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SEC Phase 1 > UCP > Flashcards

UCP Flashcards

1
Q
  1. UITF is subject to IC (Insurance Commission) approval.
A

FALSE – BSP

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2
Q
  1. Fund of funds is a UIT Fund structure that mandates the fund to invest at least 90% of its assets in ONE collective investment scheme.
A

FALSE-MORE THAN ONE

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3
Q
  1. FEEDER FUND is a UIT Fund structure that mandates the fund at least 90% of its assets in a single collective investment scheme. Feeder Fund’s investment in the target fund must not exceed 10% of the target fund’s market value.
A

TRUE

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4
Q
  1. UITFs MAY invest in other pooled funds such as collective investment schemes (CIS) or target funds.
A
  • TRUE
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4
Q
  1. UITFs are established, administered, and maintained by a trust entity. They are also regulated by the BANGKO SENTRAL NG PILIPINAS (BSP).
A
  • TRUE
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4
Q
  1. We CAN annualize ROI numbers for periods less than 1 year.
A

FALSE-CANNOT

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4
Q
  1. UITF is INSURED by the Philippine Deposit Insurance Corporation (PDIC) up to Php 500,000.00
A

– FALSE-NOT INSURED

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5
Q
  1. The Trustee MAY charge the fund with other qualified expenses (e.g. Attorney’s fee)
A
  • TRUE
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5
Q
  1. UITFs like Mutual Funds are POOLED AND OPEN-ENDED INVESTMENTS.
A
  • TRUE
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5
Q
  1. The minimum term for a Medium Term Bond Fund is > 3 YEARS.
A
  • TRUE
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5
Q
  1. A BALANCED FUND can have a Minimum: Maximum Equity Exposure [5% : 20%]
A
  • TRUE
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5
Q
  1. A UITF structure that mandates the fund to invest at least ninety percent (90%) of its assets in a single collective investment scheme.

A. Feeder Fund
B. Fund of Funds
C. Unit Paying Funds

A

A. Feeder Fund

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5
Q
  1. A UITF type that are invested in short-term, fixed income deposits and securities with duration of one year or less (≤ 1 Year) are called Money Market Fund
A
  • TRUE
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6
Q
  1. Net Asset Value per Unit should be published at least EVERY DAY.
A

– FALSE – EVERY WEEK

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6
Q
  1. A YEAR-ON-YEAR (YoY) return is the actual one-year horizon return of the fund.
A
  • TRUE
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6
Q
  1. Unit Paying Funds will generally provide participating investors a GUARANTEED stream of additional income and also potential for capital appreciation.
A

– FALSE-NON-GUARANTEED

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6
Q
  1. Net Asset Value per Unit should be computed at least EVERY WEEK.
A

– FALSE-EVERY DAY

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6
Q
  1. UITFs like Mutual Funds are managed by fund managers given FULL DISCRETION basis
A
  • TRUE
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7
Q
  1. Which of the following is incorrect about UITF?

A. Mark-to-market valuations must be computed daily
B. UITF apply the accrual type of accounting method
C. UITF NAVPUs are only being computed once daily

A

B. UITF apply the accrual type of accounting method

pooled accounting method

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7
Q
  1. BENCHMARK is a standard against which the performance of a mutual fund or investment manager can be measured.
A
  • TRUE
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8
Q
  1. A UITFs participation is via purchase of SHARES while Mutual Funds is via purchase of UNITS.
A

FALSE-UNITS, SHARES

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8
Q
  1. NAVPU VALUATION is investing at a fixed amount, at fixed regular intervals, for a long period of time.
A

FALSE-COST AVERAGING

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8
Q
  1. One UITF with a single pool of assets but different participation classes. It has more than one class of units in the fund and is invested in the same pool of securities and the same portfolio, investment objectives, and policies.

A. Feeder Fund
B. Fund of funds
C. Multi-class Fund
D. Unit Paying Funds

A

C. Multi-class Fund

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8
Q
  1. Which of the following statement is TRUE?

A. In marketing UITF, historical data should always be shown, guaranteeing return in the future.
B. Marketing UITF as better option than Savings account.
C. Any income or loss incurred in UITF is for the account of the client
D. UITF is a deposit product therefore it is not covered by PDIC.

A

C. Any income or loss incurred in UITF is for the account of the client

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8
Q
  1. A UIT Fund whose goal is to provide a regular stream of non-guaranteed income to participating investors. The fund may invest in various income-generating securities like dividend paying stocks, preferred stocks and/or coupon paying bonds.

A. Feeder Fund
B. Fund of Funds
C. Multi-class Funds
D. Unit Paying Funds

A

D. Unit Paying Funds

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8
Q
  1. A UIT Fund structure that mandates the fund to invest at least 90% of its assets in more than one (1) collective investment scheme.

A. Feeder Fund
B. Fund of Funds
C. Multi-class Fund
D. Unit Paying Fund

A

B. Fund of Funds

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9
Q
  1. Funds invest in a diversified portfolio of bonds and stocks where investment in stocks shall be up to a maximum of 40% to 60% of the fund.

A. Money Market Funds
B. Bond Funds
C. Balanced Funds
D. Equity Funds

A

C. Balanced Funds

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10
Q
  1. Funds invest in a portfolio of bonds and other similar fixed income securities with portfolio duration that may exceed one year.

A. Money Market Funds
B. Bond Funds
C. Balanced Funds
D. Equity Funds

A

B. Bond Funds

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11
Q
  1. Funds invest substantially in equities. Cash maybe kept for liquidity and portfolio rebalancing purposes.

A. Money Market Funds
B. Bond Funds
C. Balanced Funds
D. Equity Funds

A

D. Equity Funds

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12
Q
  1. Funds are invested principally in short-term, fixed income deposits and securities with portfolio duration of one year or less.

A. Money Market Funds
B. Bond Funds
C. Balanced Funds
D. Equity Funds

A

A. Money Market Funds

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13
Q
  1. Intermediate-Term Bond Fund has a maximum modified duration of?

A. 3
B. 5
C. >5

A

A. 3

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14
Q
  1. Long-Term Bond Fund has a maximum modified duration of?

A. 3
B. 5
C. >5

A

C. >5

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15
Q
  1. How is a UITF different from a Mutual Fund?
    I. UITFs are regulated by the BSP while Mutual Funds are regulated by SEC.
    II. UITFs are contractual while Mutual Funds are investment companies.
    III. UITFs are subject to liquidity requirement while Mutual Funds are not.
    IV. Participation in UITFs are in units while participation in Mutual Funds are in shares.

A. I and II
B. I, II, and III
C. I, II, and IV
D. I, II, III, and IV

A

C. I, II, and IV

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16
Q
  1. UITF is/an ______trust

A. Private
B. Implied
C. Irrevocable
D. None of the above
E. All of the above

A

A. Private

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16
Q
  1. Which of the following is a characteristic of a UITF?

A. Open ended investment company B. Open ended pooled fund
C. Debtor Credit relationship
D. None of the above
E. All of the above

A

B. Open ended pooled fund

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17
Q
  1. Which of the following is correct?

A. UITFs are not covered by PDIC
B. Deposits and UITFs are not covered by PDIC
C. Deposits and trust products are covered by PDIC
D. Trust products are covered by PDIC

A

A. UITFs are not covered by PDIC

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18
Q
  1. Which of the following are not included in the guidelines for the operating and accounting methodologies for UITFs?

