Pinnacle Plutus - VUL Mock Exam 1

Which statement describes the difference between Variable Life insurance products and Traditional participating products?

I. Traditional participating life policies aim to produce steady return by smoothing out market fluctuations, while variable life insurance policies offer the potential for higher returns but at the expense of market volatility and higher risk.

II. Variable Life insurance products can take the form of Whole Life or Endowment policies but Traditional Participating life policies cannot.

III. The investment element of variable life insurance policies is made known at the outset and is invested in a separately identifiable fund, which is made up of units of investments.

• I only

• I &III only

• II & III only

• All of the above

Which statement about diversification in portfolio management is FALSE?

• Diversification can completely eliminate the risk of investing in stock portfolio.

• Diversification helps spread the portfolio risk by investing in different categories of investment.

• Diversification involves purchasing different types of stocks and investing in stocks of different countries.

• A diversified portfolio provides greater security to an investor without having to sacrifice the return of the portfolio.

People generally invest their money to provide:

• an improvement in their financial position

• a less comfortable standard of living

• retirement income

• funds for paying necessary expenses and taxes when the person dies

What are the DISADVANTAGES of investing in cash and deposits?

I. The safest type of investment.

II. They provide the lowest return.

III. There is reinvestment risk.

• I only

• II only

• II & III only

• I, II & III

Which of the following are fixed-income securities?

I. Corporate bonds

II. Government bonds

III. Preferred shares

IV. Money Market instruments

V. Properties

• I, II, III & IV only

• I & III only

• I, III & V only

• All of the above

Which of the following are types of corporate stocks?

I. Debenture Stocks

II. Government Stocks

III. Loan Stocks

IV. Money Market Instruments

V. Convertible Stocks

• I, II, & III only

• I, II, III & IV only

• I, III & V only

• All of the above

Which of the following investment options entitle the holder ownership and share of profits in the form of dividends?

• Cash

• Bonds

• Futures

• Ordinary Shares

Which of the following statements are the ADVANTAGES of money market instruments?

I. High liquidity

II. Long-term investment

III. Low returns

IV. Low risks

V. No-reinvestment risk

• I & II only

• II & III only

• I & IV only

• All of the above

Which of the following statements are FALSE?

I. Higher capital gain is normally associated with lower risk.

II. One way to lower the risk in investment is to diversify.

III. One method of measuring risk is to determine the average return and its standard deviation from future data.

IV. Diversification can be achieved by investing in different countries and / or types of assets.

V. An investor can always choose an investment that is risk free.

• I, II & III only

• II, III & IV only

• I, III & V only

• All of the above

Which of the following funds comprise a higher proportion of equity and a lower proportion of fixed-income instruments?

• Bond Funds

• Cash Funds

• Managed Funds

• Mixed Funds