was last updated by S&P to BBB+ with negative outlook last April 2019, and last updated by Fitch to BBB with positive outlook last February 2020
Correct Answer
A. Greece, whose credit ratings last updated by S&P to be BB- with positive outlook, BB with positive outlook for Fitch’s and B1 with stable outlook for Moody’s -
- 11.
Luna is an investment banker for MoonLife Financial. In MoonLife’s policies, she is restricted from investing in high yield bonds. For this purpose, Luna makes it a point to check and monitor changes in credit ratings of Standard & Poor’s, Moody’s Investors Service, and Fitch Ratings. Which among the following countries is Luna most likely to invest in or buy bonds from?
- A.
Philippines, whose credit rating was last updated by S&P to BBB+ with negative outlook last April 2019, and last updated by Fitch to BBB with positive outlook last February 2020
- B.
Denmark, whose credit rating remained at AAA for S&P and Fitch, and at Aaa for Moody’s, all with a stable outlook
- C.
USA, whose credit rating was last downgraded by S&P to AA+ from AAA last 2011 due to concerns of budget deficits
- D.
Greece, whose credit ratings last updated by S&P to be BB- with positive outlook, BB with positive outlook for Fitch’s and B1 with stable outlook for Moody’s
Correct Answer
B. Denmark, whose credit rating remained at AAA for S&P and Fitch, and at Aaa for Moody’s, all with a stable outlook -
- 12.
Arthur is a bond investor. Like any other investor, he aims to get the best return possible. He is currently considering a zero-coupon bond trading at $925 and has a par value of $1000 which is paid at maturity after one year. If current interest rates were to rise, giving newly-issued bonds a yield of 10%, will the zero-coupon bond still be attractive to Arthur? What will most likely happen to the price of the pre-existing zero-coupon bond?
- A.
No; The price will decrease
- B.
Yes; The price will not change
- C.
Yes; The price will increase
- D.
No, the price will increase
Correct Answer
A. No; The price will decrease -
- 13.
Margaret is a newbie investor. She aims to lower her portfolio volatility. In order to do that she has to have a selection of assets that would make her portfolio “Markowitz-efficient”. Assuming that all assets have similar expected returns, which of the following would ensure that Margaret will incur the least amount of risk for a desired level of return?
- A.
A set of assets with returns that are consistently uncorrelated or has near zero correlation.
- B.
A set of assets that are consistently uncorrelated or has near zero correlation.
- C.
A set of assets with returns that are negatively correlated.
- D.
A set of assets that are negatively correlated.
Correct Answer
C. A set of assets with returns that are negatively correlated. -
- 14.
The following statements pertain to basic concepts in asset allocation and investments. Identify which among the following is true:
- A.
Risk aversion of most investors in a market causes riskier securities to have higher expected returns.
- B.
An asset held as part of a portfolio is generally riskier than the same asset held in isolation.
- C.
A bear market is a sound market to invest in as many equities gain value and share prices are generally stable.
- D.
The PSEi is composed of a fixed basket of 328 companies as of 2019 which represents the general movement of the Philippine stock market.
Correct Answer
A. Risk aversion of most investors in a market causes riskier securities to have higher expected returns. -
- 15.
Mr. Rivera, a foreign investor, uses an investment strategy where he divides up the total amount to be invested across periodic purchases of a target asset. What is the main purpose of this strategy?
- A.
To reduce the impact of volatility on the overall purchase
- B.
To maximize returns
- C.
To reduce the impact of economic inflation
- D.
All of the choices are correct
Correct Answer
A. To reduce the impact of volatility on the overall purchase -
- 16.
Mykie is planning to buy stocks through Philstocks. If she is planning to earn solely through capital gains, how much should a stock’s price increase for her to break-even?
- A.
1.09%
- B.
0%
- C.
10%
- D.
0.25%
Correct Answer
A. 1.09% -
- 17.
