Philippines UITF Certification Program Exam Questions and Answers
Question 1. An investment has a 30% probability of returning -5.0% and a 70% probability of returning 20.0%. What
is the expected return?
A. 7.50%
B. 12.50%
C. 2.50%
D. 25.00%
Correct Answer: B. 12.50%
Explanation: Expected return is the probability-weighted average of the possible outcomes. The calculation is 0.30 × -5.0% + 0.70
× 20.0% = 12.50%. A simple average would ignore the fact that the two outcomes do not have equal probabilities.
Question 2. An investment earns a nominal return of 9.0% while inflation is 2.0%. Using the exact Fisher
relationship, what is the real return?
A. 6.86%
B. 7.00%
C. 22.22%
D. 11.00%
Correct Answer: A. 6.86%
Explanation: The exact real return is (1 + nominal return) / (1 + inflation) - 1. Using the stated values gives 6.86%. Simply
subtracting inflation from nominal return is a useful approximation at low rates, but it is not the exact calculation requested.
Question 3. A one-period project requires an initial outlay of ■150,000.00 and is expected to pay ■110,000.00 one
year later. At a discount rate of 10.0%, what is the NPV?
A. ■-29,000.00
B. ■50,000.00
C. ■-50,000.00
D. ■-40,000.00
Correct Answer: C. ■-50,000.00
Explanation: NPV equals the present value of future cash flows minus the initial outlay. Discounting ■110,000.00 for one year at
10.0% and subtracting ■150,000.00 gives ■-50,000.00. The undiscounted difference ignores the time value of money and
therefore is not NPV.
Question 4. A bond has a face value of ■100.00, an annual coupon rate of 5.0%, and a market price of ■107.00.
What is its current yield?
A. 4.67%
B. 5.00%
C. 6.00%
D. -6.54%
Correct Answer: A. 4.67%
Explanation: Current yield equals annual coupon cash flow divided by current market price, so the numerator is ■5.00. Dividing by
■107.00 gives 4.67%. Current yield is not the coupon rate and it is not yield to maturity because it ignores the timing and amount of
the redemption cash flow.
Page 1
,Question 5. A share trades at ■50.00 and pays annual cash dividends of ■2.50 per share. What is the dividend
yield based on the current price?
A. 2.50%
B. 5.00%
C. 95.00%
D. 20.00%
Correct Answer: B. 5.00%
Explanation: Dividend yield equals annual cash dividend per share divided by current market price per share. ■2.50 / ■50.00 ×
100 = 5.00%. The calculation does not include capital gains or losses, so it is not a total-return measure.
Question 6. A fund earns a gross return of 10.00% for a year and incurs annual expenses equal to 0.75% of assets,
with no other adjustments. What is the approximate net return?
A. Approximately 0.75%
B. Approximately 10.75%
C. Approximately 9.25%
D. Approximately 10.00%
Correct Answer: C. Approximately 9.25%
Explanation: Under the simplified assumptions, expenses reduce the gross return approximately one-for-one. 10.00% - 0.75% =
approximately 9.25%. Actual reported performance can differ because of timing, compounding, transaction costs, taxes, and the
precise method used to accrue expenses.
Question 7. A trader takes a short futures position at 120.00. The contract multiplier is 10, and the position is
closed at 115.00. Ignoring fees and daily financing effects, what is the profit or loss per contract?
A. ■170.00
B. ■-5.00
C. ■50.00
D. ■-50.00
Correct Answer: C. ■50.00
Explanation: Futures profit or loss equals the price change multiplied by the contract multiplier, with the sign determined by
whether the position is long or short. For this short position, the result is ■50.00. The contract's quoted price change alone is not the
cash profit or loss because the multiplier converts the quotation into contract value.
Question 8. A repo has cash principal of ■5,000,000.00, an annual repo rate of 7.0%, and a term of 14 days on an
assumed 360-day basis. What is the repo interest?
