WorksheetsMock Exam
Total questions: 70
Worksheet time: 4hrs 30mins
Name
Class
Date
1.
Module 01: Which of the following roles are NOT required of a stock exchange?
a)
a. Review and approve company listings or issuance of shares
b)
b. Bailing out companies that default in their debt obligations
c)
c. Supervision of trading activities of member-brokers
d)
d. Publish trading and disclosure information for the reference of investors
2.
Module 01: The ____ is a fund established, maintained and administered by the Securities Clearing Corporation of the Philippines for the purpose of covering failed trades due to a Clearing Member's default on his cash or securities settlement obligation.
a)
a. Mutual Stockholder Fund
b)
b. Unit Investment Trust Fund
c)
c. Clearing and Trade Guaranty Fund
d)
d. Stock Investor Protection Fund
3.
Module 01: Which of the following examples is NOT considered as operational risk?
a)
a. Interest rate fluctuations
b)
b. Workplace safety
c)
c. Systems disruption and failure
d)
d. Damage to physical assets
4.
Module 01: Which among the following can be considered as a risk for a real estate company?
a)
a. Legal and compliance
b)
b. Interest rate fluctuations
c)
c. Regulatory risk
d)
d. Credit risk
e)
e. All of the above
5.
Module 01: A primary market issuance can be made in the stock exchange through:
a)
a. Initial public offering
b)
b. Futures market
c)
c. Private placement
d)
d. A and C
e)
e. B and C
6.
Module 02: Firm ABC has operating profits of ₱100,000, taxes of ₱17,000, interest expense of ₱34,000 and preferred dividends of ₱5,000. What is the firm's net profits after taxes?
a)
a) ₱66,000
b)
b) ₱49,000
c)
c) ₱44,000
d)
d) ₱83,000
7.
Module 02: Candy Corporation has pretax profits of ₱1.2 million, an average tax rate of 34%, and pays preferred dividends of ₱50,000. There are 100,000 common shares outstanding and no interest expenses. What is Candy Corporation's earnings per share?
a)
a) ₱3.91
b)
b) ₱4.52
c)
c) ₱7.42
d)
d) ₱7.59
8.
Module 02: Walker Clothing Store's accounts receivable at yearend was ₱800,000. Net credit sales during the year amounted to ₱5,840,000. The average collection period of the receivables in terms of days was
a)
a) 30 days
b)
b) 365 days
c)
c) 100 days
d)
d) 50 days
9.
Module 02: Ace Hardware Store had net credit sales of ₱3,900,000 and cost of goods sold of ₱3,000,000 for the year. The accounts receivable at the end of the year was ₱650,000. The receivables turnover was
a)
a) 5.6x
b)
b) 6.5x
c)
c) 4.6x
d)
d) 6.0x
10.
Module 02: Waters Department Store had net credit sales of ₱8,000,000 and cost of goods sold of ₱6,000,000 for the year. The average inventory for the year amounted to ₱2,000,000. Inventory turnover for the year is
a)
a) 4x
b)
b) 7x
c)
c) 3x
d)
d) 2x
11.
Module 03: An investor has 10 million. He wants the money to grow in ten years to become P20 million. To achieve his objective, he should make money grow, at what growth rate?
a)
a. 6.3%
b)
b. 7.2%
c)
c. 10%
12.
Module 03: An Investor has 10 million, and he wants his money to grow 16% per year for 7 years. What amount can he expect to have after 7 years? *which option, below, is closest to your calculation.
a)
a. 18 million
b)
b. 28 million
c)
c. 38 million
13.
Module 03: A loan consists of 350,000 pesos. The borrower promises to pay an interest rate is 3.5%. But the actual paid interest was only 8,050 pesos. What is the actual interest yield on the loan?
a)
a. 1.2%
b)
b. 2.3%
c)
c. 3.2%
14.
Module 03: If a savings deposit yields 3% per year, and the interest income is 45 pesos, then how much is the amount on deposit. *hint: the interest income / 0.03 = ?
a)
a. 150
b)
b. 1,500
c)
c. 15,000
15.