A. The pooled fund accounting method shall be employed
B. All participants shall be pooled and invested in different and separate accounts
C. Each unit shall have uniform rights and privileges
D. Units admitted or redeemed from the fund will be based on the NAVPU valuation

A

B. All participants shall be pooled and invested in different and separate accounts

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19
Q
  1. Primarily used to service liquidity

A. Money Market Funds
B. Bond Funds
C. Balanced Funds
D. Equity Funds
E. None of the above

A

A. Money Market Funds

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20
Q
  1. An intermediate term bond fund has a maximum duration of

A. Less than 1 year
B. 3 years
C. 5 years
D. More than 5 years

A

B. 3 years

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21
Q
  1. A portfolio’s return is determined by:

A. The summation of the returns of each investment
B. The summation of the weighted return of each investment
C. The average return of each investment
D. None of the above
E. All of the above

A

B. The summation of the weighted return of each investment

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22
Q
  1. A UITFs net asset value is the summation of the market value of each investment less

A. Fees
B. Fees and Taxes
C. Fees, Taxes, and other qualified expenses
D. Fees, Taxes, and other marketing expenses
E. Fees, Taxes and other related expenses

A

C. Fees, Taxes, and other qualified expenses

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23
Q
  1. Which of the following is not TRUE?

A. UITF is just like Mutual Funds are not insured by PDIC
B. Participation via purchase of a UITF are in shares, while Mutual Funds in units
C. The regulating body of UITF is BSP and Mutual Funds is SEC
D. The price of a UITF is called NAVPU while Mutual Funds is called NAVPS

A

B. Participation via purchase of a UITF are in shares, while Mutual Funds in units

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23
Q
  1. It is a UITF structure that requires the fund to invest at least 90% of its assets in a single collective investment scheme

A. Feeder Fund
B. Fund of Funds
C. Multi-Class
D. Unit Paying

A

A. Feeder Fund

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24
Q
  1. The statements below are true for feeder funds, and fund of funds except:

A. The plan rules and related documents should say this
B. There should be an explanation and illustration of this structure
C. The target fund should not be a local collective investment scheme
D. All of the above
E. None of the above

A

C. The target fund should not be a local collective investment scheme

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25
Q
  1. An accounting methodology which measures the value of tradable securities based on its current market price.

A. Accrual
B. Mark to Market
C. Lump Sum
D. Straight Method

A

B. Mark to Market

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26
Q
  1. UITF and Mutual Funds differ in that

A. UITFs are pooled funds Mutual funds are not
B. UITFs are open ended and Mutual funds are not
C. Mutual funds are subject to paid up capital requirement but UITFs are not
D. Mutual funds are managed on a full discretion basis but UITFs are not

A

C. Mutual funds are subject to paid up capital requirement but UITFs are not

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27
Q
  1. A UITF structure that mandates the fund to invest at least 90% of its assets in a single collective scheme.

A. Feeder Fund
B. Fund of Funds
C. Target Fund
D. None of the above

A

A. Feeder Fund

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28
Q
  1. UITFs may invest in the following investment outlets except:

A. Bank deposits
B. Government securities
C. Exchange traded funds
D. None of the above
E. All of the above

A

D. None of the above

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28
Q
  1. A local or foreign collective investment scheme in which the UITF invests all or a portion of its assets

A. Feeder Fund
B. Fund of Funds
C. Target Fund
D. None of the above

A

C. Target Fund

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29
Q
  1. A UITF structure that mandates the fund to invest at least 90% of its assets is more than one collective investment scheme.

A. Feeder Fund
B. Fund-of-Funds
C. Target Fund
D. None of the above

A

B. Fund-of-Funds

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30
Q
  1. A multi-class fund can only have a maximum of 2 classes of units

A. True B. False

A

B. False

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30
Q
  1. Pooled funds often invested abroad in duly acceptable target funds

A. Multi class or unit paying UITFs
B. Feeder Funds or Fund-of-Funds
C. Hedge Funds
D. Dollar denominated UITFs
E. All of the above

A

B. Feeder Funds or Fund-of-Funds

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30
Q
  1. The formula for computing a fund’s year to date return is:

A. Principal x rate x time
B. NAVPU (current) – NAVPU (same period last year) / NAVPU (same period last year)
C. NAVPU (current) – NAVPU (last year’s end figure) / NAVPU (last year’s end figure)
D. None of the above
E. All of the above

A

C. NAVPU (current) – NAVPU (last year’s end figure) / NAVPU (last year’s end figure)

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31
Q
  1. A client with little knowledge in investments asks for a brief description of UITF. The following statements describes UITF except for one.

a. UITFs are collective investment schemes
b. UITFs are made available by participation
c. UITFs are close-ended pooled trust fund
d. UITFs are regulated by the BSP
e. UITFs can be sold by bank branches.

A

c. UITFs are close-ended pooled trust fund

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32
Q
  1. A local or foreign collective investment scheme (CIS) in which the UIT Feeder Fund invests all or a portion of its assets

A. Target Fund
B. Fund of Funds
C. Feeder Fund
D. Investor Fund
E. Pooled Fund

A

A. Target Fund

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32
Q
  1. A Fund has NAVPUs of 100 on 12/31/2015 and 110 on 12/31/16. What is the YOY return of the fund on 12/31/16?

A. 5%
B. 10%
C. 15%

A

B. 10%

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33
Q

UITF CERTIFICATION PROGRAM (UCP)
MODULE 2 – REGULATIONS & OPERATIONS

  1. Client Suitability Assessment Form (CSAF) is being update every NOW and THEN or as necessary.
A

False – 3 years

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34
Q
  1. Creation of UIT Fund should be approved by BOARD OF THE DIRECTORS prior to launching.
A

False – BSP

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35
Q
  1. Availability of Plan Rules is UPON REQUEST.
A

True

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36
Q
  1. The fund shall be audited annually by an independent INTERNAL auditor acceptable to the Bangko Sentral ng Pilipinas. Results of the audit will be made available to Participants.
A

False – External

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36
Q
  1. Amendments to the Plan Rules or termination of the fund shall be approved by the Board of Directors of the Trustee. Approved amendments shall be the BSP-within FIVE BUSINESS DAYS from approval.
A

False – Ten business days

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36
Q
  1. The total assets and accountabilities of each fund shall be accounted for as a single account referred to as POOLED-FUND ACCOUNTING method.
A

True

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36
Q
  1. A UITF’s single exposure limit states that a UITF cannot invest more than 15% of its market value in a single issue or its related interest
A

– True

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37
Q
  1. Net Asset Value per Unit is computed MONTHLY.
A

F – Daily

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37
Q
  1. Investment in securities of UITFs shall be held for safekeeping by BSP ACCREDITED THIRD PARTY CUSTODIANS who shall perform independent MTM of such securities.
A

True

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37
Q
  1. The combined exposure of a UITF to any entity and its related parties shall not exceed 15% of the market value of the UITF.
A

True

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38
Q
  1. Trustee is NOT LIABLE for losses due to willful default, bad faith, or gross negligence.
A

False-LIABLE

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38
Q
  1. UITFs are EXEMPT from statutory and liquidity reserves, single borrowers limit and DOSRI ceilings?
A

True

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39
Q
  1. Investor Fund MAY invest in its own or related target fund and may charge its own trust fee apart from the trust fee charged by the related target fund.
A

True

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40
Q
  1. A UITF’s historical NAVPU, Declaration of Trust and other account opening documents SHOULD BE MADE AVAILABLE in the TOAP or the trustee’s own website.
A

False

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41
Q
  1. Trustee has EXCLUSIVE management and control over the Fund.
A

True

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42
Q
  1. Trust Entities shall not but can exceed 15% limit exposure to entities and related parties because of marked to market movements.
A

True

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43
Q
  1. The UITF name SHOULD reflect the classification and underlying assets of the fund.
A

True

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44
Q
  1. Target Funds of Feeder Funds NEED NOT be supervised by BSP.
A

True

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45
Q
  1. The list of investments for the Feeder and Fund of Funds should be updated MONTHLY.
A

False

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46
Q
  1. Government Securities are risk free and has no credit or market risk.
A

False

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47
Q
  1. Which of the following about UITF is correct?

