CMFAS M8a Exam Free Trial

How the direct additional costs are associated with the guarantee?

I. These costs can be substantial
II. Prepare accounts and reports for unit-holders
III. These direct additional costs may include the cost of a call option
IV. This cost will all be subject to ongoing scrutiny during an annual audit

Which of the following statement(s) are true for After Sales?

I. Guaranteed hedge funds clearly have a useful part to play in the world of alternative investments
II. Prices of retail hedge funds are published in the newspapers
III. The strategy takes advantage of expected price movements that occur after a merger or acquisition offer is announced
IV. Investors may also go to the respective manager’s or distributor’s website to obtain the pricing information

Which of the following statement(s) are true for the advantages of Lack of Liquidity in hedge fund?

I. The use of leverage, short selling and derivatives introduces additional risks
II. Relieves the manager from short-term cash flow concerns for better long-term performance
III. Some hedge funds have minimum lock-up periods
IV. The manager’s freedom to invest in almost anything makes risk assessment difficult on the part of the investors

When Are Hedge Funds Unsuitable For Investors?

I. Investors may not have sufficient or timely information to make investment decisions
II. Hedge funds typically have high minimum subscription amounts, making them inaccessible to many retail investors
III. Those who can afford to lose the principal of investments
IV. Inexperienced investors should refrain from investing in something that they do not understand

How global macro is the common examples of Hedge Funds?

I. It seeks to reduce market risk and generate a profit, regardless of the direction of the market
II. It aims to profit from changes in global economies, typically brought about by shifts in government policies that impact interest rates
III. The long / short positions are taken on related stocks to create a hedge
IV. Leverage and derivatives are used to accentuate the impact of market movements

Which of the following statement(s) are true Long, Short and Leveraged ETFs?

I. Instead of making investments, an ETF may be set up to pass the cash raised from the investors directly to the swap counterparty in exchange for the returns on the index
II. An ETF is a long ETF when it moves in the same direction as the index
III. A short ETF tracks the underlying index in the opposite direction
IV. Leveraging allows funds to achieve multiple times the performance of an index, either long or short

How Realtime Price Discovery brings advantages of Structured ETFs?

I. Price information is provided to the market in real time
II. ETFs track the performance of a market index
III. By comparison, unlisted fund prices are, at best, published once a day
IV. Investors can buy and sell ETFs on the market every trading day just like trading stocks

How Expenses brings disadvantages of Structured ETFs?

I. Price information is provided to the market in real time
II. By comparison, unlisted fund prices are, at best, published once a day
III. The use of derivative counterparties introduces additional counterparty risk for swap transaction involved
IV. The cost associated with using derivatives in a structured ETF contributes to tracking errors.

Which of the following statement(s) are true for Illiquid Cash Flow in the determination of fund’s market value?

I. Some derivative products are based on streams of future cash flows
II. Third-party credit data may be available in some cases for valuing credit derivatives
III. The valuation depends on the fund manager’s judgement and experience
IV. MTM is the discounted cash flows, considering probability of the counterparty default

Which of the following statement(s) are true for Direct Replication (Or Cash-Based) ETF?

I. Some derivative products are based on streams of future cash flows
II. These funds replicate the index through direct investment into the component securities of the indexes that they aim to track
III. These funds may employ the full replication
IV. These funds may employ the sampling methods

Which of the following statement(s) are true for Unit Price?

I. The buying and selling of units of unlisted index funds take place between the investor and the fund manager
II. Unit prices of unlisted index funds are based on the NAV of fund assets
III. The buying and selling of ETFs, on the other hand, take place between investors
IV. ETFs depend on marketmakers to keep prices close to the NAV

Which of the following statement(s) are true for Protective Puts?

I. It is often used in executive compensation
II. A protective put strategy calls for buying a put-on stock that one has already owned
III. The protective put benefits investors who are mainly bullish about the stock, but nevertheless want downside protection
IV. A strategy of buying a put option on a stock already owned is considered a conservative strategy

Which of the following statement(s) are the types of swap instruments?

I. Currency Swaps
II. Credit Default Swap (CDS)
III. No Equity Swaps
IV. Commodity Swaps

Which of the following statement(s) true for Interest Rate Swaps?

I. A swap agreement is exactly what the name suggests, where two parties agree to exchange cash flows at future dates
II. The most common type of swap is a plain vanilla interest rate swap
III. The reason for this exchange is to benefit from comparative advantage
IV. It is the exchange of the interest payments on a fixed rate loan to the payments on a floating rate loan

Which of the following statement(s) is true for the Energy being used as a practical example of Forward Contracts?

I. Standardised contracts traded on exchanges
II. Forward markets have developed around benchmark crude oils
III. The majority of trades use a book-in process
IV. The majority of trades use a book-out process

Which of the following statement(s) is the examples of Financial Futures?

I. Metals
II. Interest Rates
III. Bond Prices
IV. Equity stock indices

Which of the following are the types of Market Participants?

I. Metals
II. Hedgers
III. Bond prices
IV. Speculators

Which of the following statement(s) are true for Swaption in Exotic Option?

I. There are three risky underlying assets associated with this type of options
II. This is an option giving the right to enter into an underlying swap agreement
III. The term swaption typically refers to options on interest rate swaps, although any type of swaps can be used
IV. It is often used in executive compensation

What are the types of market risk?

I. General Market Risk
II. Issuer-specific Risk
III. Specific Risk
IV. Special Market Risk

Which of the following statement(s) is true for Safety of Principal?

I. Each product is structured to provide full, partial or no return of principal upon maturity
II. There is no guarantee that the intended protection will materialize
III. The credit risk of the protection-provider doesn’t affect the reliability of the protection given
IV. Structured deposits are considered investment products and NOT subject to the protection of Deposit Insurance Scheme in Singapore