Calculating Net Asset Value (NAV) of Unit Trust Scheme
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Questions and Answers

What is the maximum age for a qualified member to invest in the EPF scheme?

  • 60 (correct)
  • 55
  • 65
  • 70

    • What is the main source of income for real estate investment trusts (REITs)?

  • Capital gains from currency trading
  • Dividend income from stocks
  • Interest income from bonds
  • Rental income and capital appreciation of property (correct)

    • What is a characteristic of a collective investment scheme?

  • Allows anyone to collect money from others (correct)
  • Investment only in specific collections of shares
  • High liquidity of assets
  • Permits switching of assets to equities easily

    • What would you normally expect to find in the annual report of a unit trust scheme?

    <p>Statement of assets and liabilities</p> Signup and view all the answers

    How often must a prospectus of a unit trust fund be renewed?

    <p>Every year</p> Signup and view all the answers

    When can members withdraw funds from the EPF?

    <p>Once every 2 months</p> Signup and view all the answers

    What is a restriction on investments in a unit trust scheme?

    <p>Cannot invest in REITs</p> Signup and view all the answers

    What is a key feature of a real estate investment trust (REIT)?

    <p>Derives income from rental income and capital appreciation</p> Signup and view all the answers

    What is the maximum margin on unit trust financing?

    <p>85%</p> Signup and view all the answers

    If Mr. X wants to invest RM200,000.00, how much can he borrow from a financial institution for the investment?

    <p>RM134,000.00</p> Signup and view all the answers

    Which parties are involved in the unit trust?

    <p>All of the above</p> Signup and view all the answers

    What information can be found in the prospectus of a unit trust fund?

    <p>All of the above</p> Signup and view all the answers

    What are the risks of borrowing to invest in unit trusts?

    <p>All of the above</p> Signup and view all the answers

    What is the term used if Mrs. Z wants to reinvest her distribution in unit trusts?

    <p>Distribution Reinvestment</p> Signup and view all the answers

    Why did Investor B manage to double his investment 1.27 years earlier than Investor A?

    <p>Fund B had a higher average annual return</p> Signup and view all the answers

    What is the implication of Investor B doubling his investment 1.27 years earlier than Investor A?

    <p>Fund B is a better investment option</p> Signup and view all the answers

    What is the primary role of the governing body that regulates the investment made by the unit trust management company?

    <p>To regulate the investment made by the unit trust management company</p> Signup and view all the answers

    What is the primary purpose of calculating the net asset value (NAV) of a unit trust scheme?

    <p>To provide investors with a basis for buying or selling units</p> Signup and view all the answers

    What is the main benefit of leveraging into an investment?

    <p>Increasing the potential returns on investment</p> Signup and view all the answers

    Which of the following is a key component in the calculation of the net asset value (NAV) of a unit trust scheme?

    <p>The value of the equity investment</p> Signup and view all the answers

    What is the expected rate of return on investment before fees and expenses?

    <p>10% per annum</p> Signup and view all the answers

    What is the consequence of an investor directly investing in a small number of shares?

    <p>The investor is exposed to the risk of either making or losing a large portion of their investments</p> Signup and view all the answers

    What is the total amount of fees and expenses deducted from the initial investment?

    <p>RM5,000</p> Signup and view all the answers

    What is the primary objective of a unit trust scheme's marketing strategy?

    <p>To provide superior service to clients and attend to their needs</p> Signup and view all the answers

    What is the approximate growth rate of the investment required to reach RM160,000 in 7.2 years?

    <p>8% per annum</p> Signup and view all the answers

    What is the significance of accrued gross distribution and interest income in the calculation of the net asset value (NAV) of a unit trust scheme?

    <p>It is added to the scheme's revenue to calculate the NAV</p> Signup and view all the answers

    What is the impact of the on-going management fee on the investment's growth?

    <p>It reduces the growth rate of the investment</p> Signup and view all the answers

    Which of the following is a key characteristic of a professional unit trust scheme marketer?