A. All UITFs have a 15% exposure limit per security based on market value
B. All UITFs except tracker funds have a 15% exposure limit per security based on market value
C. A feeder fund may maintain a cash exposure of 10%

A

C. A feeder fund may maintain a cash exposure of 10%

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47
Q
  1. A UITF structure with more than one (1) class of units in the fund and is invested in the same pool of securities and the same portfolio, investment objectives and policies is allowed
A
  • TRUE
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48
Q
  1. The investment in any one target fund shall not exceed 10% of the total _____ of the target fund

A. Market Value
B. Accrual Value
C. Net Asset Value
D. None of the above
E. All of the above

A

C. Net Asset Value

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49
Q
  1. The main objectives of the UITF Rules based on the BSP issuances are the following EXCEPT.

A. To align the operation of pooled funds with international best practices and ensure differentiation from deposit products
B. To enhance the credibility of pooled funds to retail investors, enabling them to evolve as institutional investors that can support the deepening of the domestic capital markets
C. The investment objectives of target funds should be aligned with that of the investor fund.

a. A and B only
b. A and C only
c. ALL of the above
d. NONE of the above

A

d. NONE of the above

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50
Q
  1. The Confirmation of Participation and Redemption shall contain the following except:

A. NAVPU of the fund on day of purchase/redemption
B. Absolute peso or foreign currency value
C. Outstanding balance of the existing Fund
D. Number of units purchased/redeemed

A

C. Outstanding balance of the existing Fund

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51
Q
  1. ___________ must be accomplished by the client prior to making any investments in UITF. It is also a guide in recommending appropriate investment outlet to client.

A. KYC Docs
B. Client Suitability
C. Declaration of Trust Participation Form

A

B. Client Suitability

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52
Q
  1. Written plan rules in a form of Trust Agreement.

A. KYC Docs
B. Client Suitability
C. Declaration of Trust
D. Participation Form
E. Key Information and Investment Disclosure Statement

A

C. Declaration of Trust

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53
Q
  1. A UITF NAVPU must be computed:

A. Daily
B. Weekly
C. Monthly
D. None of the above
E. All of the above

A

A. Daily

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54
Q
  1. In case there is breach in exposure limit, Trust entities are given ____ days to rectify it from the time of breach

A. 30 days
B. 25 days
C. 15 days
D. 10 days

A

A. 30 days

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55
Q
  1. For customer who invested in UITFs, there is a ___ days cooling off period from the time of signing the agreement / contract

A. 2 banking days
B. 2 calendar days
C. 3 banking days
D. 3 calendar days

A

A. 2 banking days

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56
Q
  1. Which of the following are the minimum elements of a Declaration of Trust
    I. Nature and investment objectives
    II. Terms of admission and redemption
    III. Risk Disclosure
    IV. External audit requirement
    V. Basis upon which fund may be terminated

A. l, Il, Ill, IV, and V
B. I, Il, Ill, and IV
C. I, Il, IV, and V
D. Il, Ill, and V

A

A. l, Il, Ill, IV, and V

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57
Q

. ____________ are written plan rules in the form of a trust agreement. It Is made available at the principal office of Trustee for inspection by any person having an interest in the fund

A. KIIDS
B. Declaration of Trust
C. Confirmation of Participation
D. Risk Disclosure Statement

A

B. Declaration of Trust

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58
Q
  1. What is a Feeder Fund (FF)?

A. A UITF structure that mandates the fund to invest at least 90% of its assets in a single collective investment scheme
B. A UITF structure that mandates the fund to invest at least 95% of its assets in a single collective investment scheme
C. A UITF structure that mandates the fund to invest at least 90% of its assets in more than 1 collective investment scheme
D. A UITF structure that mandates the fund to invest at least 95% of its assets in more than 1 collective investment scheme

A

A. A UITF structure that mandates the fund to invest at least 90% of its assets in a single collective investment scheme

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58
Q
  1. What is the maximum term for an Intermediary Bond Fund?

A. ≤ 1 Year
B. ≤ 3 Years
C. ≤ 5 Years
D. > 5 Years

A

B. ≤ 3 Years

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59
Q
  1. What is a group of individual securities or investments that have similar return-risk characteristics or behavior

A. Asset Allocation
B. Asset Class
C. Debt Instruments
D. Alternative Assets

A

B. Asset Class

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59
Q
  1. The following are considered benefits in investing in a UITF, except:

A. Affordability
B. Professional Management
C. Diversification
D. Guarantee of Higher Returns

A

D. Guarantee of Higher Returns

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60
Q
  1. A UlTF’s Declaration of Trust requires:

A. Board approval
B. BSP approval
C. Stockholder’s approval
D. A&B
E. B&C

A

D. A&B

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60
Q
  1. What is a Fund of Fund (FoF)?

A. A UITF structure that mandates the fund to invest at least 90% of its assets in a single collective investment scheme
B. A UITF structure that mandates the fund to invest at least 95% of its assets in a single collective investment scheme
C. A UITF structure that mandates the fund to invest at least 90% of its assets in more than 1 collective investment scheme
D. A UITF structure that mandates the fund to invest at least 95% of its assets in more than 1 collective investment scheme

A

C. A UITF structure that mandates the fund to invest at least 90% of its assets in more than 1 collective investment scheme

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61
Q
  1. Is the current calendar year return computed on an absolute percentage basis

A. Year-to-Date (YTD)
B. Year-on-Year (YoY)
C. Marked-to-Market (MTM)
D. Benchmark

A

A. Year-to-Date (YTD)

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62
Q
  1. The following are Sub-Types of a Balanced, except:

A. Minimum : Maximum Equity [21% : 40%]
B. Minimum : Maximum Equity [41% : 60%]
C. Minimum : Maximum Equity [61% : 80%]
D. Minimum : Maximum Equity [81% : 100%]

A

D. Minimum : Maximum Equity [81% : 100%]

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62
Q
  1. What is the maximum term of a Money Market Fund?

A. ≤ 1 Year
B. ≤ 3 Years
C. ≤ 5 Years
D. > 5 Years

A

A. ≤ 1 Year

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62
Q
  1. Investments in any target fund shall not exceed by how much percentage of the total net asset value of the target fund?

A. 25%
B. 20%
C. 15%
D. 10%

A

D. 10%

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62
Q
  1. Are UITFs with a single pool of assets but different participation classes

A. Multi-Class Funds
B. Unit Paying Funds
C. Feeder Funds
D. Fund of Funds

A

A. Multi-Class Funds

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63
Q
  1. The following are considered major types of asset class’ for a UITF, except

A. Cash
B. Fixed Income
C. Real Estate
D. Equity

A

C. Real Estate

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64
Q
  1. Is the act of assigning a value to a position held in a tradable financial instrument based on the current market price for that instrument.

A. Net Asset Value (NAV)
B. Net Asset Value per Unit (NAVPU)
C. Benchmark
D. Market to Market (MTM)

A

D. Market to Market (MTM)

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65
Q
  1. Is a UITF whose goal is to provide a regular stream of income to participating investors

A. Multi-Class Funds
B. Unit Paying Funds
C. Feeder Funds
D. Fund of Funds

A

B. Unit Paying Funds

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66
Q
  1. Client placed after the UITF cut off time, what is the NAVPU to be used?

A. At the time of placement
B. At the time of cut off
C. At the end of the day
D. By the next cut off (T+1)

A

D. By the next cut off (T+1)

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67
Q
  1. Is the summation of the market value of each investment less fees, taxes and other qualified expenses.

A. Net Asset Value (NAV)
B. Net Asset Value per Unit (NAVPU)
C. Benchmark
D. Market to Market (MTM)

A

A. Net Asset Value (NAV)

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67
Q
  1. What is the operating accounting methodology for UITFs?