A. ■5,013,611.11
B. ■13,611.11
C. ■350,000.00
D. ■13,424.66
Correct Answer: B. ■13,611.11
Explanation: Simple repo interest on the stated convention is principal × annual rate × days / day-count basis. Using 14/360 gives
interest of ■13,611.11. The repurchase amount would normally include both principal and interest, but the question asks for the
interest component only.
Page 2
,Question 9. In the context of Philippine trust and investment-fund market, which statement about Operational risk
is most accurate?
A. The risk of loss from inadequate or failed processes, people, systems, or external events.
B. The risk that changes in market interest rates adversely affect the value or cash flows of an investment.
C. The risk of loss from changes in market prices, rates, spreads, or volatility.
D. The use of borrowing or derivatives to increase economic exposure relative to invested capital.
Correct Answer: A. The risk of loss from inadequate or failed processes, people, systems, or external events.
Explanation: Operational risk is best understood as the risk of loss from inadequate or failed processes, people, systems, or
external events. This interpretation is consistent with the way the concept is applied in professional securities and investment
practice, including activity overseen by Bangko Sentral ng Pilipinas (BSP) and the UITF certification framework. The other choices
describe different concepts or would lead to a materially different risk, trading, valuation, or compliance conclusion.
Question 10. A pooled fund reports assets of ■120,000,000.00, liabilities of ■2,000,000.00, and 5 million units
outstanding. What is the fund's NAV per unit?
A. ■24.00
B. ■24.40
C. ■23.60
D. ■0.40
Correct Answer: C. ■23.60
Explanation: Net asset value equals assets minus liabilities, divided by units outstanding. Here the net assets are
■118,000,000.00, which produces an NAV per unit of ■23.60. Using gross assets would overstate value because fund liabilities
belong in the NAV calculation.
Question 11. Which of the following best describes Treasury bill?
A. A debt instrument whose coupon resets periodically by reference to a specified benchmark plus or minus a spread.
B. A debt security that generally pays no periodic coupon and is issued below, or accretes toward, redemption value.
C. A short-term government debt instrument typically issued at a discount or on a money-market yield basis.
D. A bond that makes periodic interest payments and repays principal according to its terms.
Correct Answer: C. A short-term government debt instrument typically issued at a discount or on a money-market yield
basis.
Explanation: Treasury bill is best understood as a short-term government debt instrument typically issued at a discount or on a
money-market yield basis. This interpretation is consistent with the way the concept is applied in professional securities and
investment practice, including activity overseen by Bangko Sentral ng Pilipinas (BSP) and the UITF certification framework. The
other choices describe different concepts or would lead to a materially different risk, trading, valuation, or compliance conclusion.
Question 12. Which of the following best describes Preferred share?
A. An equity or hybrid security that generally has priority over common shares for specified dividends or liquidation claims.
B. Market price per share divided by earnings per share.
C. An increase in shares outstanding with a proportional reduction in price per share, absent other market effects.
D. A distribution by a company to shareholders according to the type and terms of the security.
Correct Answer: A. An equity or hybrid security that generally has priority over common shares for specified dividends
or liquidation claims.
Explanation: Preferred share is best understood as an equity or hybrid security that generally has priority over common shares for
specified dividends or liquidation claims. This interpretation is consistent with the way the concept is applied in professional
securities and investment practice, including activity overseen by Bangko Sentral ng Pilipinas (BSP) and the UITF certification
framework. The other choices describe different concepts or would lead to a materially different risk, trading, valuation, or
compliance conclusion.
Page 3
, Question 13. A ■10,000.00 face-value bond pays a 6.0% annual coupon in 4 equal payment(s) per year. What is
each coupon payment?
