2/4/2021 Quiz 2 (closes Mon 18 Jan @ 11:00 am): Attempt review School of Banking & Finance UNSW Business School Site Home Announcements User Guides FINS2643-Wealth Management Summer 2021 Dashboard My courses FINS2643-5212_00042 Self Assessment Quizzes (Class Contribution 15%) Quiz 2 (closes Mon 18 Jan @ 11:00 am) Started on Friday, 15 January 2021, 7:09 PM State Finished Completed on Friday, 15 January 2021, 9:02 PM Time taken 1 hour 52 mins Grade 12.00 out of 20.00 (60%) Question 1 Correct Mark 1.00 out of 1.00 sh is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m Feedback Which of the following statements regarding the benefit of homeownership is incorrect? Select the most correct answer. Select one: a. A hedge against rising rental costs. b. Certainty of substantial capital growth over time. Future gain is uncertain. Location and timing are both important. c. Real estates are illiquid investments and the transaction costs are high. d. Capital Gains Tax main residence exemption available in Australia. Your answer is correct. The correct answer is: Certainty of substantial capital growth over time. Question 2 Correct Mark 1.00 out of 1.00 Select one: Th Which of the following statements regarding asset allocation is INCORRECT? a. Asset allocation refers to the way an investor spreads investments across different asset classes. b. Asset allocation can help an investor achieve the benefits of diversification when different asset classes do not move in the same direction. c. All of the specific statements are correct. d. Asset allocation is the most important factor determining an investor’s long term portfolio return. e. Asset allocation is determined by investment objectives only. You need to consider also constraints. Your answer is correct. The correct answer is: Asset allocation is determined by investment objectives only. This study source was downloaded by 100000803506976 from CourseHero.com on 07-22-2021 02:17:53 GMT -05:00 https://moodle.telt.unsw.edu.au/mod/quiz/review.php?attempt=8543111&cmid=3461255 https://www.coursehero.com/file/91085308/Quiz-2-closes-Mon-18-Jan-11-00-am-Attempt-reviewpdf/ 1/9 2/4/2021 Quiz 2 (closes Mon 18 Jan @ 11:00 am): Attempt review Question 3 Incorrect Mark 0.00 out of 1.00 The usual order of major asset classes from lowest risk/return to highest risk/return is: Select one: a. Cash, fixed interest, property, shares b. Cash, shares, fixed interest, property c. Cash, property, fixed interest, shares d. Fixed interest, cash, shares, property e. Cash, shares, property, fixed interest Your answer is incorrect. The correct answer is: Cash, fixed interest, property, shares Question 4 Mark 1.00 out of 1.00 sh is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m Correct Which of the following statement regarding the benefit of managed funds is INCORRECT? Select one: a. Using managed funds is an easy and time-effective way of investment. b. All of the statements are correct. c. Managed funds can provide excellent diversification benefits for even a small amount of investment. d. They are typically managed on an after-tax return focus. Your answer is correct. Funds are usually pooled across share classes, and tax is not a critical consideration of fund managers. The correct answer is: They are typically managed on an after-tax return focus. Question 5 Correct Mark 1.00 out of 1.00 Which of the following statement regarding CFD is INCORRECT? Select one: Th a. A retail financial product for exposure to share indices, commodities and foreign exchanges. b. The profit is determined by the difference between the price at which the position is opened and which the position is closed. c. CFDs are a leveraged product, which means that you only need to deposit a small percentage of the full value of the trade in order to open a position. d. Market prices are used to compute interest, and this is the same as margin lending on trading shares. Market prices and market value of the positions are used in CFD interest calculation. The loan amount is used in margin lending. e. CFDs are particularly useful in creating short positions in individual stocks. Your answer is correct. The correct answer is: Market prices are used to compute interest, and this is the same as margin lending on trading shares. This study source was downloaded by 100000803506976 from CourseHero.com on 07-22-2021 02:17:53 GMT -05:00 https://moodle.telt.unsw.edu.au/mod/quiz/review.php?attempt=8543111&cmid=3461255 https://www.coursehero.com/file/91085308/Quiz-2-closes-Mon-18-Jan-11-00-am-Attempt-reviewpdf/ 