ceili sample questions set 1

8/10/2019 Ceili Sample questions Set 1

1/14

CEILLI SET 1 2010

AIA Premier Academy Page 1

CEILI - SET 1

Anticipated Questions with Answers

1 The public generally invest their money to provide ___________.

I. funds for a companyII. comfortable standard of livingIII. income in retirementIV. funds for the education and up-bringing of their children

A I, II and IIIB I, II and IVC I, III and IVD

II, III and IV

2 Depending on the investment objective, a person would need to choose___________.

A investing in asset that yield less regular income or those that havebetter for capital gain

B investing in asset that yield more regular income or those that have lessfor capital gain

C investing in asset that yield less regular income or those that have lessfor capital gain

D investing in asset that yield more regular income or those that havebetter for capital gain

3 Important considerations of an individuals decision in investment include________.

I. the individuals attitude towards riskII. the accessibility of fundIII. the taxation liabilityIV. the individuals employer performance

A I, II and IIIB II, III and IVC I, II and IVD I, III and IV


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4 A persons horizon will greatly depend on __________.

A the investment objectives, age of investor and the current financialcondition of investor

B the education background, sex and occupation background of investor

C the taxation treatment, moral characteristics of the investor and age ofinvestor

D the process of investment, the fund for paying financial expenses andage of investor

5 The performance of an investment depends on _________.

I. a countrys economy factors and past experience of the investedcompany

II. the competencies and capability of the invested companymanagement team

III. the number and spread of small-time investors choosing to investIV. the invested companys level of cost and the life cycle of the

investment

A I, II and IIIB I, II and IVC I, III and IVD II, III and IV

6

The factors that may influence the choice of deposits in a bank include_________.

I. fund available for investmentII. the length of time the funds can be in the accountIII. whether emergency withdrawal are likelyIV. the age of depositor

A I, II and IIIB I, II and IV

C I, III and IVD II, III and IV


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7 Among the advantages in investing in shares are:

I. investors are able to participate directly in the future of theinvested company

II. shares provide good dividends and capital appreciation

III. shares are very liquid and can be traded in open marketIV. the value of the shares can never go beyond the price at which

the shares are bought.

A I, II and IIIB II, III and IVC I, II, and IVD I, III and IV

8 Unit trust is essentially for:

A two-way arrangements between the investors and the fund managerB two-way arrangements between the investors and the trusteeC three-way arrangements among the investors, the trustee and the fund

managerD three-way arrangements among the investors, the trustee and the

supervisory authority

9 The function of investment trust include:

I.

making investment simpler to small-time investors

II. making investment accessible to small-time investorsIII. making investment more cost effective to small-time investorsIV. making investment a definite profitable transaction for small-time

investors


10 An example of investment trust is:

A that of Amanah Saham NationalB that of KL Mutual FundC the listed Seacorp Schroders

D that of Mayban Management Bhd


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11 What are derivatives?

A They are real estate investment providing good capital appreciation andhigh flow of income

B They are pools of fund introduced to many investors kept in trust by bank

managed by a professional fund managerC They are preference shares that give the holders the right to a fixed

dividend provided that have been madeD They are financial instruments whose values are linked to the price of

underlying instruments in the cash market

12 Investors purchasing call option will be hoping that:

A the share price will fall when option is exercised, the premium and thefixed price will be more than the values of the share

B the share price will rise when option is exercised, the premium and the

fixed price will be more than the values of the shareC the share price will fall when option is exercised, the premium and the

fixed price will be less than the values of the shareD the share price will rise when option is exercised, the premium and the

fixed price will be less than the values of the share

13 Warrants or TSR are:

I. seldom issued on their ownII. often issued free and attached to rights or loan stocksIII. often issued as an added attraction or sweetener allowing a

corporate issuer to obtain a lower financing costsIV. not permitted to be detached from the loan stock and sold

separately in the securities market


14 Hedging can be described as:

A assuming of present position opposite to future positions in an attempt tomaximize financial gains from price stability

B assuming of future positions opposite to cash position in an attempt tominimize the risk of financial loss from adverse price changes

C making money by selling a physical commodity immediately to a buyer forhis immediate enjoyment

D shifting of the risk of price fluctuation from participants who are willing toassume risks to those who are not


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15 Life insurance can be described as:

