CMFAS M5 Exam Free Trial Set Two
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Emma Finch
Customer Success Manager | CMFASexam
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Question 1 of 20
1. Question
What are the features of Independence principle of FAA?
I. The concept of independence is considered by many to be an important condition for customer interests.
II. The principles and guidelines on the determination of “independent” have been laid down in Regulation 21 of the FAR.
III. The principles and guidelines on the determination of “independent” have been laid down in “Guidelines On The Use Of The Term “Independent” By Financial Advisers.
IV. It has been considered more important that representatives of financial advisers put customers’ interests at the forefront by giving good objective advice.
Correct
The concept of independence has been considered by many to be an important condition for customer interests. However, experience from other established markets has shown that this has not been borne out. Therefore, it has been considered more important that representatives of financial advisers put customers’ interests at the forefront by giving good objective advice and be guided by the concept of reasonable basis in providing advice. Consequently, the principles and guidelines on the determination of “independent” have been laid down in Regulation 21 of the FAR and the “Guidelines On The Use Of The Term “Independent” By Financial Advisers”.
Incorrect
The concept of independence has been considered by many to be an important condition for customer interests. However, experience from other established markets has shown that this has not been borne out. Therefore, it has been considered more important that representatives of financial advisers put customers’ interests at the forefront by giving good objective advice and be guided by the concept of reasonable basis in providing advice. Consequently, the principles and guidelines on the determination of “independent” have been laid down in Regulation 21 of the FAR and the “Guidelines On The Use Of The Term “Independent” By Financial Advisers”.
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Question 2 of 20
2. Question
Where are the minimum academic qualification and examination requirements are prescribed for represenntatives?
Correct
Individuals must fulfil the following requirements before they can be an appointed representative:
(a) be at least 21 years old;
(b) satisfy the minimum academic qualification and examination requirements as prescribed in the Notice on Minimum Entry and Examination Requirements for Representatives of Licensed Financial Advisers and Exempt Financial Advisers.Incorrect
Individuals must fulfil the following requirements before they can be an appointed representative:
(a) be at least 21 years old;
(b) satisfy the minimum academic qualification and examination requirements as prescribed in the Notice on Minimum Entry and Examination Requirements for Representatives of Licensed Financial Advisers and Exempt Financial Advisers. -
Question 3 of 20
3. Question
In Enforcement function, who all does SGX investigates for misconduct?
I. Members
II. Directors
III. Employees
IV. Trading representatives
Correct
In its enforcement function, SGX investigates alleged misconduct by members, their directors, employees and trading representatives. Where the investigation reveals a possible breach of the SGX rules or bye-laws,disciplinary action may be taken against the offender. SGX initiates disciplinary actions before a disciplinary committee, which may reprimand, fine, suspend and/or expel a member or trading representative.
Incorrect
In its enforcement function, SGX investigates alleged misconduct by members, their directors, employees and trading representatives. Where the investigation reveals a possible breach of the SGX rules or bye-laws,disciplinary action may be taken against the offender. SGX initiates disciplinary actions before a disciplinary committee, which may reprimand, fine, suspend and/or expel a member or trading representative.
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Question 4 of 20
4. Question
What can be the result of the disciplinary actions initiated by SGX?
I. Reprimand
II. Fine
III. Suspension
IV. Expulsion
Correct
Where the investigation reveals a possible breach of the SGX rules or bye-laws,disciplinary action may be taken against the offender. SGX initiates disciplinary actions before a disciplinary committee, which may reprimand,fine, suspend and/or expel a member or trading representative. Where the matter also involves a violation of the law, the matter will be referred to the relevant authorities for further action.
Incorrect
Where the investigation reveals a possible breach of the SGX rules or bye-laws,disciplinary action may be taken against the offender. SGX initiates disciplinary actions before a disciplinary committee, which may reprimand,fine, suspend and/or expel a member or trading representative. Where the matter also involves a violation of the law, the matter will be referred to the relevant authorities for further action.
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Question 5 of 20
5. Question
What is not true regarding Representative To Act For Only One Principal?
