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SEC Phase 1 > SEC 1 MTIN > Flashcards

SEC 1 MTIN Flashcards

1
Q

Instruments covered by PDIC:

A

CASA accounts
Deposits Placements
LTNCD

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2
Q

If a client has 20-30 yrs. Horizon what is the best allocation

A

Choose the highest % in STOCKS, w/ small % allocation in bonds, smallest in % cash

Note: The shorter the horizon, the more conservative you should be
The longer the horizon, the more aggressive you should be
PERSONAL INVESTING; best portfolio mix

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3
Q

Meaning of INVESTING

A

the act of committing money to an endeavor with the expectation of obtaining an additional income

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4
Q

Cost Push Inflation

A

Rising of OIL PRICES

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4
Q

Meaning of Assets Allocation:

A

“NOT PUTTING YOUR EGGS IN ONE BASKET”

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5
Q

When a country has a Balance of trade surplus OR What constitute a TRADE SURPLUS?

A

Merchandize exports > merchandize imports

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6
Q

Normal Yield Curve

A

select wherein % increase as the tenor increase

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7
Q

$denominated ROP Bonds

A

instrument not subject to 20% withholding tax

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8
Q

In RA9160, who are required to report suspicious transactions to AMLA:

A

Broker dealer/ Director/ Officer/ Salesmen/ AP

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9
Q

when a salesmen resigns, what should be done

A

File with the Commission within 30days

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9
Q

not regulated or supervised by SEC

A

UITF

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10
Q

covering fixed income transaction requires Delivery of securities to 3rd party custodian of buyers/sellers

A

BSP CIRCULAR 392

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10
Q

rule that covers registration of salesmen and associated persons, brokers, dealers

A

SRC RULE 28

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11
Q

Institutional accounts:

Bank/ Investment House/ Insurance Company/ Entity with total assets of P1.20B

A

entity with total assets of 1.02B

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12
Q

The following information are contained in the order ticket prepared by the Brokering Participant:

Customer name/ Price/ Unsolicited or Solicited/ name of Salesmen

A

All of the above

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12
Q

who controlled the money supply in the Philippines

A

BSP

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13
Q

If a client wishes to put an order with the intention of having the order matched at his indicated price and withdrawn when the whole amount can’t be matched

A

FILL OR KILL

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14
Q

Trading participants must register the following personnel with PDEX? : Salesmen/ Traders/ Counterparty Limit Officer/ Associated Person/ Representative Officer

A

All of the above

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14
Q

How long should a Broker Participants keep customer record?

A

5 YRS.

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15
Q

Immediate action when license of a Broker Dealer is revoked or suspended:

A

When such Broker Dealer is a Member of an Exchange (Exchange Trading Participant), the Exchange shall immediately arrange for another Member or Exchange Trading participant) to take over any outstanding contracts relating to securities and notify the Exchange in writing of such transfer and the affected customers that said contracts have been transferred.

Where such Broker Dealer is not a Member of an Exchange (Exchange trading Participant), the Commission shall notify the affected customers, of such suspension or revocation and require that they transfer their account to another Broker dealer.

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16
Q

If one wants to know the operating performance of a corporation for a particular year, you’ll need:

A

INCOME STATEMENT

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17
Q

How does BSP control the money supply? Or, How to combat inflation?

A

SELL BONDS, INCREASE OVERNIGHT RATES and INCREASE RESERVE REQUIREMENT

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18
Q

On maturity, what will the client get?

A

FACE VALUE plus LAST COUPON INTEREST

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18
Q

Which of the following is not needed in computing for accrued interest?

A

TENOR OF THE BOND 3YRS OR 5YRS.

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19
Q

If a client buys an FXTN on a Friday, when is the settlement?

A

MONDAY

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20
Q

When interest rates moves up or down, which would move the most?

A

7YR FXTN ( longest tenor among choices)

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21
Q

How to realize a capital gain?

A

IF BOUGHT AT A PREMIUM, SELL AT EVEN A HIGHER PREMIUM

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22
Q

The following are features of a Peso Tbills EXCEPT,

A

Answer: DAY COUNT IS ACTUAL/365

/360 dapat

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23
Q

The coupon interest of Phil Government securities are subject to withholding tax. This means that:

A

tax will be withheld by the issuer (the Govt. agency that issued the security) on each interest payment date

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24
Q

Which of the following is correct:

A

THE PRICE OF A GOVERNMENT BOND IS HIGHER THAT THE PRICE OF A CORPORATE BOND OF THE SAME TENOR

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25
Q

should an investor is willing to take on risk that would offer the highest yield

A

SUBDORDINATED DEBT

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26
Q

Arrange the following rating from highest to lowest:

