TREASURY

FINAL EXAM REVIEWER
TREASURY
1. What is fixed income?

-an investment whose return is usually fixed or predictable and is paid at a regular
frequency ie semi-annual, quarterly or zero coupon
2. What is the definition of FACE VALUE?

-amount paid to the investor at maturity
3. What does COUPON PAYMENT mean?

-guaranteed fixed interest payment that the issuer will pay investors periodically (semi-
annual or quarterly)
4. What does PRICE mean?

-the value at which the investor buys (offer) or sells (bid) a security
5. What does YIELD TO MATURITY mean?

-annualized return until maturity date – takes into consideration the price, coupon,
remaining term
6. Definition of terms:
-MATURITY DATE – date when the issuer will repay the bond’s principal and last coupon
payment
-ISSUE DATE – date when the bond was issued
-TRADE DATE – date when order was executed in the market
-SETTLEMENT DATE – date when the investor pays
-VALUE DATE – date when the bond starts earning interest
-CALL DATE – date when issue exercises call option
-CALL OPTION – option but not an obligation of the issuer to redeem the bonds at a set
date at a specified price
-PERPETUAL NOTES – no maturity date, usually have a call option
7. What are the 4 things we need to know before we sell to our clients?
-amount to be invested
-preferred tenor
-target yield (if any)
-client risk profile
8. What are the 4 main types when doing client risk profiling?
-conservative – looking for better rates outside of TD, capital preservation is very
important, prefers short tenors
-moderately conservative – investments with more risk, capital preservation still
important but returns are also considered, open to medium tenors
-moderately aggressive – tries to balance good returns and risk taken, considers type of
product to invest in and risks involved, tenor preference ranges from short and medium
term
-aggressive – comfortable in taking calculated risks for better returns, willing to take on
possible short-term losses for long-term gains, open investments with long tenors
9. What are Peso Government Bonds?

-T-Bills, Retail Treasury Bonds (RTBs), Fixed Rate Treasury Notes (FXTNs) are examples of
Peso Government borrowings
-considered safe because they are issued and guaranteed by the government
10. What are PHP Corporate Bonds?

-borrowings of Philippine companies
-since they are issued and guaranteed by the company, the risk involved is connected to
the issuing company’s credit rating and tenor of investment
-good for moderately conservative clients
11. What are USD BONDS and who do we sell them to?
-borrowings of either companies or countries that are denominated in USD
-same risks as Peso Corporate bonds but with an additional layer of risk of USD currency
fluctuation is taken by the investor
-clients who have USD and are looking to invest
-clients with excess PHP and looking to invest in USD – RCBC can sell USD to client for
the purpose of investment but the tenor of the investment should be 1 year and above
-the only exception to this rule is if client will place in a 90-day TD (pre-termination is
not allowed)
12. Can we sell the same securities to all clients even after identifying their risk profiles?
-No – because some investments require a certain level of investment sophistication and
financial capability before being offered
13. What is an Asset Swap?

-a product that allows a client with PHP funds to invest in a USD bond, with all USD cash
flows exchanged into PHP
-a combination of 3 transactions – client purchase of USD, client purchase of USD bond,
swap agreement
-this product should only be offered to clients who intend to hold the bond until its
maturity – otherwise, it may result in capital loss
14. What are Perpetual Bonds?

-borrowings usually USD denominated where the bond does not have a maturity date
but has special features that are specified by the issuer
-the issuers usually have the option to buy back the bond at a specified price and date
15. Although RCBC Treasury offers different products and they all require different
documentation, what are the 7 one time documents that RCBC Treasury requires for
On Boarding for all products?
-Client Agreement
-Client Sustainability Letter
-CSA form
-Non-QIB Info Sheet
-Notarized Secretary’s Certificate (for corporate)
-List of Authorized Trader (for corporate)
-Guava Template (email to trader)
16. What are the 3 deal documents (per transaction)?

-Letter of Instruction (LOI)
-Commitment Letter
-Application to Purchase (only for Asset Swaps or USD purchases)
17. What are 2 common types of foreign exchange transactions?

-SPOT – settlement date until 2 days after confirmation date
-FORWARD – settlement date is more than 2 days after confirmation date and the client
MUST HAVE pre-settlement risk (PSR) or credit lines if confirmation does not equal
settlement date
18. Who is our target market for FX?

-foreign currency earners
-exporters
-importers
-travelers
-travel agencies
19. Does an individual or company need to have a purpose for buying foreign currency?
-Yes, an individual or company MUST have an obligation or purpose for buying foreign
currency
-it is the bank’s obligation to identify their ultimate purpose
20. How much is the maximum limit in USD per individual that may be freely bought inside
and outside of the Philippines?
-USD 10,000
21. What is the maximum allowed limit for residents to purchase FX? State for individuals
and for corporates.
-individuals – USD500,000
-corporates – USD 1,000,000
22. The increased maximum limit amount under the FX regulations applies to trade and
non-trade transactions but NOT for…?
-loans and investments
23. What is the limit per calendar year for outward investments by Philippine residents
wherein there is no need to notify the BSP?
-USD60 million
24. As per the BSP, what are some valid underlying transactions for FX purchases?
-trade
-non-trade
-resident to resident (subject to documentary requirements)
-onshore investments
-foreign currency loans from banks operating in the Philippines
-outward investment by Philippine residents
25. What are the 3 main features of RCBC Online FX that are designed for the convenience
of the client?
-exchange and invest your FX online anytime, anywhere
-you can order your foreign notes online and pick it up from participating branches
-you can buy and sell all major currencies at very competitive rates, real time
26. You can open an FCDU account online with no maintaining ADB to assist your
settlement for foreign exchange purposes. What is this called?
-FX Global
27. What are the available currencies that an enrolled client can open in FX Global?
-USD
-GBP
-Euro
-JPY
-HKD
-SGD
28. What time/days is Online FX available?

-9AM to 5AM the following day except on weekends and Philippine holidays
29. What is the limit of what the clients can transact on Online FX?
-daily FX transaction limit of USD10K or its equivalent in other currencies
30. What is the minimum amount for 90-day USD TD?

-USD1K

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FINAL EXAM REVIEWER

1. What is fixed income?

2. What is the definition of FACE VALUE?

3. What does COUPON PAYMENT mean?

4. What does PRICE mean?

5. What does YIELD TO MATURITY mean?

9. What are Peso Government Bonds?

10. What are PHP Corporate Bonds?

13. What is an Asset Swap?

14. What are Perpetual Bonds?

16. What are the 3 deal documents (per transaction)?

17. What are 2 common types of foreign exchange transactions?

18. Who is our target market for FX?

28. What time/days is Online FX available?

30. What is the minimum amount for 90-day USD TD?

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