Correct
The principle of accountability is essential to ensure that there is a higherlevel entity or person who would be accountable for the professional and ethical conduct of a representative of the financial adviser. This principle is captured in the “Representative To Act For Only One Principal” rule under the FAA. Each financial adviser representative can represent only one principal. Hence, if a person is a tied agent, he cannot be a licensed financial adviser representative at the same time.
Incorrect
The principle of accountability is essential to ensure that there is a higherlevel entity or person who would be accountable for the professional and ethical conduct of a representative of the financial adviser. This principle is captured in the “Representative To Act For Only One Principal” rule under the FAA. Each financial adviser representative can represent only one principal. Hence, if a person is a tied agent, he cannot be a licensed financial adviser representative at the same time.
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Question 6 of 20
6. Question
Which is not a benefit of conducting needs analysis?
Correct
The benefits of conducting needs analysis are as follows:
(a) It helps to discover the client’s needs and to advise the most suitable product to buy and how much to buy;
(b) It enables more time to spend on the client’s situation than on the product.
(c) If you sell the client additional products based on his needs and objectives, he will be able to see how the products fit into his overall plan.
(d) It also enables you to establish a long-term relationship with your client.Incorrect
The benefits of conducting needs analysis are as follows:
(a) It helps to discover the client’s needs and to advise the most suitable product to buy and how much to buy;
(b) It enables more time to spend on the client’s situation than on the product.
(c) If you sell the client additional products based on his needs and objectives, he will be able to see how the products fit into his overall plan.
(d) It also enables you to establish a long-term relationship with your client. -
Question 7 of 20
7. Question
How can patients apply for Medifund assistance?
I. Through the Medical Social Workers.
II. Medifund-approved institutions.
III. The Community Development Councils.
IV. Hospital Medifund Committee
Correct
Patients who fulfil the eligibility criteria can apply for Medifund assistance through the Medical Social Workers (MSWs) at the
Medifund-approved institutions. They can also apply through any of the Community Development Councils.Incorrect
Patients who fulfil the eligibility criteria can apply for Medifund assistance through the Medical Social Workers (MSWs) at the
Medifund-approved institutions. They can also apply through any of the Community Development Councils. -
Question 8 of 20
8. Question
What are the features of GUIDELINE NO: FAA-G10?
I. The aim of these Guidelines is to provide guidance on the controls, processes and procedures that the MAS expects licensed financial advisers to implement.
II. These Guidelines do not apply to persons who are exempted from the requirements in the Notice On Recommendations On Investment Products.
III. Switching includes a situation where a client disposes of, or reduces his interest in, all or part of an investment product.
IV. Monitor switching from one designated investment product to another designated investment product in a manner that would not be detrimental to the clients.
Correct
Guideline No: FAA-G10 is issued pursuant to Section 64 of the FAA. The aim of these Guidelines is to provide guidance on the controls, processes and procedures that the MAS expects licensed financial advisers and exempt financial advisers to implement, in order to monitor switching and ensure that their representatives do not advise clients to switch from one designated investment product referred to as “original product”) to another designated investment product (referred to as “replacement product”) in a manner that would be detrimental to the clients.
Incorrect
Guideline No: FAA-G10 is issued pursuant to Section 64 of the FAA. The aim of these Guidelines is to provide guidance on the controls, processes and procedures that the MAS expects licensed financial advisers and exempt financial advisers to implement, in order to monitor switching and ensure that their representatives do not advise clients to switch from one designated investment product referred to as “original product”) to another designated investment product (referred to as “replacement product”) in a manner that would be detrimental to the clients.
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Question 9 of 20
9. Question
How much penalty will be imposed in case of premature withdrawal of SRS savings?
Correct
A 5% penalty for premature withdrawal will also be imposed, unless it is made under exceptional circumstances, such as the following:
(i) Death;
(ii) Medical grounds;
(iii) Bankruptcy; or
(iv) The full withdrawal of the SRS balance by a foreigner who has maintained his SRS account for at least ten years from the date of his first contribution.Incorrect
A 5% penalty for premature withdrawal will also be imposed, unless it is made under exceptional circumstances, such as the following:
(i) Death;
(ii) Medical grounds;
(iii) Bankruptcy; or
(iv) The full withdrawal of the SRS balance by a foreigner who has maintained his SRS account for at least ten years from the date of his first contribution. -
Question 10 of 20
10. Question
What conditions apply SRS Investments in case of life insurance products?