A. Marked-to Market (MTM)
B. Accrual Method
C. Cash Accounting
D. None of the Above

A

A. Marked-to Market (MTM)

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68
Q
  1. The Net Asset value of the UITF is calculated as follows:

A. Market value of each investment less fees, taxes and all selling expenses defined by the Board of Directors.
B. Market value of each investment less trust fees
C. Accrued value of each investment less fees, withholding taxes and any expenses
D. Market value of each investment less fees, taxes and qualified expenses defined in the Declaration of Trust.
E. Accrued value of each investment less fees, taxes and all necessary expenses.

A

D. Market value of each investment less fees, taxes and qualified expenses defined in the Declaration of Trust.

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69
Q
  1. A valuation method that provides investors with a more accurate and fair value of his investments at any given time. It ensures that no participant in a collective investment scheme is put at a disadvantage as a consequence of a new investor coming into, or of existing investors getting out of the fund.

A. Accrual Valuation
B. Mark to Market Valuation
C. Comparable Valuation
D. Discounted Cash Flow Valuation
E. Net Asset Valuation

A

B. Mark to Market Valuation

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70
Q
  1. Which of the following documents a conservative-type of investor may sign if he wants to invest in aggressive types of UITF products/ equities?

A. Declaration of Trust
B. KIIDS
C. Waiver of CSA
D. Risk disclosure statement
E. Confirmation of Participation

A

C. Waiver of CSA

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71
Q
  1. When limit is breached due to MTM or extraordinary circumstances, trustee is given __ days to correct the breach

A. 1 day
B. 7 days
C. 20 days
D. 30 days
E. 45 days

A

D. 30 days

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72
Q
  1. Which is not a type of UITF?

A. Feeder Funds
B. Fund of Funds
C. Multi Class Funds
D. All mentioned are types of UITF

A

D. All mentioned are types of UITF

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73
Q
  1. Choose which statement does not describe a Risk Disclosure Statement.

A. One of the forms required in opening UITF account
B. This is the statement informing the client of the nature of the UITFs and the risks involved in investing therein. As investments in UITF carry different degrees of risk, it is necessary that before client participate in these UITFs client should have:
*fully understood the nature of the investment in UITFs and the extent of exposure to risks
*read this RDS completely
*Independently determined that the investment in the different UITFs is appropriate to client
C. RDS is optional when opening a UITF account

A

C. RDS is optional when opening a UITF account

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74
Q
  1. Choose the procedures included in amending UITF plan rules.

A. Board Approval
B. BSP Approval
C. Notice Period to UITF investors of at least 30 days
D. All of the above

A

D. All of the above

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75
Q
  1. What are the rules of Trust entity in UITFs

A. Establish
B. Administer
C. maintain one or more UITFs
D. all of the above

A

D. all of the above

76
Q
  1. Choose the mandatory declarations in UITF

A. UITF is not a deposit and not insured by PDIC
B. Returns cannot be guaranteed and historical navpu is for illustration of Navpu movements and fluctuations
C. When redeeming, proceeds may be less than original investment and losses will be solely for the account of the client
D. The trustee is not liable for any loss unless upon willful default, bad faith, or gross negligence.
E. All of the above

A

E. All of the above

77
Q
  1. This is the statement where you can find the list of top investments and prospective investments, outlook and for strategy in the upcoming quarter. The enhanced measures of return, performance and volatility. This statement made available every calendar quarter?

A. Statement of Account
B. Risk Disclosure Statement
C. Key Information and Investment Disclosure Statement (KIIDS)
D. None of the above

A

C. Key Information and Investment Disclosure Statement (KIIDS)

77
Q
  1. UITFs are exempt from the following statutory limits applicable to trust accounts in general.

A. Reserve requirements ratio
B. Single borrower’s limit (SBL) imposed on the bank
C. DOSRI ceilings
D. All of the above

A

D. All of the above

78
Q
  1. What is the document signed by both client and the CUSP that helps to assess the risk profile of a UITF investor?

A. Client Suitability Assessment (CSA)
B. Risk Disclosure Statement (RDS)
C. Waiver of CSA Risk Profile (Waiver)
D. Participating Trust Agreement (PTA)
E. Confirmation of Participation (COP)

A

A. Client Suitability Assessment (CSA)

79
Q
  1. The total assets and accountabilities of each fund shall be accounted for as a single account method referred to as:

A. Accrual Basis Accounting
B. Cash Basis Accounting
C. Pooled Fund Accounting
D. Hybrid Accounting
E. Book Value Accounting

A

C. Pooled Fund Accounting

80
Q
  1. The following disclosures is incorrect:

A. The return of UITFs are guaranteed in the long run
B. UITFs are not covered by PDIC
C. Historical values, when presented, are for reference purposes only and are not in any form a guarantee of income/return
D. Gains/Losses are for the sole account of the client
E. All of the above

A

A. The return of UITFs are guaranteed in the long run

81
Q
  1. This is a type of investment that is not allowed for UITs:

A. Equity
B. Offshore Securities
C. Exchange Traded Funds
D. Promissory Notes
E. Time Deposits

A

D. Promissory Notes

82
Q
  1. Marketing Materials may present relevant HISTORICAL and FUTURE performance of UITF.
A

FALSE – Historical only

82
Q

UITF CERTIFICATION PROGRAM (UCP)
MODULE 3 – SALES PROCESS

  1. All marketing materials related to the sale of UITFs must clearly state and should be in LAYMAN’S terms.
A

TRUE

83
Q
  1. Does the Trustee need to publish the current navpu, Year to Date (YTD) ROI and Year on Year (YOY) ROI at least WEEKLY?
A

TRUE

84
Q
  1. The rule of thumb states that you should determine the MINIMUM risk that your client can safely absorb and recommend the UITF with the highest potential gains.
A

FALSE

85
Q
  1. A UITF NAVPU computation must be PUBLISHED DAILY in a nationally circulated newspaper.
A

FALSE

86
Q
  1. The Client Suitability Assessment (CSA) determines the MINIMUM risk that a client can accept.
A

FALSE

87
Q
  1. There is NO SUCH THING as an inconsistent answer.
A

TRUE

87
Q
  1. Client Suitability Assessment (CSA) should be updated at least EVERY 3 YEARS or whenever there are changes to the client’s investment objectives, financial circumstances or requirements.
A

TRUE

88
Q
  1. In a UITF, the earnings of the investors are based on actual performance of the fund and can never erode your principal investment.
A

FALSE

89
Q

Risk Disclosure must be accomplished by client EVERY TIME s/he participates in a different fund.

A

TRUE

90
Q
  1. CSA can be updated ANYTIME the client wants or whenever there are changes to the client’s investment objectives.
A

TRUE

91
Q
  1. UITFS are CONSIDERED public borrowings.
A

FALSE

91
Q
  1. You should convince a client to invest all of his savings in order for his/her assets to grow.
A

FALSE

92
Q
  1. 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.
A

FALSE

93
Q
  1. Which of the following is correct about risk profiles?

a. A trustee may allow a conservative client to invest in equity UITFs
b. An aggressive client is not allowed to invest in a bond fund
c. A trustee must pay a conservative client if a money market fund incurred any losses

A

a. A trustee may allow a conservative client to invest in equity UITFs

94
Q
  1. In matching the client with the right UITF Product, we have to determine if client has enough funds to invest, its liquidity and idealistically. What best describes this?

A. Size
B. Horizon
C. Objective
D. Risk-return profile
E. Experience

A

A. Size

95
Q
  1. We have to determine if the fund is for capital appreciation or capital preservation. This determines client’s _________?

