40 Questions
Which of the following funds is likely to have the highest risk?
Hedge Fund
Which of the following investor requirements can unit trust funds meet?
All of the above
What is the total value of Mr. Dave's investment at the end of May?
RM4,500
What is the Net Asset Value (NAV) per unit of Mr. Dave's investment in June?
RM0.70
Which of the following funds would be suitable for a 20-year-old employee with a high risk tolerance?
Growth Fund
What is the primary goal of the Capital Market Masterplan?
To increase awareness of the Malaysian Islamic Capital Market
What is the main advantage of investing in a unit trust?
Diversification of investments
What is the main difference between a Hedge Fund and a Balance Fund?
Risk level
What is the formula to calculate NAV per unit ex distribution?
NAV cum distribution / units in circulation
Why is UTS an ideal way of investing for an investor who is unable or unwilling to do research and analyze the investment market?
Because it provides professional management
What is one of the benefits of investing in UTS that reduces risk?
Diversification
What is the primary function of the Securities Commission?
To regulate the unit trust industry
What is the benefit of UTS that allows investors to easily redeem their investments?
Ready access to funds
What is the role of the Securities Commission in relation to licensed persons?
To supervise and license them
What is the correct calculation to determine the amount received from the repurchase of units in Fund XYZ?
Number of units x NAV per unit ex distribution
What is NOT a function of the Securities Commission?
Providing investment advice to investors
What is the initial investment amount of the money market fund?
RM100,000
What is the on-going management fee of the money market fund?
1.4%
What is the rate of return of the money market fund?
11%
What is the value of the investment after 10 years if the initial entry cost decreased to 6%?
RM235,938.96
How long does it take to increase the investment amount to RM200,000 with the effective rate of return from question 28?
7.5 years
What is the total expense incurred by the ABC Millennium Fund during the financial year?
RM3,725,717
What is the MER of the ABC Millennium Fund?
1.58%
If Mr. Eddie invested RM10,000 today, how many units is he getting if forward pricing is applied?
15,384.62 units
What is the characteristic of an investor who focuses on long-term returns?
Higher risk tolerance in the short-term
How is the price of a listed security determined?
By buyers and sellers in the market
What type of equity UTS generally invests in companies with higher capital growth potential but with associated higher risk?
Aggressive growth
What is the main advantage of using the Rule of 72?
To estimate the number of years required to double an investment
What is the impact of a rising share market on the value of units in equity UTS?
It normally results in an increase in the value of units
What is a disadvantage of investing in a UTMC?
Loss of control over investment portfolio
What does a gradually decreasing MER over a period of several years indicate?
Efficient management of operating costs for its fund size
What is the formula to calculate the effective rate of return?
Rate of return - (Rate of return X tax rate)
What is one of the benefits of investing in a Unit Trust Scheme (UTS)?
Easy access to funds
What is the concept of systematic and regular investment of a fixed amount of money?
Regular investment plan
How can an investor determine the number of units held during redemption?
By dividing the investment amount by the NAV per unit
What is a useful tool for monitoring investment performance in UTS?
Performance tables published by research houses
What is the primary asset class in an equity UTS portfolio?
Shares of listed companies
How is the NAV per unit calculated?
By dividing the total NAV by the total number of units in circulation
What is the role of UTC in UTS transactions?
To assist in buying and selling units
What is the effect of a distribution on the NAV per unit?
It decreases the NAV per unit
Study Notes
Investment Funds
- Equity Fund: highest risk fund
- Hedge Fund: higher risk fund
- Balance Fund: medium risk fund
- Money Market Fund: lowest risk fund
Unit Trust Fund
- Designed to meet investor's requirements such as:
- Long-term savings
- Retirement fund
- Children's education
Investment Returns
- Mr. Dave's investment:
- Total investment: RM4,500
- Average price of investment: RM0.43 (calculated)
Unit Trust Investment
- Mr. Dave's unit trust investment:
- Number of units held by the end of May: 4,500 units (calculated)
Client Type
- 20-year-old employee:
- Stage 1 client type
- Little savings, low commitments, and skeptical about unit trust investment
- Right tolerance for risk
- Recommended to invest in Growth Fund
Capital Market Masterplan
- Recommendation to enhance awareness of Islamic Capital Market to domestic and international levels
Lump Sum Investment
- Initial investment: RM100,000
- Initial entry cost: 6.5%
- Ongoing management fee: 1.4%
- Rate of return: 11%
- Return of investment after 10 years: RM234,831.27 (calculated)
- Value of investment after 10 years with decreased entry cost: RM235,938.96 (calculated)
Forward Pricing
- Published NAV: RM0.65
- Price at the end of the day: RM0.66
- Number of units received by Mr. Eddie with forward pricing: 15,384.62 units (calculated)
MER (Management Expense Ratio)
- ABC Millennium Fund:
- Annual Management Fee: RM3,528,673
- Trustee: RM150,326
- Auditor's Remuneration: RM16,300
- Administration expenses: RM28,418
- Average Fund Size: RM235,300,528
- MER: 1.58% (calculated)
Unit Trust Management
- Mr. Abraham invested RM5,000 in ABC Growth Fund
- Owned by ABC Unit Trust Management Bhd
Distribution of Units
- Distribution of RM0.04 per unit for Fund XYZ
- NAV cum distribution: RM1,500,000
- Units in circulation: 1,000,000 units
- NAV per unit ex-distribution: RM1.46 (calculated)
- Mr. Z's repurchase of 20,000 units: RM30,000 (calculated)
Benefits of Investing in UTS
- Professional management
- Ready access to funds
- Opportunity cost
- Investment exposure
- Diversification
Securities Commission
- Functions:
- Regulate unit trust industry
- Ensure compliance with securities laws
- License and supervise licensed persons
- Act as custodian of assets of UTS
This quiz evaluates your understanding of investment funds, including equity, money market, balance, and hedge funds, as well as their associated risks and investor requirements.
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