Investment Assets

Question 1

A single premium policy means a policy.

a. Managing the portfolio of investment and administering the buying and selling of shares in the
unit trust itself
b. Ensuring that the fund manager adhere to the provision of the trust deed agreement
c. Acting generally to protect the unitholders
d. Holding the pool of money and assets in trust in behalf of the investors.

Answer 1

A. Under which only one premium is required.

Question 2

In a Unit Trust Investment, the duties of a Trustee include all of these EXCEPT:

a. Selects and manages the investments of the Trust.
b. Holds the pool of money and assets in trust on behalf of the investors.
c. Ensures that the fund managers adhere to the provisions of the trust deed.
d. Protects the interests of the unit holders.

Answer 2

A. Selects and manages the investments of the Trust.

Question 3

What are the advantages of investing in preferred shares?

I. It gives shareholders the right to a fixed dividend
II. Has the priority over company assets during dissolution
III. They enjoy benefit of capital appreciation

a. I, II and III
b. I and II
c. I and III
d. II and III

Answer 3

A. I, II and III

Question 4

Which statement about cash is TRUE?

a. Investment in cash increases when there is a bull run in the stock market.
b. Investment in cash decreases when there is a rise in interest rates.
c. Amount invested in cash is dependent on the size of the cash flow requirement.
d. Its yield potential is high.

Answer 4

C. Amount invested in cash is dependent on the size of the cash flow requirement.

Question 5

Investing in bonds offer the following advantages EXCEPT

a. It offers protection to the principal and guaranteed steady stream of income
b. It is place of temporary refuge when the investor foresees that the market outlook is uncertain
c. It allows the investor a chance for capital preservation
d. It enables the investors an opportunity for capital appreciation

Answer 5

D. It enables the investors an opportunity for capital appreciation

Question 6

What are the ADVANTAGES in investing in preferred shares?

I. It has priority on company assets during dissolution.
II. It has a benefit of capital appreciation.
III. The shareholder has the right to a fixed dividend.

a. I and II only
b. I and III only
c. II and III only
d. I, II and III only

Answer 6

D. I, II and III only

Question 7

Which of the following are fixed income securities?

I. Corporate Stocks
II. Government Bonds
III. Preferred Shares
IV. Money Market Instruments
V. Properties

a. I, II, III and IV
b. I and III only
c. I, II and V only
d. All of the above

Answer 7

A. I, II, III and IV

Question 8

Which of the following investment options entitles the holder ownership and share of profits in the
form of dividend appreciation?

a. Cash
b. Bonds
c. Futures
d. Ordinary Shares

Answer 8

D. Ordinary Shares

Question 9

Rank the following in term of their liquidity, from the least liquid to the most liquid.

I. Short Term Securities
II. Property
III. Cash
IV. Equities

a. IV, II, III, I
b. III, I, IV, II
c. II, I, IV, III
d. II, IV, I, III

Answer 9

D. II, IV, I, III

Question 10

A Unit Trust is __________________________

a. Established by a trust deed which enables a trustee to hold the pool of money and assets in
trust on behalf of the investor
b. A close-end fund and does not have to dispose off of its assets if large number of investors
sell their shares
c. One whereby investor buys units in the trust itself and not shares in the company
d. An organization registered under the SECURITY AND EXCHANGE COMMISSION (SEC)
which usually invests in a wide range of equities and other investment.

Answer 10

A. Established by a trust deed which enables a trustee to hold the pool of money and assets in
trust on behalf of the investor

Question 11

What are the disadvantages of investing in cash and deposits?

I. It is the safest type of investment.
II. They provide the lowest return.
III. There is reinvestment risk.

a. I only
b. II only
c. II and III only
d. I, II and III

Answer 11

C. II and III only

Question 12

Which of the following are types of corporate stocks?

I. Debenture stocks
II. Government stocks
III. Loan stocks
IV. Money Market Instruments
V. Convertible Stocks

a. I, II and III only
b. I, II, III and IV only
c. I, III and V only
d. All of the above

Answer 12

C. I, III and V only

Question 13

Factors in consider in buying Properties:

I. Quality of land
II. The Location of land
III. The value of building on land
IV. The investment
V. Place of work

a. I, II and III only
b. II, III and IV only
c. I, III and V only
d. All of the above

Answer 13

A. I, II and III only

Question 14

What are the basic types of real estate investment?

I. Rural Property
II. Domestic Property
III. Agricultural Property
IV. Commercial/Industrial Property
V. Foreign Property

a. I, II and III only
b. II, III and IV only
c. I, III and V only
d. All of the above

Answer 14

B. II, III and IV only

Question 15

What are the disadvantages of investing in common shares?

I. Dividends are paid not more than fixed rates
II. Investors are exposed to market and specific risks
III. Shares can become worthless if company becomes insolvent

a. I, II
b. I, III
c. II, III
d. I, II and III

Answer 15

C. II, III

Question 16

What is the most suitable investment instrument for an investor who is interested in protecting his
principal and receiving a steady stream of income?

a. Equities
b. Warrants
c. Variable life policies
d. Fixed income securities

Answer 16

D. Fixed income securities

Question 17

The disadvantage of fixed income securities include…

I. The coupon rate is fixed and cannot respond to inflation.
II. The investors are exposed to market specific risks.
III. Fluctuations in bond prices may lead to capital losses

a. II and III only
b. I and II only
c. I, II and III
d. I and III only

Answer 17

A. II and III only