CUTE Exam 2022 PDF

CUTE EXAM 2022 1. Under whose name would the assets and investments of a unit trust scheme be registered ? a) Trustee b) Stockbroking house c) Unit Trust Management Company (UTMC) d) Investor 2. Which of the following form(s) part of the responsibilities and obligations of Uni...

CUTE EXAM 2022 1. Under whose name would the assets and investments of a unit trust scheme be registered ? a) Trustee b) Stockbroking house c) Unit Trust Management Company (UTMC) d) Investor 2. Which of the following form(s) part of the responsibilities and obligations of Unit Trust Management Companies ? i. Processing applications for investment in unit trust scheme ii. Custodian of assets of the unit trust scheme iii. Maintain unit holders’ register iv. Regulate the init trust industry a) I & III b) I, II, III & IV c) I, iii & IV d) I only 3. Unit trust distributions (payment to unit holders) can be made up of the following : i. Interest earned ii. Capital gains iii. On-going management fees iv. Dividends a) I & II b) I, II, III & IV c) I, II & III d) I, II & IV 4. Which of the following is a function of Federation of Investment Managers Malaysia (FIMM) ? a) A governing body which regulates the investment made by the unit trust management company b) Reviews all promotional materials prior to release to the public c) Provides a common platform for unit trust companies to discuss issues in the industry d) Issues all guidelines in respect of unit trust fund activities and to report to the Securities Commission for any non-compliance 5. Which of the following is (are) TRUE for a Deed ? i. Deed stipulates the rights and obligations of the manage, rights and duties of the trustees and the rights of the unit holders ii. Deed stipulates the maximum fees unit trust management company can charge to investor iii. The life span of a deed is normally 10 years iv. Deed must be registered with Securities Commission a) I, II & IV b) III only c) I, II, III & IV d) I, II & III 6. An investor had invested a single amount of money in a unit trust fund at RM0.80 per unit in the rst year and subsequently purchased another 20,000 units in second year. At the end of third year he decided to redeem all his investments at Buying Price RM0.90 per unit and the total proceed was RM79,200. How many units was he entitled for the investment he made in the rst year ? a) None of the optional answer is correct b) 88,000 units c) 79,200 units d) 68,000 units fi fi  7. Amongst others, the calculation of Net Asset Value (NAV) of a unit trust scheme involves. i. The value of the equity investments ii. Costs and charges involved in various transactions of the scheme iii. The value of money market instruments (if applicable) iv. Accrued gross distribution and interest income after deduction of relevant fees and expenses such as annual management fees and administrative expenses a) I, III & IV b) I, II, III & IV c) I & II d) I, II & III 8. What is meant by switching of fund ? a) A switch occurs when a unit holder swaps units that he / she currently has with another unit holder b) A switch occurs when a unit holder sells units in one unit trust fund and purchase units another unit trust fund operated by a di erent fund manager c) A switch occurs when a unit holder sells units in one unit trust fund and purchase units in another unit trust fund operated by the same fund manager d) None of the optional answer is correct 9. What must you not say to a potential investor ? i. Unit trust is as safe as xed deposit ii. The market value of your capital may be lower than initially invested iii. Return in unit trust is not xed iv. You should diversify your portfolio and have some xed deposits a) I, II & III b) I only c) II, III & IV d) I, II, III & IV 10. It is important that all long term investment strategies should be constructed so as to : i. Keep pace with in ation ii. Keep pace with prices of share market iii. Provide for capital growth to increase the real value of the assets iv. Provide opportunity to borrow/gear for other investments a) II & IV b) I & III c) II & III d) I & II 11. John receive RM500 cash as his birthday gift. If he puts the money in his Kid’s Savings Account that o ers him 5.0% average yearly return, how long would it take to double the value of his money in the account ? a) 20 years b) 25 years c) 14.4 years d) 18 years 12. The main purpose of a prospectus is : a) To outline the marketing plan of the unit trust scheme b) To outline the pro le of the target investors c) To highlight the projected returns of the unit trust scheme d) To provide potential and existing investors with all the necessary information to make an informed decision ff fi fl fi fi fi ff  13. What do you understand by the term ‘Diversi cation’ in the context of investments ? a) A technical tern which means investing in as many assets as one can b) Diversi cation implies that an investor will invest in only one asset to ensure a reduced portfolio risk c) A term used to describe a market phenomenon whereby all prices that go down will eventually come back up again d) Investing in a board range of individual investments thus reducing the overall risk of an investment portfolio 14. When a cash distribution is declared, a) the distribution has to be reinvested b) the investment value of a unit holder remains unchanged c) the investment value of a unit holder falls relative to the distribution paid d) the distribution must be reinvested at Managers’ selling price 15. Which of the following are