2/9 2/4/2021 Quiz 2 (closes Mon 18 Jan @ 11:00 am): Attempt review Question 6 Correct Mark 1.00 out of 1.00 Which of the following statements regarding ETF is incorrect? Select one: a. ETFs are open-ended funds. b. ETFs are mostly index funds and can be traded like shares on stock exchanges. c. ETFs replicate index funds through either physical or synthetic replication. d. Authorised Participants and Market Makers have an arrangement with the issuers to create and redeem ETF units on a regular basis. e. ETFs’ price can be significantly different from the value of its underlying assets, similar to listed managed funds. Authorised participants arbitraging the price of the basket of securities and ETF's price makes the deviation from NAV small. Your answer is correct. The correct answer is: ETFs’ price can be significantly different from the value of its underlying assets, similar to listed managed funds. Correct Mark 1.00 out of 1.00 sh is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m Question 7 Which of the following statement regarding fund selection is incorrect? Select one: a. Index funds are better if they have low tracking errors and expenses. b. Active funds should be compared with those with similar characteristics such as asset classes, style, and size. c. Active funds are better if they have good track records and low MERs. d. Good past returns of active funds can guarantee better future returns. There is some predictability of up to 1 year. Long run future returns are noisy. Managers know how to charge fees, which gives a higher bar to even skillful managers to deliver higher long term returns after fees. e. Evaluate funds based on past returns is inherently backward-looking. Your answer is correct. The correct answer is: Good past returns of active funds can guarantee better future returns. Question 8 Incorrect Mark 0.00 out of 1.00 Select one: Th Master trusts allow investors to a. Switch between Funds and/or managers. b. Buy or sell direct Australian shares. c. All answers are correct. d. Access a range of fund managers. e. Two of the specific statements are correct. Your answer is incorrect. The correct answer is: Two of the specific statements are correct. This study source was downloaded by 100000803506976 from CourseHero.com on 07-22-2021 02:17:53 GMT -05:00 https://moodle.telt.unsw.edu.au/mod/quiz/review.php?attempt=8543111&cmid=3461255 https://www.coursehero.com/file/91085308/Quiz-2-closes-Mon-18-Jan-11-00-am-Attempt-reviewpdf/ 3/9 2/4/2021 Quiz 2 (closes Mon 18 Jan @ 11:00 am): Attempt review Question 9 Incorrect Mark 0.00 out of 1.00 Which of the following characteristics describe listed managed funds? Select one: a. The value of the unit is determined solely by the value of the underlying assets. b. The price of the unit can be significantly influenced by the investment demand and supply in the market. c. Units can only be bought and sold through a fund manager. d. The fund manager is generally obliged to repurchase any units if an investor wishes to sell them. e. All of the characteristics describe listed managed assets. Only one of the statements is true. Your answer is incorrect. The correct answer is: The price of the unit can be significantly influenced by the investment demand and supply in the market. Incorrect Mark 0.00 out of 1.00 sh is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m Question 10 Which of the following statement regarding the regulation of managed funds is the Most CORRECT? Select one: a. ASIC regulates managed investment schemes (MIS) and listed investment companies. b. APRA regulates large superannuation funds. c. Australian Taxation Office (ATO) regulates the self-managed superannuation funds. d. All persons providing investment advice must be licensed by ASIC e. All of the statements are correct. Your answer is incorrect. The correct answer is: All of the statements are correct. Question 11 Correct Mark 1.00 out of 1.00 Select one: Th A put option gives the holder a. The obligation to buy an asset at the strike price. b. Two of the statements are correct. c. Downside risk protection of the underlying asset. d. The right to sell an asset at the strike price. e. None of the statements are correct. Your answer is correct. The correct answer is: Two of the statements are correct. This study source was downloaded by 100000803506976 from CourseHero.com on 07-22-2021 02:17:53 GMT -05:00 https://moodle.telt.unsw.edu.au/mod/quiz/review.php?attempt=8543111&cmid=3461255 