I. Only single premium products are allowed.
II. Life cover will be capped at three times the single premium.
III. Plans can allow for a contribution continuation feature / benefit upon disability.
IV. Other types of life insurance e.g. critical illness, health and longterm care are excluded.
Correct
As for life insurance products, the following conditions shall apply:
(i) Only single premium products are allowed (including recurrent single premium products, encompassing both annuity and nonannuity plans);
(ii) Life cover (including total and permanent disability benefits) will be capped at three times the single premium;
(iii) Plans can allow for a contribution continuation feature / benefit upon disability;
(iv) Other types of life insurance e.g. critical illness, health and longterm care are excluded;Incorrect
As for life insurance products, the following conditions shall apply:
(i) Only single premium products are allowed (including recurrent single premium products, encompassing both annuity and nonannuity plans);
(ii) Life cover (including total and permanent disability benefits) will be capped at three times the single premium;
(iii) Plans can allow for a contribution continuation feature / benefit upon disability;
(iv) Other types of life insurance e.g. critical illness, health and longterm care are excluded; -
Question 11 of 20
11. Question
What information should be included in Valuation Error Report?
I. State the name of the ILP sub-fund and class(es) of units affected by valuation error.
II. Describe the nature of the error and state the magnitude of error as a percentage of the ILP sub-fund‘s Net Asset Value (NAV).
III. Attach a calculation of the valuation error.
IV. State when and how the valuation error was discovered.
Correct
The valuation error report should be made using the insurer‘s company letterhead and sent via electronic means. The report should contain the following information:
1. State the name of the ILP sub-fund and class(es) of units affected by valuation error.
2. Describe the nature of the error (e.g. overvalued or undervalued) and state the magnitude of error as a percentage of the ILP sub-fund‘s Net Asset Value (NAV).
3. Attach a calculation of the valuation error.
4. State when and how the valuation error was discovered.Incorrect
The valuation error report should be made using the insurer‘s company letterhead and sent via electronic means. The report should contain the following information:
1. State the name of the ILP sub-fund and class(es) of units affected by valuation error.
2. Describe the nature of the error (e.g. overvalued or undervalued) and state the magnitude of error as a percentage of the ILP sub-fund‘s Net Asset Value (NAV).
3. Attach a calculation of the valuation error.
4. State when and how the valuation error was discovered. -
Question 12 of 20
12. Question
In case of a compensation, what all should be included in valuation error report?
I. State the amount of compensation to be paid to policy owners and the ILP sub-fund.
II. State the name of the entity that pays for the compensation.
III. Attach a calculation of the total compensation to be made.
IV. Describe the measures taken, or to be taken, to improve internal controls and prevent the occurrence of similar incidents.
Correct
If compensation (i.e. valuation error represents 0.5% or more of the ILP sub-funds NAV per unit) is required:
1. State the number of affected Singapore policy owners (as recorded in the sub-fund register) who (a) subscribed; and (b)redeemed, during the time period over which the valuation occurred, if any.
2. State the amount of compensation to be paid to (a) policy owners; and (b) the ILP sub-fund, if any.
3. State the name of the entity that pays for the compensation.
4. Attach a calculation of the total compensation to be made.
5. Describe the measures taken, or to be taken, to improve internal controls and prevent the occurrence of similar incidents.Incorrect
If compensation (i.e. valuation error represents 0.5% or more of the ILP sub-funds NAV per unit) is required:
1. State the number of affected Singapore policy owners (as recorded in the sub-fund register) who (a) subscribed; and (b)redeemed, during the time period over which the valuation occurred, if any.