A. Size
B. Objective
C. Horizon
D. Risk-return profile
E. Experience

A

B. Objective

96
Q
  1. Charmaine De Jesus, a Certified UITF Marketing personnel, must know when does the client need the cash or its investment to determine the suited UITF for the client.

A. Size
B. Horizon
C. Objective
D. Risk-return profile
E. Experience

A

B. Horizon

97
Q
  1. Client wants to ensure the preservation of capital at all times.

A. Conservative
B. Moderate
C. Aggressive

A

A. Conservative

98
Q
  1. Client is willing to accept higher risks involving volatility of returns and even possible loss of investment in return for potential higher long-term results

A. Conservative
B. Moderate
C. Aggressive

A

C. Aggressive

99
Q
  1. Client is willing to expose the funds to a certain level of risks in consideration of higher returns.

A. Conservative
B. Moderate
C. Aggressive

A

B. Moderate

100
Q
  1. The trust officer shall charge fees that are commensurate to the services rendered and/or within the range prescribed by the management based on the following, except:

A. Agreement with client
B. Time spent
C. Extent of business relationship
D. Degree of difficulty and performance in handling the account

A

A. Agreement with client

100
Q
  1. If there are multiple investors in a UITF, the CSA is done by:

A. The principal account holder only
B. All of the account holders
C. Depends on the institution’s procedures
D. None of the above
E. All of the above

A

C. Depends on the institution’s procedures

101
Q
  1. The Client Suitability Assessment and Risk Disclosure Statement should be signed by:

A. CSA - client and UITF Personnel; RDS - client only
B. CSA and RDS should be signed by client only
C. CSA – Client only; RDS – client and UITF Personnel
D. CSA and RDS should be both signed by the client and UITF Personnel

A

D. CSA and RDS should be both signed by the client and UITF Personnel

102
Q
  1. The following must be stated in the Key Information and Investment Disclosure Statement (KIIDS) except:

A. All charges made against the fund
B. Risks inherent to the fund
C. Participation is not a deposit product
D. Name of the trust entity’s employees who manage the fund

A

D. Name of the trust entity’s employees who manage the fund

102
Q
  1. What needs to be stated in the Confirmation of Participation electronic document:

l. Signature of the trustee
Il. NAVPU of the fund on the day of transaction
Ill. Number of units transacted
IV. Currency value

A. l, Il, Ill, IV
B. l, Il, and Ill
C. Il, Ill, and IV
D. l, Il, and IV

A

A. l, Il, Ill, IV

103
Q
  1. All UITF participants shall be given the following all the time:

I. Customer Suitability Assessment Form
II. KYC Forms
III. Waiver
IV. Risk Disclosure Statement
V. Participating Trust Agreement

A. l, Il, Ill, IV, and V
B. l, Il, Ill, IV
C. l, Il, IV, V
D. l, Ill, IV, and V

A

C. l, Il, IV, V

104
Q
  1. This form is used to assess if client is suitable to invest in UITFs and is signed by the client and UITF marketing personnel

A. KIIDS
B. Confirmation of Participation / Redemption
C. Customer Suitability Assessment Form (CSA)
D. Transaction Order Form
E. CSA Waiver

A

C. Customer Suitability Assessment Form (CSA)

105
Q
  1. It is important to emphasize to client the following when offering UITFs. Select one:

A. UITF is a trust product and not a deposit product
B. The fund’s risk profile, investment objectives and policies, including limitations, if any
C. Structure and description of the kind of investments of the fund
D. Base currency of the fund
E. All of the Above

A

E. All of the Above

106
Q
  1. Client factors that determine the suitability of each type of UITF. Select one:

A. Size, Horizon, Opportunity, Risk-return profile, Experience
B. Situation, Horizon, Opportunity, Risk-return profile, Expectation
C. Size, Horizon, Objective, Risk-return profile, Experience
D. None of the above

A

C. Size, Horizon, Objective, Risk-return profile, Experience

107
Q
  1. Type of investor who wants to ensure preservation of capital at all times. Select one:

A. Conservative
B. Moderate
C. Aggressive

A

A. Conservative

108
Q
  1. Client Suitability Assessment (CSA) should be accomplished by the client Select one:

A. After investing in UITFs
B. Prior to investing in UITFs
C. After 1 year of investing in UITFs
D. Anytime

A

B. Prior to investing in UITFs

108
Q
  1. Is used by clients to map out one’s life stage and program investments accordingly to meet the different life stage needs.

A. Goals Based Investing
B. Horizon Matching
C. Cost Average
D. Diversification
E. Life Cycle Based Investing

A

E. Life Cycle Based Investing

109
Q
  1. CSA needs to be signed

A. per client
B. per account
C. per client and per account
D. None of the above

A

C. per client and per account

110
Q
  1. Which of the following documents a conservative-type of investor may sign if he wants to invest in aggressive types of UITF products/ equities?

A. Declaration of Trust
B. KIIDS
C. Waiver of Customer Suitability Assessment Form
D. Risk disclosure statement
E. Confirmation of Participation

A

C. Waiver of Customer Suitability Assessment Form

111
Q
  1. Client with risk classification of aggressive may invest in conservative UITF products

A. TRUE – (Aggressive investors can invest in conservative UITF product w/o the need of a CSA waiver)
B. FALSE

A

A. TRUE – (Aggressive investors can invest in conservative UITF product w/o the need of a CSA waiver)

112
Q
  1. Client with risk classification of moderate may invest in equity funds

A. TRUE
B. FALSE – (In the absence of a waiver, client can only invest according to his/her risk assessment)

A

B. FALSE – (In the absence of a waiver, client can only invest according to his/her risk assessment)

113
Q
  1. This document is necessary to assess if client is suitable to invest in UITFs

A. Customer Suitability Assessment
B. Risk Disclosure Statement
C. Confirmation of Participation
D. None of the Above

A

A. Customer Suitability Assessment

114
Q
  1. 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

A

B. Confirmation of Participation

114
Q
  1. 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 Customer Risk Assessment (CSA), the client is guided to match his risk tolerance to appropriate funds.
E. All of the above.

A

E. All of the above.

115
Q
  1. UITFs are required to be audited by an external auditor in what frequency?

A. Monthly
B. Bi-Monthly
C. Quarterly
D. Semi- Annually
E. Annually

A

E. Annually

116
Q
  1. 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.

A

D. No, because there is a mismatch between the recommended investment horizon for an equity fund, and his requirement for his funds

116
Q
  1. What is the appropriate UITF for an investor?

A. Money Market Fund to allow the investor to get his/her money back in a short period of time
B. Equity Fund to allow investor to have high returns
C. Depends on the investor, investment objective and risk tolerance
D. Depends on the discretion of the trust entity
E. Depends on the preference of the investor regardless of risk profile since results of the Customer Suitability Assessment (CSA) can be waived.

