Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

SEC PHASE 2 > ANNEX B > Flashcards

ANNEX B Flashcards

1
Q

What takes place 20 days after filing for a new issue with the SEC?
(a) Firm subscription
(b) Cooling off period
(c) Registration
(d) Selling concession
(e) Underwriting

A

(c) Registration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Who elects the board of directors of a Corporation?
(a) Common stockholder
(b) Preferred stockholders
(c) Bond holders
(d) Corporate officers
(e) Management

A

(a) Common stockholder

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Who enforces the Securities Act of 1933 and the Securities Exchange Act of 1934?
(a) NASD
(b) SEC
(c) NYSE
(d) CBOE
(e) Treasury

A

(b) SEC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

A natural person hired to buy and sell securities on a salary orcommission basis by a Broker. Dealer institution is known as:
(a) Broker Dealer
(b) Salesman
(c) Trader
(d) Associated Persons
(e) None of the above

A

(b) Salesman

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Which rule by the SEC covers the registration of salesmen and associated persons?
(a) SEC rule 28
(b) SRC rule 4
(c) SEC rule 4
(d) SRC rule 28
(e) None of the above

A

(d) SRC rule 28

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

The person employed full time by the Broker Dealer whose responsibilities include internal control supervision of other employees, agents, salesmen, officers, directors of such Broker Dealer for compliance with the Code and rules and regulations is known as:
(a) Broker Dealer
(b) Salesman
(c) Trader
(d) Associated Person

A

(d) Associated Person

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Which of the following is a Department within the Securities & Exchange Commission of the Philippines:
(a) The Corporate Finance Department
(b) The Compliance and Enforcement Department
(c) The Company Registration and Monitoring Department
(d) The Market Regulation Department
(e) All of the above

A

(e) All of the above

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Which of the following conditions must be met for commercial papers to be exempt from registration with the SEC?
I. Payable to a specific person
II. Issued to not more than nineteen (19) non-institutional
lenders;
III. In an amount as prescribed by the Commission
IV. Issued to not more than twenty one (21) non-institutional lenders;
(a) I, II,and III
(b) I, III and IV
(c) IandII
(d) II only

A

(a) I, II,and III

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

All of the following are regulated and supervised by the Securities Exchange Commission EXCEPT:
(a) Philippine Stock Exchange
(b) Mutual Funds
(c) Philippine Dealing Exchange
(d) Corporations
(e) Unit Investment Trusts

A

(e) Unit Investment Trusts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

The type of Trading Participant who buys and sells securities for account of others/public is known as:
(a) Dealing Participant
(b) Broker Participant
(c) Trading Participant
(d) Qualified Investor
(e) All of the above

A

(b) Broker Participant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

The following are Qualified Investor Participants, Except:
(a) Banks
(b) Insurance Company
(c) Investment Company
(d) An entity with total assets of more than php 1,000,000
(e) An entity with total assets of more than php 1,200,000

A

(d) An entity with total assets of more than php 1,000,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

If a client wishes to put an order with the intention of having his/her total order matched at his indicated price and withdrawn when the whole amount can not be matched, he/she should put a:
(a) Iceberg Order
(b) Fill and Kill Order
(c) Limit Order
(d) Fill or Kill Order
(e) None of the above

A

(d) Fill or Kill Order

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

The following information are contained in the order ticket prepared by the Brokering Participant, except:
(a) Name of customer
(b) Price at which order was executed
(c) Whether order was solicited or unsolicited
(d) Name of the salesman
(e) All of the above

A

(e) All of the above

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

How long should Broker Participants keep records of Customer orders?
(a) 10 years
(b) 7 years
(c) 5 years
(d) 3 years
(e) 1 year

A

(c) 5 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Customer accounts are protected when the registration of a Trading Participant is suspended or revoked because:
(a) the owners of the Trading Participant will honor its obligations to it’s customers.
(b) the investments of the customers are protected by insurance from business failures of the trading participants
(c) the Securities & Exchange Commission requires the Trading Participants to put up margins against customer transactions
(d) the outstanding contracts of the customers will be taken over by another trading participant
(e) None of the above

A

(d) the outstanding contracts of the customers will be taken over by another trading participant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Which of the following statements are true?
I. Brokering Participants can only trade for clients
II. Dealing Participants can trade for clients and Firm’s
account
III. Brokering Participants can trade for clients and Firm’s
account
IV. Dealing Participants can only trade for their own
account
V. Deals are entered into separate terminals, customer
transaction in the broker terminals and firm’s account into the dealing terminals
(a) I,IIandV
(b) II, III and V
(c) II and III
(d) I,IVandV
(e) IandII

