FIMM SET 3 (1).pdf

SET 3 1. Prices of listed close-ended trusts are determined in the following manner : a) The total value of the assets is divided by the number of units in circulation b) Prices are determined by the demand and supply in the market such as Bursa Malays...

SET 3 1. Prices of listed close-ended trusts are determined in the following manner : a) The total value of the assets is divided by the number of units in circulation b) Prices are determined by the demand and supply in the market such as Bursa Malaysia where the trust is listed c) The Unit Trust Management Company computes the daily prices upon close of business day d) The in vestment Committee sets the daily prices 2. In general, which of the following type of unit trust is likely to depreciate most when the overall stock market falls ? a) Equity trust b) Fixed income trust c) Money market trust d) Property trust 3. The Malaysian Unit Trust Funds Performance Table is a useful tool because it : a) Allows performance to be tabled at meetings held by Securities Commission b) Taps into the fund manager’s credibility c) Summarises investment performance for the industry and allows for easy comparison d) Enables the public to understand the fees and charges charged by unit trust management companies in Malaysia 4. The Net Asset Value of an Equity Index Tracking fund a) Will uctuate in response to changes in the prices of equity index component stocks b) Will be uctuate in response to changes in interest rates only c) Will no react at all to the ups and downs of the stock market d) None of the optional answer is correct 5. I In year 1995, Cik Jamal put RM50,000 in an investment that earned him 9% p.a. Supposed the investment is able to deliver the above yearly return for the past as well as the coming years, when will his money doubled ? a) Year 2000 b) Year 2003 c) Year 2005 d) Year 2007 6. Which statement regarding the EPF Members Withdrawal Scheme is correct ? a) The maximum age for the quali ed member is 60 b) Members can withdraw funds from the EPF once in every 2 months c) Investment can be made with any unit trust scheme d) Balance in Account 2 is not eligible for this scheme 7. Which of the following statement is correct ? a) The income of real estate investment trusts (REIT’s) is mainly derived from the rental income and capital appreciation of the property held by the trust b) The portfolio if real estate trust (REIT’s) can be switch to equities easily as the asset are highly liquid c) Real estate investment trust (REIT’s) are not allowed to be listed d) Unlisted unit trust are not allowed to invest in REIT’s 8. A collective investment scheme is a) A type of fund that allows anyone to collect money from others, much like people collect money for charity b) An investment fund which invests only in speci c collection of shares c) A collection of investments which cannot be sold without permission of the owners d) Another term used to describes a unit trust scheme fl fl fi fi  9. What would you not normally expect to nd in the annual report of unit trust scheme ? a) Statement of assets and liabilities of the unit trust scheme b) Auditor’s report c) Fund composition and statement of asset allocation d) Unit prices of competitors’ products 10. Generally, prospectus of a unit trust fund must be renewed __________________ a) Every month b) Every six month c) Every year d) Every two years 11. When was the rst unit trust management company set up in Malaysia ? a) 1949 b) 1950 c) 1959 d) 1960 12. Investors who invested in unit trust with borrowed money : a) Will only make pro t if returns from their investment are higher than the cost of their borrowing b) Will not a ected by changes in the base lending rate set by their end- nancier c) Are guaranteed to make pro t in longer term d) Need to keep on investing until the loan is fully settled 13. An investor wants to gain exposure to 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 good investment alternative for her ? a) Invest in equity index fund b) Invest in xed income fund c) Invest in any open-ended fund d) Invest in real estate property trusts 14. Puan Rose decided to withdraw some of her savings to invest in unit trusts. She would like to invest all of her money in a fund at one time and let it grow irrespective of the market condition. Whereas for Puan Sarina, she has very little savings but every month she is willing to cut some of her expenses and invests in unit trusts. Name the respective ways that can be used by them to invest in unit trusts a) Spot & Instalment plans b) Lump sum investment & Regular saving plan c) Lump sum investment & Contractual plan d) Fixed investment & Instalment plan 15. Generally, what are the possible forms of return in investment can an investor expect from investing in unit trusts ? i. Dividends ii. Capital appreciation iii. Interest a) I & II b) I & III c) II & III d) All of the optional answers are correct fi ff fi fi fi fi fi Kindly use the following information to answer the questions 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 ration : 1 for 3 16. How many units will the investor hold after the unit split exercise ? a) 24,000 units b) 8,000 units c) 15,000 units d) 6,000 units 17. What is her total investment value after the unit split exercise ? a) RM2,000 b) RM6,000 c) RM8,000 d) None of the optional answer is correct 18. I 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) Growth fund b) Bond fund c) Balanced fund d) Income fund 19. Rank the following funds according to their level of risks from highest to lowest i. Equity Growth Fund ii. Money Market Fund iii. Balanced Fund iv. Hedge Fund a) I, III, II IV b) IV, I, III, II c) II, III, I, IV d) II, I, III, IV 20. Mabel would like to retire as a millionaire. If she has RM500,000 today and can earn 8% per annum on this amount of money, how long would it take to achieve her goal ? a) 8 years b) 9 years c) 10 years d) 11 years 21. In the marketing unit trust scheme, providing quality services includes : a) Being responsive to customers’ requests, queries and complaints b) Providing clear and precise reporting c) Providing convenient choices in handling investors’ cash and payments d) All of the optional answers are correct Kindly use the following information to answer the questions An investor had invested a single amount of money in a unit trust fund at rM0.5000 per unit in the rst year and subsequently purchased another 10,000 units at RM0.5200 per unit in second year. At the end of third year, he decided to redeem his investment at