[wattatops] Upjfa Finance Academy 52.2 Final Exam

1. If you are 18 right now, what is the best age for you to begin investing?

18

21

25

35

2. Why do actively managed funds charge higher fees compared to passively managed funds?

Because actively managed funds can beat the index which requires more work and expertise

Because actively managed funds are guaranteed to have high returns

Because an investor will never lose money in an actively managed fund

Because actively managed funds take on lower market risk

3. 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?

Less than face value

Greater than face value

Equal to face value

Cannot be determined

4. Where can you not buy investments?

Bubble

GCash

COL

Seedbox

5. T-bills are typically issued in ____ maturities.

≤1 year

2-5 years

6-10 years

11-30 years

6. Which of the following choices can be considered as something attributable more to an investor's risk tolerance rather than their risk capacity?

Investor's Experience

Time Horizon of Investment

Income

Age

7. Which of the following best exemplifies a want expense?

Eating steak everyday

Purchasing an affordable house to live in

Replacing a broken phone

Purchasing a second hand car

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:

Php1,020.10, Php1,040.60

Php1,020.00, Php1,040.00

Php1,020.00, Php1,040.40

Php1,020.10, Php1,040.00

9. 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?

No; The price will decrease

Yes; The price will not change

Yes; The price will increase

No, the price will increase

10. 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?

1.09%

0%

10%

0.25%

11. 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?

April 6

April 2

April 7

April 9

12. An equity fund significantly outperformed its benchmark for 3 years and similarly underperformed for 2 years. You can infer that the fund ________.

Has a different asset mix than the benchmark it is tracking

Has an incompetent fund manager

Performs better than its peer group

Is a bad investment

13. 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?

Best-case

Worst-case

Base-case

All cases are correct

14. The following include tax-advantaged investments in the Philippines, except for:

Roth Individual Retirement Account

Personal Equity & Retirement Account

Personal Equity and Savings Option Fund

PAG-IBIG MP2 SAVINGS

15. 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?

ATRAM Peso Money Market Fund

BPI savings account

Retail treasury bonds

Petron Series A Bonds

16. The following statements pertain to basic concepts in asset allocation and investments. Identify which among the following is true:

Risk aversion of most investors in a market causes riskier securities to have higher expected returns.

An asset held as part of a portfolio is generally riskier than the same asset held in isolation.

17. 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?

She reassessed her risk-profile and found that stocks aren’t suited for her.

A post online suggests a better stock pick.

Stock B’s price doubled. It’s an opportunity to earn a lot

Stock A’s price fell by 15%. It’s best to cut her losses.

18. According to experts, an investor should purchase at least ₱8000 worth of stocks in order to minimize fees. The reason for this being,

Broker’s Commission is waived when the transaction is worth at least ₱8000

Stock Transaction Tax reaches its minimum value when transactions are worth at least ₱8000

A Transaction worth at least ₱8000 waives the PSE Transaction Fee

19. Which of the following is not likely to increase GDP?

Raising government revenue by increasing tax rates

Php300-billion cash injection to the market through bond purchases

BSP lowering the benchmark interest rate

Infrastructure projects like the “Build, Build, Build” Program

20. 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?

Ayala Land, Inc.

AllHome Corp.

Fruitas Holdings Inc.

The Philippine Stock Exchange, Inc.

21. Which of the following about mutual funds is not true?

It takes at least 1 day before you can withdraw money from a mutual fund

The amount you can invest in a mutual fund has to be divisible by the minimum investment amount

Mutual funds benefit greatly from the effects of diversification

22. 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:

11.5%

10.5%

12%

10%

23. A JFA mem asks you how they can invest in foreign markets. You tell them that the following options are available, except for:

Opening a global account with BDO Nomura

Buying mutual funds that focus on international investments

Investing in multinational corporations

All of the choices are correct

24. Andrea's financial goal for her investments is capital preservation. Given this, what investment should she have mainly purchased?

On January 25, Andrea invested in a 90-day T-Bill which generated around 2% return to counter the effects of inflation.

Andrea is currently investing in bonds with average yields of around 8% annually.

25. Reden is willing to take high risks in exchange for high returns. Which among these investments options show an increasing order of expected returns?

None of the other choices are correct

Balanced Fund, Bond Fund, Equity Fund

Bond Fund, Equity Fund, Balanced Fund

Balanced Fund, Equity Fund, Dividend Fund

26. 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?

Both of these factors

Alexa will retire in 2 years

Alexa wants to save enough money to buy a house

Neither of these factors

27. 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:

Php1,020.00, Php1,040.40

Php1,020.10, Php1,040.60

Php1,020.00, Php1,040.00

Php1,020.10, Php1,040.00

28. 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?

29. 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?

7500, 4500, 3000

4000, 9000, 1000

7500, 7500, 0

3000, 7500, 4500

30. 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?

10.00

5.00

9.09

4.88

31. Which of the following is the best reason why long term bonds usually have higher annual rates than short term bonds?