A

C. Depends on the investor, investment objective and risk tolerance

116
Q
  1. 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

A. Risk-Reward Rule

117
Q
  1. 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

A

E. All of the above

117
Q
  1. 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.

A

B. The marketing personnel’s signature on the CSA is optional.

118
Q
  1. 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

A

E. Investments with less than 1-year horizon considering retirement

119
Q
  1. Refers to the matching of the time horizon for the usage the fund against the horizon of an investment

A. Horizon Matching
B. Expense Matching
C. Goals Based Matching
D. Asset Allocation
E. None of the above

A

A. Horizon Matching

120
Q

MODULE 4 – FUNDAMENTALS OF INVESTMENTS

  1. EQUITY is a type of security that signifies ownership in a corporation and represents a claim on the corporation’s assets and earnings.
A

TRUE

121
Q
  1. 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.

A

D. Diversification works well only in a bullish market

122
Q
  1. FIXED INCOME SECURITY is an instrument that allows governments, companies and other types of issuers to borrow money from investors.
A

TRUE

123
Q
  1. Fixed income securities are RISKIER than common shares.
A

FALSE – Less risky

124
Q
  1. BOND HOLDER is the one offering the bonds for sale to investors.
A

FALSE – Bond Issuer

125
Q
  1. COUPON is the periodic interest payment made by the bond issuers during the life of the bond.
A

TRUE

126
Q
  1. PRINCIPAL is the amount to be repaid to the investor at maturity.
A

TRUE

127
Q
  1. When interest rates rise, bond prices FALL.
A

TRUE

128
Q
  1. Earnings in BONDS are through coupons and through trading of bonds.
A

TRUE

129
Q
  1. YIELD TO MATURITY (YTM) is a compounded rate of return of a security until maturity.
A

TRUE

129
Q
  1. Equity has NO DURATION.
A

TRUE

130
Q
  1. MODIFIED DURATION is the measure of a bond’s price sensitivity to interest rate changes. It is also the weighted average of a bond’s cash flow.
A

FALSE -Duration

131
Q
  1. DURATION MATCHING is a systematic combination of investment instruments to produce an optimal combination of liquidity and returns.
A

TRUE

132
Q
  1. Coupon rates of Issues sold to the market at different times by the same issuing company SHOULD NOT be affected by current interest rates in the market.
A

FALSE -Should

133
Q
  1. Stocks and Bonds HAVE an inverse relationship.
A

TRUE

134
Q
  1. EQUITY is an investment that gives periodic fixed interest payment.
A

FALSE

135
Q
  1. Interest rate INCREASES as risk exposure increase.
A

TRUE

136
Q
  1. The higher the duration of the fund, the LESS RISKY but with the higher return.
A

FALSE

137
Q
  1. Which of the investments below are allowed in UITFs?

a. Time Deposits
b. Corporate Bonds
c. Government Securities
d. Equities
e. All of the Above

A

e. All of the Above

137
Q
  1. COUPON is the periodic interest payment made to the bond holder during the life of the bond.
A

TRUE

138
Q
  1. Which of the investments below has the lowest risk exposure?

a. Equities
b. Bonds
c. Real Estate
d. Time Deposits
e. Jewelries

A

d. Time Deposits

139
Q
  1. Which of the following is an Equity Investment?

a. Deposits
b. Common Shares
c. Treasury Bonds
d. Corporate Bonds
e. Treasury Bills

A

b. Common Shares

140
Q
  1. Choose which asset gives you the highest POTENTIAL return.

a. Bonds
b. Equities
c. Deposits
d. Options have the same returns

A

b. Equities

141
Q
  1. Which of the following is incorrect?

a. Initial public offering (IPO) trades in the secondary market.
b. Initial public offering (IPO) trades in the primary market.
c. Government bonds are offered by the Bureau of Treasury

A

a. Initial public offering (IPO) trades in the secondary market.

141
Q
  1. What do you call the date when a debt security is due for a payment?

a. Transaction Date
b. Value Date
c. Maturity Date
d. Coupon Date
e. Collecting Date

A

c. Maturity Date

142
Q
  1. This is the possibility for an investor to experience losses due to changes in market prices of securities (e.g., bonds and equities).

a. Interest rate Risk
b. Foreign Exchange Risk
c. Market Risk
d. Country Risk
e. Liquidity Risk

A

c. Market Risk

142
Q
  1. Which of the following is true of money market instruments?

a. Their yields are highly correlated over time
b. They typically sell for par value when they are initially issued (especially T-bills and commercial paper).
c. Treasury bills have the highest yield.
d. They all make periodic coupon (interest) payments.
e. A and B

A

a. Their yields are highly correlated over time

143
Q
  1. This is the possibility for an investor to experience losses due to changes in interest rates.

a. Interest rate Risk
b. Foreign Exchange Risk
c. Market Risk
d. Country Risk
e. Liquidity Risk

A

a. Interest rate Risk

144
Q
  1. This is the possibility for an Investor to experience losses due to the inability to sell or convert assets into cash immediately or in instances where conversion to cash is possible but at a loss.

a. Interest rate Risk
b. Reinvestment Risks
c. Market Risk
d. Country Risk
e. Liquidity Risk

A

e. Liquidity Risk

145
Q
  1. This is the risk associated with the possibility of having lower returns or earnings when maturing funds or the interest earnings of funds are reinvested.

a. Interest rate Risk
b. Reinvestment Risks
c. Market Risk
d. Country Risk
e. Exchange Risk

A

b. Reinvestment Risks

146
Q
  1. This is the risk associated with the possibility of having lower returns or earnings when maturing funds or the interest earnings of funds are reinvested.

a. Interest rate Risk
b. Reinvestment Risks
c. Market Risk
d. Country Risk
e. Exchange Risk

A

b. Reinvestment Risks

146
Q
  1. This is the possibility for an investor to experience losses due to a borrower’s failure to pay principal and/or interest in a timely manner on instruments such as bonds, loans, or other forms of security which the borrower issued.

a. Credit/Default Risk
b. Reinvestment Risks
c. Market Risk
d. Country Risk
e. Exchange Risk

A

a. Credit/Default Risk

147
Q
  1. This is the possibility for an investor to experience losses arising from investments in securities issued by/in foreign countries due to the political, economic and social structures of such countries.

a. Credit/Default Risk
b. Reinvestment Risks
c. Market Risk
d. Country Risk
e. Exchange Risk

A

d. Country Risk

148
Q
  1. This is the risk that the broker/dealer will commit error, fraud, or financial failure.
    f. Credit/Default Risk

a. Sovereign Risk
b. Counter-party Risk
c. Country Risk
d. Exchange Risk

A

b. Counter-party Risk

149
Q
  1. This is the risk that the actions of a sovereign government or independent events (war, riots, etc.) may affect the ability of issuers in that country to pay off their debts.

a. Credit/Default Risk
b. Sovereign Risk
c. Counter-party Risk
d. Country Risk
e. Exchange Risk

A

b. Sovereign Risk

150
Q
  1. What is the formula for the Sharpe Ratio?

a. S = (Return of Portfolio – Risk free rate/Std Dev of Portfolio’s Excess Return
b. S = (Risk free rate – Return of Portfolio)/Std Dev of Portfolio’s Excess Return
c. S= (Std Dev of Portfolio’s Excess Return - Return of Portfolio) - Return of Portfolio
d. S= (Std Dev of Portfolio’s Excess Return - Return of Portfolio) - Risk free rate

A

a. S = (Return of Portfolio – Risk free rate/Std Dev of Portfolio’s Excess Return

151
Q
  1. Modified duration ___________ when the coupon ______________.
    A. Increases, Decreases
    B. Decreases, Increases
    C. Decreases, Decreases
A

B. Decreases, Increases

151
Q
  1. Modified duration increases when the maturity ______________.

A. Increases
B. Decreases
C. Has no movement

A

A. Increases

152
Q
  1. Modified duration _____________ when the yield increases.

A. Increases
B. Decreases
C. Has no movement

A

B. Decreases

153
Q
  1. The bigger the duration number the____________ the interest rate risk or reward for bond prices.

A. Greater
B. Lesser
C. Stable

A

A. Greater

154
Q
  1. It tells an investor how much excess return is generated from the amount of excess risk taken relative to the benchmark.