2. State the amount of compensation to be paid to (a) policy owners; and (b) the ILP sub-fund, if any.
3. State the name of the entity that pays for the compensation.
4. Attach a calculation of the total compensation to be made.
5. Describe the measures taken, or to be taken, to improve internal controls and prevent the occurrence of similar incidents. -
Question 13 of 20
13. Question
When Guideline No: FAA-G09 is not applicable to any licensed or exempt financial adviser or its representative, who advises on any structured deposit?
I. Where advice is given to an accredited investor, expert investor or institutional investor.
II. Where advice is given to a high net worth individual as defined in the “Guidelines On Exemption For Specialised Units Serving High Net Worth Individuals.
III. Where advice is given to any person outside Singapore who is not a citizen of Singapore.
IV. Where advice is given to any person outside Singapore not a permanent resident of Singapore.
Correct
Guideline No: FAA-G09 is issued pursuant to Section 64 of the FAA. These Guidelines apply to any licensed or exempt financial adviser or its representative, who advises on any structured deposit, except:
(a) where advice is given to an accredited investor, expert investor or institutional investor, as defined in Regulation 2(1) of the FAR;
(b) where advice is given to a high net worth individual as defined in the “Guidelines On Exemption For Specialised Units Serving High Net Worth Individuals” Under Section 100(2) of the FAA.
(c) where advice is given to any person outside Singapore who is:
(i) an individual and:
a) not a citizen of Singapore;
b) not a permanent resident of Singapore.Incorrect
Guideline No: FAA-G09 is issued pursuant to Section 64 of the FAA. These Guidelines apply to any licensed or exempt financial adviser or its representative, who advises on any structured deposit, except:
(a) where advice is given to an accredited investor, expert investor or institutional investor, as defined in Regulation 2(1) of the FAR;
(b) where advice is given to a high net worth individual as defined in the “Guidelines On Exemption For Specialised Units Serving High Net Worth Individuals” Under Section 100(2) of the FAA.
(c) where advice is given to any person outside Singapore who is:
(i) an individual and:
a) not a citizen of Singapore;
b) not a permanent resident of Singapore. -
Question 14 of 20
14. Question
What all does The Monetary Authority of Singapore (MAS) Act regulates?
I. Monetary aspect
II. Banking aspect
III. Financial aspect
IV. Economy aspect
Correct
MONETARY AUTHORITY OF SINGAPORE (MAS)
The MAS was formed on 1 January 1971 after Parliament passed the monetary Authority of Singapore (MAS) Act in 1970. The Act gives the MAS the authority to regulate all elements of monetary, banking and financial aspects of Singapore, with the purpose of centralising all the various monetary functions associated with a central bank performed by several government departments and agencies under one single control.
Incorrect
MONETARY AUTHORITY OF SINGAPORE (MAS)
The MAS was formed on 1 January 1971 after Parliament passed the monetary Authority of Singapore (MAS) Act in 1970. The Act gives the MAS the authority to regulate all elements of monetary, banking and financial aspects of Singapore, with the purpose of centralising all the various monetary functions associated with a central bank performed by several government departments and agencies under one single control.
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Question 15 of 20
15. Question
What does SGX monitors in surveillance function?
I. Unusual trading activities
II. Prohibited trading practices or conduct
III. Insider trading
IV. Market manipulation
Correct
In its surveillance function, SGX monitors trading activities of the securities and derivatives markets to detect unusual trading activities, and prohibited trading practices or conduct, including insider trading and market manipulation.
Incorrect
In its surveillance function, SGX monitors trading activities of the securities and derivatives markets to detect unusual trading activities, and prohibited trading practices or conduct, including insider trading and market manipulation.
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Question 16 of 20
16. Question
Which are the ECDD measures that can be performed?
I. The first payment to be carried out through an account in the customer’s name with another FI subject to similar or equivalent CDD standards.
II. Using public sources of information (e.g. websites) to gain a better understanding of the reputation of the customer or any beneficial owner of a customer.
III. Commissioning external intelligence reports where it is not possible for a financial adviser to easily obtain information through public sources.
IV. Reducing the frequency of updates of customer identification information.
Correct
Other ECDD measures that may be performed include:
(a) requiring the first payment to be carried out through an account in the customer’s name with another FI subject to similar or equivalent CDD standards;
(b) using public sources of information (e.g. websites) to gain a better understanding of the reputation of the customer or any beneficial owner of a customer.
