18 Questions
What is the purpose of the margin between the bid and offer price in a variable life policy?
To cover the management's cost of the policy
How is the policy value of a variable life policy calculated?
Using the bid price of units allocated into the policy
Which of the following is a disadvantage of investing in common shares?
All of the above
What is the purpose of rebating in the context of insurance policies?
To offer a special inducement to purchase a policy
Which of the following statements about variable life policies is TRUE?
The life company needs to maintain a separate account for variable life policies distinct from the general account
Which of the following is the most suitable investment instrument for an investor interested in protecting their principal and receiving a steady stream of income?
Fixed income securities
What is a key characteristic of a flexible premium policy with returns that vary with the underlying value of investments?
Returns tied to investment performance
Which of the following does NOT contribute to the specific risk of an investment?
Expected market growth rate
Which of the following is NOT an advantage of investing in bonds?
Chance for high capital appreciation
Rank the following investment instruments in terms of risk, from least risky to most risky.
I > III > II > IV
According to the disclaimer, what is one restriction on sharing the questionnaire and answer key prepared for general information purposes?
Cannot be published or reproduced without consent
Why is it important for variable life insurance policies to be tied to the underlying investment performance?
To align policy benefits with market conditions
In a risk-return graph, where do equity funds typically fall?
At the top end
Which investment option generally offers higher returns with lower risk?
Balanced funds
Where do cash funds typically sit on a risk-return graph?
At the bottom end
Which type of fund is usually associated with the lowest risk?
Bond funds
What does a risk-return graph show about the relationship between risk and return?
Higher return always comes with lower risk
Which type of fund is likely to have the highest risk in terms of investment?
Equity funds
Test your knowledge on investment instruments and policy value calculation. Determine the most suitable investment instrument for an investor interested in protecting the principal and receiving a steady stream of income. Choose the correct statements about offer price, margin between bid and offer price, and policy value.
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