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Ceili Sample questions Set 2

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Ceili Sample questions Set 2
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  CEILLI- Set 2 2010 AIA Premier Academy Page 1 CEILI - SET 2 Anticipated Questions with Answers  1 The term ‘Investment - linked’ in Malaysia shall be similar to the term __________________ in the United Kingdom and to the term _______________________ in the United States.  A Unit-Linked and Unit Trust  B Unit-Linked and Variable Life  C Unit Trust and Variable Investment  D Investment Trust and Variable-Linked  2 Risk can be classified into two particular categories in relation to investment. They include  _________________.  I.   the risk of not losing some or all of a person’s initial investment  II.   the risk of rate of return on the investment not matching up to the individual’s expectation  III.   the risk of rate of return on the investment matching up to the individual’s expectation  IV.   the risk of losing some or all of a person’s initial investment  A I & II  B I & III  C II & IV  D III & IV  3 Diversification in investment involves __________________________.  A reducing the risks of investment by putting the fund under management into several categories of investment  B reducing the risks of investment by putting all one’s eggs in one basket  C putting all the funds under management into one category of investment  D spreading the risks of investment by not putting the fund into several categories of investment  4 People generally invest their money to provide:  I.   an improvement in their financial position  II.   a less comfortable standard of living  III.   income in retirement  IV.   funds for paying necessary expenses and taxes when the person dies  A I, II & III  B I, III & IV  C I, II & IV  D II, III & IV    CEILLI- Set 2 2010 AIA Premier Academy Page 2 5 Three elements affect the accessibility of the funds. They include __________________.  I.   the age and attitude of the investor towards risk  II.   the initial cost in setting up or buying into the investment  III.   the time horizon of needs of the fund  IV.   the cost or penalty of realising the investment before its maturity period  A I, II & III  B I, II & IV  C I, III & IV  D II, III & IV  6 What is/are the characteristic(s) of warrants?  I.   warrants give the holder the option to subscribe for ordinary shares at a predetermined conversion ratio  II.   warrants give the holder the option to subscribe for ordinary shares at a predetermined exercise price  III.   warrants are usually detached from the loan stock and traded separately in securities market  IV.   warrants are issued on their own  A I  B I, II & III  C I, III & IV  D I, II, III & IV  7 The following characteristics of shares at a predetermined conversion ratio warrants are true, EXCEPT  A warrants gives the holder the option to subscribe for ordinary shares at a predetermined conversion ratio  B warrants gives the holder the option to subscribe for ordinary shares at a predetermined exercise price  C the life span of a warrant can be varied at the discretion of the holder   D the option attached to the warrants can be exercise by subscribing for ordinary shares in cash, by exchanging the loan stock or by a combination of both  8 The disadvantage of warrants or TSR is _____________________.  A investor have to put in a large initial outlay to establish an exposure to the shares  B on expiry, warrants which are not exercised lose their value completely  C like ordinary shares, there is no chance for price recovery  D by selling the warrants given to an investor in the first instance; the investor cannot benefit from the capital gain    CEILLI- Set 2 2010 AIA Premier Academy Page 3 9 Rank the following investment vehicle in terms of their level of risks, from the least risky to the most risky.  I.   cash and deposit  II.   derivatives  III.   a well diversified investment portfolio of a company  IV.   stock option  A I, III, IV & II  B I, IV, III & II  C I, II, III & IV  D I, IV, II & III  10 Which of the following is NOT a type of fixed income securities?  A money market instruments  B government bonds  C preference shares  D none of the above  11 Which of the following statements about corporate bonds are FALSE? I.   medium or long term debt obligation of a company secured by specific assets  II.   the higher the security pledge and the credit worthiness of the company  III.   the higher the rate of return will be unsecured bonds carry lower rates of interest than secured bonds  A I, II  B I, III  C II, III  D I, II & III  12 What are the advantages of investing in preference shares?  I.   it gives shareholder the right to a fixed dividend  II.   has priority over company assets during dissolution  III.   they enjoy benefit of capital appreciation  A I, II  B I, III  C II, III  D I, II & III  13 Which one of the following investment vehicles are for capital appreciation purpose?  A corporate bonds and preference shares  B preference shares and ordinary shares  C corporate bonds and ordinary shares  D ordinary shares and option    CEILLI- Set 2 2010 AIA Premier Academy Page 4 14 What are the disadvantages in investing in ordinary shares?  I.   dividends are paid not more than the fixed rate  II.   investor are exposed to market and specific risks  III.   shares can become worthless if company becomes insolvent  A I, II  B I, III  C II, III  D I, II & III  15 The three basic types of corporate stocks include ___________________. A futures, investment trusts and options  B fixed income stocks, treasury bills and time deposits  C debenture stocks, loan stocks and convertible stocks  D preference stocks, unit trusts and derivatives  16 Investing in bonds offers the following advantages EXCEPT A it is a place of temporary refuge when the investor foresee that the market outlook is uncertain  B it offers protection to the principal and guaranteed steady stream of income  C it enables the investor an opportunity for capital appreciation  D it allows the investor a chance for capital preservation 17 Spot markets, a type of cash markets are ___________________. A markets which quote prices referred to the current market price of an item available for immediate delivery  B markets for deferred delivery of commodities  C markets that are traceable only from the late 20 century  D known to establish forward contracts featuring the contract price and future delivery dates  18 Which of the following fixed income securities yield the highest return?  A government bonds  B corporate bonds  C convertible bonds  D unsecured non-convertible bonds  
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