Money Market Trust: Risk Profile

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Questions and Answers

What is the primary objective of the Acts that regulate the unit trust industry?

To protect the interests of the UTMC

To promote the securities market

To regulate the trustee's activities

To safeguard the benefits of the unitholder (correct)

How often must the prospectus of a unit trust be renewed according to regulation?

Every 2 years

Every 6 months

Every year

Every 12 months (correct)

What is the risk profile of an equity trust compared to other types of trusts?

Neutral

Defensive

Conservative

Aggressive (correct)

What is the maximum margin on unit trust financing?

79% (A) Signup and view all the answers

Who is responsible for regulating the unit trust industry?

The Securities Commission (A) Signup and view all the answers

What is the main purpose of a unit trust prospectus?

To provide an executive summary of the unit trust (D) Signup and view all the answers

What happens to an equity trust when the overall stock market falls?

It depreciates more than other types of trusts (A) Signup and view all the answers

What is the role of the UTMC in the unit trust industry?

To manage unit trusts (B) Signup and view all the answers

What is provided to an investor on the date of allotment of units?

NAV of a unit (C) Signup and view all the answers

What is NOT part of the confirmation provided to an investor?

Margin call (A) Signup and view all the answers

What is the platform for UTMC to discuss issues relating to the unit trust industry?

Ministry of Finance (B) Signup and view all the answers

What is NOT part of the Code of Ethics?

Use of authorization card (B) Signup and view all the answers

What is provided to an investor regarding the exit fee?

Confirmation of the rate of exit fee (B) Signup and view all the answers

What is a key aspect of fair dealing?

Treating all clients equally (C) Signup and view all the answers

What is NOT part of the Standards of Professional Conduct?

Use of authorization card (B) Signup and view all the answers

What is the purpose of the confirmation provided to an investor?

To inform the investor of the initial service charge and exit fee (D) Signup and view all the answers

What is the primary role of a UTC when advising clients?

To ensure investors read through and understand the prospectus of the particular fund (B) Signup and view all the answers

What is the effect of a unit split on the NAV of a UTS?

It does not affect the NAV of the UTS (D) Signup and view all the answers

What should a UTC do when an investor is unsure about investing in a UTS?

Provide detailed information about the fund to help the investor make an informed decision (C) Signup and view all the answers

What is the main objective of a unit split?

To attract new investors by lowering the unit price (B) Signup and view all the answers

What is the responsibility of a UTC when advising investors?

To ensure investors understand the services provided by UTMC (C) Signup and view all the answers

What is the role of UTMC in the unit trust industry?

To provide services to unit trust funds (A) Signup and view all the answers

What should an investor do before investing in a UTS?

Read through and understand the prospectus of the particular fund (C) Signup and view all the answers

What is the risk involved in investing in a UTS?

The risk is involved and investors should be aware of it (A) Signup and view all the answers

What is the primary objective of dollar cost averaging?

To reduce the average cost of investments (A) Signup and view all the answers

What is the consequence of investing a fixed amount of money at regular intervals?

The average cost of investments is always lower than the average price (B) Signup and view all the answers

What is the characteristic of a unit trust scheme?

It allows investors to pool their savings with similar objectives (B) Signup and view all the answers

What does a gradually decreasing MER over a period of several years indicate?

The UTMC is managing its operating cost efficiently for its fund size (A) Signup and view all the answers

What is the formula to calculate the MER?

MER = [fees + recovered expenses] x 100 (D) Signup and view all the answers

What is the advantage of dollar cost averaging compared to investing all capital at one time?

It helps reduce the average cost of investments (A) Signup and view all the answers

What is the purpose of investing a fixed amount of money at regular intervals?

To reduce the average cost of investments (B) Signup and view all the answers

What is the feature of dollar cost averaging that helps reduce the average cost of investments?

Systematic and regular investment of a fixed amount of money (D) Signup and view all the answers

What information is contained in the Register related to each investor?

Personal data relating to each investor (D) Signup and view all the answers

What is the main purpose of the Disciplinary Committee established by FIMM?

To take disciplinary action against UTCs who breach the FIMM Code of Ethics (C) Signup and view all the answers

What is the compounding factor formula used to calculate the future value of an investment?

FV = PV x (1 + i)^n (D) Signup and view all the answers

What is the institution that marked the beginning of Islamic finance in Malaysia?

Bank Islam Malaysia Berhad (B) Signup and view all the answers

What is the effect of inflation on the cost of education fees over time?

The cost of education fees increases (B) Signup and view all the answers

What is the purpose of a unit trust agent introducing himself to a client?

To introduce himself as a unit trust agent (D) Signup and view all the answers

What is the significance of the Register in the unit trust industry?

It contains personal data relating to each investor (A) Signup and view all the answers

What is the primary function of the Investigating Committee established by FIMM?

To investigate complaints from customers (C) Signup and view all the answers

Study Notes

Unit Trust Industry

The main objective of the Acts that regulate the unit trust industry is to safeguard the benefits of unitholders.
The prospectus of a unit trust must be renewed at least once every 12 months.

Unit Trust Financing

The maximum margin on unit trust financing is fixed at 67%.

Unit Trust Scheme

A unit trust scheme is a form of collective investments that allows investors with similar objectives to pool their savings.
Investing in unit trusts involves risks, and investors should understand the risks involved.

Unit Split

A unit split does not affect the NAV of the unit trust scheme or the value of a unitholder's investment.
The objective of a unit split is to attract new investors by lowering the unit price.

Investment Strategies

Dollar cost averaging is a systematic and regular investment of a fixed amount of money, regardless of the price level of the investment at the time.

Code of Ethics

The Code of Ethics includes fair dealing, competence, and compliance with laws and regulations.
The Standards of Professional Conduct include acting with due care, skill, and diligence, and using authorization cards.

UTC Roles

A UTC should advise clients on the services provided by UTMC, explain the risks involved in investing in unit trusts, and ensure clients read and understand the prospectus.
A UTC does not need an IA license.
A UTC should perform a needs analysis for clients and not recommend a unit trust product without understanding their needs.

Regulatory Bodies

The Disciplinary Committee investigates complaints from customers.
The Securities Commission regulates the unit trust industry.

Islamic Finance

Islamic finance in Malaysia began to develop with the establishment of Bank Islam Malaysia Berhad in 1983.

Calculations

To calculate the future value of an investment, use the compounding factor formula: (1 + i)^n.

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Description

This quiz covers the risk profile of a money market trust in comparison to other investment options. It helps investors and UTC make informed decisions.