A. ■2,500.00
B. ■300.00
C. ■600.00
D. ■150.00
Correct Answer: D. ■150.00
Explanation: Annual coupon interest is face value multiplied by the annual coupon rate, which equals ■600.00. Dividing that
amount by 4 payment period(s) gives ■150.00 per payment. The bond's market price is irrelevant to the contractual coupon cash
flow unless the question specifically asks for a yield measure.
Question 14. A pooled fund reports assets of ■150,000,000.00, liabilities of ■5,000,000.00, and 10 million units
outstanding. What is the fund's NAV per unit?
A. ■0.50
B. ■15.50
C. ■14.50
D. ■15.00
Correct Answer: C. ■14.50
Explanation: Net asset value equals assets minus liabilities, divided by units outstanding. Here the net assets are
■145,000,000.00, which produces an NAV per unit of ■14.50. Using gross assets would overstate value because fund liabilities
belong in the NAV calculation.
Question 15. A currency pair is quoted at 1.0879 spot and 1.0770 for the relevant forward date, in identical
quotation terms. Which statement is correct?
A. The spot and forward rates imply no forward premium or discount.
B. The forward relationship cannot be assessed from the two quoted rates.
C. The base currency trades at a forward discount of approximately 1.00% for the quoted period.
D. The base currency trades at a forward premium of approximately 1.00% for the quoted period.
Correct Answer: C. The base currency trades at a forward discount of approximately 1.00% for the quoted period.
Explanation: Compare the forward rate with spot using the same quotation convention. The proportional difference is (1.0770 /
1.0879 - 1) × 100 = -1.00%, so the direction follows whether forward is above or below spot. This percentage describes the
quoted-period forward premium or discount and is not automatically an annualized measure.
Question 16. A company earns net income of 12 million and has average common equity of 60 million. What is
return on equity?
A. 12.00%
B. 5.00%
C. 20.00%
D. 80.00%
Correct Answer: C. 20.00%
Explanation: Return on equity compares earnings available to common equity with the equity capital supporting those earnings.
Using the stated figures, × 100 = 20.00%. The measure should not be inverted because equity divided by income answers a
different question.
Page 4
Question 1. An investment has a 30% probability of returning -5.0% and a 70% probability of returning 20.0%. What
is the expected return?
A. 7.50%
B. 12.50%
C. 2.50%
D. 25.00%
Correct Answer: B. 12.50%
Explanation: Expected return is the probability-weighted average of the possible outcomes. The calculation is 0.30 × -5.0% + 0.70
× 20.0% = 12.50%. A simple average would ignore the fact that the two outcomes do not have equal probabilities.
Question 2. An investment earns a nominal return of 9.0% while inflation is 2.0%. Using the exact Fisher
relationship, what is the real return?
A. 6.86%
B. 7.00%
C. 22.22%
D. 11.00%
Correct Answer: A. 6.86%
Explanation: The exact real return is (1 + nominal return) / (1 + inflation) - 1. Using the stated values gives 6.86%. Simply
subtracting inflation from nominal return is a useful approximation at low rates, but it is not the exact calculation requested.
Question 3. A one-period project requires an initial outlay of ■150,000.00 and is expected to pay ■110,000.00 one
year later. At a discount rate of 10.0%, what is the NPV?
A. ■-29,000.00
B. ■50,000.00
C. ■-50,000.00
D. ■-40,000.00
Correct Answer: C. ■-50,000.00
Explanation: NPV equals the present value of future cash flows minus the initial outlay. Discounting ■110,000.00 for one year at
10.0% and subtracting ■150,000.00 gives ■-50,000.00. The undiscounted difference ignores the time value of money and
therefore is not NPV.
Question 4. A bond has a face value of ■100.00, an annual coupon rate of 5.0%, and a market price of ■107.00.
What is its current yield?
A. 4.67%
B. 5.00%
C. 6.00%
D. -6.54%
Correct Answer: A. 4.67%
Explanation: Current yield equals annual coupon cash flow divided by current market price, so the numerator is ■5.00. Dividing by
■107.00 gives 4.67%. Current yield is not the coupon rate and it is not yield to maturity because it ignores the timing and amount of
the redemption cash flow.