A

(d) I,IVandV

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Which of the following would most likely result in the market price of a good falling?
(a) rising demand and falling supply
(b) rising demand and rising supply
(c) rising demand and unchanging supply
(d) falling demand and falling supply
(e) falling demand and rising supply

A

(e) falling demand and rising supply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

If the rate of growth in an economy is 4 percent, inflation is 2 percent, and the nominal rate of interest is 10 percent, what is the real rate of interest?
(a) 5 percent
(b) 7 percent
(c) 8 percent
(d) 12 percent
(e) 13 percent

A

(a) 5 percent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Headline in today’s newspapers “typhoon Mina destroys rice crops in the North”. What will most likely happen?
(a) the demand for rice will increase
(b) the supply of rice will go down
(c) the supply of rice will go up
(d) the price of rice will go down
(e) none of the above

A

(b) the supply of rice will go down

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

The value of money is influenced by:
(a) The law of demand
(b) The law of supply
(c) Interest rates
(d) Inflation
(e) All of the above

A

(d) Inflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

The economy is fast approaching the ____________ cycle
when production goes down together with interest rates, prices and investments.
(a) through
(b) peak
(c) recession
(d) expansion

A

(a) through

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Interest Income derived from fixed income investments are booked in the Income Statement of a Company engage in manufacturing as:

(a) Operating Income
(b) Net Sales
(c) Selling and Administrative Expenses
(d) Operating Income
(e) Other Expenses

A

(a) Operating Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

To encourage more employment in a Country, the government can
(a) adopt policies that promote higher interest rates
(b) reduce the money supply
(c) incur more spending than the pevious year
(d) pay off international debts
(e) all of the above

A

(c) incur more spending than the pevious year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

If the Bangko Sentral Ng Pilipinas wanted to use all three of its major monetary tools to increase the money supply, it would:
(a) sell bonds, reduce the overnight rate, and reduce reserve requirements
(b) sell bonds, reduce the overnight rate and increase reserve requirements
(c) buy bonds, reduce the overnight rate and reduce reserve requirements
(d) sell bonds, increase the overnight rate and increase reserve requirements
(e) buy bonds, increase the overnight rate and reduce reserve requirements

A

(c) buy bonds, reduce the overnight rate and reduce reserve requirements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

company has a current ratio of 1.2. Cash is used to pay off accounts payable. What happens to the ratio?
(a) Decreases
(b) Increases
(c) Stays the same
(d) Cannot be determined

A

(b) Increases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Achilles purchased USD200K of ROP bonds at 110 for settlement 3 days after the coupon payment date. How much is his cash-out if the coupon rate of the bond is 8.75%?
(a) USD200,000
(b) USD211,700
(c) USD220,145.83
(d) USD235,000.
(e) USD220,000.

A

(c) USD220,145.83

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Mike already received a total of USD17,750.00 in coupon payments over the last 2 years for his USD100K ROP bond. coupon rate of the ROP?
(a) 10%
(b) 9.5%
(c) 8.875%
(d) 8%
(e) 7.5%

A

(c) 8.875%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

To compute for the accrued interest of a bond, which of the following data is required?
(a) face value
(b) interest payment dates
(c) coupon rate
(d) all of the above

A

(d) all of the above

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Alexis is receiving Php20K every 6 months from the Php500K bond she bought during the initial issuance. What is the coupon rate of the bond?
(a) 8%
(b) 9%
(c) 10%
(d) 11%
(e) 12%

A

(c) 10%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Mr. Chan goes to the branch and informs the branch manager that he will sell his USD100K ROP31 holding and buy USD100K of ROP24.

Given the following:
ROP31 7.75% cpn 109.75-110.75
ROP24 6.375% cpn 101.25-102.25

At what price will the bank buy Mr. Chan’s ROP holding?

(a) 102.25
(b) 7.75
(c) 101.25
(d) 109.75
(e) none of the above

A

(d) 109.75

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Sam paid USD116,250.00 for the USD100K ROP bond he bought 10 days after the issuance date. The coupon rate of the bond is 8.75%. What was the offer price of the bond?
(a) 116.25
(b) 116.00
(c) 115
(d) 114.5
(e) 114

A

(b) 116.00

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Sabrina bought Php1.0MM of RTB with quarterly coupon interest at 7% gross. If the RTB is for 3 years, how much will she receive on the maturity date?
(a) Php1,000,000
(b) Php1,014,000
(c) Php1,028,000
(d) Php1,056,000
(e) Php1,070,000

A

(b) Php1,014,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

What is the coupon rate of a Php1.0MM investment that earns Php12K every quarter?
(a) 5%
(b) 6%
(c) 7%
(d) 8%
(e) 10%

A

(b) 6%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

How much is the face value of Daisy’s investment if she earns 8% gross or Php20K every 6 months?
(a) Php500K
(b) Php600K
(c) Php625K
(d) Php650K
(e) Php700K