Buying Price RM0.6000 per unit and the total proceeds was RM15,000 22. Hoe many units was he entitled for the investment he made in rst year ? a) 15,000 units b) 35,000 units c) 25,000 units d) None of the optional answer is correct 23. What is the total amount of money he had invested in the rst and second year ? a) RM7,500 b) RM5,200 c) RM12,700 d) None of the optional answer is correct 24. Upon redemption in the third year, calculate the raw return of the investment that he made in the rst year. (Assume no distribution was paid during the period) a) 15% b) 18% c) 20% d) 100% 25. Which of the following is the most appropriate thing to do if you meet a person who has never invested on unit trusts and does not feel comfortable to invest in unit trust ? a) Let the potential investor have a prospectus and walk thru with her b) Comfort her by letting her know that unit trust is an investment with no risk c) Shows her the marketing brochure and take them back as you need to show the brochure to other clients d) Show her excellent performance record of the unit trust fund and tell her that her performance will repeat again this year 26. One of your friend tells you “By the time I retire in year 2020, I believe the KLCI will be many times what is today. I’m happy with that. Give me a fund that can best deliver the same result”. What would you recommend to him ? a) Buy a Growth Fund because it can give him return better than KLCI by year 2020 b) Buy a Balance Fund because it’s investment return a less volatile than KLCI c) Buy an Index Tracking Fund using KLCI as the benchmark d) For such a long investment horizon, don’t worry buy any funds 27. If the distribution declared is 3.5 cent per unit, how much is the selling price ex-distribution ? (Round the answer to the nearest cent) a) RM0.49 b) RM0.52 c) RM1.86 d) RM1.96 28. Based on the above answer and assume that a client invested RM10,000 ex-distribution, how many units will she got for her investment ? a) 20,408.16 units b) 19,436 units c) 5,120.23 units d) 5,102.04 units 29. If the initial service charges is reduced from 5% to 3% and based on the selling price ex-distribution, how much saving can the client get, given the same number of units purchased in previous question ? a) RM326.53 b) RM184.93 c) RM327.95 d) RM200.00 fi fi fi fi  30. Unit trust o er an e ective way to pursue lifetime nancial goals with advantage that would be di cult to achieve by lay persons who invest on their own. The advantages include : i. On going professional fund management ii. Diversi cation of assets with reduced risks iii. Can be bought and sold easily iv. More favourable transaction costs for unit trust due to large investment amount v. Flexibility to switch between di erent type of funds (applicable to certain unit trust) a) !, II & III b) I, II, III & IV c) I, II, III & V d) All of the optional answers are correct Kindly use the following information to answer the questions In the annual report of ABC Millennium Fund, the expenses incurred by the fund during the nancial were : RM Annual Management Fee 3,528,673 Trustee Fee 150,326 Auditors’ Remuneration 16,300 Administrative Expenses 28,418 The average Net Asset Value for the period was RM235,300,528 31. Calculate the Management Expenses Ratio (MER) of the fund for the nancial year. a) 1.50% b) 1.58% c) 0.07% d) 0.01% 32. A decrease in MER calculated from the above indicates : a) The annual management fee must be revised downward b) The Unit Trust Management Company (UTMC) must be overpaid for the administrative expenses c) The UTMC os not managing the total fees and expenses well d) The UTMC is managing the total fees and expenses well 33. Market risk is a time of risk involves investing in equity trust and in means a) Stock value underlying the net asset value of the unit trust scheme uctuates in response to the activities of individual companies and general market or economic conditions. Such movement will cause the NAV or prices of units to fall as well as rise b) Poor management of the scheme will jeopardised the investment of unit holders through the lost of their capital invested in the scheme c) Unit holders might be forced to provide additional funds to restore their loan margin when the value of the unit trust scheme dropped drastically d) None of the optional answer is correct 34. One of the major bene ts investing in unit trust is to gain access to the experienced of a professional fund manager. Which term best describes a professional fund manager ? a) Someone who has bought and sold so many investment in his lifetimes b) A friend who always recommends the best stocks to buy c) Someone who always manages in excess of RM500 million d) Someone who has been professionally trained in the eld of fund management 35. Raw return is a) The best measure for unit trust return b) A form of measure which is superior to the annualised return c) A measure that shows the total return achieved by holding the investment over the entire period between buying and selling d) The only return measure that accounts for the value of time fi ff ff fi ff fi fi fl fi fi ffi  36. Unit Trust Management Scheme (UTMC) must issue a prospectus for each of its unit trust scheme. The UTMC is required to : a) Issue prospectus at least once a year b) Provide complete information c) Send a copy to any potential investor who request a copy d) All the answers are correct 37. Risk/Returns characteristics can vary signi cantly between two funds. Which of the following statement is not a correct comparison of the risk/returns trade o between investing in a Capital Growth Fund (G) and a Capital Protection Fund (P) a) G’s returns are potentially higher than P’s because G is less risky b) G needs to adopt a riskier investment strategy to achieve potentially higher returns c) P’s losses are potentially less because it takes less risk d) Expect a lower return from P because the fund takes less risk 38. In all investment related industries, what is the most important component for investors to have in product the are purchasing ? a) Performance b) Con dence c) Risk d) Relationship 39. A listed trust us commonly known as a : a) Open ended trust b) Universal trust c) Closed ended trust d) Regional trust 40. Encik Adam has invested RM5,000 in ABC growth fund managed by ABC Unit Trust Management Berhad. Encik Adam now owns a) RM5,000 worth of units of entitlement in ABC Growth Fund b) RM5,000 Wirth of shares In ABC Unit Trust Management Berhad c) RM5,000 worth of direct ownership of investment portfolio held by ABC Growth Fund