I. a means of alleviating of the financial distress that death maybring

II. a means of spending and divesting when death occurs

III. a pool of fund into which a large numbers of policyowners jointlycontribute in relation to their risk exposures

IV. a contract dependent in human life


16 The first investment-linked life insurance contract in the United Kingdomtransacted some 30 years ago was ________

A a group retirement annuity for the self-employedB an individual retirement annuity for the self-employedC introduced by the London & Manchester Association Company Limited in

1953D linked to an internal unit trust administered by the London & Manchester

Association Company Limited

17 The Investment Company Act 1940 of United States ________A regards entities that invest assets of variable life insurance policyowners

as investment companies and regulates the companies managementand operationsB requires that potential clients be provided with a prospectus that among

others discloses the identity and nature of the insurers businessC requires that potential clients be provided with a prospectus that among

others discloses the financial information of the insurerD requires that insurance agents and agency office employees dealing with

variable life insurance must pass an examination in securities businessand be registered with the National Association of Securities Dealers

18 One of the factors which has contributed to the expansion of the investment-linked life insurance business in Singapore was ___________A the requirement of the Securities Exchange Act 1934 that all insurance

agents and agency office employees dealing in variable life insurancemust pass an examination in securities business

B the regulations of investment companys management and operationincluding that of how the premiums are going to be invested, financialinformation of the insurer, chargeable fees and expenses and rights ofpolicyowners

C the introduction of the Enhanced Investment Scheme (EIS) by the CentralProvident Fund (CPF) in 1993

D the introduction of the new generation of investment-linked life insuranceproducts, the Hambro Whole Life Plan in 1997


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19 How are the premiums under investment-linked life insurance policiesapportioned?A A major portion of the investment-linked life insurance policies premium

are allocated for the mortality protection aspects under the policy and the

lesser part of the premium are used to purchase units in the investment-linked fund managed by the life offices

B Investment-linked life insurance policies premium will be divided equallyin both mortality protection aspects and to purchase units in theinvestment-linked fund managed by the life offices

C A major portion of the investment-linked life insurance policies premiumare used to purchase units in the investment-linked fund and a lesserportion for the mortality protection aspects under the policy

D The whole Investment-linked life insurance policy premiums are used topurchase units in the investment-linked fund, and the mortality aspects isgiven free

20 Each premium that an investment-linked life insurance policyowner makes is_________.A allocated to units at the life offices selling price called offer price

prevailing on each investment dateB allocated to units at the life offices selling price called offer price

prevailing on each cash-in-dateC allocated to units at the life offices selling price called bid price prevailing

on each investment dateD allocated to units at the life offices selling price called bid price prevailing

on each cash-in-date

21 In respect of investment-linked life insurance funds, the difference between theoffer and bid prices in normal market condition is ___________.A 10% - 20% of offer price, and this difference is known as the offer-bid

spreadB 10% - 20% of bid price, and this difference is known as the offer-bid

spreadC 5% - 6% of offer price, and this difference is known as the offer-bid

spreadD 5% - 6% of bid price, and this difference is known as the offer-bid spread

22 One fundamental difference between traditional with profit life insurancepolicies and investment-linked life policies is ___________.A investment-linked life insurance policies aim to produce a steady return by

smoothing out market fluctuationsB traditional with-profit life insurance policies aim to produce a steady return

by smoothing out market fluctuationsC investment-linked life insurance policies do not offer the potential for

higher returnsD traditional life insurance policies offer the potential for higher returns


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23 The expenses of running a life office and acquiring investment-linked lifeinsurance business ___________A are covered by making certain charges on the policies issued both up-

front and regular policy charges not specifically detailed in the policyitems

B are borne in part by the policyowners directly in relation to the particularpolicies and in part taken out of the life fund as a whole

C are levied on the policies through open stipulation in the policies includingthe types and level of charges imposed

D cannot be determined by a careful study of the policies document andpolicies statement

24 If the offer price in an investment date is RM2.50 and the premium amount ofRM250.00 is used to buy units, it will buy __________.