A

(c) Php625K

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

How long did Pat hold on to her Php10MM investment if she received a total of Php1.6MM and the coupon rate of the bond she held was 10% gross payable semi annually?
(a) 1.5 years
(b) 2 years
(c) 2.5 years
(d) 3 years
(e) 3.5 years

A

(b) 2 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

What is the coupon rate of the Php800K RTB of May if she received and earned a total of Php76,800.00 after 1.5 years?
(a) 5%
(b) 6%
(c) 7%
(d) 8%
(e) 9%

A

(d) 8%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

What is the coupon rate of the USD50K ROP bond if the coupon payment is USD1,937.50 every 6 months?
(a) 5.75%
(b) 6.75%
(c) 7.75%
(d) 8.75%
(e) 9%

A

(c) 7.75%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Jenny invested Php1,040,500 for Php1,000,000 of RTB with 6.75% gross coupon. How much will she receive every quarter?
(a) Php12,000
(b) Php13,500
(c) Php15,000
(d) Php18,500
(e) Php20,000

A

(b) Php13,500

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

The current USD/Php exchange rate is quoted as follows: bank buy at 41.00 and sell a 41.35. How much will Paul pay if he will buy USD100K?
(a) Php4,125,000
(b) Php4,135,000
(c) Php4,150,000
(d) Php4,100,000
(e) Php4,117,500

A

(b) Php4,135,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

What are the components in computing for the client’s cash-out when selling ROPs to clients?
(a) face value, bid price, coupon rate, accrued tenor
(b) face value, offer price, coupon rate, accrued tenor
(c) face value, offer price, coupon rate, issue date
(d) face value, offer price, coupon rate, maturity date
(e) face value, bid price, coupon rate, issue date

A

(b) face value, offer price, coupon rate, accrued tenor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

If Irish receives php 13,500 from her investment each coupon payment and she paid Php ,1,040,500 for a Retail Treasury Bond with a face value of Php 1,000,000, after how many coupon payments can she consider to be break even on her initial principal investment?
(a) 1 coupon payment
(b) 2 coupon payments
(c) 3 coupon payments
(d) 4 coupon payments
(e) 5 coupon payments

A

(c) 3 coupon payments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

What is the current yield of an 8% bond with a par value of $1000 and a market value of $1,200?
(a) 6.67%
(b) 8.00%
(c) 12.00%
(d) 14.67%
(e) 28.00%

A

(a) 6.67%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

What would be the accrued interest for a 5% $1,000 bond settled on July 15th with coupon payment dates of April 15th and October 15th?
(a) $10.00
(b) $12.50
(c) $25.00
(d) $50.00

A

(b) $12.50

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

What is the price for a six-month (182- day) U.S. T-bill with a simple discount yield of 3%?
(a) 97.48
(b) 98.24
(c) 98.48
(d) 98.54

A

(c) 98.48

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

For an 8% bond with a par value of a $1000 and a market value of $1,200, what is the nominal yield?
(a) 4.00%
(b) 6.00%
(c) 6.67%
(d) 8.00%

A

(d) 8.00%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

What is the discount yield for a three month (91-day) T-bill selling at 98.48?
(a) 4%
(b) 5%
(c) 6%
(d) 7%
(e) 8%

A

(c) 6%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

If the yield on T-bills is 4% and it increases by 100 basis points, what is the new yield?
(a) 4.01%
(b) 4.04%
(c) 4.10%
(d) 5.00%
(e) 5.04%

A

(d) 5.00%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

How much would be paid in principal and gross interest over the lifetime of a 20-year 4% bond with a par value of $1,000?
(a) $800
(b) $1,400
(c) $1,800
(d) $2,000

A

(c) $1,800

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

What is the return before interest and commissions after buying XYZ on $100 at 50% margin then selling at $150?
(a) 50%
(b) 75%
(c) 100%
(d) 150%
(e) 200%

A

(c) 100%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

What is the equivalent taxable bond yield for an 6% tax exempt bond for an investor in the 32% tax bracket?
(a) 4.08%%
(b) 6.32%
(c) 8.82%
(d) 18.75%

A

(c) 8.82%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

For a 6% ten-year corporate bond with a par value of $1,000 purchased at $1,080, what is the approximate yield to maturity?
(a) 4%
(b) 5%
(c) 6%
(d) 8%

A

(b) 5%

52
Q

How many months interest are paid with the first coupon for a bond issued January 1, 2007 and the first coupon April 1, 2007?
(a) 1 month
(b) 2 months
(c) 3 months
(d) 6 months