d) All answers are correct 41. What happens when a unit split 1:2 is declared ? a) The unit price doubled b) The units in circulation doubled c) The unit price decreases proportionately d) None of the answer is correct 42. Amongst others, the calculation of the net asset value (NAV) of a unit trust scheme involves i) The value of the equity investment ii) Cost and charges involved in various transaction of the scheme iii) The value of the money market instrument (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 and II b) I, II & III c) I, II and IV d) All answers are correct 43. In order to enhance professionalism in marketing of unit trust a) It is irrelevant what promises are made to clients with respect to investment returns b) It is important to provide superior service to clients and attend to their needs c) It is important to observe as many marketing leads as possible d) It is important to recommend to potential client the best performing unit trust regardless of the suitability of the fund fi ff fi  44. What is the risk of an investor directly investing in a small number of shares ? a) The investor is exposed to the risk of either making or losing large portion of her investments b) The investor bene ts from diversi cation of portfolio c) The investor is able to consistently reap high returns of investment d) It is easy for investor to select good company 45. A unit split in e ect does not add value to the unit trust investors investment holdings, but __________________ a) Make sure that the fund managers are able to earn their fees b) Is used by UTMC to lower the NAV per unit, thus and enabling new investors to invest to the fund c) Is used to enlarge the fund size in Ringgit term d) Is used to reclassify the fund to “penny stocks” fund 46. Dollar cost averaging is a) a strategy that entails buying low and sell high b) a way to purchase unit trust funds and minimised the service charge c) a systematic way of regular investment with xed amount of money d) a way to sell unit trust funds and minimised the capital gains 47. 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 on the investment iii. Invest the money in an instrument that can generate higher returns than the in ation rate iv. Maximise the bene ts of e ective nancial planning a) I & III b) III & IV c) I, III & IV d) I, II, III & IV 48. Daily Net Asset Values of unit trust scheme are available through a) Referring to the unit trust pricing table published by major newspaper b) Calling the UTMC c) Visiting the U it Trust Management Companies, head o ce or its branches d) All the answers are correct 49. What is the most important bene ts you will get from creating a diversi ed portfolio that includes stocks, bonds and money market funds ? a) A guarantee that the portfolio wont su er if the stock market falls b) Higher returns than the portfolio that is not diversi ed c) The ability to balance both risk and returns in achieving ones nancial goal d) All the optional answer are correct 50. 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 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 b) I & III c) I, II & III d) All answers are correct fi fi ff fi ff fi fi fi ff fl fi fi ffi ff fi fi fl fi  51. Which of the following increase the overall risk level of your portfolio a) Shifting your investment from bonds to stocks b) Shifting your investment from stocks to bonds c) Shifting your investment from stocks to money market d) Shifting your investment from stocks to xed deposit 52. Please identify features of an open ended unit trust i. It is collective investment scheme that provide an opportunity for small investors to participate in stock market investment ii. Ownership of the fund is divided into units of entitlement iii. If the market condition is not encouraging, the unit holders will not be able to liquidate their investment as other investors are not keen to purchase a) I & II b) I & III c) I & III d) All answers are correct 53. Which of the following best describes Aggressive Growth Fund ? a) The fund will invest primarily in stocks which earn signi cant dividend income b) The fund normally generate returns which closely resemble the performance of a stock market index, both in terms of risk and return c) Generally the fund will be invested in stocks with higher growth potential and with higher risk characteristic d) The fund mainly invests corporate bonds, government securities and liquid assets 54. Which of the following is NOT the right of unit holders ? a) To obtain information about the unit trust scheme and its performance b) To receive pro le of board of directors c) To redeem units d) To select shares for the unit trust scheme’s portfolio 55. Which of the following statements is not valid a) Investors are entitled to received unit trust certi cate or statement for his investment b) Unit trust are professionally manage by the UTMC c) Unit holders directly purchase the securities in the investment portfolio of the unit trust d) Value of a unit will uctuate in line with the changes in the net asset value of the unit trust 56. Generally, a unit trust that has 80% of its assets invested in growth stocks would be the most appropriate investment for the preparation of : a) A college fund for an 18 year old b) An individual retirement fund for a 52 year old c) An income providing savings for an 86 year old d) Non of the optional answer is correct 57. The best way for investors to minimise the impact of the initial service charge on the unit trust investment is to : a) Buy and sell units as often as they can b) Invest as regular as possible and avoid lump sum investment c) Adhere to a long term buy and hold strategy, making sure that the unit purchased match their long term investment objective d) Only purchase aggressive growth funds 58. Which of the following should be included in the computation Net Asset Value if a unit trust fund ? a) The value of the equity investments in the unit trust scheme b) Trustee fees c) Auditors’ fees d) All of the above fi fl fi fi fi  59. What is one of the functions of FMUTM ? a) Reviews all materials prior to release to public b) Generates all the guidelines that unit trust companies comply to and to report to Compliance Authority of non-compliance is found c) Provides a common platform for unit trust companies to discuss in the industry d) A governing body which regulates the investment made by the unit trust management company 60. Leveraging into an investment means a) 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 pro t b) Lowering the risk