the investment costs to an investor who invest in unit trusts with borrowed money ? i. Initial service charge ii. Annual management fees iii. Switching fee (applicable to certain unit trust scheme) iv. Interest expense a) II, III& IV b) I, II & III c) I, II, III & IV d) I, II & IV 16. Select the statements which are correctly matched. i. Spread of risk - A larger pool of funds allows the fund manager to purchase a wider range of investments ii. Liquidity - Unit holders can redeem their units as and when they prefer iii. Professional management - Unit holders can contribute ideas, knowledge and experiences to the fund manager and that can help the fund manager to generate more returns iv. Ease of purchase - Unit holders can purchase and liquidate their investment through fund manager a) I, II, III & IV b) I, II & IV c) I, III & IV d) I, II & III 17. In promoting unit trusts to prospective investors, it is important for Unit Trust Consultant (UTC) to explain which of the following ? a) Investment objectives of the unit trust scheme b) All of the optional answers are correct c) Potential risks and returns d) Fees and charges 18. En. Adam has invested RM5,000 in ABC Growth Fund managed by ABC Unit Trust Management Bhd. En. Adam now owns : a) RM5,000 worth of direct ownership of investment portfolio held by ABC Growth Fund b) RM5,000 worth of units of entitlement on the ABC Growth Fund c) RM5,000 worth of shares in ABC Unit Trust Management Bhd. d) All of the optional answers are correct 19. Choose the correct statement regarding aggressive growth funds. i. Generally, these funds invest in common stocks with a high potential for rapid growth and capital appreciation ii. These funds seek to provide maximum capital growth with less emphasis on distribution or interest income iii. These funds generally incur higher risks in an e ort to secure more pronounced growth iv. Investors who must conserve their principal or who must maximise current income are most suitable to invest in these funds a) II, III & IV b) I, II & III c) I, III & IV d) I, II, III & IV fi ff fi  20. The unit trust funds that are available in the market could be designed to meet the following investor requirement(s) : a) All of the optional answers are correct b) Children’s education c) Retirement fund d) Long-term savings 21. What is the bene t of creating a diversi ed portfolio that includes stocks, bonds and money market funds ? a) A guarantee that your portfolio will not su er if the stock market falls b) All of the optional answer are correct c) Generate higher returns than a non-diversi ed portfolio d) To provide an element of stability in a declining stock market 22. A 5% initial service charge means that on the day when an investor invests RM1,000, the actual investible amount in the fund will be : a) RM1,050 b) None of the optional answer is correct c) RM1,000 d) RM950 23. Which of the following is the principal document that governs the operation of a unit trust scheme ? a) Auditors’ Report b) Certi cate of Entitlement c) Investigating Accountant’s Report d) Deed 24. Which of the following statement(s) is (are) correct ? i. Aggressive Growth Fund is a type of equity unit trusts that generally seeks to provide maximum growth of capital with secondary emphasis on distribution or interest income ii. Equity unit trusts can also take the form of Income Funds, i.e. unit trusts which invest primarily in corporate bonds, government securities and liquid securities like bills and cash iii. In declining markets, Income Funds may show a higher degree of price stability than Aggressive Growth Fund. However, they may also advance at a slower rate in a rising market a) I, II & III b) I only c) II & III d) I & III 25. In year 2015, Encik Jamal put RM50,000 in an investment that earned him 9.0% per annum. Suppose the investment is able to deliver the above yearly return for the past as well as the coming years, when will his money double ? a) Year 2025 b) Year 2020 c) Year 2027 d) Year 2023 28. In an investor is able to tolerate high risks and prefers long-term capital gains to short-term income, which of the following fund is most suitable for her ? a) Balanced fund b) Growth fund c) Bond fund d) Income fund fi fi ff fi fi  29. A trustee is a company that : i. Is registered under the Trust Companies Act 1949 ii. Is independent of the unit trust management company (except for in the case related-party trustee) iii. Is independent of the unit trust scheme iv. Has bene cial ownership of all assets of a unit trust scheme a) I, II & IV b) I & IV c) II, IIi & IV d) I, II, III & IV 30. Daily Net Asset Values of unit trust schemes are available through : a) All of the optional answers are correct b) Calling the Unit Trust Management Company (UTMC) c) Visiting the Unit Trust Management Company’s head o ce or its branches d) Referring to that unit trust pricing tables published by major newspapers 31. Which of the following are the rights of unit holders ? i. Information about the unit trust scheme and its performance ii. Rights to receive pro le of board of directors iii. Rights to redeem units iv. Rights to select shares for the unit trust scheme’s portfolio a) I & III b) I, II, III & IV c) I, II & III d) I, III & IV 32. Registered Unit Trust Consultant (UTC) are allowed to : i. Make recommendation on the suitable unit trust schemes that a clients may hold ii. Make recommendation on the suitable securities listed on approved stock exchange that a client may hold iii. Make recommendation