Given the following candlestick chart, which day did the stock’s price open at 112, closed at 114, had the highest price at 115, and lowest at 111?
- A.
April 6
- B.
April 2
- C.
April 7
- D.
April 9
Correct Answer
A. April 6 -
- 18.
Ms. Rona recently started investing in stocks for the long term. However, she saw drastic changes in the prices of her investments. Which of the following would be a good reason to sell?
- A.
She reassessed her risk-profile and found that stocks aren’t suited for her.
- B.
A post online suggests a better stock pick.
- C.
Stock B’s price doubled. It’s an opportunity to earn a lot
- D.
Stock A’s price fell by 15%. It’s best to cut her losses.
Correct Answer
A. She reassessed her risk-profile and found that stocks aren’t suited for her. -
- 19.
Ruben started investing 5 years ago and had a moderate investor’s profile. Upon reviewing the performance of his investments, he decided to rebalance his portfolio. Which of the following is a good reason behind this decision?
- A.
He wants to maintain his asset allocation and risk-reward profile.
- B.
There is a new fad in investments.
- C.
His portfolio is performing just as he planned.
- D.
He sees an opportunity in more aggressive investments.
Correct Answer
A. He wants to maintain his asset allocation and risk-reward profile. -
- 20.
An equity fund significantly outperformed its benchmark for 3 years and similarly underperformed for 2 years. You can infer that the fund ________.
- A.
Has a different asset mix than the benchmark it is tracking
- B.
Has an incompetent fund manager
- C.
Performs better than its peer group
- D.
Is a bad investment
Correct Answer
A. Has a different asset mix than the benchmark it is tracking -
- 21.
Which of the following is not likely to increase GDP?
- A.
Raising government revenue by increasing tax rates
- B.
Php300-billion cash injection to the market through bond purchases
- C.
BSP lowering the benchmark interest rate
- D.
Infrastructure projects like the “Build, Build, Build” Program
Correct Answer
A. Raising government revenue by increasing tax rates -
- 22.
Ricardo plans to buy a house which is worth 2 million in 10 years. He initially invested 60,000 in a mutual fund with a stated interest rate of 7% compounded annually and invests an additional 10,000 monthly. Which scenario needs to happen for him to reach his goal?
- A.
Best-case
- B.
Worst-case
- C.
Base-case
- D.
All cases are correct
Correct Answer
A. Best-case -
- 23.
The following include tax-advantaged investments in the Philippines, except for:
- A.
Roth Individual Retirement Account
- B.
Personal Equity & Retirement Account
- C.
Personal Equity and Savings Option Fund
- D.
PAG-IBIG MP2 SAVINGS
Correct Answer
A. Roth Individual Retirement Account -
- 24.
Given the following information, how much cash are you actually entitled to receive if you own 500 common shares?
- A.
Php450
- B.
Php500
- C.
Php1
- D.
Php25
Correct Answer
A. Php450 -
- 25.
Which of the following companies are part of a fixed basket of common stocks of listed companies, carefully selected to represent the general movement of the Philippine stock market?
- A.
Ayala Land, Inc.
- B.
AllHome Corp.
- C.
Fruitas Holdings Inc.
- D.
The Philippine Stock Exchange, Inc.
Correct Answer
A. Ayala Land, Inc. -
- 26.
According to experts, an investor should purchase at least ₱8000 worth of stocks in order to minimize fees. The reason for this being,
- A.
Broker’s Commission reaches a minimum percentage of 0.25% of the gross trade amount when the transaction is worth ₱8000 or more
- B.
Broker’s Commission is waived when the transaction is worth at least ₱8000
- C.
Stock Transaction Tax reaches its minimum value when transactions are worth at least ₱8000
- D.
A Transaction worth at least ₱8000 waives the PSE Transaction Fee
Correct Answer
A. Broker’s Commission reaches a minimum percentage of 0.25% of the gross trade amount when the transaction is worth ₱8000 or more -
- 27.
Why do actively managed funds charge higher fees compared to passively managed funds?