A

(c) 3 months

53
Q

The min. features as specified by BSP Circular No. 304, Series of 2001 specify that LTNCD:
I. can be denominated in Philippine Pesos or Dollars
II. should have a minimum maturity of five (5) years,
III. should be scripless in form and registered with a third
party Registry Bank maintaining an Electronic Registry
Book.
IV. should be registered in the name of the individual or
corporate investor, negotiable and prenumbered
(a) I, II, and IV
(b) IV, III and I
(c) II, III and IV
(d) II,IVandI
(e) I, II, III and IV

A

(c) II, III and IV

54
Q

Which or the following statements about LTNCDs are true?
I. Covered by Philippine Deposit Insurance Corporation
II. The coupon payment is subject to withholding tax
regardless of holder
III. Cannot be pre-terminated
IV. Issued with a minimum tenor of five (5) years
(a) IandII
(b) II and III
(c) I,IIandIV
(d) I, III and IV
(e) None of the above

A

(d) I, III and IV

55
Q

Which of the following is not a benefit when investing in Bank issued Lower Tier 2?
(a) the yield is high
(b) the issue is liquid because there is a secondary market
(c) it has a definite term of at least 5 years with interest fixed/guaranteed
(d) it is not insured with the Philippine Deposit Insurance Corp
(e) None of the above

A

(d) it is not insured with the Philippine Deposit Insurance Corp

56
Q

Which of the following is currently not allowed by the BSP as an investment outlet for UITF?
(a) Bank Loans
(b) Treasury Bills
(c) Bank Deposits
(d) Marketable Securities
(e) None of the above

A

(a) Bank Loans

57
Q

Which of the following describes Hybrid Tier 1 (HT1) capital?
I. Fixed coupon payments but subject to suspension
II. Shareholders meeting required to redeem
III. Perpetual with option to redeem on or after 10 years
IV. Has a dilutive effect on shareholders
(a) I,IIandIV
(b) I, II and III
(c) I, III, and IV
(d) I, and III
(e) I, II, III and IV

A

(c) I, III, and IV

58
Q

Based on BSP circular 503, HT1 must be issued in minimum denominations of ________________or its equivalent
(a) $10,000
(b) php 1,000,000
(c) php 250,000
(d) $5,000
(e) php 500,000

A

(e) php 500,000

59
Q

Consider two bonds, A and B. They are both issued at the same time by the same corporate firm. They both have the same maturity, seniority, and coupon. The only difference between the two bonds is that A is callable and B is not. Which of the following most likely best describe the relationship between A and B
(a) Bond A will have a lower yield than bond B.
(b) Bond B will have a lower price than bond A.
(c) Bond A will have a higher yield than bond B.
(d) Bonds A and B will have the same yields.

A

(c) Bond A will have a higher yield than bond B.

60
Q

Which of the following reflects the performance of UITFs or Mutual Funds?
(a) Par Value
(b) Stated Value
(c) Asset Value
(d) Net Asset Value
(e) None of the above

A

(d) Net Asset Value

61
Q

All of the following are characteristics of U.S. Treasury Notes EXCEPT:
(a) They have a maximum maturity of ten years
(b) They are sold at auctions
(c) They are interest bearing securities
(d) They are sold at discount

A

(d) They are sold at discount

62
Q

When one sells securities with an obligation to buy them back, these are?
(a) Federal funds
(b) Repurchase agreements
(c) Banker’s acceptances
(d) Commercial paper
(e) Subordinated Notes

A

(b) Repurchase agreements

63
Q

When one sells securities with an obligation to buy them back, these are?
(a) Federal funds
(b) Repurchase agreements
(c) Banker’s acceptances
(d) Commercial paper
(e) Subordinated Notes

A

(b) Repurchase agreements

64
Q

Which of the following is an important characteristic of T-Bills?
(a) Nonnegotiable
(b) Illiquid
(c) Safety of principal
(d) Lack of secondary market
(e) None of the above

A

(c) Safety of principal

65
Q

What type of bonds do not pay interest but have yields?
(a) Income bonds
(b) Corporate bonds
(c) Below investment grade bonds
(d) Zero-coupon bonds
(e) Sovereign bonds

A

(d) Zero-coupon bonds

66
Q

Who is the manager of a mutual fund?
(a) Management company
(b) Custodian
(c) Investor
(d) Broker
(e) None of the above

A

(a) Management company

67
Q

The interest received from the Philippine government securities are subject to:
(a) Corporate Income Tax
(b) Individual Income Tax
(c) Documentary Science Tax
(d) Final Withholding Tax
(e) Capital Gains Tax

A

(d) Final Withholding Tax

68
Q

Which of the following are features of the Philippine treasury bill:
I. 91, 182, 364 days
II. day count is 360
III. redemption at par
IV. issued by a government owned corporation
(a) I, III and IV
(b) IandII
(c) I, II and III
(d) I,IIandIV
(e) All of the above