of investing especially in unit trust c) Using the dollar cost averaging method to lower down the cost per unit d) Lending money to investors who wish to gain maximum exposure to make sure the growth of the assets Question 61, 62 & 63 are related : Given data : * Initial investment : RM80,000 * Term of Investment : 3 years * Expected investment return before fees and expenses : 10% per annum * On-going management fee : 1.5% per annum * Initial service charge : 5% 61. Calculate the expected value of investment at the end of the third year a) RM97,317 b) RM101,156 c) RM102,183 d) RM106,480 62. How long does it approximately take for the expected value of the initial investment to reach RM160,000 ? a) 7.2 years b) 8.5 years c) 14.4 years d) 20.6 years 63. Now assume that the on-going management fee is 1.0% instead of 1.5%, what is the expected value of investment at the end of third year a) RM98,669 b) RM101,156 c) RM103,602 d) RM106,480 An investor had invested in 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 the second year. At the end of the third year, he decided to redeem all his investment at Buying Price RM0.90 per unit and the total proceed was RM79,200 64. How many units was entitled for the investment he made in the rst year ? a) 68,000 units b) 79,200 units c) 88,000 units d) None answer is correct 65. If investment return is 10% per annum, marginal tax rate is 20%, and in ation rate is 5% per annum, what is e ective return after tax and in ation ? a) 3% b) 4% c) 5% d) 2.5% fl fi fi fl fi ff  66. Which of the following could not be used as an investment benchmark when assessing investment performance ? a) The Kuala Lumpur Inter-bank O er Rate (KLIBOR) b) The Kuala Lumpur Composite Index (KLCI) c) The 5 year bond rate d) The current account situation as a percentage of a Gross Domestic Product (GDP) 67. The maximum initial service charge is disclosed in a) Deed b) Prospectus c) Marketing materials d) All of the above 68. What do you understand by the term “Call Margin” a) it is an amount the investor might have to pay his/her nancier if the credit exposure of a unit trust loan falls beneath a certain level b) It is a type of processing fees imposed by the nancier in relation to nancing of unit trust investment c) It is the nancier’s marked-up margin imposed on top of the based lending rate applicable for the unit trust loan d) it is a charges imposed on futures contract 69. Unit holder F is a rst-time investor and had purchased UTS XYZ from PDUT B, on Tuesday, 2 May 2006. After returning home, he met some friends who have experiences in UTS investment. Prior to his discussion with friends, he started to feel that he did not fully understand the purchase and he also felt that PDUT B has misled him by focusing more on past performance of UTS XYZ. What is your advise to the unit holder F ? a) Unit holder F cannot do anything at all as the purchase has been made b) Unit holder F should wait for the right time to repurchase all his units c) Unit holder F can exercise his “cooling o ” right which is an opportunity to reconsider his purchase d) Unit holder F should terminate PDUT B’s service immediately 70. Unit holder Z received an Annual Report on the performance of UTS B which he invested in. Listed below are the major contents of the Annual Report which he will come across except i. Average Annual Return over one, three and ve years and since launch ii. UTS B’s Investment objectives and policies iii. Auditor’s Report iv. Risk Disclosure Statement v. Cooling O Right a) II & IV b) I, II, & III c) III, IV & V d) IV & V 71. What is the e ective rate of return after tax and in ation ? a) 4.5% b) 4% c) 4.3% d) 4.2% 72. Assume that the in ation rate rise up to 4.8%, what is the e ective rate of return ? a) 4.5% b) 4% c) 4.3% d) 4.2% fi ff ff fi fl ff ff fi fi fl fi ff fi  73. A distribution of RM0.04 per unit has been distributed for fund XYZ, the NAV cum distribution was RM1,500,000 while units in circulation were 1,000,000 units. Calculate the NAV per unit ex distribution. a) RM1.49 b) RM1.46 c) RM1.50 d) RM1.40 74. Technique A operates in a way which the period of ownership prior to ex-D date is irrelevant. It is therefore possible to “buy” a distribution entitlement for the full period by acquiring units just before the ex-D date. Technique A is known as ___________ a) Automatic reinvestment b) Suspension c) Spread d) “Buying” a distribution Lump Sum Investment : RM100,000 Initial Entry Cost : 6.5% On-going management Fee : 1.4% Rate of Return : 11% 75. What is the return of the investment after 10 years ? a) RM233,839.11 b) RM234,831.26 c) RM233,547.23 d) RM234,098.95 76. Assume that the initial entry cost decreased to 6%, what is the value if the investment after 10 years ? a) RM233,839.11 b) RM235,089.59 c) RM235,938.96 d) RM234,098.95 77. An investor buys or disposes the units in UTS based on the unit price quoted by UTMC which is determined at the close of the business day. The above statement is referring to the practice of _________________ a) Forward Pricing b) Historic Pricing c) Today’s Pricing d) Future Pricing 78. Fixed income funds are generally said to have lower risk to equity fund. Hence what can be expected of the returns from these funds a) Usually higher that equity funds b) Usually lower than equity funds c) Consistently higher than equity funds d) None answer is correct 79. What type of investment would you most expect to nd in an aggressive growth fund a) Investment in capital guaranteed life insurance product b) Cash c) Investment in properties with regular income d) Shares of technology companies recently listed on the stock exchange 80. The best way to help investors go through prospectus is to begin with : a) Members of investment committee b) Fee’s and charges c) Key data section d) Pro le of the board of directors and key management sta fi fi ff  81. An Index UTS a) Invest primarily in all of the securities or representative sample of the securities that are included in a selected market index b) Invest primarily in overseas share markets c) Invest in real property, usually prominent commercial properties d) Invest in a range of companies that closely match companies comprising a particular index 82. In general which of the following type of the unit trust is likely to depreciate most when the overall stock market falls a) Property trust b) Fixed income trust c) Equity trust d) Money market trust 83. The maximum margin on unit trust nancing is xed at a) 85% b) 67% c) 50% d) 79% 84. Mr X wants to invest RM200,000.00. What is the maximum