on the suitable insurance policies that a client may hold iv. Make recommendation on the suitable options and futures contracts that a client may hold a) I & III b) All of the optional answers are correct c) I, II & II d) I only 33. Shariah-compliant funds do not invest in companies involved in the following activities : i. Conventional banking ii. Telecommunication iii. Gambling iv. Alcoholic beverages a) II only b) I, II, III & IV c) III & IV d) I, III & IV fi fi ffi  34. Pointing to the latest performance table, Mei Ling enthusiastically tells you “Look ! The OMG Small- Cap Fund was up 36% last month. I think this fund may be the best for me to invest. Knowing choosing a fund merely based on the best record in the previous month is not in her best interest ; what other aspect would you advise her to look into before investing in the fund ? i. Consistency of the fund’s performance in medium to long term ii. Her own nancial goal and decide how much risks she can a ord to take iii. Suitability of the fund’s investment objectives and riskiness with her own investment goals and risk pro le iv. Total fees and charges imposed by the fund and the service level provided a) I, II, III & IV b) I & II c) I, II & III d) II & III 35. The following are responsibilities of Unit Trust Management Company, EXCEPT for a) Act as the custodian for the assets of the unit trusts b) Maintain proper accounting records of the unit trusts c) Issue unit certi cates or statements to unit holders d) Process sales and repurchase of units 36. For the period from 1 January 200x to 31 December 200x, the expenses incurred by the Fund were as follows : Annual Management Fee RM 150,000 Trustee Fee RM 8,000 Auditors’ Fee RM 2,000 Bank Charges & Other Expenses RM 5,000 The average net asset value was RM10,000,000 Please calculate the Management Expenses Ratio (MER) a) 2% b) 1.65% c) 1.50% d) 0.15% 37. The term “Cooling-O Period” refers to : a) The period of time during which investors have the right to sell their units back to the UTMC at no penalty to the investors b) The period of time during which no selling or buying of units can be conducted c) The period of time during which the stock market cool-o after a strong rally d) The period of time during which the Unit Trust Management Company (UTMC) has the right to repurchase all units from the unit holders at no penalty to the UTMC 38. What type of investments would you most expect to nd in an aggressive growth fund : a) Shares of technology companies recently listed on the stock exchange b) Investments in properties with regular income c) Cash d) Investments in capital guaranteed life insurance products 39. EPF members can withdraw a portion of their savings to purchase unit trusts. Which EPF account balance may be used for such investment ? a) Account 2 b) Account 1 c) Account 3 d) Account 4 fi fi fi ff ff fi ff 40. An investor holding 5,000 units before 1:2 unit split issue has an investment value at RM15,000. After the unit split issue, the investor will : a) Hold 7,500 units with investment value at RM15,000 b) Hold 5,000 units with investment value at RM15,000 c) Hold 7,500 units with investment value at RM22,500 d) Hold 2,500 units with investment value at RM15,000 41. Dollar Cost Averaging is a) A strategy that entails buying low and selling high b) A way to sell unit trust funds and to minimise the capital gains c) A way to purchase unit trust funds and minimise the service charge d) A systematic way of regular investment with xed amount of money 42. How can an investor hedge against in ation ? i. Cut down all the unnecessary expenses and keep the money at home ii. Lower the tax rate of the investment iii. Invest the money in an instrument that can generate a higher return than the in ation rate iv. Maximise the bene ts of e ective nancial planning a) III & IV b) II, III & IV c) I, III & IV d) I & III 43. “Market risk is a type of risk associated with investing in equity based funds” Which of the following best explains the statement above ? a) Stock values underlying the Net Asset Value (NAV) of the unit trust scheme uctuate in response to the activities of individual companies and general market of economic conditions. Such movement will cause the NAV of prices of units to fall as well as rise b) None of the optional answer is correct c) Poor management of the scheme will jeopardise the investment of unit holders through the lost of their capital invested in the scheme d) Unit holders might be forced to provide additional funds to restore their loan margin when the value of the unit trust scheme dropped drastically 44.Eight years ago, Mr. and Mrs. Ang started preparing the education fund for their child, Jason. The current value of the fund is now half of the projected education costs. What would be the expected annual rate of return that the fund should achieve so that Jason’s education costs will be fully funded at the end of tenth year from now ? a) Approximately 36% per annum b) Approximately 4% per annum c) Approximately 7.2% per annum d) Approximately 9% per annum fi ff fi fl fi fl fl  45. An investor wants to gain exposure to the commercial property market in Kuala Lumpur but with only a small amount of money (approximately RM5,000), she was not able to invest at all. Which is a good investment alternative for her ? a) Invest in any open0ended funds b) Invest in equity index fund c) Invest in real estate property trusts d) Invest in xed income fund 46. All registered Unit Trust Consultant (UTC) must observe the Standards of Professional Conduct which includes the following : i. Maintain knowledge of and comply with all applicable laws, rules and regulations governing the unit trust industry ii. Not to market any unit trusts without relevant prospectus iii. Ensure as far as possible that the unit trust scheme proposed is suitable to the needs and not beyond the resources of the prospective investor iv. not to omit any material facts nor make misleading statements regarding future events a) I, II, III & IV b) I, III & IV c) I, II & III d) I & III 47. In order to overcome the adverse impact of in ation : a) Investors should only invest in property trusts b) None of the optional answer is correct c) Investors need to preserve the purchasing power of their original investments and be earning a rate if return in excess of the in ation rate d) Investors need to buy unit trusts when the market prices are low 48. Which of the following best describes an Equity Growth Fund ? a) It invests in bonds, cash and less in equities b) t avoids the equity market c) In invests in cash and bonds d) It invests mainly in equities 49. Which of the following best describes a Fixed Income Fund ? a) Invest in cash only b) It avoids the bond market c) It invests mainly in bonds d) It invest mainly in equity 50. Encik Ali is a 60-year old retired teacher and a conservative investor. He approaches you for your advice on suitable types of investment that could provides him with current income and moderate capital growth If the interest rate is decreasing and both of you agree that the rate will continue to decrease, which of the following type of investment would you recommend to him ? a) Money Market Fund b) Property Fund c) Bond Fund d) Equity Growth Fund 51. A unit split in e ect does not add value to the unit trust investors’ investment holdings, but a) Makes sure that the fund managers are able ti earn their fees b) Is used to re-classify the fund to “Penny-Stocks” fund c) Is used by unit trust management company to lower the NAV per unit, thus enabling new investors to invest in the fund d) Is used to enlarge the fund size in Ringgit term fl fi ff fl  52. Assume that no initial sales charge was imposed, an investor had invested single amount of money in a scheme with the Selling Price of RM0.7000 per unit. 5 years later he decided to redeem his investment at Buying Price RM1.2000 per unit and the total proceed was RM15,000 How much had he invested 5 years earlier ? a) RM10,500 b) RM15,000 c) RM12,600 d) RM8,750 53. Which of the following fund is best described by this statement ? “The unit trust fund is managed in accordance with Syariah Principles and aims to maximise capital returns over medium to long-term by investing mainly in equities listed on the Bursa Malaysia” a) Balanced fund b) Fixed-Income fund c) Islamic fund d) Property fund 54. An investor has invested a total of RM200,000 in a unit trust fund. Assuming that he has obtained the maximum margin of nancing, how much was his loan amount ? a) None of the optional answer is correct b) RM66,000 c) RM200,000 d) RM134,000 55. Generally, a unit trust that has 80% of its assets invested in growth stocks would be the most appropriate type of investment for the preparation of : a) An income producing savings for an 86 year old b) A college fund for an 18 year old c) None of the optional answer is correct d) An individual retirement fund for a 52 year old 56. Given data : i. No. Of units held before unit split ; 18,000 units ii. Total value of the investment before unit split ; RM6,000 iii. Unit split ratio ; 1 for 3 How many units will the investor hold after unit-split exercise ? a) 6,000 unis b) 15,000 units c) 18,000 units d) 24,000 units 57. In order to maintain honesty, dignity and integrity, a registered Unit Trust Consultant (UTC) at all times must not misrepresent or recklessly represent : a) The products and/or its characteristics o ered by the management company he/she represents b) All of the optional answers are correct c) The past investment performance of the unit trust scheme d) His/her quali cations or that of the management company he/she represents fi fi ff 58. For a Unit Trust Management Company (UTMC) to manage Islamic Funds, the Securities Commission requires the UTMC to establish a committee to ensure that Islamic principles are adhered to Name the committee a) Syariah Committee b) Unit Trust Committee c) Investment Committee d) Internal Audit Committee 59. The Unit Trust Management Company (UTMC) should ensure that all persons involved in the marketing and distribution of unit trusts are registered with and authorised by : a) Bank Negara Malaysia b) Securities Commission c) Trustee d) Federation of Investment Managers Malaysia (FIMM) 60. Puan Rose decided to withdraw some of her savings to invest in unit trust funds. She would like to make a single investment of her savings in a unit trust fund and let it grow irrespective of the market condition. Wheres for Puan Sarina, she has very little savings but she is willing to cut some of her expenses and invests in unit trust funds on a monthly basis Name the respective ways that can be used by them to invest in unit trust funds a) (Puan Rose - Fixed Investment Plan) and (Puan Sarina - Instalment Plan) b) (Puan Rose - Lump Sum Investment Plan) and (Puan Sarina - Regular Savings Plan) c) (Puan Rose - Lump Sum Investment Plan) and (Puan Sarina - Contractual Plan) d) (Puan Rose - Spot Plan) and (Puan Sarina - Instalment Plan)