Module 03: If a rental property is yielding 12.5% a year and the rental income is P 2million. What is the value of the property. *Hint = Rental Income / Value of Property = Yield.
a)
a. 1.6 million
b)
b. 16 million
c)
c. 160 million
16.
Module 04: Economics is defined as the study of
a)
a. how society manages its scarce resources.
b)
b. business.
c)
c. central planning.
d)
d. government regulation.
17.
Module 04: When government policies are being designed,
a)
a. increasing efficiency usually results in more equity.
b)
b. there is usually a tradeoff between equity and efficiency.
c)
c. equity can usually be achieved without an efficiency loss.
d)
d. equity and efficiency goals are usually independent of each other.
18.
Module 04: If a good is "normal," then an increase in income will result in
a)
a. a lower market price.
b)
b. a decrease in the demand for the good.
c)
c. an increase in the demand for the good.
d)
d. no change in the demand for the good.
19.
Module 04: A technological advancement will shift the
a)
a. supply curve to the left.
b)
b. demand curve to the left.
c)
c. supply curve to the right.
d)
d. demand curve to the right.
20.
Module 04: Suppose there is an increase in input prices. We would expect supply
a)
a. to increase.
b)
b. to decrease.
c)
c. to remain unchanged.
d)
d. to either increase or decrease.
21.
Module 05: Which of the following is NOT among the main categories of equity valuation models?
a)
a. Cost/ Asset Based Models
b)
b. DuPont Analysis Model
c)
c. Intrinsic Value Models
d)
d. Market Multiples Model
22.
Module 05: Which of the following refers to the valuation approach where the value of a security is derived by looking at the pricing of 'comparable' or similar assets relative to a common variable like earnings, cash flows, book value or sales?
a)
a. Cost/ Asset Based Models
b)
b. DuPont Analysis Model
c)
c. Intrinsic Value Models
d)
d. Market Multiples Model
23.
Module 05: Which of the following refers to the valuation approach which relates the value of a security to the risk-adjusted present value of expected future cashflows on that asset?
a)
a. Cost/ Asset Based Models
b)
b. DuPont Analysis Model
c)
c. Intrinsic Value Models
d)
d. Market Multiples Model
24.
Module 05: The formula refers to which relative valuation multiple?
a)
a. Price to Earnings Ratio (PE Ratio)
b)
b. Price to Earnings Growth Ratio (PEG Ratio)
c)
c. Enterprise Value to EBITDA Ratio (EV/ EBITDA Ratio)
d)
d. Dividend Yield Ratio
25.
Module 05: Which of the following relative valuation approaches derives the value of acquiring the company as a whole instead of only equity?
a)
a. Price to Earnings Ratio (PE Ratio)
b)
b. Price to Earnings Growth Ratio (PEG Ratio)
c)
c. Enterprise Value to EBITDA Ratio (EV/ EBITDA Ratio)
d)
d. Dividend Yield Ratio
26.
Module 06: _______________ is financial ratio to measure profitability prior to considering the cost of financing
a)
a. Gross Profit Margin
b)
b. EBIT Margin
c)
b. EBIT Margin
d)
d. Net Margin
27.
Module 06: If an analyst wants to know the Price-to-Earnings ratio of a stock, he/she should divide the stock's Price with
a)
a. Net Profit divided by Outstanding Shares
b)
b. Net Profit attributable to Common Stockholders divided by Outstanding Shares
c)
c. Net Profit attributable to Common Stockholders divided by Authorized Common Stock
d)
d. Net Profit divided by Authorized Common Stock
28.
Module 06: In Free Cash Flow valuation, the net debt/cash is deducted from the calculated firm value, to get the equity value. We can get the net debt/cash position of the company by
a)
a. Deducting Cash and Equivalents from Short Term and Long Term Debt
b)
b. Deducting Cash and Equivalents from Total Liabilities
c)
c. Deducting Short Term and Long Term Debt from Cash and Equivalents
d)
d. Deducting Total Liabilities from Cash and Equivalents
29.