https://www.coursehero.com/file/91085308/Quiz-2-closes-Mon-18-Jan-11-00-am-Attempt-reviewpdf/ 4/9 2/4/2021 Quiz 2 (closes Mon 18 Jan @ 11:00 am): Attempt review Question 12 Correct Mark 1.00 out of 1.00 Strategic asset allocation requires periodic rebalancing to the original asset allocation. Which of the following statement regarding the rebalancing is INCORRECT? Select one: a. Rebalancing is necessary as the asset allocation automatically changes as the value of assets changes. b. Rebalancing leads to buying assets at higher prices and selling assets that have fallen in value. You got it. This statement is incorrect. The opposite is true. Since holdings are fixed, fluctuation in weights is due to price movements. Higher weight means prices went up. When you rebalance, you sell some of the assets with higher weights (relatively higher price assets) and buy assets with the lower weights (relatively cheaper). c. Does not require active market timing skill. d. Take advantage of timing varying risk premiums across asset classes. e. All of the specific statements are correct. Your answer is correct. Question 13 Correct Mark 1.00 out of 1.00 sh is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m The correct answer is: Rebalancing leads to buying assets at higher prices and selling assets that have fallen in value. Common ways of investing in property in Australia include Select one: a. Direct ownership b. Listed real estate investment trusts (REITs) c. Listed property companies (e.g. Westfield and lendlease) d. Unlisted property trust e. All of the answers Your answer is correct. You got it. The correct answer is: All of the answers Question 14 Correct Th Mark 1.00 out of 1.00 Which of the following statements regarding the characteristics of house prices in Sydney and Melbourne is INCORRECT? Select one: a. Long-run returns from property investment are comparable to returns from the stock market. b. The equity beta of property price indices is low, meaning a low correlation between house prices and stock market movements. c. The low equity beta of property price indices suggests the property investment can be a good diversification strategy for stock market investors. d. In recent years, the correlation between house prices and the stock market has decreased. They increased but still less than the correlation between stocks or stocks and listed equity. e. Every property is unique and infrequently traded, which makes measuring returns challenging. Your answer is correct. The correct answer is: In recent years, the correlation between house prices and the stock market has decreased. This study source was downloaded by 100000803506976 from CourseHero.com on 07-22-2021 02:17:53 GMT -05:00 https://moodle.telt.unsw.edu.au/mod/quiz/review.php?attempt=8543111&cmid=3461255 https://www.coursehero.com/file/91085308/Quiz-2-closes-Mon-18-Jan-11-00-am-Attempt-reviewpdf/ 5/9 2/4/2021 Quiz 2 (closes Mon 18 Jan @ 11:00 am): Attempt review Question 15 Incorrect Mark 0.00 out of 1.00 You’ve met a client, Sandra. She tells you she has $50,000 in her home loan offset account and wants to invest all of this money so she can feel that her money is “working harder” for her long term. Which of the following questions would not be absolutely necessary to ask before you provide Sandra with sound investment advice? Select one: a. What is the interest rate on your home loan? b. What other cash do you currently have on hand? It is important that the clients have other emergency funds, cash buffers & adequate savings for their short term personal goals (e.g. holidays), to minimise the chance that they need to withdraw funds from the investment you recommend. c. How much super do you currently have? d. How much money are you currently saving each month? Your answer is incorrect. Question 16 Incorrect Mark 0.00 out of 1.00 sh is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m The correct answer is: How much super do you currently have? You’ve met a client, Sandra. She tells you she has $50,000 in her home loan offset account and wants to invest all of this money so she can feel that her money is “working harder” for her long term. Which investment strategies would you consider recommending for Sandra? Select one: a. Keep the funds in her offset account. b. A $100,000 ETF portfolio with a $50,000 margin account. Incorrect - Margin accounts are costly and carry a high level of risk. Although they can be useful in certain circumstances, taking money out of an offset account and then using these funds to create a margin facility could be assessed