- A.
Because actively managed funds can beat the index which requires more work and expertise
- B.
Because actively managed funds are guaranteed to have high returns
- C.
Because an investor will never lose money in an actively managed fund
- D.
Because actively managed funds take on lower market risk
Correct Answer
A. Because actively managed funds can beat the index which requires more work and expertise -
- 28.
Last March, the Bangko Sentral ng Pilipinas (BSP) conducted policy rate cuts to soften the impact of coronavirus in the Philippines. This will likely _____ market rates and _____ outstanding bonds' prices.
- A.
Increase; increase
- B.
Increase; decrease
- C.
Decrease; increase
- D.
Decrease; decrease
Correct Answer
C. Decrease; increase -
- 29.
Which of the following is the best reason why long term bonds usually have higher annual rates than short term bonds?
- A.
Risk of inflation
- B.
Risk of interest rate fluctuations
- C.
Time value of money
- D.
Credit risk
Correct Answer
B. Risk of interest rate fluctuations -
- 30.
A bond whose coupon rate is 5% is currently trading at a market where the rate of bonds with similar risks is 6%. Given these facts, holding other things constant, what will most likely be the price of the bonds in the market?
- A.
Less than face value
- B.
Greater than face value
- C.
Equal to face value
- D.
Cannot be determined
Correct Answer
A. Less than face value -
- 31.
Which of the following about mutual funds is not true?
- A.
It takes at least 1 day before you can withdraw money from a mutual fund
- B.
The amount you can invest in a mutual fund has to be divisible by the minimum investment amount
- C.
Investing in a mutual fund containing stocks A and B, with stock A being more risky, has a lower expected return than investing only in stock A
- D.
Mutual funds benefit greatly from the effects of diversification
Correct Answer
B. The amount you can invest in a mutual fund has to be divisible by the minimum investment amount -
- 32.
Which of the ff. will a wealthy but highly risk-averse investor be more likely to invest in?
- A.
A portfolio composed of stocks that moves perfectly with the PSEi
- B.
A portfolio composed mostly of bond funds with some equity index funds
- C.
A portfolio composed of bond funds
- D.
A portfolio composed mostly of equity index funds with some bond funds
Correct Answer
B. A portfolio composed mostly of bond funds with some equity index funds -
- 33.
Which of the ff. best exemplifies the concept of diversification?
- A.
Correlations impact portfolio risk more than individual standard deviations
- B.
Diversification provides lower portfolio standard deviations without affecting returns
- C.
A portfolio with two stocks from the same industry has a lower standard deviation than a portfolio with two stocks from different industries
- D.
Theoretically, all investors should have exactly the same portfolio weights for risky assets
Correct Answer
A. Correlations impact portfolio risk more than individual standard deviations -
- 34.
The KIIDS contains the following, except for:
- A.
Rights of participants
- B.
Investment objective
- C.
Portfolio holdings
- D.
Related party transactions
Correct Answer
A. Rights of participants -
- 35.
You have 11 participation units in an equity index fund at the beginning of the year. The NAVpu as of year-end is 111.5, rising from 100 at the beginning of the year. Annual fees include a 0.95% trustee fee, a 0.50% early redemption fee, a custodian fee of 0.04%, and an external auditor fee of 0.01%. As of year-end, the stock market index is at 7,000, rising from 6,250 at the beginning of the year. Your return for this year is:
- A.
11.5%
- B.
10.5%
- C.
12%
- D.
10%
Correct Answer
A. 11.5% -
- 36.
When comparing the effective annual rate of short-term bonds and long-term bonds, the rate of long-term bonds are always ___
- A.
Cannot be determined
- B.
Higher
- C.
Lower
- D.
Equal
Correct Answer
A. Cannot be determined -
- 37.
Which of the following is the best reason for an investor to be concerned with the composition of a portfolio?
- A.
Risk reduction
- B.
Maximizing returns
- C.
Avoidance of investment disasters
- D.