amount can be borrows from a nancial institution for the investment ? a) RM134,000.00 b) RM66,000.00 c) RM120,000.00 d) RM80,000.00 85. Which are the parties involved in the unit trust ? i. UTMC ii. Trustee iii. Investment Manager iv. Unit holder a) I & II b) I, II & III c) I, II & IV d) All of the above 86. Which of the following can be found in the prospectus of unit trust fund ? i. Investment objectives ii. Authorised investments iii. Fees & charges iv. Trust expenses a) I, II & III b) IV only c) I & III d) All of the above 87. Which of the following is/are the risks of borrowing to invest un UTS ? i. Interest rate uctuate ii. Default in repayment of loans iii. Premature repayment of loan iv. Margin call a) I & II b) I & III c) II & III d) All of the above fl fi fi fi 88. What is the term used if Mrs. Z wants to reinvest her distribution in UTS ? a) Distribution Reinvestment b) Buying Distribution c) Suspension d) Distribution Equalisation 89. Investor A and Investor B had won the Millionaire contest and received cash price of RM64,000 each. The decided to invest their prize on Fund A and Fund B respectively INVESTOR A INVESTOR B FUND A RM64,000 — FUND B — RM64,000 The average annual return for Fund A is 8.5% and Investor B has managed to double his investment by 1.27 years earlier than Investor A. What is the average annual return for Fund B ? a) 7.5% b) 10% c) 8.75% d) None of the above 90. Mr. A says “Oh ! XYZ Fund is really good. I shall invest in this fund to get Hugh return in 3 years time !” Upon hearing this, a PDUT should advise Mr. A which of the following ? a) The fees and service for the particular fund b) The possible risk involved c) To go through the prospectus d) All of the above is correct 91. Calculate the average unit cost for the above investment NAV Amount invested 0.50 RM 1,500.00 0.60 RM 1,500.00 0.70 RM 1,500.00 a) RM0.59 b) RM0.95 c) RM0.78 d) RM0.64 92. Which of the following provides a common platform for UTMC to discuss issues in relating to the unit trust industries ? a) Registrar of Companies b) Federation of Malaysian Unit Trust Managers (FMUTM) c) Securities Commission (SC) d) Ministry of Finance 93. The fund manager of a unit trust scheme is allowed to charge a management fee. The fees is……. a) mainly used to cover the management expenses incurred by the manager in managing the scheme b) Also known as advisory fee charged by the Trustee c) Levied by the manager on the investment made by investors to cover the commission paid to agent d) Used for the purposed of registering the unit holders with the Trustee 94. Suppose that part of the asset allocation of fund X, and fund Y are as follows : Fund X Fund Y Equity 70% 0% Money Market 10% 85% Fund X is most appropriate to be classi ed as : a) Equity fund b) Fixed income fund c) Property fund d) Money market fund 95. Which of the following statement is (are) correct : i) Interest rate is decreased, value of fund Y will be more adversely a ected ii) Interest rate is decreased, value of fund Y will be more positively a ected iii) Value fund X will be more positively a ected when the stock market is increasing a) I only b) I & III c) II & III d) All answers are correct 96. Which of the following is (are) true about Bond Fund ? i) It is best to buy when interest rates are peaking and bond yields are high ii) Manager’s fees and charges are generally lower compared to equity funds iii) Fund prices will falls when interest rates rise iv) No matter when you redeem your investment, you will get back at least your principal amount or your capital you had invested a) II only b) I & III c) I, II & III d) All answers are correct 97. Which of the following is not true ? a) Generally, the portfolio of unit trust investment is determined by the fund manager b) A unit trust is an investment mechanism which allows investors who shared similar nancial objectives to pool their money c) The portfolio of investments is allowed to include only one asset class d) Unit holders do not directly purchase the securities and ownership of the fund is divided into units 98. For every unit trust fund, how many report must Unit Trust Management Company (UTMC) publish each nancial year for the unit holder ? a) At least one b) At least two c) At least three d) At least four 99. What is Unit Trust Scheme (UTS) ? a) Form of collective investment that allow investors with similar objectives to pool their saving b) An investment portfolio in which only contains one type of asset c) Form of collective investment whereby the unit holders are the shareholders of the company they have invested d) Global fund aimed at stimulating investment in high technology projects e) An investment portfolio whereby the investors of the particular UTS will purchase the securities in the portfolio directly ff fi ff ff fi fi  100. For the Financial Year Ended 30 Dec 200x, the nancial statement of ABC Fund shows that the expenses were incurred : Management Fee : RM1,340,999 Trustee Fee : RM730,173 Auditors Fee : RM172,641 Bank Charges & Other Expenses : RM361594 The average fund size for ABC Fund during the year was RM250,492,853. Calculate the management expenses ratio (MER) of the fund for the year ended 30 Dec 200x a) 1.07% b) 1.03% c) 1.08% d) 1.04% 101. What does a gradually decreasing MER over a period of several year indicate ? a) UTMC is not managing its operating cost well b) UTMC is managing its operating cost e ciently for its fund size c) That all newly launched UTS will have MER d) UTMC is managing its operating cost e ciently 102. How do investors overcome the impact of in ation ? a) By reducing tax rate b) Investors need to preserve the purchasing power of the original investment c) Hope to earn a return that is less than the in ation rate d) None of the optional answers are correct 103. A PDUT should not say a) Investing in UTS has no risk b) If do not have money to invest, investors should apply for a loan c) Returns are guaranteed when investing in UTS d) All of above 104. Dollar Cost Averaging (DCA) can a ect the average cost of investment. Which statement clearly explains the DCA e ects ? a) With xed amount of money, investors can acquire more units in rising a market over a short term period b) With xed amount of money, investors can acquire lesser units in a uctuating market over long term period c) With xed amount of money, investors can acquire more units at lower price and fewer units at higher price which can reduce the average cost over long term period d) With xed amount of money, investors can acquire regular amount