A

(c) I, II and III

69
Q

Which of the following is not a feature of the Fixed rate treasury note :
(a) interest payment is quarterly
(b) tenor is more than one year
(c) issued at face value
(d) interest is calculated on 360/days
(e) none of the above

A

(e) none of the above

70
Q

RTBs stand for:
(a) Republic Treasury Bills
(b) Regular Treasury Bills
(c) Retail Treasury Bills
(d) Regular Treasury Bonds
(e) Retail Treasury Bonds

A

(e) Retail Treasury Bonds

71
Q

The method of pegging a uniform coupon rate of a Treasury Bond at the stop-out level of arrayed amounts of bid with the corresponding yield rate tendered is known as:
(a) Competitive bid
(b) English auction
(c) Non competitive bid
(d) Dutch auction
(e) None of the above

A

(d) Dutch auction

72
Q

What does RoSS stand for?
(a) Registrar of Securities Sold
(b) Registry of Securities Sold
(c) Registry of Scripless Securities
(d) Registrar of Securities Scripless
(e) Registry of Sold Securities

A

(c) Registry of Scripless Securities

73
Q

How many business day(s) does it take to settle purchase of government securities at the primary market?
(a) same day
(b) 1
(c) 2
(d) 3
(e) 5

A

(c) 2

74
Q

Which of the following statements is correct?
(a) the price of a subordinated bond is higher than the price of a government bond of the same tenor
(b) the price of an unsecured corporate bond is higher than the price of a government security of the same tenor
(c) the price of an unsecured corporate bond is lower than the price of a subordinated bond of the same tenor
(d) the price of a government bond is higher than the price of an unsecured corporate bond of the same tenor
(e) none of the above

A

(d) the price of a government bond is higher than the price of an unsecured corporate bond of the same tenor

75
Q

Assuming all things equal, which among the following issues would offer the highest yield to an investor?
(a) Senior Debt
(b) Unsecured Bond
(c) Subordinated Bond
(d) Government Bond
(e) Commercial Paper

A

(c) Subordinated Bond

76
Q

In the world of finance, a type of loan that ranks after all other debts should a company fall into receivership or close is called:
(a) Corporate Bond
(b) Commercial Papers
(c) Subordinated Debt
(d) Corporate Debt
(e) None of the above

A

(c) Subordinated Debt

77
Q

Subordinated Debt is also known as:
(a) Public Debt
(b) Senior Debt
(c) Junior Debt
(d) Corporate Debt
(e) None of the above

A

(c) Junior Debt

78
Q

Which of the following statement(s) about Bank issued Lower Tier 2 (LT2) is/are false?
I. LT2 are covered by Philippine Deposit Insurance Corp
II. In terms of hierarchy of payment, LT2 is ranked lower than deposit
III. LT2 are negotiable and transferable
IV. Interest income from LT2 is free of withholding tax for all investors
V. The yield of the LT2 is higher than that of deposits
(a) I, II, IV
(b) II, III, IV
(c) I,II,V
(d) I, III, IV
(e) I, IV

A

(e) I, IV

79
Q

Which among the following statements describe the benefits of investing in Unit Investment Trusts or Mutual Funds?
I. The funds are managed by a professional investment manager
II. The investments are not covered by Philippine Deposit Insurance Corp
III. The minimum investment amount required is relatively small, i.e. php 10,000
IV. Funds can offer lower investment risks through diversification
(a) IandII
(b) I, III and IV
(c) II, III and IV
(d) III and IV
(e) I, II and III

A

(b) I, III and IV

80
Q

Which of the following describes Hybrid Tier 1 (HT1) capital?
I. Fixed coupon payments but subject to suspension
II. Shareholders meeting required to redeem
III. Perpetual with option to redeem on or after 10 years
IV. Has a dilutive effect on shareholders
(a) I,IIandIV
(b) I, II and III
(c) I, III, and IV
(d) I, and III
(e) I, II, III and IV

A

(c) I, III, and IV

81
Q

All of the following are abbreviations for securities issued by the Philippine government, except:
(a) FXTN
(b) LTNCD
(c) ROP
(d) RTB

A

(b) LTNCD

82
Q

How is interest on a U.S. government bond computed?
(a) Actual days of the month & a 360-day year
(b) Actual days of the month & a 365-day year
(c) 30-day months & a 360-day year
(a) 30-day months & a 365-day year

A

(b) Actual days of the month & a 365-day year

83
Q

If an investor holds a bond to maturity, they will make a capital gain if:
(a) The bond is issued at par
(b) The bond is purchased below par
(c) The bond is issued above par
(d) The bond is purchased above par
(a) None of the above