A 0.01 unitB 10 unitsC 100 unitsD 100 units less the unallocated premium

25 Investment-linked funds can be structured into 2 ways:A Warrant units and right unitsB Investment units and mortality unitsC Accumulation units and distribution unitsD Term units and annuity units

26 As the value of Investment-link policy depends on the performance of financialinstrument in which the investment is invested,A fund manager bears the risk and the policyowner bears the benefit of the

policyB the life office bears the risk and policyowner bears the benefit of the

policyC the invested company bears risk and life office bears the benefit of the

policyD policyowner bears both risk and benefit of the policy

27 Currently, financial instrument which Investment-linked Funds are investedinclude:

I. Cash FundII. Equity FundIII. Property FundIV. Diversified Fund

A IB I and IIC

I, II and III

D I, II, III and IV


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28 The switching facility in Investment-linked fund allows

A a life office to switch on Investment-linked life insurance policy to atraditional with profit endowment policy

B a life office to switch a single premium Investment-linked whole lifeinsurance plan to a regular premium Investment-linked whole lifeinsurance plan

C a policyowner to switch part or all of his investment from one Investment-linked fund to another

D policyowner to switch part or all of his investment from one life officespolicy to another life offices policy at the same premium

29 If the number of unit in an Investment-linked Fund is 100,000 and the value ofthe total value of the fund at x point in time is RM1 million, the value of eachunit can be calculated by

A multiplying number of unit in existence with value of the total fundB subtracting the number of unit existing before x point from the 100,000

unit multiply the number with the value of total fundC dividing the value of the total fund by the sum of the number of units in

existenceD dividing the value of the total fund by the sum of the number of units

existing before x point in time

30 Under traditional with-profit life insurance policy,

I. the life fund maintains a reserve to help level out the short termfluctuation in value of the life funds investment

II. maintaining a reserve could mean that the policyowner does notreceive the full value in a year of high investment gains

III. maintaining a reserve could mean that the policyowner does notsuffer in a year of poor investment conditions

IV. maintaining a reserve could mean that the full impact of thechanges in investment conditions will be directly borne by thepolicyowner



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31 A major difference between traditional with-profit life insurance product andInvestment-linked life insurance policy

A traditional with-profit life insurance policy can reduce in value particularlywhen the life fund is being transferred to policy reserve

B traditional with-profit life insurance policy can never reduce in value,provided that the life office is solvent

C the value of traditional with-profit life insurance policy will fluctuate greatlydepending on the investment performance of the life office

D the value of Investment-linked life insurance policy can never fluctuateonce the units are added to the policyowners policy

32 The value of investment depend on 2 factors:

A the offer price and bid priceB disability income and cash valueC cash value plus protection costD the value of each of the units plus number of units the policy has

accumulated to date

33 The phrase "Top-Up" in Investment-Linked Life Insurance means:

A the policyowners pay further premium to purchase additional units of theinvestment-linked fund which will be added to the existing units in thepolicyowners account

B the life office maintain reserves to level out short term fluctuation in thevalue of Investment-linked fund

C when the Investment-linked fund value increases, the value of the fundwill also increase

D the policyowner can change his investment fund to another fund which hebelieves to have great opportunities for higher return

34 With dual pricing method, Ahmad has paid RM4,000 premium to buy his singlepremium investment-linked policy. The offer price is Rm1 and bid offer spreadis 5%. Assuming the unit price never change, what is the bid price and theamount that Ahmad will get if he cash in or claim the policy ________

A 0.095 and RM3,800 respectivelyB 0.95 and RM3,800 respectivelyC 0.05 and RM2,000 respectivelyD 0.50 and RM2,000 respectively

35 Under single premium pricing method, Joo Hin bought a single-premiuminvestment-linked policy. He hold 3,800 units at RM1.00 unit price. With 1%mortality charge and policy fee of RM100, what is the cash value of his policy?A RM3,938B RM3,800C RM3,700

D RM3,662


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36 The formula for Annual Yield for single premium fund isA (RGP) n+ 1,n = number of unitsB (RGP)

1/n+ 1,n = number of year

C (RGP)1/n - 1,n = number of unitsD (RGP) n - 1,n = number of years

37 The benefits of investing in investment-linked funds.

I. It offers the policyowner an access to a "pooled" or "diversifiedportfolio" of investment.

II. Investment-linked products have simple design with clearstructure which caters separately for investment and insuranceprotection.

III. Policyowners can access to the investment-linked fund managedby professional fund manager with unproven track record.

IV. Investors can buy investment-linked life insurance policy with an

initial investment at as low as RM4000.


38 A well-diversified investment-linked fund has.

A many professional fund managers who take care of many fundsB

a better risk characteristic than a less-diversified fund

C a simple designed product which cater separately for investment andinsurance protection

D provision of flexibility to change the level of premium payment and takepremium holidays

39 The flexibility of investment-linked fund are.

I. investment-linked products have simple product design whichcater separately for investment and insurance protection

II. policyowner can easily change the level of his premium payment

and add single premium top-upsIII. policyowner can buy an investment-linked life insurance policy

with an initial investment at as low as RM4,000IV. policyowner can easily change the level of sum assured and

switch investment between funds



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40 The following statements about investment expertise in investment-linked isFALSE.