(c) commissioning external intelligence reports where it is not possible for a financial adviser to easily obtain information through public sources or where there are doubts about the reliability of public information.Incorrect
Other ECDD measures that may be performed include:
(a) requiring the first payment to be carried out through an account in the customer’s name with another FI subject to similar or equivalent CDD standards;
(b) using public sources of information (e.g. websites) to gain a better understanding of the reputation of the customer or any beneficial owner of a customer.
(c) commissioning external intelligence reports where it is not possible for a financial adviser to easily obtain information through public sources or where there are doubts about the reliability of public information. -
Question 17 of 20
17. Question
To whom should a financial adviser report the suspicious transactions?
Correct
A financial adviser should ensure that the internal process for evaluating whether a matter should be referred to the Suspicious Transaction Reporting Office (“STRO”) via an STR is completed without delay and should not exceed 15 business days of the case being referred by the relevant employee, representative or officer, unless the circumstances are exceptional or extraordinary.
Incorrect
A financial adviser should ensure that the internal process for evaluating whether a matter should be referred to the Suspicious Transaction Reporting Office (“STRO”) via an STR is completed without delay and should not exceed 15 business days of the case being referred by the relevant employee, representative or officer, unless the circumstances are exceptional or extraordinary.
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Question 18 of 20
18. Question
How often the units of an ILP subfund should be valued?
Correct
The insurer should ensure that the units of an ILP subfund are valued every business day. Where the ILP subfund:
(a) does not offer dealing every business day, it should be valued every regular dealing day, but in any event, at least once a month;
(b) is a property ILP sub-fund which complies with Appendix 6 (Property Funds) of the Code, it should have a full valuation at least once yearly.Incorrect
The insurer should ensure that the units of an ILP subfund are valued every business day. Where the ILP subfund:
(a) does not offer dealing every business day, it should be valued every regular dealing day, but in any event, at least once a month;
(b) is a property ILP sub-fund which complies with Appendix 6 (Property Funds) of the Code, it should have a full valuation at least once yearly. -
Question 19 of 20
19. Question
What is an international organisation?
I. An entity established by formal political agreements between member countries that have the status of international treaties.
II. An entity whose existence is recognised by law in member countries.
III. An entity which is not treated as a resident institutional unit of the country in which it is located.
IV. An entity which is treated as a resident institutional unit of the country in which it is located.
Correct
“International organisation” means an entity established by formal political agreements between member countries that have the status of international treaties, whose existence is recognised by law in member countries and which is not treated as a resident institutional unit of the country in which it is located;
Incorrect
“International organisation” means an entity established by formal political agreements between member countries that have the status of international treaties, whose existence is recognised by law in member countries and which is not treated as a resident institutional unit of the country in which it is located;
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Question 20 of 20
20. Question
Which of the following is not a misconduct committed by representative?
I. Acts Involving Fraud, Dishonesty or Other Offences of a Similar Nature.
II. Acts Involving Inappropriate Advice, Misrepresentation or Inadequate Disclosure of Information.
III. Failure to satisfy the Guidelines On Fit And Proper Criteria.
IV. Any misconduct resulting in a non-compliance with any regulatory requirement relating to the provision of any financial advisory service under the FAA.
Correct
A financial adviser shall report to the MAS, upon discovery of any of the following types of misconduct committed by its representatives:
(a) Acts Involving Fraud, Dishonesty or Other Offences of a Similar Nature.
(b) Acts Involving Inappropriate Advice, Misrepresentation or Inadequate Disclosure of Information.
(c) Failure to satisfy the Guidelines On Fit And Proper CriteriaIncorrect
A financial adviser shall report to the MAS, upon discovery of any of the following types of misconduct committed by its representatives:
(a) Acts Involving Fraud, Dishonesty or Other Offences of a Similar Nature.
(b) Acts Involving Inappropriate Advice, Misrepresentation or Inadequate Disclosure of Information.
(c) Failure to satisfy the Guidelines On Fit And Proper Criteria
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