Licensed Custodian, Dealer and Financial Adviser.   CPFIS Registered Investment Administrator

More Money Less Stress School Examination
You have gone through our School and now, test your knowledge in our Examination! It should be a piece of cake if you have been diligent in School. To pass, you need to have a minimum score of 75 points.

Q1: Before you make your first unit trust investment, it is important to know your level of risk tolerance
  so that you can accurately predict the returns your unit trust will yield in 2 years
  so that you can predict when is the right time to sell your unit trusts
  so that you can decide what type of unit trust best matches your investment objectives.
  so that you can control the value of your unit trusts
Q2: Which of the following best describes 'Time Horizon'?
  How long you can afford to hold on to your investments before selling them off
  The time when the sun sets over the horizon
  The growth cycle of a unit trust investment
  The best time to switch from one unit trust to the other
Q3: How would you budget for investment?
  70% of each month's salary goes into investments
  I invest the amount left over after taking care of all major commitments
  Why budget?
  I usually spend all my salary on other things and have to borrow to invest
Q4: If you save $2,000 in an investment that gives you 15% annual return, in 30 years' time, how much would your savings be worth according to the principle of compounding?
  I don't save
  $10, 545.30
Q5: What are bonds?
  Bonds are basically loans, where you are the lender.
  Bonds are portfolios of unit trusts, bonds, and other investment instruments.
  Bonds are derivative instruments
  Bonds are 'shares' of a company
Q6: Which of the following is true?
  Stocks are 'shares' of a company whereas dividends are non-obligatory yearly cash payments to share-owners that represent a portion of profits.
  Stocks are what you lend out whereas dividends are what you receive in payment for your loans
  Stocks are unit trusts whereas dividends are the monthly cash-payments to owners of unit-trusts
  Stocks are always traded at a fixed price whereas the prices for dividends are never fixed
Q7: Which of the following best describes the investment strategy of a 'contrarian investor'?
  A contrarian investor buys more units of a fund using contra
  A contrarian investor buys when the market is up and sells when the market is down
  A contrarian investor buys when the market is down and sells when the market is up
  A contrarian investor only invests in country funds
Q8: In general, rising interest rates cause bond prices to
  Remain the same
  Interest rates do not affect bond prices in any way
Q9: Which of the following is false?
  Unit trusts are portfolios of stocks, bonds, and other investment instruments.
  Unit trusts can be sold anytime at the market price
  Unit Trusts spread the risks involved in investing because they buy into a good variety of stocks and bonds
  Unit Trusts are a type of insurance policy
Q10: How is the price of a stock determined before it is listed?
  By the location of the company
  By the company's actual and potential earnings
  By the staff strength of the company
  By the number of years that it has been in existence
Q11: Where do Global Funds typically invest in?
  Mostly in emerging markets
  In all parts of the world including the Singapore market
  In all parts of the world excluding the Singapore market
  In all types of foreign investments, including stocks, bonds and real estate
Q12: What is one thing you can be certain of when you switch unit trusts frequently?
  You maximise your returns
  Your risks are spread out
  You will be able to catch the market timing
  You incur additional costs
Q13: The bid price of a unit trust is
  Its price after a promotional discount
  The price at which the fund manager buys your units back from you.
  The total value of all the assets minus all the management fees in your unit trust.
  The price at which you can buy units in a unit trust
Q14: Which one of the following describes 'Dollar Cost Averaging'?
  The average cost of all the unit trusts in a portfolio
  A constant investment into a unit trust at predetermined times such that the investor purchases more units when the price is low and less when it is high.
  The average returns of the unit trusts achieved over a period of time expressed as the annual compounded interest rate
  None of the above
Q15: What is asset allocation in building a portfolio?
  It is the total value of all the assets minus all the expenses in your portfolio
  It is to fully expose your portfolio to only equities
  It is to balance your portfolio between various types of unit trusts
  It is to weight your portfolio towards one type of unit trust
Q16: If a unit trust is invested in only one country
  it is broadly diversified
  it has a high P/E ratio
  is classified as low risk
  is narrowly focused
Q17: If past performance is not an indicator of future results, should it be totally disregarded?
  Yes since it does not help at all
  No, it can still be used to predict short-term results
  No, but it should be considered together with other non-quantitative factors
  No, because past performance is actually an indicator of future results
Q18: If Peter is a conservative investor and is not a big fan of risk-taking, if given a choice between a Country X Fund and a Global Fund, which would you recommend him to invest in?
  The Global Fund
  Neither, both are high risk funds
  Country X Fund
  Neither, but I would recommend a Emerging Markets Fund instead as it is the most risk-free.
Q19: An investor seeking a fund that generally buys cheap stocks of well-run unnoticed companies would be best served by a fund manager with what kind of investing style?
  Money Market
Q20: Unit trusts measure their performance against
  Rate of depreciation
  Interest rates
  A benchmark index
  Inflation rates
Q21: What is meant by a unit trust's bid-offer spread?
  Its performance over the length of time it is invested
  A measure of how much its price has fluctuated over short periods.
  Its annualized rate of return
  The difference between its buying price and selling price
Q22: What do money market unit trusts invest in?
  These invest in stocks of companies
  These invest in bonds and other fixed income instruments
  These invest in a combination of stocks and bonds.
  These invest in short-term debt instruments comprising IOUs of various kinds
Q23: If you have a short investment horizon of between 2 to 5 years,
  you should hold a greater proportion of less risky unit trusts
  you should hold a mixture of higher risk unit trusts, and lower risk unit trusts.
  you can afford to have a greater proportion of higher risk unit trusts
  you should hold only narrowly focused unit trusts
Q24: What is an underlying fund?
  The main fund in which a feeder fund invests in.
  A fund which invests in the emerging markets
  A fund which invests only in derivatives
  A fund which has a contrarian investment approach
Q25: What is the difference between the bottom-up and top-down investment strategies in asset management?
  A bottom-up strategy focuses on growth while the top-down strategy focuses on value.
  A bottom-up strategy underweights the major world indices while the top-down strategy overweights the major world indices
  A bottom-up strategy focuses on diversification while a top-down strategy focuses on specialization.
  A bottom-up strategy focuses on a company's fundamentals while a top-down strategy focuses on the sector or industry and then searches for the companies within those sectors/industries to invest in.


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