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SEC PHASE 2 > CH6. FI > Flashcards

CH6. FI Flashcards

1
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

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2
Q

Which of the following Philippine debt instruments are subject to 20% withholding tax?
(a) corporate bonds
(b) long term commercial papers
(c) government securities
(d) all of the above

A

(d) all of the above

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3
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

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4
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

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5
Q

The coupon (interest) of Philippine government securities are subject to withholding tax. This means that:
(a) tax will be paid by the holder to a government agency each time he/she receives interest
(b) the dealer will withhold tax on interest payment dates
(c) tax will be withheld by the issuer (the government agency that issued the security) on each interest payment dates
(d) None of the above

A

(c) tax will be withheld by the issuer (the government agency that issued the security) on each interest payment dates

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6
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

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7
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

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8
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

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9
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

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10
Q

Bonds issued by foreign governments are known as:
(a) sovereign bonds
(b) corporate bonds
(c) international bonds
(d) emerging market bonds
(e) all of the above

A

(a) sovereign bonds

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11
Q

Which of the following statement is the most likely to be 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

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12
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

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13
Q

Which of the following is not among the types of securities the U.S. Treasury issues?
(a) Treasury Bond
(b) Treasury Paper
(c) Treasury Bills
(d) Treasury Note
(e) None of the above

A

(b) Treasury Paper

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14
Q

The U.S. Treasury debt instruments issued in 2, 3, 5, and 10 years maturities are called _____________________
(a) Treasury Notes
(b) Treasury Bills
(c) Treasury Bonds
(d) None of the above

A

(a) Treasury Notes

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15
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 ____________________
(a) Corporate Bond
(b) Commercial Papers
(c) Subordinated Debt
(d) Corporate Debt
(e) None of the above

A

(c) Subordinated Debt

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16
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

17
Q

The following can purchase LTNCD:
I. Individuals
II. corporations
III p. other financial / institutional investors
IV. Trust Funds
(a) I, II and III
(b) I, II, and IV
(c) I, III and IV
(d) I, II, III and IV

A

(d) I, II, III and IV

18
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

19
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

20
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

21
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

22
Q

Which of the following best describes T-bills?:
(a) Long-term Treasury obligations
(b) Short-term Treasury obligations
(c.) Interest bearing securities
(d) Non-marketable debt of the government
(e) None of the above

A

(b) Short-term Treasury obligations

23
Q

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

A

(d) PERA

24
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
(e) 30-day months & a 365-day year

A

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

25
Q

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

A

(b) The bond is purchased below par

SEC PHASE 2 (10 decks)

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