A

AA,, A, BB, B

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27
Q

What happen to margin accounts:

INCREASED BUYING POWER;
SECURITIES ACT AS COLLATERAL;
BROKER MAY SELL SECURITIES WITHOUT ASKING; INVESTOR IS WILLING TO RISK CAPITAL

A

Answer (all of the above)

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28
Q

Which is considered a covered transaction by AMLA:

A

TRANSACTION AMOUNT IS MORE THAN P500K

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29
Q

this is needed for a Broker Dealer to transact on behalf of a client

A

CLIENT AGREEMENT

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30
Q

All of the following are responsibilities of a Salesmen EXCEPT:

A

GUARANTEE RETURNS

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31
Q

the amount by which the rate of return on a risky investment exceeds the rate of return on a less risky investment

A

RISK PREMIUM

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32
Q

Which is considered as the highest priority?

A

CLIENT TRANSACTION

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33
Q

SRO stands for:

A

SELF-REGULATORY ORGANIZATION

34
Q

Government Debt refers to:
PUBLIC DEBT;
SOVEREIGN ISSUE/ NATIONAL DEBT

A

all of the above

35
Q

GDP growth is 4%, inflation is 3% and interest rate is 10%, what is the real rate of return?

A

REAL IR= NOMINAL IR - INFLATION RATE

7%

35
Q

department that governs/monitors trading of fixed income securities (buying and selling of securities); ensures compliance with regulation requirements

A

MARKET REGULATION DEPARTMENT

36
Q

No securities, unless EXEMPT, shall be sold or distributed unless such securities have a

A

REGISTRATION STATEMENT

37
Q

this phase in the economic cycle is described by an upturn in business activity, GNP increasing and decreasing employment

A

EXPANSION

38
Q

If a client invests in an LTNCD, which is not applicable?

A

SOVEREIGN RISK

39
Q

a type of trading account in which the trust Department can trade for client without client’s go signal for each transaction.

A

DISCRETIONARY ACCOUNT

40
Q

All Broker dealers must have the following information of their clients on CAIF EXCEPT:

A

CIVIL STATUS

41
Q

The country is experiencing High Inflation & low unemployment, what does the market expect?

Answer: INCREASE INTEREST RATES, INCREASE TAXES, LOWER GOVERNMENT SPENDING

A

INCREASE INTEREST RATES, INCREASE TAXES, LOWER GOVERNMENT SPENDING

41
Q

What is the return after buying shares worth $100 at 50% margin and then selling at $90?

A

20% LOSS

42
Q

Mr. X resigned and moved to another company, what should Mr. Salesman do before he starts to trade?

Inform SEC that he is resigning
Check if Co. B is SEC accredited
Check if his license is still valid
Check if Co. B is a member of the exchange

A

All of the above

43
Q

SRC RULES:

A

TRADING Guidelines is not included

44
Q

Rose offered 7% (net) 5 yr + 1 day LTNCD. She wants to know which Treasury Bills would yield a rate for her to equate to the LTNCD or the equivalent yield in long term

A

GS: 8.75% ( gross up of 7%)

45
Q

An Associated person should report with SWORN STATEMENT to PDEX
REPURCHASE

A

5 days

45
Q

Government Debt is the same as : NATIONAL DEBT/ PUBLIC DEBT/ SOVEREIGN ISSUE

A

ALL OF THE ABOVE

45
Q

BEST EXECUTION means:

A

obligation of an investment services firm executing on behalf of customers to ensure that the prices of orders receive the optimal mix of price improvement, spread and likelihood of execution

45
Q

borrowing/ selling that sells securities to lender/buyer in return for cash and agrees to repurchase the securities at a later date for a greater sum of cash

A

REPURCHASE AGREEMENT

46
Q

UITF COMPUTATION: NAVPU X NO. OF UNITS; If fees are given but asking only for maturity proceeds ( not pretermination);

A

just compute for NAVPU x No. Of Units (do not less the fees)

46
Q

the process of earnings on an asset’s reinvested earnings

A

COMPOUNDING

46
Q

What do you need to submit when buying or selling a security:

A

CLIENT AGGREEMENT

47
Q

What is Credit Spread?

A

A SPREAD OPTION POSITION IN WHICH THE PRICE OF THE OPTION SOLD IS GREATER THAN THE PRICE OF THE OPTION BOUGHT

48
Q

Accrued no of days for a coupon payment from May 31 to Aug 25?

A

Answer: 86 days accrued tenor (1 + 30 + 31 + 24)

49
Q

Foreign Investor investing in ROP’s :

A

NO FX RISK

50
Q

What are the features of 91 day Tbills?