A. Information Ratio
B. Sharpe Ratio
C. Tracking Error
D. Benchmark Return

A

A. Information Ratio

155
Q
  1. __________ is the purchase of future cash flows.

A. Saving
B. Investing
C. Interest
D. Dividends
E. Future Value

A

B. Investing

156
Q
  1. Interest is paid to compensate for:

A. Time
B. Inflation
C. Risk of Uncertainty
D. All of the Above

A

D. All of the Above

157
Q
  1. Group of investments having the same risk / return characteristics:

A. Asset Class
B. Equity Sector
C. Pooled Funds
D. Direct Investments

A

A. Asset Class

158
Q
  1. Inflation is not a component of an investor’s return.

A. TRUE
B. FALSE
C. MAYBE

A

B. FALSE

159
Q
  1. The risk reward rule states that low risk = low return and high risk = high return.

A. TRUE
B. FALSE
C. MAYBE

A

A. TRUE

160
Q
  1. Rank the Asset Classes from Conservative to Aggressive.

A. Money Market, Balanced, Bond, Equities
B. Money Market, Bond, Equities, Feeder Fund
C. Money Market, Bond, Balanced, Equities
D. Money Market, Bond, Equities, Balanced

A

C. Money Market, Bond, Balanced, Equities

161
Q
  1. Bonds purchased directly from the issuer are bought from:

A. The Bond Market
B. The Primary Market
C. The Secondary Market
D. The Tertiary Market
E. The Market Place

A

B. The Primary Market

162
Q
  1. Securities that generate higher and steady income except:

A. Treasury Bills
B. Government bonds
C. Corporate Bonds
D. None of the Above
E. All of the Above

A

A. Treasury Bills

163
Q
  1. Which of the following is an example of zero coupon bond?

A. Treasury Bills
B. Fixed Rate Treasury Notes
C. Corporate Bonds
D. None of the Above
E. All of the Above

A

A. Treasury Bills

164
Q
  1. This refers to the risk that the bond issuer will delay or not be able to pay the interest and/or principal.

A. Interest Rate Risk
B. Market Risk
C. Liquidity Risk
D. Credit Risk

A

D. Credit Risk

165
Q
  1. Measures the sensitivity of bond prices relative to interest rates.

A. Duration
B. Volatility
C. Tracking Error
D. None of the Above
E. All of the Above

A

A. Duration

166
Q
  1. The following are the characteristics of a bond except:

A. A debt instrument
B. May pay regular income payments
C. Has a stated maturity date
D. A type of fixed income investment E. None of the Above

A

E. None of the Above

167
Q
  1. Represents ownership in a company

A. Bonds
B. Listed Equities
C. Preferred shares
D. A&B E. B&C

A

B&C

168
Q
  1. Stocks earn from:

A. Capital appreciation
B. Coupon payments
C. Dividend payments
D. A&B E. A&C

A

A&C

169
Q
  1. All of these are characteristics of stocks except:

A. Gains primarily from stock appreciation although some stock may give regular dividends
B. High long term average returns but very high year to year volatility
C. Very unpredictable cash flows
D. Primarily for capital growth
E. None of the above

A

E. None of the above

170
Q
  1. The formula for information ratio is expected portfolio return less the risk free rate over the standard deviation:

A. True
B. False

A

B. False

Sa sharpe ratio to

170
Q
  1. All of the items below are true of derivatives except:

A. Derive their value from a value of another security
B. May be used by a UITF for Income generation
C. Primarily used by UITF to minimize NAVPU volatility
D. None of the above
E. All of the above

A

B. May be used by a UITF for Income generation

170
Q
  1. __________________ is the excess return per unit of risk:

A. Sharpe Ratio
B. Information Ratio
C. Volatility
D. Standard deviation
E. Tracking error

A

A. Sharpe Ratio

171
Q
  1. Underlying investments for UITFs can be bought from primary or secondary market

A. True
B. False

A

A. True

171
Q
  1. Philippine Stock Exchange (PSE) and the Philippine Stock Exchange Index (PSEI) are the same:

A. False
B. True

A

A. False

171
Q
  1. This refers to the risk that an individual or entity will experience losses due to factors that affect the overall performance of investments in financial markets

A. Market Risk
B. Reinvestment Risk
C. Currency Risk
D. Credit Risk

A

A. Market Risk

172
Q
  1. The additional amount paid for a bond that is traded at a price that is higher than its par value

A. Premium
B. Discount
C. Yield to Maturity (YTM)
D. Maturity Value
E. None of the above

A

A. Premium

173
Q
  1. The price of a bond is inversely correlated to the interest rate.

A. True
B. False
C. Maybe
D. None of the above

A

A. True

174
Q
  1. What kind of risk occurs when prices fluctuate due to the market?

A. Market Risk
B. Interest Rate Risk
C. Credit Risk
D. None of the above

A

A. Market Risk

175
Q
  1. What are the major types of asset classes?

A. Money market
B. Fixed Income
C. Equities
D. Alternative investments
E. All of the above

A

E. All of the above

176
Q
  1. Rank the following from highest to lowest according to potential returns:

I- Equities
II- Bonds
III- Balanced
IV- Money market

A. IV,III,II,I
B. I,III,II,IV
C. IV,II,III,I
D. IV,III,I,II

A

B. I,III,II,IV

176
Q
  1. Which investment is subject to duration risk?

A. Equities
B. Time Deposit
C. Foreign currency
D. Fixed income securities
E. All of the above

A

D. Fixed income securities

177
Q
  1. What is an example of zero coupon investment?

A. T-bills
B. RTB
C. FXTN
D. Equities

A

A. T-bills

178
Q
  1. What is type of fund tries to replicate the movement and return of a benchmark, also known as index fund?

A. Passive fund
B. Active fund
C. Money market fund

A

A. Passive fund

179
Q
  1. Which investment will suffer the biggest loss for falling interest rates?

A. 1Y Treasury Bill
B. 3Y RTB
C. 7Y FXTN
D. 10Y Treasury Bond

A

A. 1Y Treasury Bill

180
Q
  1. What is the importance of a benchmark?

A. It measures the rate of change in bond prices
B. It measures the performance of an investment relative to a broad market index
C. It measures the risk present in an investment
D. None of the above

A

B. It measures the performance of an investment relative to a broad market index

181
Q
  1. What risk refers to the inability to sell an investment or can be sold but at a discount?

A. Credit risk
B. Liquidity risk
C. Market risk
D. Reinvestment risk

A

B. Liquidity risk

182
Q
  1. Among fixed income securities, this instrument is the most liquid in the Philippine domestic market.

A. Promissory note
B. Government Securities
C. Corporate Bonds
D. All
E. None

A

B. Government Securities

182
Q
  1. What is the basic principle of diversification?

A. Investing in a single product
B. Investing in a combination of products to achieve higher risk
C. Investing in a combination of products to achieve higher returns

A

C. Investing in a combination of products to achieve higher returns

183
Q
  1. What is the maximum modified duration for an intermediary bond fund?

A. 1 year
B. 3 years
C. 5 years
D. 10 years

A

B. 3 years

184
Q
  1. Which asset class is likely to deliver “High-average returns in the long run but very high year to year volatility?

A. Money Market
B. Fixed Income
C. Stocks
D. Real Property Investments
E. All of the above

A

C. Stocks

185
Q

UITF CERTIFICATION PROGRAM (UCP)
MODULE 5 – CODE OF CONDUCT & ETHICS

  1. TRUST OFFICER means any officer or non-officer of the trust department who exercises discretion and judgment. This shall likewise apply to any Trust Officer acting as Fund Manager who is engaged in all forms of administration of property, or money and its equivalent, for the benefit of the owner or a third person.
A

TRUE

185
Q
  1. The purpose of diversification is to reduce the standard deviation (risk) of an investment portfolio by investing in uncorrelated securities. Which of the following statement/s describes diversification in simple terms.