    <p>They provide superior service to clients and attend to their needs</p> Signup and view all the answers

    What is the purpose of the prospectus in a unit trust scheme?

    <p>To provide potential and existing investors with all the necessary information to make an informed decision</p> Signup and view all the answers

    What is the result of reinvesting distribution paid by a unit trust fund?

    <p>The distribution is used to buy more units of the unit trust fund</p> Signup and view all the answers

    What is the purpose of the initial charge in a unit trust scheme?

    <p>To cover the cost of selling and distributing the units</p> Signup and view all the answers

    What is the effect of an exit fee on the redemption value of a unit trust fund?

    <p>It reduces the redemption value</p> Signup and view all the answers

    What is the main component of the net asset value (NAV) of a unit trust scheme?

    <p>The value of the equity investment</p> Signup and view all the answers

    What is the incorrect statement about the unit trust scheme?

    <p>It involves a fixed return on investment</p> Signup and view all the answers

    What is the purpose of the annual management fee in a unit trust scheme?

    <p>To pay for the investment management fees</p> Signup and view all the answers

    What is the correct formula to calculate the redemption value of a unit trust fund?

    <p>Redemption value = Number of units x (NAV - Initial charge - Exit fee)</p> Signup and view all the answers

    Study Notes

    Unit Trust Schemes

    • The maximum age for a qualified member in an EPF is 60.

    Real Estate Investment Trusts (REITs)

    • The income of REITs is mainly derived from rental income and capital appreciation of the property held by the trust.
    • REITs are allowed to be listed.

    Collective Investment Schemes

    • A collective investment scheme is an investment fund that invests in a collection of assets, such as shares or bonds.
    • It is also known as a unit trust scheme.

    Unit Trust Schemes

    • A unit trust scheme's annual report typically includes a statement of assets and liabilities, auditor's report, fund composition, and statement of asset allocation.
    • The prospectus of a unit trust fund must be renewed every year.
    • The first unit trust management company was set up in Malaysia in [year not specified].

    Net Asset Value (NAV) Calculation

    • The calculation of NAV involves the value of equity investments, costs and charges involved in various transactions, the value of money market instruments (if applicable), and accrued gross distribution and interest income after deduction of relevant fees and expenses.

    Investment Risks and Strategies

    • Leveraging into an investment means borrowing funds to invest to gain maximum exposure, expecting that the rate of return on investment will exceed the borrowing cost, thus giving rise to additional profit.
    • The risk of an investor directly investing in a small number of shares is that the investor is exposed to the risk of either making or losing a large portion of their investments.

    Unit Trust Financing

    • The maximum margin on unit trust financing is fixed at 67%.
    • If an investor wants to invest RM200,000, the maximum amount that can be borrowed from a financial institution is RM134,000.

    Parties Involved in Unit Trust

    • The parties involved in a unit trust are the UTMC, trustee, investment manager, and unit holder.

    Prospectus of Unit Trust Fund

    • A prospectus of a unit trust fund typically includes investment objectives, authorized investments, fees and charges, and trust expenses.

    Risks of Borrowing to Invest in Unit Trusts

    • The risks of borrowing to invest in unit trusts include interest rate fluctuations, default in repayment of loans, premature repayment of loans, and margin calls.

    Distribution Reinvestment

    • Distribution reinvestment is a term used when an investor reinvests their distribution in a unit trust scheme.

    Investor Choices

    • Investors have the choice to reinvest their distribution in a unit trust fund, take the money out and spend it, or buy more shares of the Unit Trust Management Company.

    Net Asset Value (NAV) of a Fund

    • If the NAV of a fund is RM1.00, the initial charge is 1.5%, and no exit fee is imposed, an investor who redeems 10,000 units would receive RM9,850.

    Purpose of Prospectus

    • The main purpose of a prospectus is to provide potential and existing investors with all the necessary information to make an informed decision.

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    Description

    This quiz is about the calculation of Net Asset Value (NAV) of a unit trust scheme, involving various factors.

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