Passing the JFA app process
Correct Answer
A. Risk reduction -
- 38.
If you have a BDO account and have set up online banking, you would still need the following to open a trading account in BDO Nomura:
- A.
Investor Suitability Form
- B.
TIN
- C.
All of the choices are correct
- D.
None of the other choices are correct
Correct Answer
A. Investor Suitability Form -
- 39.
A JFA mem asks you how they can invest in foreign markets. You tell them that the following options are available, except for:
- A.
Opening a global account with BDO Nomura
- B.
Buying mutual funds that focus on international investments
- C.
Investing in multinational corporations
- D.
All of the choices are correct
Correct Answer
A. Opening a global account with BDO Nomura -
- 40.
Vivi is a recently employed graduate with total net current assets of Php8,000 after deducting this month’s expenses (total current assets are assets that can be converted to cash quickly and typically include cash and marketable securities). What would you recommend she use this Php8,000 for?
- A.
Emergency fund
- B.
Stocks
- C.
New shoes
- D.
Balanced funds
Correct Answer
A. Emergency fund -
- 41.
When forecasting the future returns of a stock investment, it is always best to use:
- A.
The average historical return
- B.
An analyst's forecast
- C.
Intuition
- D.
Cannot be determined
Correct Answer
D. Cannot be determined -
- 42.
Lucas is a risk-neutral investor. What portfolio mix would you recommend to him? Assume that leveraged portfolios are not allowed.
- A.
Point B
- B.
Point A
- C.
Point M
- D.
Point Z
Correct Answer
A. Point B -
- 43.
Where can you not buy investments?
- A.
Bubble
- B.
GCash
- C.
COL
- D.
Seedbox
Correct Answer
A. Bubble -
- 44.
You have a bond maturing in two years with a face value of Php 100,000 and a stated interest rate of 4%. Interest is paid quarterly on March 31, June 30, September 30, and December 31. On September 30, the gross cash you receive from interest payments is ___
- A.
Php1,000
- B.
Php4,000
- C.
Php12,000
- D.
Php100,000
Correct Answer
A. Php1,000 -
- 45.
To open a COL account online, you would need:
- A.
A blank paper where you will write your signature thrice
- B.
TIN
- C.
All of the choices are correct
- D.
None of the other choices are correct
Correct Answer
A. A blank paper where you will write your signature thrice -
- 46.
Kate is a well-paid doctor that wants to invest a total of Php79 in fixed-income investments. Given the following investment options, where should she invest it in?
- A.
ATRAM Peso Money Market Fund
- B.
BPI savings account
- C.
Retail treasury bonds
- D.
Petron Series A Bonds
Correct Answer
A. ATRAM Peso Money Market Fund -
- 47.
Assuming that prices are not sticky and that person A’s salary and expenses increases at exactly the same rate as inflation, what will happen to the peso amount of person A’s savings next year as compared to this year’s?
- A.
It will increase
- B.
It will decrease
- C.
It will stay the same
- D.
Cannot be determined
Correct Answer
A. It will increase -
- 48.
Reden is willing to take high risks in exchange for high returns. Which among these investments options show an increasing order of expected returns?
- A.
None of the other choices are correct
- B.
Balanced Fund, Bond Fund, Equity Fund
- C.
Bond Fund, Equity Fund, Balanced Fund
- D.
Balanced Fund, Equity Fund, Dividend Fund
Correct Answer
A. None of the other choices are correct -
- 49.
T-bills are typically issued in ____ maturities.
- A.
≤1 year
- B.
2-5 years
- C.
6-10 years
- D.
11-30 years
Correct Answer
A. ≤1 year -
- 50.
All else kept constant, the higher the price of a fixed-income investment, the ___ the yield.
- A.
Longer
- B.
Lower
- C.
Shorter
- D.
Higher
Correct Answer
B. Lower -
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Mar 15, 2022Quiz Edited by
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Apr 15, 2020Quiz Created by
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