Page 1
,Question 5. A share trades at ■50.00 and pays annual cash dividends of ■2.50 per share. What is the dividend
yield based on the current price?
A. 2.50%
B. 5.00%
C. 95.00%
D. 20.00%
Correct Answer: B. 5.00%
Explanation: Dividend yield equals annual cash dividend per share divided by current market price per share. ■2.50 / ■50.00 ×
100 = 5.00%. The calculation does not include capital gains or losses, so it is not a total-return measure.
Question 6. A fund earns a gross return of 10.00% for a year and incurs annual expenses equal to 0.75% of assets,
with no other adjustments. What is the approximate net return?
A. Approximately 0.75%
B. Approximately 10.75%
C. Approximately 9.25%
D. Approximately 10.00%
Correct Answer: C. Approximately 9.25%
Explanation: Under the simplified assumptions, expenses reduce the gross return approximately one-for-one. 10.00% - 0.75% =
approximately 9.25%. Actual reported performance can differ because of timing, compounding, transaction costs, taxes, and the
precise method used to accrue expenses.
Question 7. A trader takes a short futures position at 120.00. The contract multiplier is 10, and the position is
closed at 115.00. Ignoring fees and daily financing effects, what is the profit or loss per contract?
A. ■170.00
B. ■-5.00
C. ■50.00
D. ■-50.00
Correct Answer: C. ■50.00
Explanation: Futures profit or loss equals the price change multiplied by the contract multiplier, with the sign determined by
whether the position is long or short. For this short position, the result is ■50.00. The contract's quoted price change alone is not the
cash profit or loss because the multiplier converts the quotation into contract value.
Question 8. A repo has cash principal of ■5,000,000.00, an annual repo rate of 7.0%, and a term of 14 days on an
assumed 360-day basis. What is the repo interest?
A. ■5,013,611.11
B. ■13,611.11
C. ■350,000.00
D. ■13,424.66
Correct Answer: B. ■13,611.11
Explanation: Simple repo interest on the stated convention is principal × annual rate × days / day-count basis. Using 14/360 gives
interest of ■13,611.11. The repurchase amount would normally include both principal and interest, but the question asks for the
interest component only.
Page 2
,Question 9. In the context of Philippine trust and investment-fund market, which statement about Operational risk
is most accurate?
A. The risk of loss from inadequate or failed processes, people, systems, or external events.
B. The risk that changes in market interest rates adversely affect the value or cash flows of an investment.
C. The risk of loss from changes in market prices, rates, spreads, or volatility.
D. The use of borrowing or derivatives to increase economic exposure relative to invested capital.
Correct Answer: A. The risk of loss from inadequate or failed processes, people, systems, or external events.
Explanation: Operational risk is best understood as the risk of loss from inadequate or failed processes, people, systems, or
external events. This interpretation is consistent with the way the concept is applied in professional securities and investment
practice, including activity overseen by Bangko Sentral ng Pilipinas (BSP) and the UITF certification framework. The other choices
describe different concepts or would lead to a materially different risk, trading, valuation, or compliance conclusion.
Question 10. A pooled fund reports assets of ■120,000,000.00, liabilities of ■2,000,000.00, and 5 million units
outstanding. What is the fund's NAV per unit?
A. ■24.00
B. ■24.40
C. ■23.60
D. ■0.40
Correct Answer: C. ■23.60
Explanation: Net asset value equals assets minus liabilities, divided by units outstanding. Here the net assets are
■118,000,000.00, which produces an NAV per unit of ■23.60. Using gross assets would overstate value because fund liabilities
belong in the NAV calculation.
Question 11. Which of the following best describes Treasury bill?