of units at lower price which can reduce the average cost over long term period 105. The followings are roles of UTC, except : a) Inform the investors about structure oof UTS and what are their rights as unit holder b) To be responsible to the customer’s request as with honesty and dignity c) Force sells to customers in order to get bene ts from their investment d) Fine tune their product knowledge 106. It is important for the UT industry to be regulated in order to protected clients’ investments. Which of the following is not an authority involved in UTS regulation ? a) Ministry of Finance b) Bank Negara Malaysia c) Institut Bank-Bank Malaysia d) Securities Commission fi fi fi fi ffi ffi ff fl fi fl fi fl ff 107. ________________ is a sales charge or entry fee levied by a UTMC on the initial purchase of UTS. The charge is sometimes called a ‘load’, ‘front end load’ or sales or entry charge. The charge can be expressed either as a xed amount or calculated as a percentage of the NAV of a unit a) Initial Load Charge b) Initial Sales Charge c) Initial Service Charge d) Initial Interest Charge 108. What is the name of the regulatory body for UTS in Malaysia ? a) Bank Negara Malaysia b) Registrar of Companies c) FMUTM d) Securities Commission 109. If NAV of a fund is RM1.00, the fund manager declared a distribution of RM0.12, how much would an investor receive if he redeems 10,000 units after distribution ? a) RM10,500.00 b) RM8,800.00 c) RM9,800.00 d) RM10,800.00 110. The main objective of the Acts that regulate the unit trust industry is to safeguard the bene ts of the a) Unit holder b) UTMC c) Trustee d) Securities Commission 111. Which are the key requirements of a trustee ? i. Must be a trust company registered under The Trust Company Act 1949 ii. Must be independent of the UTMC and UTS iii. Must be registered with the SC iv. Act as a custodian by holding all the assets belonging to a UTS a) I & II b) III only c) IV only d) All of the above 112. Assume an investor has invested a lump sum of RM25,000. 2 years later the total returns were RM27,300. Calculate the compounded return from this investment. a) 5.5% b) 4.5% c) 6.5% d) 7.5% fi fi  113. What will be received by the investor’s generally after they have invested in UTS ? i. Con rmation that the investor’s application amount has been received ii. Con rmation of the number of units acquired in the UTS and the NAV of a unit on the date of allotment of units iii. Con rmation on the rate of initial service charge imposed in both percentage form and actual value as well as the percentage form and actual value as well as the net a amount invested net of service charge iv. Con rmation on the rate of exit fee imposed both in percentage form and actual value as well as the total amount repurchased v. A certi cate for the number of units issued 114. When did RHB Unit Trust Management Berhad introduced the rst Islamic bond fund ? a) 2000 b) 2001 c) 2002 d) 2004 115. Which of the below is/are NOT Part of the Code of Ethics ? i. Fair dealing ii. Competence iii. Use of authorisation iv. Acting with due care, skill and diligence v. Compliance with law a) III & V b) I, II & IV c) III only d) None of the above 116. Which of the following is NOT true about the agency structure ? a) The standard structure comprises a Group Agency Manager, Agency Manager, and Agency Supervisor and an Agent b) There must be more that 4 tier c) The unit must not exceed 50 persons in total at all time d) An agent is not allowed to recruit other agents 117. What do you understand about unit split ? a) It a ects the NAVE of the UTS b) It a ects the value of a unit holder’s investment c) It does not a ect the NAV of the UTS or the value of a unit holder’s investment d) None of the optional answers are correct 118. A complaint can be referred to : a) UTC b) UMTC c) FMUTM & SC d) All of the above 119. For a Syariah based UTS, where can the excess cash or liquid assets be kept/invested ? a) Investment accounts b) Current accounts c) Syariah based instruments d) None of the above ff ff fi fi fi fi fi ff fi  120. Which is NOT TRUE about management fee ? a) The annual management fee is calculated on the Gross NAV of UTS b) The average annual management fee is 1.5% c) The management fee is to cover the cost managing UTS d) The fee is an optional requirement to be included in the prospectus 121. There are many potential risks that are related to investing in UTS. Listed below are a few types of risk. Which of the following has an incorrect description ? a) Market Risk - stock value does not uctuate in response to the activities of individual companies and general market or economic conditions b) Liquidity Risk - de ne as the ease with which a security can be sold at or near its fair value depending on the market c) In ation Risk - the risk of high in ation will a ect the real return from investment d) Risk of Non Compliance - risk that speci cally occurs when a Syariah compliant security is reclassi ed as a Syariah non compliant securities 122. What does liquidity means in the context of UTS ? a) Unit can be bought easily b) Average cost of investment acquired to below the average price c) Investors can sell their investment at any time d) Payment of income to unit holders 123. Net Asset Value = RM250,000 Unit is Circulation = 300,000 units Distribution of Income = 3.5 cent Unit Split = 1.5 Calculate the NAV per unit ex distribution (3 decimal points for calculation) a) RM0.73 b) RM0.80 c) RM0.70 d) RM0.76 124. Calculate the NAV per unit ex distribution assuming post unit split (3 decimal points for calculation) a) RM0.63 b) RM0.60 c) RM0.67 d) RM0.69 125. Which is NOT TRUE regarding the role of FMTUM ? a) To provide self regulation for the UT industry b) Appointed by the SC to conduct unit trust examinations for person wishing to become UTC c) To advise the Ministry of Finance d) To work closely with the SC in the development and growth of the unit trust industry fl fi fl fl fi ff fi 126. Which is NOT TRUE about a UTC ? a) UTC should introduce himself as a unit trust agent b) UTC does a need analysis for his client c) UTC needs an IA and UTC license d) UTC recommends a unit trust product 127. Which of the following is true ? X Y 70% Equity 20% Equity 30% Money Market 80% Money Market a) If the market falls, Y will be more negatively a ected than X b) If the market falls, X will be more negatively a ected than Y c) If the market rises, both X and Y will be negatively a ected d) None of the above is correct 128. How do we calculate redemption price ? a) NAV + Transaction