Module 06: Calculating the ______________________ ratio is one way to measure quality of earnings based on the premise that cash metrics is a better indicator than accrual numbers
a)
a. Cash from operations to Gross Profit
b)
b. Cash from investing to Gross Profit
c)
c. Cash from operations to Net Income After Tax
30.
Module 06: In evaluating profitability, the investor needs to know whether the company's profit metrics are big, growing (present vs. past), and
a)
a. Better than peers
b)
b. Better than PSEi
c)
c. Better than MSCI
d)
d. Worse than peers
31.
Module 07: ISO31000 provides a simple definition of risk. The following are components of this definition except?
a)
a. Risk as effect
b)
b. Risk as certainty of loss
c)
c. Risk as uncertainty
d)
d. Risk as impact on objectives
32.
Module 07: What are the 2 dimensions of credit risk?
a)
a. Probability of default and loss given default
b)
b. Probability of default and exposure
c)
c. Certainty of default and loss given default
d)
d. Certainty of default and exposure
33.
Module 07: The following are considered financial risks except?
a)
a. Market Risk
b)
b. Credit Risk
c)
c. Liquidity Risk
d)
d. Operational Risk
34.
Module 07: Which of the following is a widely used indicator of credit risk?
a)
a. Stock Price
b)
b. Moody's Credit Rating
c)
c. Company News
d)
d. Bond Yield
35.
Module 07: Which of the following bonds are considered speculative grade bonds?
a)
a. Republic of the Philippines' BBB+ USD denominated bonds
b)
b. Bahrain's B+ USD denominated bonds
c)
c. China government bonds A+ rated
d)
d. Indonesia Government Bonds BBB rated
36.
Module 08: During an initial public offering, what benefit will be realized by the sponsors of the corporation going public?
a)
a. Price-to-earnings multiple that will match the sector or industry multiple;
b)
b. Market valuation;
c)
c. Price stabilization by the underwriter;
d)
d. First day uptick in stock price compared to offer price;
e)
e. Tracking benefits relative to the main index.
37.
Module 08: Debt securities that are listed and traded in an organized marketplace will provide investors with an exit mechanism in the same way that equity securities that are listed and traded in an exchange will provide investors with the same benefit. Nevertheless, can listed securities be traded on a negotiated basis outside of the bond or stock exchange?
a)
a. Yes, since listed securities in the Philippines are certificated such that investors may deal in these securities outside of the stock or bond exchange;
b)
b. Yes, since listed securities in the Philippines are still the property of the stockholder and are registered, as a general rule, in the stockholders' name;
c)
c. Yes, since listed securities may be uplifted from the depository to effect the transfer of the said securities to the buyer by the seller in an off-exchange transaction;
d)
d. No, since there will be a higher tax by way of capital gains tax compared to the preferential stock transaction tax;
e)
e. No, since the listed company registrar will not allow said off-exchange transaction for minimum public float compliance purposes
38.
Module 08: ESG investing in the fixed income space has attracted institutional investors due to which fundamental reason?
a)
a. In the long-term, high ESG scores are a good indicator of better risk management aligned with investor expectations;
b)
b. In compliance with investment policy allocation requirements;
c)
c. Higher ESG scores translate to higher stock price;
d)
d. ESG is a mandate of the law and legal compliance is a necessary theme;
e)
e. Environmental guidelines are a trend.
39.
Module 08: In planning for an initial public offering, which practice by private corporations becomes a key issue in complying with the SEC and PSE requirements for public companies?
a)
a. Appointing a member of the founder's family as the President & CEO;
b)
b. Appointing the founder as the Chairman of the Board of Directors;
c)
c. Maintaining two books for accounting and financial statements purposes;
d)
d. Including independent directors in the Board of Directors;
e)
e. Insider trading by the members of the immediate family
40.
Module 08: An underwriter performs which function in an initial public offering of a company for listing in the SME Board of the PSE?
a)
a. Legal advisory services to the issuer;
b)
b. Price stabilization activities;
c)
c. Coordinator, bookrunner and a firm commitment to take up any shares not sold to investors at the end of the offer period;
d)
d. International coordinator and selling the shares to the investors in said markets especially where the offer size is substantial;
e)
e. All of the above.
41.