A. A debt instrument whose coupon resets periodically by reference to a specified benchmark plus or minus a spread.
B. A debt security that generally pays no periodic coupon and is issued below, or accretes toward, redemption value.
C. A short-term government debt instrument typically issued at a discount or on a money-market yield basis.
D. A bond that makes periodic interest payments and repays principal according to its terms.
Correct Answer: C. A short-term government debt instrument typically issued at a discount or on a money-market yield
basis.
Explanation: Treasury bill is best understood as a short-term government debt instrument typically issued at a discount or on a
money-market yield basis. This interpretation is consistent with the way the concept is applied in professional securities and
investment practice, including activity overseen by Bangko Sentral ng Pilipinas (BSP) and the UITF certification framework. The
other choices describe different concepts or would lead to a materially different risk, trading, valuation, or compliance conclusion.
Question 12. Which of the following best describes Preferred share?
A. An equity or hybrid security that generally has priority over common shares for specified dividends or liquidation claims.
B. Market price per share divided by earnings per share.
C. An increase in shares outstanding with a proportional reduction in price per share, absent other market effects.
D. A distribution by a company to shareholders according to the type and terms of the security.
Correct Answer: A. An equity or hybrid security that generally has priority over common shares for specified dividends
or liquidation claims.
Explanation: Preferred share is best understood as an equity or hybrid security that generally has priority over common shares for
specified dividends or liquidation claims. This interpretation is consistent with the way the concept is applied in professional
securities and investment practice, including activity overseen by Bangko Sentral ng Pilipinas (BSP) and the UITF certification
framework. The other choices describe different concepts or would lead to a materially different risk, trading, valuation, or
compliance conclusion.
Page 3
, Question 13. A ■10,000.00 face-value bond pays a 6.0% annual coupon in 4 equal payment(s) per year. What is
each coupon payment?
A. ■2,500.00
B. ■300.00
C. ■600.00
D. ■150.00
Correct Answer: D. ■150.00
Explanation: Annual coupon interest is face value multiplied by the annual coupon rate, which equals ■600.00. Dividing that
amount by 4 payment period(s) gives ■150.00 per payment. The bond's market price is irrelevant to the contractual coupon cash
flow unless the question specifically asks for a yield measure.
Question 14. A pooled fund reports assets of ■150,000,000.00, liabilities of ■5,000,000.00, and 10 million units
outstanding. What is the fund's NAV per unit?
A. ■0.50
B. ■15.50
C. ■14.50
D. ■15.00
Correct Answer: C. ■14.50
Explanation: Net asset value equals assets minus liabilities, divided by units outstanding. Here the net assets are
■145,000,000.00, which produces an NAV per unit of ■14.50. Using gross assets would overstate value because fund liabilities
belong in the NAV calculation.
Question 15. A currency pair is quoted at 1.0879 spot and 1.0770 for the relevant forward date, in identical
quotation terms. Which statement is correct?
A. The spot and forward rates imply no forward premium or discount.
B. The forward relationship cannot be assessed from the two quoted rates.
C. The base currency trades at a forward discount of approximately 1.00% for the quoted period.
D. The base currency trades at a forward premium of approximately 1.00% for the quoted period.
Correct Answer: C. The base currency trades at a forward discount of approximately 1.00% for the quoted period.
Explanation: Compare the forward rate with spot using the same quotation convention. The proportional difference is (1.0770 /
1.0879 - 1) × 100 = -1.00%, so the direction follows whether forward is above or below spot. This percentage describes the
quoted-period forward premium or discount and is not automatically an annualized measure.
Question 16. A company earns net income of 12 million and has average common equity of 60 million. What is
return on equity?
A. 12.00%
B. 5.00%
C. 20.00%
D. 80.00%
Correct Answer: C. 20.00%
Explanation: Return on equity compares earnings available to common equity with the equity capital supporting those earnings.
Using the stated figures, × 100 = 20.00%. The measure should not be inverted because equity divided by income answers a
different question.
Page 4