A. A portfolio with assets that do not behave in similar manner to the same economic event
B. Equities portfolio investing across different sectors and market capitalization (small, mid, and large)
C. A bond portfolio can have varying maturities, credit qualities and durations.
D. All of the above
E. None of the above

A

D. All of the above

186
Q
  1. REASONABLE refer to what is fair, proper, just, moderate and suitable under the circumstances.
A

TRUE

187
Q
  1. A trust relationship is the SAME as a banking relationship.
A

FALSE

188
Q
  1. The trust unit of a bank reports directly to the BANK PRESIDENT.
A

FALSE - the trust unit reports to the Board of Directors

189
Q
  1. Funds under trust management are CO-MINGLED with that of the bank proper.

FALSE – funds under trust management are separate from the bank proper

A

FALSE – funds under trust management are separate from the bank proper

190
Q
  1. Due to the CHINESE WALL, the trust unit cannot share client details with other units of the bank.
A

TRUE

191
Q
  1. Fees MUST be commensurate to services rendered & based on: time spent, extent of business relationship, personnel required, degree of difficulty and performance, responsibilities / risks, nature of the fund / assets.
A

TRUE

192
Q
  1. In a fully discretionary fund management mandate, EARNING INCOME for the fund is the priority.
A

FALSE – safety of principal is the priority in a discretionary mandate

193
Q
  1. Negative and derogatory remarks CANNOT be avoided in dealing with/describing competitor institutions.
A

FALSE - Making negative/false remarks on other institutions should be avoided

194
Q
  1. Marketing materials SHOULD NOT have misleading statements / disclosures.
A

TRUE

195
Q
  1. A trust officer is REQUIRED to provide fund performance and investment activities of the client’s portfolio.
A

TRUE

196
Q
  1. The TOAP Code of Conduct CONFLICTS with the manual of regulations which states that the primary principal of trust is fidelity because it also considers the welfare of society
A
  • FALSE
197
Q
  1. It is OKAY to proceed with conflicts of interests, as long as the client accepts these.
A

FALSE - Conflicts of interest should be avoided

198
Q
  1. The TOAP Code of Conduct may be amended by a majority vote of the BOARD OF DIRECTORS:
A

TRUE

199
Q
  1. CHINESE WALL is used to describe situations where there is a need to maintain confidentiality in order to prevent conflicts of interest. Financial institutions have used Chinese wall policies as a means to self-regulate their business dealings by creating ethical boundaries between departments, e.g. block the exchange of information between departments if it might result in business activities that are ethically or legally questionable.
A

TRUE

200
Q
  1. The TOAP Code of Conduct MAY be amended by a majority vote of the board of directors:
A

TRUE

201
Q
  1. Trust is

A. A fiduciary relationship
B. Legal ownership is transferred to a Trustee
C. Created at a direction of a person or persons
D. None of the above
E. All of the above

A

E. All of the above

202
Q
  1. The main Influences of the TOAP code of conduct include:
    E. General Banking Law of 2000

A. Prudent Man’s Rule
B. Rules and Regulations on Trust, other Fiduciary Business and Investment Activities of Financial Institutions.
C. None of the above
D. All of the above

A

D. All of the above

203
Q
  1. ____________ requires that fiduciaries manage the assets entrusted to them with the same care and discretion as well as diligence as a person of prudence, good character, and intelligence would handle his/her own affairs.

A. Self-Dealing
B. Arm’s length transaction
C. Prudent Man’s rule
D. Reasonable

A

C. Prudent Man’s rule

204
Q
  1. Trust is

A. A fiduciary relationship
B. Legal ownership is transferred to a Trustee
C. Created at a direction of a person or persons
D. None of the above
E. All of the above

A

E. All of the above

205
Q
  1. ____________ requires that fiduciaries manage the assets entrusted to them with the same care and discretion as well as diligence as a person *of prudence, good character, and intelligence would handle his/her own affairs
    A. Self-Dealing
    B. Arm’s length transaction
    C. Prudent Man’s rule
    D. Reasonable
A

C. Prudent Man’s rule

206
Q
  1. To prevent conflict of interest, a Trustee should impose this virtual barrier that prohibits disclosure of private and sensitive information within the organization.

A. Best Execution
B. Prudent Administration
C. Chinese wall policy
D. Arm’s length transaction

A

C. Chinese wall policy

207
Q
  1. A Trustee should always act with the best interest of the client in mind showing utmost care and diligence on the asset being managed

A. Best Execution
B. Prudent Administration
C. Chinese wall policy
D. Arm’s length transaction

A

B. Prudent Administration

208
Q
  1. A Trustee should give three best quotations in every investment outlet inquired and should present the risk associated in each investment guaranteeing no fixed return, only _______ is being observed.

A. Best Execution
B. Prudent Administration
C. Chinese wall policy
D. Arm’s length transaction

A

A. Best Execution

208
Q
  1. Trust Officer shall keep in complete _________ of the records of the client as well as any information required in the course of handling the latter’s account except when required or requested by competent authorities.

A. Best Execution
B. Outmost Care
C. Confidentiality

A

C. Confidentiality

209
Q
  1. Fidelity is the cardinal principle common all fiduciary relationships. Which of the following policies are predicated upon fidelity is/are included?

I. Prudent administration
II. Undivided loyalty and utmost care
III. Non-delegation of responsibilities
IV. Preserving and protecting property
V. Keeping and rendering accounts

A. I, III, V, ONLY
B. II and IV ONLY
C. ALL ARE NOT INCLUDED
D. ALL ARE INCLUDED

A

D. ALL ARE INCLUDED

210
Q
  1. Undivided loyalty means:

A. Interest of the Bank shall be placed above the Client
B. Interest of the Client shall be placed above the Bank
C. Interest of both the Client and the Bank shall be placed above always
D. None of the above

A

B. Interest of the Client shall be placed above the Bank

211
Q
  1. What does PRUDENT MAN’S RULE mean?

C. Requires to manage the assets entrusted to them with the same care and discretion, good character, and intelligence would handle his/her own affairs
A. Shall refer to what is fair, proper, just, moderate and suitable under the circumstance
B. Relates to transactions wherein a trustee may be acting for his/her personal benefit and also as trustee which may give rise to conflict of interests.
C. All of the above
D. None of the above

A

C. Requires to manage the assets entrusted to them with the same care and discretion, good character, and intelligence would handle his/her own affairs

211
Q
  1. This rule requires that fiduciaries manage assets entrusted to them with the same care and discretion as well as diligence as a person of prudence, good character, and intelligence would handle his/her own affairs.

A. Fiduciary rule
B. Prudent Man’s rule
C. Extraordinary Diligence rule
D. Highest Integrity rule

A

B. Prudent Man’s rule

212
Q
  1. When given full discretion, a trustee must do all of the following, except:

A. Safety of principal is primary, income only secondary
B. Clear understanding of client guidelines, objectives, restrictions
C. Require client’s approval for high risk transactions
D. Comply with all terms and conditions
E. Conduct business at arm’s length basis

A

C. Require client’s approval for high risk transactions

213
Q
  1. What is the term for a transaction between two independent parties, in which both parties are acting in their own self-interest, and both sides are independent, possess equal bargaining power, and are not under pressure or duress?

A. Integrity
B. Teamwork
C. Arm’s length transaction

A

C. Arm’s length transaction

214
Q
  1. Can a trust officer accept gifts from clients?

A. Yes, as long as it is not substantial in value.
B. It depends on the gifting policy of the institution.

A

B. It depends on the gifting policy of the institution.

215
Q
  1. What is the term for investment trades that are executed in a timely manner and on the best available terms that are favorable to the client?

A. Best execution
B. Prompt trade
C. Best rate

A

A. Best execution

216
Q
  1. What is the term for keeping information about past, current and prospective clients confidential, unless disclosure is authorized in writing by the client or required by law?

A. Confidentiality and Materiality of Information
B. Chinese Wall
C. Data Retention Policy

A

A. Confidentiality and Materiality of Information

SEC Phase 1 (3 decks)

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