A

(b) The bond is purchased below par

84
Q

The failure of an issuer to repay principal and interest in a timely manner is known as:
(a) price risk
(b) liquidity risk
(c) credit risk
(d) reinvestment risk
(e) none of the above

A

(c) credit risk

85
Q

If an investor in fixed income securities whose home currency is pesos buys a dollar denominated bond issued by the Philippine Government overseas, which of the following risks should the investor be concerned about:
I. Sovereign Risk
II. Market Risk
III. Foreign Exchange Risk
IV. Liquidity Risk
(a) I
(b) IandII
(c) I, II and III
(d) I, and III
(e) I, II, III and IV

A

(e) I, II, III and IV

86
Q

The return on long term corporate bonds is higher than the return provided by a similar feature and tenor long-term government bonds. The difference is the premium investors receive for taking on ___________risk.
(a) market
(b) liquidity
(c) default
(d) political
(e) foreign exchange

A

(c) default

87
Q

Which of the following risks should be considered by a local investor when investing in peso denominated LTNCDs?
I. Price
II. Credit
III. Liquidity
IV. Sovereign/Political
(a) IandII
(b) II, III and IV
(c) I, II III
(d) I, II, IV
(e) I, II, III and IV

A

(c) I, II III

88
Q

Place the following Moody ratings from highest to lowest:
I. Baa
II. B
III. A
IV. Aa
(a) II, I, III, IV
(b) I, II, IV, III
(c) III, II, IV, I
(d) IV, III, I, II

A

(d) IV, III, I, II

89
Q

Bonds rated BBB or lower are classified as:
(a) Income bonds
(b) Guaranteed bonds
(c) Zero-coupon bonds
(d) Below investment grade bonds
(e) Investment grade bonds

A

(d) Below investment grade bonds

90
Q

What is the risk to an investor of using a margin account?
(a) Leverage increases risk
(b) Could lose more money than invested
(c) Potential to amplify losses
(d) Principal is at risk
(e) All of the above

A

(e) All of the above

91
Q

What are considered the safest securities in any market?
(a) Investment Grade corporate bonds
(b) Convertible bonds
(c) Government securities
(d) Subordinated Notes
(e) Commercial paper

A

(c) Government securities

92
Q

Which of the following applies to margin accounts?
I. Increased buying power
II. Securities act as collateral for loan
III. Broker may sell securities without asking
IV. Investor willing to risk capital
(a) I, III and IV
(b) I, II, IV
(c) IandIV
(d) I
(e) I, II, III and IV

A

(e) I, II, III and IV

93
Q

Which risk should an investor with a fixed income portfolio be most concerned about during periods of rising interest rates?
(a) Credit risk
(b) Reinvestment risk
(c) Price risk
(d) Sovereign risk
(e) All of the above

A

(c) Price risk

94
Q

Which of the following puts an Investor’s principal at risk?
(a) Purchase of a 10 year Corporate Bond
(b) Trading on Margin
(c) Purchase of Commercial Paper
(d) Investment in Unit Investment Trust
(e) All of the above

A

(e) All of the above

95
Q

The Philippines contributes its share and play a vital role in the global fight against money laundering. Which Republic Act known as The Anti-Money Laundering Act was the revised and when did the revised Law took effect?
(a) RA 9610 effective Oct. 17, 2001
(b) RA 9160 effective Sept. 29, 2001
(c) RA 9491 effective Sept. 7, 2003
(d) RA 9194 effective Mar. 23, 2003
(e) RA 9194 effective Mar. 7, 2003

A

(d) RA 9194 effective Mar. 23, 2003

96
Q

Which of the following Institutions is not mandated by the AMLA to submit covered and suspicious transaction reports to the AMLC:
(a) insurance companies
(b) pre-need companies
(c) banks
(d) securities dealers
(e) none of the above

A

(e) none of the above

97
Q

Which of the following transactions are not covered or suspicious transactions per AMLA:
(a) the transaction amount is more than php 500,000.00
(b) the client is not properly identified
(c) there is a deviation to client profile and historical transaction
(d) the amount of transaction was php 400,000.00 but not
commensurate to the financial capacity of the client
(e) none of the above

A

(e) none of the above

98
Q

The following statements are salient features of the AMLA, except:
(a) Criminalizes money laundering
(b) Creates a financial intelligence unit
(c) Imposes requirements on customer identification, record keeping and
reporting of covered and suspicious transactions
(d) Provides for freezing/seizure/forfeiture/recovery of dirty
money/property
(e) All of the above

A

(e) All of the above

99
Q

What is the penalty for knowingly transacting or attempting to transact any monetary instrument/property which represents, involves or relates to the proceeds of an unlawful activity?
(a) 4 to 7 years imprisonment and a fine of not less than P1.5M but not more than P3M.
(b) 7 to 14 years imprisonment and a fine of not less than P3M but not more than twice the value of the monetary instrument/property.
(c) 6 months to 4 years imprisonment or a fine of not less than P100,000 but not more than P500,000, or both.
(d) none of the above
(e) all of the above

A

(b) 7 to 14 years imprisonment and a fine of not less than P3M but not more than twice the value of the monetary instrument/property.