Module 09: The following derivatives have traded assets as the underlying except
a)
a. call
b)
b. put
c)
c. futures
d)
d. interest rate swap
42.
Module 09: The forward price in a forward contract on a stock is dependent on the following except
a)
a. The underlying stock price
b)
b. The risk-free interest rate
c)
c. The expected return on the stock
d)
d. The time to maturity
43.
Module 09: Which of the following is not true about futures contracts?
a)
a. They are traded in organized exchanges.
b)
b. Trading them requires a margin account.
c)
c. For all practical purpose, the futures price is almost the same as the forward price.
d)
d. There is no daily settlement.
44.
Module 09: Keeping all other variables constant, an increase in the underlying stock price will ______ the call price.
a)
a. increase
b)
b. decrease
c)
c. have no effect on
d)
d. randomize
45.
Module 09: Calculate the price of a 3-month European put option on a non-dividend-paying stock with a strike price of $50, the continuously compounded risk-free rate is 10% per annum, and the volatility is 30% per annum. Use the fact that N(-.24167) = .404519 and N(-0.09167) = 0.46348. The put price in dollars is closest to
a)
a. 2.08
b)
b. 2.18
c)
c. 2.28
d)
d. 2.38
46.
Module 10: Date of the bond's final payment
a)
a. Tenor
b)
b. Maturity date
c)
c. Face value
47.
Module 10: Holders must receive any unpaid dividends before common shares may be paid dividends – less risk than non-cumulative preferred shares
a)
a. Participating preferred shares
b)
b. Participating common shares
c)
c. Cumulative preferred shares
48.
Module 10: Current yield takes into account current price of bond
a)
a. True
b)
b. False
49.
Module 10: Which of the following does not describe a zero-coupon bond
a)
a. N = 3
b)
b. Interest = 3
c)
c. Coupon = 3
50.
Module 10: If a bond's coupon rate is higher than the yield of maturity, then:
a)
a. Price is less than par
b)
b. Par value will increase
c)
c. This is a premium bond
51.
Module 11: The basic trade-off in the investment process is
a)
a. between the anticipated rate of return for a given investment instrument and its degree of risk.
b)
b. between understanding the nature of a particular investment and having the opportunity to purchase it.
c)
c. between high returns available on single instruments and the diversification of instruments into a portfolio.
d)
d. between the desired level of investment and possessing the resources necessary to carry it out.
e)
e. None of the above.
52.
Module 11: The rate of exchange between future consumption and current consumption is
a)
a. The nominal risk-free rate.
b)
b. The coefficient of investment exchange.
c)
c. The pure rate of interest.
d)
d. The consumption/investment paradigm.
e)
e. The expected rate of return.
53.
Module 11: The ____ the variance of returns, everything else remaining constant, the ____ the dispersion of expectations and the ____ the risk.
a)
a. Larger, greater, lower
b)
b. Larger, smaller, higher
c)
c. Larger, greater, higher
d)
d. Smaller, greater, lower
e)
e. Smaller, greater, greater
54.
Module 11: The coefficient of variation is a measure of
a)
a. Central tendency.
b)
b. Absolute variability.
c)
c. Absolute dispersion.
d)
d. Relative variability.
e)
e. Relative return
55.
Module 11: The nominal risk free rate of interest is a function of
a)
a. The real risk free rate and the investment's variance.
b)
b. The prime rate and the rate of inflation.
c)
c. The T-bill rate plus the inflation rate.
d)
d. The tax free rate plus the rate of inflation.
e)
e. The real risk free rate and the rate of inflation.
56.
Module 12: Which among the following is NOT a security?
a)
a. certificate of membership in a golf and country club
b)
b. insurance policy
c)
c. common shares
d)
d. corporate bonds
57.
Module 12: What is pre-emptive right?
a)
a. Right of a stockholder to demand payment of the fair value of his shares if he disagrees with a corporate action.
b)
b. Right of a stockholder to subscribe to all issues or disposition of shares of any class of the corporation, in proportion to his shareholdings.
c)
c. Right of a minority shareholder to sell his shares if a majority shareholder is negotiating a sale of his own shares
d)
d. None of the above.