Cost Factor b) NAV - Transaction Cost Factor c) NAV + an Exit Fee d) NAV - an Exit Fee 129. What does a register contain ? a) The category of funds each investor has invested in b) The total of investment each investor has in each fund category c) Personal data relating to each investor d) None of the above 130. Which of the parties below has been established to investigate any complaints from customers ? a) Appealing Committee b) Investigating Committee c) Disciplinary Committee d) Investment Committee 131. Given an in ation rate of 5%, how much will education fee of RM80,000 cost in 10 years time ? (Use 4 decimal points for your calculation) a) RM146,601 b) RM130,000 c) RM130,312 d) RM114,023 132. Islamic Finance in Malaysia began to develop with the establishment of : a) Shell MDS Sdn Bhd b) The Islamic Capital Market Unit c) Bank Islam Malaysia Berhad d) Malaysia Capital Market Masterplan fl ff ff ff 133. Net Asset Value of the fund did not change with UNIT SPLIT. Why does the UTMC take the options to split ? a) Gain Management fee b) Increase fund size in term of ringgit c) Lower unit NAV so that new investors can purchase d) Increase unit NAV to bene t existing unit holder 134. NAV calculation includes : i. Equity market ii. Money market (if applicable) iii. Transaction cost of UTS iv. MER a) I & II b) I,II & III c) I, II & IV d) All of the optional answers are correct 135. Distribution can be used i. Reinvest ii. Use on oneself iii. Purchase UTMC shares a) I only b) I & II c) II & III d) All of the optional answers are correct 136. Trustee is i. Regulatory body to control investment decision by UTMC ii. Common platform for UTMC to discuss issues iii. Guideline & report to regulatory body for non compliance on investment iv. Safeguard the assets of the fund 137. FMUTM is i. Common platform for UTMC to discuss issues ii. To agree on standards of practice for the protection of the interests of unit holder iii. To improve regulations, tax, and other rules a ecting the sales of unit trusts a) I & II b) II & III c) I & III d) All of the optional answers are correct fi ff 138. Halal stocks do not invest in companies involve in activities products or service related to the following : i. Conventional banking ii. Telecommunication iii. Gambling iv. Alcoholic beverages a) II only b) III & IV c) I, III & IV d) I, II, III & IV 139. Which of the following o er(s) the choice(s) of what an investor can do with the distribution paid by unit trust funds ? i. Reinvest in the unit trust fund, which means the distribution buys more units ii. Take the money out and spend it iii. Buy more shares of the Unit Trust Management Company a) I, II & III b) I & III c) I & II d) None of the optional answer is correct 140. If NAV of a fund is RM1.00, the initial charge is 1.5% and no exit fee is imposed. How much would an investors received if he redeems 10,000 units a) RM9,850 b) RM10,000 c) RM10,150 d) None of the optional answer is correct 141. The main purpose of prospectus is : a) To provide potential and existing investors with all the necessary information to make an informed decision b) To outline the marketing plan of the unit trust scheme c) To highlight the projected returns of the unit trust scheme d) To outline the pro le of the target investors 142. Amongst others, the calculation of the net asset value (NAV) of a unit trust scheme involves i) The value of the equity investment ii) Cost and charges involved in various transaction of the scheme iii) The value of the money market instrument (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 & II b) I, II & III c) I, III & IV d) All optional answers are correct 143. In haste to close sales, you may inadvertently say wrong things. Which of the following is (are) not the right proposition(s) to use ? a) “It is safe to invest now. The market is going up and you will de nitely make pro ts” b) “No money is not a problem because you can apply for a loan” c) “You’ll get free insurance or gifts and I can add on some additional units for you” d) All of the optional answers are not the right propositions fi ff fi fi  144. Unit trust o er and e ective way to pursue lifetime nancial goals with advantages that would be di cult to achieve by lay persons invest on their own. The advantages include i) On-going professional fund management ii) Diversi cation of assets with reduces risk iii) Can be bought and sold easily iv) More favourable transaction cost for unit trust due to large investment amount v) Flexibility to switch between di erent type of funds (applicable to certain unit trust) a) I, II & III b) I, II, III & IV c) I, II, III & V d) All of the optional answers are correct 145. _____________ is also the term used for the price at which units are sold to the public. It is similar to the unit Net Asset Value (NAV) of the unit trust fund. a) O er price b) Redemption price c) Service charge d) Buying price 146. Which of the following best describe the disadvantage of nancing investment of a unit trust fund through borrowing a) In a rising market, the value of the investment in unit trust fund and the loan borrowed rises b) The value of the investment in unit trust fund does nit uctuate with share market price but the loan nancing does c) In falling share market, the value of investment in unit trust fund be decreasing whilst the loan liability remain constant or increasing. The e ect of this may result in the need to increase the collateral to the nancial institution d) None of the answers are correct 147. The unit trust scheme (UTS) can only invest in securities that : a) Guarantee the highest returns with minimum risks b) Have been authorised in the deed of the UTS c) Have small market capitalisation with great potential for capital appreciation in the long run d) Are well diversi ed in the global market 148. Kindly use the following information to answer the questions Hasnah invested all the money that she collected from her patent and relative during Hari Raya in fund A and fund B on 13th January 200x. The unit prices at the close of business on the day and other information related to her investment are as follows. FUND A FUND B i. Total invested RM1,000 RM1,000 ii. NAV per unit RM0.2700 RM0.8295 iii. Selling price per unit RM0.2700 RM0.8295 iv. Initial sales charge 5% 0% v. Exit fee 0% 2% vi. Pricing policy Forward Forward Calculate the total number of units received by Hasnah for her investment made in Fund A (W) and Fund B (X) respectively a) W = 3,527.33 units X = 1,205.55 units b) W = 3,703.70 units X = 1,265.82 units c) W = 3,407.41 units X = 1,145.27 units d) No answer is correct 149. An existing investor Mary decided to sell her 5,000 units in Fund B on the same day, how much would she receive form her redemption ? a) RM4,064.55 b) RM4,147.50 c) RM1,350 d) RM1,417.50 ff fi fi ff ff ff ff fl fi fi fi fi ffi  150. With the above information, Hasnah’s friend told you : “I think I should invest in Fund A mainly because the units of the fund are much cheaper that those of Fund B.” Should both of the funds achieve the same rate of returns, then the value of every Ringgit that I invested in Fund A will be higher than those of Fund B. Is she right by saying so ? a) Yes, she is perfectly right b) Not really. Although Fund A is a cheaper than Fund B, the value of her investment in either one of the fund will still be the same if both of the funds achieved the same rate of return c) No. The statement is wrong. Should all other fees and charges imposed by Fund A and B are the same, then Fund A is more expensive than Fund B. Consequently, the value of investment for every Ringgit that she invested in Fund A will be lower that those of Fund B if both of the fund achieved the same rate of returns d) None of comment is acceptable Kindly use the following information to answer the questions Cik Zarinaa and Encik Hamzah took part in a millionaire contest and won RM64,000 cash respectively. Both of them decided to invest their cash prizes at the same time as follows : ZARINA HAMZAH i) Investment A RM64,000 RM0.00 ii) Investment B RM0.00 RM64,000 RM64,000 RM64,000 151. Supposed that investment A provide an average annual return of 8.5% and the value of Encik Hamzah investment doubled approximately 1.27 years earlier that those Cik Zarina. What is the average annual return of invesment B ? a) Approximately 7.39% b) Approximately 9.77% c) Approximately 10% d) No answer is correct 152. Supposed that the amount of the cash win by them is RM128,000 each and all else being unchanged, what is the average annual return of the investment B ? a) Approximately 14.78% b) Approximately 19.54% c) Approximately 20% d) No answer is correct Kindly use the following information to answer the questions A family spent RM25,000 on goods and services last year and RM26,125 this year. Assumed that the pattern value of consumption and the in ation rate remain unchanged. 153. How much money will the family need next year to maintain the same living standard as this year ? a) RM27,250 b) RM27,301 c) RM26,125 d) No answer is correct 154. Based on the above in ation rate, if an investor earns a 5% return for his investment, his marginal tax is 20%. What is his e ective return after tax and in ation ? a) 15% b) - 1.5% c) - 0.5% d) - 0.3% 155. The unit trust funds that are available in the market could be designed to meet the following requirements : a) Long term savings b) Children education c) Retirement funds d) All answers are correct fl fl fl ff  156. An investor bought a unit trust from an agent who provided incorrect information about the fund. With whom can the investor lodge a complaint ? i. Federation of Malaysian Unit Trust Managers (FMUTM) ii. Securities Commission iii. Unit Trust Management Company concerned iv. Ministry of Finance a) II only b) I & II c) II & IV d) I, II, & III 157. Which of the following fund is best describe by this statement : “ The unit trust nd manager is managed in accordance with Syariah principles and aims to maximised capital appreciation medium to long term by investing mainly in equities listed on the Bursa Malaysia ” a) Balanced funds b) Islamic funds c) Property funds d) Fixed income funds 158. What is (are) the basic quality(ies) of a professional Persons Dealing in Unit Trust (PDUT’s) a) Give timely and accurate information b) Keep abreast on the latest development in the unit trust industry c) Provide on-going advisory and services d) All of the optional answers are correct 159. Which of the following forms the minimum standards of conduct expected of registered person dealing in unit trust (PDUT) and are intended to be a guide to ascertain whether a registered PDUT is acting in a manner which continue to satis ed the minimum standard of registration ? a) Code of ethics and professionalism b) Code of ethics and standards of professional conducts c) Code of ethics and standards of professional conducts for multilevel marketing d) None of the optional answers are correct 160. Which of the following is (are) investment alternative to unit trust a) Fixed deposit b) Direct share investment c) Property d) All the optional answers are correct 161. An index fund is : a) Listed as one of the component securities in the Kuala Lumpur exchange composite index (KLCI) b) Actively manage by buying and selling stocks upon careful and rigorous stock analysis and selection c) A fund that ensures returns will always be above KLCI d) A fund that has composition closely resembles that of the relevant index such as KLCI 162. If investment return is 10% per annum, marginal tax rate is 20%, and in ation rate is 5% per annum, what is e ective return after tax and in ation ? a) 3% b) 4% c) 5% d) 2.5% fl fi fl fi ff 163. From previous question it is clear that in ation can erode one’s purchasing power. How can an investor hedge against in ation ? a) Cut down all the unnecessary expenses and keep the money at home b) Lower the tax rate on the investment c) Invest the money in an instrument that can generate higher returns than the in ation rate d) None of the optional answer is correct fl fl fl ANSWERS SET 3 1. B 21. D 41. C 61. A 81. D 101. B 121. A 141. A 161. D 2. A 22. A 42. D 62. B 82. C 102. B 122. C 142. D 162. A 3. C 23. C 43. B 63. A 83. B 103. D 123. B 143. D 163. C 4. A 24. C 44. A 64. A 84. A 104. C 124. C 144. D 5. B 25. A 45. B 65. A 85. D 105. C 125. C 145. D 6. D 26. C 46. C 66. D 86. D 106. C 126. C 146. C 7. A 27. A 47. B 67. D 87. D 107. C 147. B 8. D 28. B 48. D 68. A 88. A 108. D 128. D 148. A 9. D 29. B 49. C 69. C 89. B 109. B 129. C 149. A 10. C 30. D 50. D 70. D 90. D 110. A 130. B 150. C 11. C 31. B 51. A 71. C 91. A 111. D 131. C 151. C 12. A 32. D 52. A 72. B 92. B 112. B 132. C 152. D 13. D 33. A 53. C 73. B 93. A 113. C 133. C 153. A 14. B 34. D 54. D 74. D 94. A 114. A 134. D 154. C 15. A 35. C 55. C 75. B 95. C 115. A 135. B 155. D 16. A 36. D 56. D 76. C 96 C 116. B 136. B 156. D 17. B 37. A 57. C 77. A 97. C 117. C 137. A 157. B 18. A 38. C 58. D 78. B 98. B 118. D 138. C 158. D 19. B 39. C 59. C 79. D 99. A 119. C 139. C 159. B 20. B 40. A 60. A 80. C 100. D 120. D 140. B 160. D