Risk of inflation

Risk of interest rate fluctuations

Time value of money

Credit risk

32. Which of the ff. will a wealthy but highly risk-averse investor be more likely to invest in?

A portfolio composed of stocks that moves perfectly with the PSEi

A portfolio composed mostly of bond funds with some equity index funds

A portfolio composed of bond funds

A portfolio composed mostly of equity index funds with some bond funds

33. The KIIDS contains the following, except for:

Rights of participants

Investment objective

Portfolio holdings

Related party transactions

34. 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?

Emergency fund

Stocks

New shoes

Balanced funds

35. All else kept constant, the higher the price of a fixed-income investment, the ___ the yield.

Longer

Lower

Shorter

Higher

36. 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?

He wants to maintain his asset allocation and risk-reward profile.

There is a new fad in investments.

His portfolio is performing just as he planned.

He sees an opportunity in more aggressive investments.

37. Given the following information, how much cash are you actually entitled to receive if you own 500 common shares?

Php450

Php500

Php1

Php25

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:

Investor Suitability Form

TIN

All of the choices are correct

None of the other choices are correct

39. 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 set of assets with returns that are consistently uncorrelated or has near zero correlation.

A set of assets that are consistently uncorrelated or has near zero correlation.

A set of assets with returns that are negatively correlated.

A set of assets that are negatively correlated.

40. 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.

Increase; increase

Increase; decrease

Decrease; increase

Decrease; decrease

41. When comparing the effective annual rate of short-term bonds and long-term bonds, the rate of long-term bonds are always ___

Cannot be determined

Higher

Lower

Equal

42. Which of the following is the best reason for an investor to be concerned with the composition of a portfolio?

Risk reduction

Maximizing returns

Avoidance of investment disasters

Passing the JFA app process

43. Lucas is a risk-neutral investor. What portfolio mix would you recommend to him? Assume that leveraged portfolios are not allowed.

Point B

Point A

Point M

Point Z

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 ___

Php1,000

Php4,000

Php12,000

Php100,000

45. To open a COL account online, you would need:

A blank paper where you will write your signature thrice

TIN

All of the choices are correct

None of the other choices are correct

46. 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?

47. 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?

To reduce the impact of volatility on the overall purchase

To maximize returns

To reduce the impact of economic inflation

All of the choices are correct

48. Which of the ff. best exemplifies the concept of diversification?

Correlations impact portfolio risk more than individual standard deviations

Diversification provides lower portfolio standard deviations without affecting returns

Theoretically, all investors should have exactly the same portfolio weights for risky assets

49. When forecasting the future returns of a stock investment, it is always best to use:

The average historical return

An analyst's forecast

Intuition

Cannot be determined

50. 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?

It will increase

It will decrease

It will stay the same

Cannot be determined

[wattatops] Upjfa Finance Academy 52.2 Final Exam

1. If you are 18 right now, what is the best age for you to begin investing?

2.

What first name or nickname would you like us to use?

2. Why do actively managed funds charge higher fees compared to passively managed funds?

3. 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?

4. Where can you not buy investments?

5. T-bills are typically issued in ____ maturities.

6. Which of the following choices can be considered as something attributable more to an investor's risk tolerance rather than their risk capacity?

7. Which of the following best exemplifies a want expense?

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:

10. 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?

11. 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?

12. An equity fund significantly outperformed its benchmark for 3 years and similarly underperformed for 2 years. You can infer that the fund ________.

13. 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?

14. The following include tax-advantaged investments in the Philippines, except for:

15. 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?

16. The following statements pertain to basic concepts in asset allocation and investments. Identify which among the following is true:

17. 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?

18. According to experts, an investor should purchase at least ₱8000 worth of stocks in order to minimize fees. The reason for this being,

19. Which of the following is not likely to increase GDP?

20. 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?

21. Which of the following about mutual funds is not true?

23. A JFA mem asks you how they can invest in foreign markets. You tell them that the following options are available, except for:

24. Andrea's financial goal for her investments is capital preservation. Given this, what investment should she have mainly purchased?

25. Reden is willing to take high risks in exchange for high returns. Which among these investments options show an increasing order of expected returns?

26. 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?

27. 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:

29. 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?

30. 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?

31. Which of the following is the best reason why long term bonds usually have higher annual rates than short term bonds?

32. Which of the ff. will a wealthy but highly risk-averse investor be more likely to invest in?

33. The KIIDS contains the following, except for:

34. 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?

35. All else kept constant, the higher the price of a fixed-income investment, the ___ the yield.

36. 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?

37. Given the following information, how much cash are you actually entitled to receive if you own 500 common shares?

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:

40. 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.

41. When comparing the effective annual rate of short-term bonds and long-term bonds, the rate of long-term bonds are always ___

42. Which of the following is the best reason for an investor to be concerned with the composition of a portfolio?

43. Lucas is a risk-neutral investor. What portfolio mix would you recommend to him? Assume that leveraged portfolios are not allowed.

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 ___

45. To open a COL account online, you would need:

47. 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?

48. Which of the ff. best exemplifies the concept of diversification?

49. When forecasting the future returns of a stock investment, it is always best to use:

50. 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?

40. 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.