58.
Module 12: Which among the following employees of Broker Dealers are allowed to deal directly with clients for the purpose of soliciting clients and buying and selling of securities?
a)
a. Salesman only.
b)
b. Salesman and Trainee(s) only.
c)
c. Salesman and Associated Person only.
d)
d. Salesman, Trainee(s) and Associated Person.
59.
Module 12: Which of the following information is/are required to be disclosed in the prospectus of a company conducting an initial public offering?
a)
a. The company's main source of revenues
b)
b. Risk that the company's contract with its main supplier may be terminated at any time
c)
c. The fact that a portion of the proceeds of the offering will be used for repayment of debt.
d)
d. All of the above.
e)
e. None of the above.
60.
Module 12: Which of the following best describes the rationale for the mandatory tender offer rule?
a)
a. To ensure that full disclosure is made in connection with the buy-out of a substantial block of shares of a corporation.
b)
b. The rule seeks to give minority stockholders an opportunity to exit the company when there is an acquisition that results in shift in the control of the company.
c)
c. The rule seeks to ensure gain or profit for the minority stockholders.
d)
d. None of the above.
61.
Module 13: What is the short interest ratio prescribed under the PSE's Short Selling Guidelines?
a)
a. 5%
b)
b. 10%
c)
c. 15%
d)
d. 20%
e)
e. Not applicable
62.
Module 13: How many listed Exchange Traded Funds do we have in PSE?
a)
a. 1
b)
b. 2
c)
c. 3
d)
d. 4
e)
e. 5
63.
Module 13: True or False. Cash dividends received from dollar denominated securities can be both in US dollars and Philippine pesos.
a)
a. True
b)
b. False
64.
Module 13: ___________ is the buying and selling the same asset or similar assets in order to profit from a difference in the price
a)
a. Open-ended
b)
b. Creation and redemption
c)
c. Close-ended
d)
d. Arbitrage
65.
Module 13: At what level was the PSEi when it reached its lowest close in March 2020?
a)
a. 4,523.42
b)
b. 4,623.42
c)
c. 4,723.42
d)
d. 4,823.42
66.
Module 14: This concept talks about the obligation of investment practitioners (members/candidates) to comply with the policies and procedures established by their employers that govern the employer-employee relationship to the extent that such policies and procedures do not conflict with applicable laws, rules or regulations or the Code and Standards:
a)
a. Loyalty
b)
b. Diligence and Reasonable Basis
c)
c. Suitability
d)
d. Fair Dealing
67.
Module 14: All of the following are key factors of Material Information:
a)
a. Mergers, Acquisition, Joint Ventures
b)
b. Changes in Management
c)
c. Government reports of economic trends
d)
d. All of the above
68.
Module 14: Which of the following statement is correct regarding person's (member's or candidate's) duty under the Code and Standards?
a)
a. In the absence of specific applicable law or other regulatory requirements, the Code and Standards govern the member's or candidate's actions.
b)
b. A member or candidate is required to comply only with applicable local laws, rules and regulations or customs even though the Code and Standards may impose a higher degree of responsibility or a higher duty on the member or candidate.
c)
c. A member or candidate who trades securities in a securities market where no applicable local laws or stock exchange rules regulate the use of material nonpublic information may take investment action based on material nonpublic information.
d)
d. All of the above
69.
Module 14: Which of the following statement/s is or are true as to why Ethics matter in the Investment Industry:
I. A strong ethical culture that helps honest, ethical people engage in ethical behavior will foster the trust of investors, lead to robust global capital markets and ultimately benefit society.
II. Ethics for a global investment industry should not be universal and ultimately support trust and integrity above acceptable local or regional customs and culture.
III. Investment professionals should consider how their investment decision-making processes affect the global financial markets in the broader context of how they apply their ethical and professional obligations.
a)
a. III only
b)
b. I only
c)
c. I, II and III
d)
d. I and III
70.
Module 14: This defines as a set of moral principles or rules of conduct that provide guidance for behavior when it affects others
a)
a. Diligence
b)
b. Prudence
c)
c. Ethics
d)
d. Ethical Conduct
100 %