A

Answer: ZERO COUPON, 360 DAY COUNT; NON-INTEREST BEARING

51
Q

What is Quality Spread?

A

THE SPREAD BETWEEN TREASURY SECURITIES ANS NON-TREASURY SECURITIES THAT ARE IDENTICAL IN ALL RESPECTS EXCEPT FOR QUALITY RATING

52
Q

Who assist banks/corporations when issuing new security?

A

INVESTMENT BANK

53
Q

Registered salesmen must not engage in practices and inflate trading volume with the intention to mislead market participants

A

MARKET MANIPULATION

53
Q

Which one has a higher coupon, convertible or non-convertible?

A

NON-CONVERTIBLE

54
Q

Tbills also known as: SOVEREIGN DEBT, PUBLIC DEBT, NATIONAL DEBT

A

( ALL OF THE ABOVE)

55
Q

note: TAX EXEMPT INSTITUTIONS SHOULD BE TAXED IF INVESTING IN GS

A

note: TAX EXEMPT INSTITUTIONS SHOULD BE TAXED IF INVESTING IN GS

55
Q

necessary for the computation of accrued interest

A

FV, COUPON, COUPON PAYMENT DATE

55
Q

RISK TOLERANCE

A

important factor to consider before investing or what works best for an investor

55
Q

What depicts a normal yield? Answer: 30D @ 3.50%; 90D @ 4%; 180D @ 4.50%; 360D @ 5%; 2 YRS. @ 6% ( THE LONGER THE TERM THE HIGHER SHOULD BE THE RATE)

A

30D @ 3.50%; 90D @ 4%; 180D @ 4.50%; 360D @ 5%; 2 YRS. @ 6% ( THE LONGER THE TERM THE HIGHER SHOULD BE THE RATE)

56
Q

Selling Bonds at a discount:

A

Answer: YTM must be greater than Coupon Rate

56
Q

The following evidences of indebtedness are exempt from registration:

A

payable to a specific person

neither negotiable nor assignable and shall held till maturity

issued to not more than 19 non-institutional lenders

Amount not exceeding P50m or such higher amount as may be prescribed by the Commission by resolution

56
Q

Salesmen is endorsed to?

A

SEC BY BROKER DEALER

57
Q

Conservative investor’s portfolio :

A

Answer: Bulk of investment should be more on Bonds, less stocks

57
Q

A registered person shall provide clients with the following information except:

adequate information about hid firm including his business address
financial condition of his business upon request of client
management team upon request of client
confirm effected transaction promptly with client

A
58
Q

Fees should be:

A

UNBUNDLED

58
Q

Penalty when you engage in a suspicious transaction:

A

Answer: 7-14 YRS. IMPRISONMENT AND 3M BUT NOT MORE THAN TWICE THE MONEY LAUNDERED

58
Q

DEFINITIONS:

BANKS – institution that offers financial services
INVESTMENT BANK – helps companies and governments raise money by issuing and selling securities in the capital markets
TRUST – administration of assets in behalf of another
CREDIT UNION – cooperative FI owned and controlled by its members

A
58
Q

risk that an investment will change in value due to a change in absolute level of interest rates

A

PRICE RISK

59
Q

date when client will pay for cost of bond plus accruals

A

SETTLEMENT DATE

59
Q

Requirement of Discretionary account:

BROKER – dealer to obtain signature of each person authorized to exercise discretion on the account
Record date such discretion was granted
Parameters of the discretionary arrangement

A
60
Q

Compute for the clean price

A

– NO ACCRUED INTEREST

61
Q

SAVING ACCOUNT : considered an investment

A
62
Q

For non-exempt institutions – ALL SECURITIES ARE TAXABLE

A
63
Q

Selling Bonds at a discount:

A

Answer: YTM > COUPON RATE

64
Q

Which of the following are true?
An investor can opt to be a none qualified investor in the OTC
A qualified investor may deal in the OTC
A non qualified investor can only deal in the OTC through a broker
A non-qualified may deal in the OTC by participating in a non-directional trust account

A

ALL OF THE ABOVE

65
Q

Tbills are exposed to:

A

Sovereign Risk, Interest Rate Risk, Market Risk, Liquidity Risk, Credit/Default Risk

65
Q

The following statements refer to cases when a broker dealer salesmen 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

ANSWER: D

65
Q
A
65
Q
A
66
Q

RTB 600F Face; Client wants to receive 64,800.00 in 2.25 yrs.
What is the coupon rate?

A

Answer 6%

I=PRT TRIAL AND ERROR

66
Q
A
66
Q
A
67
Q
A

SEC Phase 1 (3 decks)

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