100
Q

When can a broker dealer effect a transaction on behalf of a client?
(a) Anytime the client signs a standard client agreement
(b) Anytime a client opens an account even before a client agreement is signed
(c) When the client signs a standard client agreement and places an order with the broker dealer
(d) When the client places an order with the broker dealer even if the client has not signed the client agreement

A

(c) When the client signs a standard client agreement and places an order with the broker dealer

101
Q

Which of the following is information that a client agreement must contain:
(a) the full name and registered address of the broker dealer
(b) the full name and address of the client
(c) a description of the nature of services to be provided to or available to the client
(d) a risk disclosure statement
(e) all of the above

A

(e) all of the above

102
Q

All of the following statements are true, except:
(a) In addition to the requirement that the client agreement be in a language that is understood by the client, the registered person who deals with the client must still explain to the client the contents of the agreement
(b) Since the client agreement is in a language that is understood by the client, the registered person who deals with the client is not required to explain the contents of the agreement to the client anymore.
(c) a written client agreement must be entered into before the broker dealer can provide services to a client.
(d) A broker dealer shall not effect transactions with the client or a person designated by the client unless a written authorization by the client to do so is obtained and on file
(e) all of the above statements are true

A

(b) Since the client agreement is in a language that is understood by the client, the registered person who deals with the client is not required to explain the contents of the agreement to the client anymore.

103
Q

Under SRC Rule 52.1, the following statements are true, except:
(a) The broker dealer can create new accounts without meeting the client face to face as long as all the required customer information is provided
(b) Numbered accounts are allowed for trading purposes provided that the owner fills up the CAIF with his identity clearly indicated in the form.
(c) Anonymous accounts, accounts under fictitious names, and all other similar accounts shall be absolutely prohibited.
(d) If more than one party is named on the account, new account will be obtained for each party on the account
(e) None of the above

A

(a) The broker dealer can create new accounts without meeting the client face to face as long as all the required customer information is provided

104
Q

Which of the following information is not required for a non institutional account?
(a) Source of funds
(b) List of Directors
(c) The customer’s investment objective and other related information concerning the customer’s financial situation and needs;
(d) Occupation of customer and name, address and telephone number of employer;
(e) Customer’s tax identification number, Social Security System number or Government and Insurance System number

A

(b) List of Directors

105
Q

CAIF means:
(a) Client Account Information File
(b) Customer Account Information Form
(c) Client Agreement Information File
(d) Customer Agreement Information Form
(e) Customer Account Information File

A

(b) Customer Account Information Form

106
Q

For Corporate accounts, the following information is/are required, except:
(a) By-laws and Arcticles of incorporation
(b) List of Directors
(c) List of all stockholders
(d) Secretary’s Certificate of board resolution authorizing the opening of the account with the Broker Dealer firm;
(e) financial information

A

(c) List of all stockholders

107
Q

When is a customer order considered “unsolicited”?
(a) when the client initiates the phone call
(b) when the salesman initiates the phone call
(c) when the client mentions the name of the security first
(d) when the salesman mentions the name of the security first
(e) None of the above

A

(c) when the client mentions the name of the security first

108
Q

In general, how often must a broker dealer provide customers with a statement of account?
(a) monthly
(b) every 60 days
(c) quarterly
(d) upon request by client

A

(a) monthly

109
Q

Dormant accounts are accounts that have not been traded for at least:
(a) 1 year
(b) 3 years
(c) 5 years
(d) 7 years
(e) 10 years

A

(b) 3 years

110
Q

The Code of Ethics specifically addresses all of the following EXCEPT:
(a) competence.
(b) integrity and dignity.
(c) independent judgment.
(d) importance of contractual obligations

A

(d) importance of contractual obligations

111
Q

Which of the following refers to the obligation of an investment services firm executing on behalf of customers to ensure that the prices those orders receive reflect the optimal mix of price improvement, speed and likelihood of execution?
(a) Customer Account Information
(b) Best Execution
(c) Account Opening
(d) Broker Quotation System
(e) None of the above

A

(b) Best Execution

112
Q

The following statements refer to cases when a broker dealer salesman can disclose customer information, EXCEPT:
(a) The information concerns illegal activities on the part of the client or prospective client
(b) Disclosure is required by law
(c) The client or prospective client permits disclosure of the
Information
(d) The supervisor of the broker dealer allows it
(e) None of the above