A Investment-linked funds have professional fund managers who have theinvestment expertise to invest the fund to achieve high return over the

long term.B Investment-linked funds have professional fund managers who have the

investment expertise to invest the fund to always achieve high return overthe short term.

C An ordinary policyowner does not normally has good knowledge offinancial market to invest his money effectively.

D Investment-linked fund have professional fund manager to manage thefund.

41 The criterias for comparing traditional life insurance products with investment-linked life insurance products include

I. the products investment returns and risks.II. the policy premium computation.III. the death benefit.IV. the life offices management expertise.


42 Investment-linked life insurance products benefits

A are solely dependent on fixed income securities in which the funds invest.B comprise the investment returns only.C wholly or partly determined by referring to the value of or income from

property of any description or by referring to the fluctuation in or in anindex of, the value of property of any description.

D are determined and fixed at the inception of the policy contract.

43 Under traditional without-profit life insurance products, the amount payable to

the policyownersA does not depend on the investment performance of the life office as it is

fixed at the inception of the policy thus there are no investment risks.B Includes bonuses which are allocated to the policyowner in the form of

additions to the sum assured but these allocations are not directly linkedto the life office investment performance.

C vary according to the performance and values of the underlying assets ofthe life offices investment.

D vary according to the performance and values of the underlying assetsthat the policies are tied to.


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44 Investment-linked life insurance policies are said to be account driven. Thismeans that

I. the premiums charged and the benefits under the policy are fixedbase on specific sum assured and stated in the policies at their

inceptions.II. Policyowner have the flexibility in changing their premium

payments.III. Life offices may retain the right to vary some of the changes made

under the policies.IV. If the future experience differs from what is assured when the

policies are priced, the life offices may depart from their intendedpolicies and change the offer and bid prices.


45 The following statements concerning taxation in respect of investment-linkedlife insurance policies are true.

I. surpluses generated from writing investments-linked life insuranceproducts are already taxed at the level of the life insurancecompanies.

II. Proceeds distributed to policyowner of investment-linked life

insurance policy are tax free in the hands of policyowner.

III. Disposal of units in investment-linked life insurance should attracttax as they are capital receipts.

IV. The tax laws currently governing other forms of life insuranceapply to investment-linked life insurance.



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46 What are the stages involved in providing effective advice to investment-linkedlife insurance customers?

I. conducting the fact-findingII. marketing qualification

III. assessing and satisfying customersIV. making recommendation to customers

A I, II and IIIB I, III and IVC II, III and IVD I, II, III and IV

47 After the financial needs of a customer is assessed, what must an investment-linked life insurance agent do?

I. consider the most appropriate means to satisfy those needsoffered within the investment-linked insurance.

II. Consider the most appropriate means of satisfying those needswhich may involve financial products other than investment-linkedlife insurance.

III. Refer the customer to another person with better expertise incertain areas of financial services, should the need arise.

IV. If the financial needs fall outside the scope of the insurersportfolio the agent must discontinue his finding.

A

I and IV

B II and IIIC II and IVD II

48 What do you understand by the phrase " conducting the fact-finding" which isdone by an investment-linked insurance agent?

A Gathering all information of the investment available by the insurer.B Gathering all relevant information about the customer before making

recommendation.

C Gathering all information about the various plans offered by otherinsurers in the market.

D Gathering as far as possible all elements that will affect the customersinvestment.

49 Under the sales-oriented basis. What technique is frequently used?

A Product Sales TechniqueB Market Sales TechniqueC Hand Sales TechniqueD Forced Sales Technique


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50 For a company to be successful in selling the products, the most importantthing to have is :

A Market-oriented agency force.B Competitive products.C Dedicated Staff.D Good working environment.

51 An agent who engages in personal selling requires the following process:

I. conducting fact finding.II. Assessing/satisfying customers needs.III. Making recommendation to the customer.

A I and IIB I and IIIC II and IIID I, II and III

52 What are the important ingredients in a successful sales interview?

A The agents skill in handling objections from a prospect.B The reduction of the product price.C Change in sales planD The agent making objections and drawing the prospects attention to the

advantages of the product.

53 What is the main reason of insurance agent in participating in the planning ofnew product?A Feedback on the market.B To establish a goal for the agency and ways to achieve it.C New ideas are established.D To promote self esteem and confident in agent.

ceili sample questions set 1

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