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Worksheets50-Item Exam: Mutual Fund
Total questions: 50
Worksheet time: 25mins
Ana is 28 and considering a fixed deposit vs. equity mutual fund. Which factor should weigh most in her decision?
Her age alone
Her risk appetite and financial goals
The bank’s reputation
The number of units in the fund
Which scenario best illustrates diversification in mutual funds?
Investing only in one company’s stock
Splitting savings between a fixed deposit and a single bond
Pooling money into a fund that invests across stocks, bonds, and money market instruments
Buying gold jewelry as an investment
If a mutual fund underperforms its benchmark, what does this imply?
The fund manager is guaranteed to be replaced
Investors automatically lose all their money
The fund delivered lower returns compared to a standard index
The fund becomes a fixed deposit
Which type of mutual fund is most suitable for retirees seeking steady income?
Equity Fund
Debt/Bond Fund
Balanced Fund
Index Fund
Liquidity in mutual funds means:
Investors can withdraw anytime, subject to conditions
The fund always guarantees returns
The fund invests only in cash
Investors cannot redeem before maturity
Why are equity funds considered higher risk than debt funds?
Equity funds are managed by less experienced managers
Equity returns depend on volatile stock markets
Debt funds have no risk at all
Equity funds are illegal in some countries
Which advantage of mutual funds directly benefits small investors?
Guaranteed returns
Diversification by pooling small investments
Zero market risk regardless of conditions
Access only to large-ticket opportunities with high minimums
Which situation favors a fixed deposit over a mutual fund?
A retiree needing guaranteed income
A young professional seeking growth
An investor diversifying globally
Someone with high risk appetite
The role of a fund manager is best described as:
Collecting deposits from investors
Professionally managing pooled investments
Guaranteeing fixed returns
Acting as custodian of securities
Which statement best compares mutual funds and fixed deposits?
Mutual funds are risk-free; fixed deposits are risky
Mutual funds are market-linked; fixed deposits offer fixed returns
Both guarantee equal returns
Both are managed by banks
Who ensures investor protection in a mutual fund?
Custodian
Trustee
Sponsor
AMC
Which entity manages the fund professionally?
Trustee
AMC
Custodian
Investor
In the Philippines, mutual funds are regulated by:
Bangko Sentral ng Pilipinas (BSP)
Securities and Exchange Commission (SEC)
Department of Finance
Insurance Commission
Which global company pioneered index funds?
Fidelity
Vanguard
Sun Life
HDFC
Why are custodians essential in mutual funds?
They guarantee returns
They hold securities safely
They manage investor relations
They regulate the fund
Which is a similarity between banks and mutual funds?
Both guarantee fixed returns
Both accept money from the public
Both provide loans
Both are risk-free
Which Philippine company is an example of an AMC?
BPI Investment
BSP
Vanguard
Fidelity
Why might mutual funds be considered riskier than bank deposits?
Mutual funds are market-linked and can fluctuate in value
Mutual funds guarantee higher fixed returns
Bank deposits are not regulated by financial authorities
Mutual funds are insured by the same schemes as bank deposits
Which role is most comparable to a “guardian” of investor assets?
Sponsor
Trustee
AMC
Investor
Which advantage do mutual funds have over bank deposits?
Guaranteed returns
Potentially higher market-linked growth
No fees
No risk
Which fund type is most suitable for conservative investors?
Equity Fund
Money Market Fund
Balanced Fund
Thematic Fund
Which fund tracks a market index?
Equity Fund
Index Fund
Bond Fund
Balanced Fund
During inflation, why might bond funds underperform?
Rising interest rates reduce bond prices
Bonds become illegal
Bond managers resign
Bonds lose diversification
Which Philippine product is an ETF?
ATRAM Peso Bond Fund
First Metro Philippine Equity ETF
Sun Life Balanced Fund
BPI UITF
Which financial product combines insurance and investment?
UITF
VUL
ETF
Balanced Fund
Which is a thematic fund sector?
Technology
Fixed deposits
Custodial services
Commercial banking
Which regulator oversees UITFs in the Philippines?
SEC
BSP
DOF
Insurance Commission
Which advantage do ETFs have over mutual funds?
Traded like stocks
Guaranteed returns
No fees
Which fund balances risk and return by mixing stocks and bonds?
Balanced Fund
Equity Fund
Bond Fund
Money Market Fund
Which product is often the entry point for Filipino investors before mutual funds?
UITFs
ETFs
Equity Funds
Thematic Funds
Which type of bond carries the highest default risk?
Government bond
Corporate bond
Junk bond
Treasury bill
Bond prices move inversely with:
Inflation
Interest rates
Credit ratings
Maturity dates
Which risk erodes real returns of fixed payments?
Credit risk
Inflation risk
Liquidity risk
Duration risk
What is duration management?
Adjusting sensitivity to interest rate changes
Extending bond maturity
Increasing coupon rates
Reducing liquidity
Why might fund managers shorten duration in rising interest rate environments?
To increase volatility
To limit losses
To guarantee returns
To reduce diversification
Which technique involves shifting between government, corporate, or municipal bonds?
Credit analysis
Sector rotation
Duration management
Liquidity management
Which challenge did bond funds face in March 2020?
Excessive returns
Liquidity crisis
No credit risk
Guaranteed losses
Which bond characteristic defines the interest paid annually?
Par value
Coupon rate
Maturity date
Issuer
Which strategy aligns bond fund management with investor objectives?
Ignoring market indicators
Balancing risk across issuers and maturities
Investing only in junk bonds
Guaranteeing fixed returns
Which real-world case showed bond funds reducing duration in 2022?
To chase higher coupon rates
To limit losses from rising interest rates
To increase exposure to junk bonds
To avoid custodian fees
Which risk occurs if the issuer fails to make payments on a bond?
Interest rate risk
Credit risk
Inflation risk
Liquidity risk
Which example best illustrates liquidity risk in bond funds?
Difficulty selling bonds quickly at fair value
Rising inflation eroding returns
Issuer defaulting on payments
Interest rates falling
Which analysis pipeline helps fund managers select bonds with strong issuers?
Duration management
Credit analysis
Sector rotation
Liquidity management
A bond with a par value of ₱1,000 and a 6% coupon rate pays how much each year?
₱600 annually
₱60 annually
₱6 annually
₱100 annually
Which factor must fund managers monitor to align a bond fund’s strategy with investor objectives?
Economic indicators like inflation and interest rates
Custodian fees
Trustee appointments
Sponsor reputation
A young professional wants growth but fears risk. Which portfolio mix is most suitable?
100% equity fund
Balanced fund combining equity and debt
Fixed deposit only
Money market fund only
During a market downturn, which investor profile is most likely to stay invested in equity funds?
Retiree needing steady income
Risk-averse saver
Long-term growth-oriented young professional
Someone saving for a short-term purchase
Which comparison best highlights the difference between mutual funds and commercial banks?
Mutual funds guarantee returns; banks do not
Banks provide loans; mutual funds invest in securities
Both are risk-free
Both are regulated by the SEC
If inflation rises sharply, which fund type is most vulnerable?
Equity fund
Bond fund
Balanced fund
Index fund
Which real-world case demonstrates how global mutual funds expand opportunities for Filipino investors?
Vanguard’s index funds accessible via feeder funds
BSP’s regulation of UITFs
Fixed deposits in local banks
Custodian safekeeping of securities