A

(d) The supervisor of the broker dealer allows it

113
Q

All of the following are responsibilities of a Salesman, EXCEPT:
(a) Possess and pursue knowledge of Law
(b) Guaranty returns
(c) Maintain objectivity and independence
(d) Demonstrate integrity, honesty and professional competency
(e) None of the above

A

(b) Guaranty returns

114
Q

From a Broker Dealer’s perspective, llace the following investment transactions from highest priority to lowest:
I. salesman’s transaction as a beneficial owner
II. client transaction
III. employer’s transaction
(a) I, II, III
(b) II, I, III
(c) III, II, I
(d) II, III, I

A

(d) II, III, I

115
Q

Ben is a registered fixed income salesman and is in the process of taking his certification exam to be an equities salesman. Rita, his client, asks him for recommendations about the stock of Bank X. Ray should:
(a) Conduct equity research about Bank X and provide Rita with his findings and recommendations
(b) Recommend the purchase of the stock of Bank X since it is performing well
(c) Inform Rita not to purchase the stock of Bank X since he is not aware of the performance of Bank X
(d) Refer Rita to an investment professional who is registered as an equities salesman
(a) None of the above

A

(d) Refer Rita to an investment professional who is registered as an equities salesman

116
Q

The following are duties of a Registered person to clients, Except:
(a) Fair Dealing
(b) Preservation of Confidentiality
(c) Provide Material nonpublic information
(d) Determine suitability of investment to client’s financial situation
(e) None of the above

A

(c) Provide Material nonpublic information

117
Q

Henry is a registered salesman of fixed income securities. He wants to invest php 1 million in a 5 year Philippine Treasury Note. During the day, his client calls up and puts an order to buy php 9 million of 5 year Philippine Treasury Note at market until filled. He places an order to buy php 10 million of the said 5 year note and was able to buy php 5 million at a price of 98. After a second, the balance of php 5 million was executed at 98.25. What was the price of the note Henry purchased?
(a) 98.25
(b) 98.00
(c) Eric’s order was not executed
(d) 98.125

A

(a) 98.25

118
Q

Emir provided his client with a recommendation to buy PLDT’s peso denominated bond with a remaining life of 3.5 years at a price of 102. After 6 months, the price of the said bond rose to 108 and the client sold the bond to recognize the profit. Ecstatic, the client gave Emir php 5,000 for giving him the recommendation. Emir should:
(a) Accept the money and inform his supervisor
(b) Accept the money as a reward with the consent of his supervisor
(c) Decline the money
(d) Accept the money and turn it over to his supervisor
(e) None of the above

A

(c) Decline the money

119
Q

If a client asks the Broker Dealer for information/documents, which among the following is the Broker Dealer not required to provide per SRC Rule?
(a) Client Agreement
(b) Transaction Confirmation
(c) Financial condition of broker dealer (upon request of client)
(d) List of Management Officers (upon request of client)
(e) Customer account statement

A

(d) List of Management Officers (upon request of client)

120
Q

BSP Circular 392 covering fixed income transactions requires:
(a) Broker dealers to have signed client agreements before transacting with customers
(b) Delivery of securities to third party custodians of buyers/investors
(c) Client information to conform with Anti Money Laundering Law
(d) Issuance of Client Statements
(e) Best execution for all client transactions

A

(b) Delivery of securities to third party custodians of buyers/investors

121
Q

Best execution refers to:
(a) access to major quoting systems
(b) speed with which orders can be executed
(c) ability to obtain best price for order
(d) All of the above

A

(d) All of the above

122
Q

The place where previously issued securities are traded is known as:
(a) Primary markets
(b) Secondary markets
(c) Tertiary markets
(d) Capital markets
(e) None of the above

A

(b) Secondary markets

123
Q

Which of the following is/are objective of the Over-the-Counter Rules?
(a) investor protection
(b) transparency
(c) to promote the capital markets
(d) market integrity
(e) all of the above

A

(e) all of the above

124
Q

All
of the following statements are false, except:
(a) a qualified investor can directly buy or sell securities in the OTC market from non qualified investors
(b) a non qualified investor can also deal directly in the OTC market
(c) a non qualified investor can only participate in the OTC market by dealing through a broker
(d) a non qualified investor can deal directly with a qualified investors in the OTC market
(e) none of the above

A

(c) a non qualified investor can only participate in the OTC market by dealing through a broker

125
Q

All of the following statements are true, except:
(a) A dealer cannot deal with a non-qualified investor
(b) A broker can deal with a non-qualified investor
(c) A dealer shall not deal with another dealer unless he has exerted reasonable effort to determine that the other dealer is authorized to participate in the OTC market
(d) An authorized broker can deal with other authorized dealers in the OTC market for his client’s orders
(e) None of the above

A

(e) None of the above

SEC PHASE 2 (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions