CMFAS M8a Exam Free Trial Set Two

Which of the following statement(s) are true for Enhanced Index Fund?

I. The use of customised indexes, or dynamic instead of static indexes
II. Enhanced index funds are designed to enhance the return potential of index funds
III. Enhanced index funds add elements of active portfolio management to passively managed index funds
IV. As a result, the cost advantage of indexing is reduced, in exchange for potentially higher return

Which of the following is the Role of The Trustee?

I. Trustee acts on behalf of unit-holders and oversees the proper operation of the trust
II. Protects the interests of unit-holders by ensuring that the fund is run in accordance with the trust deed, the regulations, and the prospectus
III. Create and maintain the register of unit-holders or delegate this function to the fund manager
IV. Report any breaches to the MAS

Which of the following statement(s) are advantages of Structured ILPs as a wrapper?

I. Less sophisticated investors or those with little prior experience with structured products may find formula funds easier to understand
II. A wide and ready distribution network through existing insurance distribution channels
III. Insurance coverage being provided, albeit typically very small
IV. ILPs operates like a term insurance plus a structured fund

Which of the following statement(s) are true for absolute return in hedge fund?

I. The MAS considers a fund to be a hedge fund if it uses leverage
II. A hedge fund usually aims for a risk-adjusted absolute return
III. A hedge fund doesn’t aim in outperforming a standard market benchmark
IV. Information on the NAV of the fund is made available on the manager’s website

How Special sector funds is the common examples of Hedge funds?

I. Leverage is usually not used
II. Its similar to distressed securities and risk arbitrage funds, but they tend to focus on new or under-followed areas of opportunity
III. The nature of such investments involves greater volatility than other event-driven strategies
IV. It uses a top-down approach to invest long and short in the companies of specific sectors of the economy

What Are Structured ETFs?

I. The investor has to take note that an ETF may trade at a price that differs from its NAV
II. Structured ETFs are structured funds that are traded on the stock exchange
III. The price on an ETF is set on a willing buyer and willing seller basis
IV. Only synthetic ETFs are structured ETFs

Which of the following statement(s) are true for hedge fund?

I. The MAS considers a fund to be a hedge fund if it uses leverage
II. A structured hedge fund is a subset of hedge funds that uses derivatives to achieve its risk-return profile
III. Market price is affected by market forces and does not always closely match the underlying fund’s NAV
IV. Information on the NAV of the fund is made available on the manager’s website

Which of the following statement(s) are true for Risk Considerations in case of the typical types of documentation and risks?

I. A common method to reduce market risks is diversification of investments across asset classes and geographic locations
II. Investing in negatively correlated securities is another common method of risk mitigation
III. A more appropriate response is to take no risks according to risk tolerance
IV. Credit and FX risks can be shared or transferred to another party using swaps and credit derivatives

Which of the following statement(s) are true for Difference Between The Price Of ETF And Its NAV?

I. The investor has to take note that an ETF may trade at a price that differs from its NAV
II. The price on an ETF is set on a willing buyer and willing seller basis
III. The NAV of a unit trust is based on forward pricing and the actual NAV is only known after placement of the order
IV. In the process of buying and selling, the participating dealer can create or redeem ETF units to meet the market demand

What are the advantages of investing in a CIS?

I. Professional Management
II. Portfolio Diversification
III. Access To Bulky Investments
IV. Accounting Of Scale

Which of the following are the typical types of documentation and risks?

I. Risk Considerations
II. Pre-sale Documentation
III. No Post-sale Disclosure
IV. Redemption Prices

Which of the following statement(s) are true for Long Calls?

I. It is often used in executive compensation
II. Buying calls appeals to aggressive investors because of leverage
III. When one considers the combination of leverage it is easy to see that buying call options is an attractive strategy for bullish investors
IV. There are three risky underlying assets associated with this type of options

Which of the following are the common examples of structured funds?

I. Index Funds
II. Fund Of Funds (FoF)
III. Unhedged Funds
IV. Enhanced Index Fund

What to consider before investing in structured funds?

I. Index Funds
II. Advantages Of Investing In A CIS
III. Disadvantages Of Investing In A CIS
IV. Additional Considerations For Structured Funds

Which of the following statement(s) is true for pricing of forward contracts?

I. Derivatives are useful hedging tools for commodities producers and consumers
II. The forward price for a contract is determined by taking the spot price at the time of the transaction and adding to it a cost of carry
III. Derivative contracts are integral parts of structured products
IV. Subject to margin requirements

Which of the following are proper examples of Forward Contracts?

I. Subject to margin requirements
II. Energy
III. Standardised contracts traded on exchanges
IV. Commodities

Which of the following statement(s) are the Options for Bearish Option Strategies?

I. Long calls
II. Long puts
III. Naked calls
IV. Selling naked puts

What are the similarities and differences in Governance of ILPs?

I. The assets of a CIS are held by a third-party custodian such as the trustee
II. The regulatory framework for ILPs is different from that for CIS which is governed by the Securities and Futures Act
III. Only life insurers licensed under the Insurance Act may issue ILPs
IV. The investment portion of a structured ILP is a CIS by nature, although not by legal structure

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

I. Derivatives are useful hedging tools for commodities producers and consumers
II. Standardised contracts traded on exchanges
III. Subject to margin requirements
IV. There are partial settlements of emerging gains / losses through daily mark-to-market process

What Types of Investors Would Invest in A Fund of Funds?

I. Professional expertise in fund selection
II. FoFs are useful to investors who do not have time to monitor fund performance
III. For those who are interested in specialty investment areas but do not have enough experience or knowledge to invest in such niche areas on their own
IV. Access to specialty managers that are generally not known or available to retail investors