as “double gearing”. This type of strategy should only be considered for sophisticated investors. A lower risk alternative strategy would be for Sandra to consider borrowing against equity in her home and adding these funds to any ETF portfolio she commits to. c. A $250,000 investment property, with a $50,000 (20%) deposit. d. A capital-guaranteed Term Deposit. Your answer is incorrect. Th The correct answer is: Keep the funds in her offset account. This study source was downloaded by 100000803506976 from CourseHero.com on 07-22-2021 02:17:53 GMT -05:00 https://moodle.telt.unsw.edu.au/mod/quiz/review.php?attempt=8543111&cmid=3461255 https://www.coursehero.com/file/91085308/Quiz-2-closes-Mon-18-Jan-11-00-am-Attempt-reviewpdf/ 6/9 2/4/2021 Quiz 2 (closes Mon 18 Jan @ 11:00 am): Attempt review Question 17 Incorrect Mark 0.00 out of 1.00 Which of the following statement regarding the unlisted managed funds is correct? Select one: a. There can be a large discrepancy between the net asset value and the redemption price of the unit. b. Units can be bought and sold directly between investors on stock exchanges. c. A large number of redemptions occurring at the same time could lead managers of those funds to liquidate fund investments in a fire sale. d. These funds are particularly suitable for investments that require long-term capital commitment. Not necessarily, there are a lot of unlisted cash management trusts which are short term unlisted funds. Hedge funds and private equity funds need long-term capital commitment. e. All the statements are correct. Your answer is incorrect. Question 18 Correct Mark 1.00 out of 1.00 sh is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m The correct answer is: A large number of redemptions occurring at the same time could lead managers of those funds to liquidate fund investments in a fire sale. Please use the capitalization method to value the following property. The annual income net of all costs from the property is $15,000. The discount rate is 7%, and the income is expected to grow at 2% annually. What’s the value of the property? (Please only write down the number without any texts or a dollar sign, for example, 500000. No decimals.) Answer: 300000 15000/(0.07-0.02) Th The correct answer is: 300000 This study source was downloaded by 100000803506976 from CourseHero.com on 07-22-2021 02:17:53 GMT -05:00 https://moodle.telt.unsw.edu.au/mod/quiz/review.php?attempt=8543111&cmid=3461255 https://www.coursehero.com/file/91085308/Quiz-2-closes-Mon-18-Jan-11-00-am-Attempt-reviewpdf/ 7/9 2/4/2021 Quiz 2 (closes Mon 18 Jan @ 11:00 am): Attempt review Question 19 Correct sh is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m Mark 1.00 out of 1.00 The main message of the following graph is that the risk characteristics of different asset classes might differ depending on the investment horizons. True or False? Select one: True False Th Do you really know it or it's just luck? You will find this graph is the slides. Try to explain it to someone. The correct answer is 'True'. This study source was downloaded by 100000803506976 from CourseHero.com on 07-22-2021 02:17:53 GMT -05:00 https://moodle.telt.unsw.edu.au/mod/quiz/review.php?attempt=8543111&cmid=3461255 https://www.coursehero.com/file/91085308/Quiz-2-closes-Mon-18-Jan-11-00-am-Attempt-reviewpdf/ 8/9 2/4/2021 Quiz 2 (closes Mon 18 Jan @ 11:00 am): Attempt review Question 20 Incorrect Mark 0.00 out of 1.00 The modern portfolio theory justifies why a fund company can service investors with different risk tolerance using the same portfolio. According to the Capital Asset Pricing Model, all investors should invest in the optimal risky portfolio and the risk-free asset. Therefore a fund can use the same diversified portfolio to service different investors as it only needs to adjust the asset allocation between the risky portfolio and risk-free asset. True or false? Select one: True False Please review the graphical portfolio choice. Understand how investors with different risk profile is represented in the graph. How the investment opportunity set looks like leverage, and optimal decision. Th sh is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m The correct answer is 'True'. This study source was downloaded by 100000803506976 from CourseHero.com on 07-22-2021 02:17:53 GMT -05:00 https://moodle.telt.unsw.edu.au/mod/quiz/review.php?attempt=8543111&cmid=3461255 https://www.coursehero.com/file/91085308/Quiz-2-closes-Mon-18-Jan-11-00-am-Attempt-reviewpdf/ Powered by TCPDF (www.tcpdf.org) 9/9
