[Set 2] Module 4 - Sales Process Flashcards
(31 cards)
The Client Suitability Assessment (CSA) determines the MINIMUM risk that a client can accept.
False
In a UITF, the earnings of the investors are based on actual performance of the fund and can never erode your principal investment.
False
Risk Disclosure must be accomplished by client EVERY TIME s/he participates in a different fund.
True
Valued clients may opt to skip the UITF account opening process (CSA, Risk Disclosure Statement, and explanation of the UITF terms and conditions) if they wish to do so.
False
What document should a client have as proof of his investment?
a. Declaration of Trust
b. Confirmation of Participation
c. Risk Disclosure Statement
d. Participating Trust Agreement
b. Confirmation of Participation
A UITF Client wants verbal assurance from you, a new CUSP, that his investment in UITF will be “safe”. For clients to have some comfort, you explained to the client that:
a. Trust Entities are authorized by the Bangko Sentral ng Pilipinas to operate UITFs ensuring integrity of the Trust Entity.
b. The Declaration of Trust is approved by the Trust Committee, the Board of Directors, and the Bangko Sentral ng Pilipinas ensuring that the UITF went through several processes of approvals.
c. All investments and investment activities are guided by BSP Regulations and supervised by the regulation: internal and external auditors. Proper disclosures on risks and regular reporting of the performance of the funds are made through the KIIDS.
d. Based on the results of the Client Suitability Assessment (CSA), the client is guided to match his risk tolerance to appropriate funds.
e. All of the above.
e. All of the above.
An MBA student received his bonus from his company. He has earmarked the money as payment for his tuition fee for the next semester (in 6 months ’time). His risk profile is aggressive, and he wants to invest in an equity fund because he wants the money to earn more in the next 6 months. Is it PRUDENT for you to PRESENT to him an equity fund?
a. Yes, because he wants to invest in an equity fund and that is his money
b. Yes, since his risk profile matches the investment
c. Yes, as long as he signs the waiver
d. No, because there is a mismatch between the recommended investment horizon for an equity fund, and his requirement for his funds
e. No, because he should diversify his investment.
d. No, because there is a mismatch between the recommended investment horizon for an equity fund, and his requirement for his funds
Which statement is False?
a. Client Suitability Assessment (CSA) needs to be updated as often as necessary particularly if there is a change in the financial circumstance of the client
b. The marketing personnel’s signature on the CSA is optional.
c. A client may waive the result of the CSA to invest in a UITF with higher risk
d. A CSA must be updated at least every 3 years.
e. CSA is a critical part of the account opening process to understand client’s reward objective, and risk tolerance.
b. The marketing personnel’s signature on the CSA is optional.
c. A client may waive the result of the CSA to invest in a UITF with higher risk
High Risk-High Return; Low Risk-Low Return are catch phrases of which investment principle?
a. Risk-Reward Rule
b. Cash is King
c. Buy low; Sell High
d. Peso Cost Averaging
e. Horizon Matching
a. Risk-Reward Rule
A Client asked if your Trust Department carries a fund similar to his investment in Sure Ball Equity Fund. Client disclosed that his investment is guaranteed as glaringly and clearly stated in the name of the Fund. Which of the following statements will you use in your discussion with the client?
a. The return of the investment of Sure Ball Equity Fund is not guaranteed
b. Sue Ball Equity Fund is just a name and not necessarily a guarantee of the Return of the Investment of the Fund
c. It is best to read the Key Information and Investment Disclosure to know about the objectives of the Fund
d. The Sure Ball Equity Fund is presumably invested in equities thus subject to market risk among others
e. All of the above
e. All of the above
In general, what type of investment is best for UITF customers at retirement age?
a. UITFs with regular inflow of cash to match expenditures
b. Aggressive investments to maximize investment funds for the retirement years
c. Investments which provides the highest possible return to sustain the retirement years
d. Investments with balance risk for a balanced return
e. Investments with less than 1-year horizon considering retirement
e. Investments with less than 1-year horizon considering retirement
Diversification is more commonly referred to by investors as “do not put your eggs in one basket”. It can be defined by the following statements except:
a. Diversification can be achieved by investing across different asset classes and types
b. Diversification avoids concentration in one particular investment
c. Diversification can help achieve more consistent returns over time and reduces overall investment risk
d. Diversification works well only in a bullish market
e. Diversification is essential to any long-term investment strategy.
d. Diversification works well only in a bullish market
The enumeration of risks pertinent to the investment is required for the opening of a UITF account.
True
A PTA or Confirmation of Participation and Redemption need not manually signed by the trustee or his authorized representative if the same is in the form of an electronic document that conforms with the Electronic Commerce Act
True
The investments of a multi-class UITF shall remain as one pool and are not separately allocated to classes
True
A conservative client wants to invest in a fixed income fund. Will you allow him?
a. Yes, provided he signs a waiver of the results of the Client Suitability, and he agrees that he understands the risks of investing in a fixed income fund despite his risk tolerance.
b. Yes, always
c. No.
d. Cannot be determined.
a. Yes, provided he signs a waiver of the results of the Client Suitability, and he agrees that he understands the risks of investing in a fixed income fund despite his risk tolerance.
An investor may be accepted as a client without the need to do Know-Your-Client processes.
False
A Trust Entity may accept any type of client regardless if background checking has been done, to meet its sales targets.
False
A bond fund is worth Php 200 Mn with a duration of 10. Interest rates went up by 100 bps. What will most likely happen to the value of the fund?
a. Increase in Value
b. Decrease in Value
c. Nothing will happen
b. Decrease in Value
A marketing officer (MO) recently joined the bank. He mentioned that he is familiar with the Client Suitability Assessment process. An investor who wants to open a UITF account walks in the branch, and unfortunately the CUSP is not available and only the marketing officer is available. Can the marketing office open the UITF account?
a. Yes, since the MO is familiar with the CSA Process
b. Yes, provided that the MO explains the UITF
c. No, the MO is not allowed to open the UITF account. The bank must wait for the CUSP
d. Cannot be determined.
c. No, the MO is not allowed to open the UITF account. The bank must wait for the CUSP
KIIDS are provided to clients
a. Daily
b. Monthly
c. Quarterly
d. Annually
c. Quarterly
S.H.O.R.E. stands for Size, Horizon, Objective, Risks & Expectation
False
Client Suitability Assessment (CSA) should be updated at least EVERY 2 YEARS or whenever there are changes to the client’s investment objectives, financial circumstances or requirements.
False
CUSP should not sign the CSA
False
