Set 1 Past Paper PDF

Set 1 Questions & Answers 010808 Set 1 A. I and II B. I, II and III 1) An investor can obtain loan from a financial institut...

Set 1 Questions & Answers 010808 Set 1 A. I and II B. I, II and III 1) An investor can obtain loan from a financial institution for the C. I, III and IV purpose of investing in UT. Mr. B wants to invest RM 80,000 in D. All of the above Equity UTS. Assuming he has borrowed up to the maximum margin of financing, what would be the amount he needs to invest Answer B on his own? Asset allocation is not one of the ways to measure performance of UTS in Malaysia. It is the practice of spreading a portfolio of investments A. 27,400 C. RM28,400 across a range of investment assets, to reduce the level of risk to match B. 26,400 D. RM29,400 the risk tolerance of investor. Answer B 4) All those entering the unit trust industry with the intention of Maximum loan to valuation = 67% marketing and distributing unit trust are required to meet the Balance from own pocket money = 33% requirement by FMUTM. Based on the Guidelines on Marketing 33% x RM 80,000 = RM 26,400 and Distribution of Unit Trust Funds, which of the following statement is not valid? 2) The following are the roles of UTC, except; A. Without the UTS prospectus a registered person is not allowed to A. Inform the investor about the structure of UTS and what their market or distribute unit trust. rights as unitholders are. B. Persons registered with the UTMC and upon receiving the B. To be responsible to the customer’s request with honesty and authorization card by the UTMC, are allowed to start selling the dignity. unit trust fund. C. Force sell to the customer in order to get benefit from their C. The registered persons must bring along together with them the investment. authorization card when they go to see their prospect. D. Fine- tune their product knowledge. D. Persons who wish to market and / or distribute units must be at least 21 years of age. Answer C UTC should not do force selling in order to get the investor to invest Answer B with them and benefited from the investor’s investment UTC must be registered with FMUTM and upon receiving the authorization card by FMUTM only they are allowed to start selling. 3) Which of the following can be used to measure UTS in Malaysia? 5) To further reduce risks to investors in UTS, the Securities I. Benchmarks Commission specifies the maximum exposure of a UTS’s portfolio II. Total Return over Various Time Periods to specific investments. The limit can be in form of exposure to a III. Performance tables single issuer, class of securities or group of companies. Investment IV. Asset allocation restriction on the maximum exposure in a single company is to; 1 Set 1 Questions & Answers 010808 A. Specify the maximum amount that the fund is allowed to invest in C. Using the dollar cost averaging method to lower down the cost per any one group of companies. unit. B. Maximize the pool of Malaysian resources that is invested in D. Lending money to investors who wish to gain maximum exposure Malaysia. to make sure the growth of the assets. C. Limit the downside of investing in any one single stock. D. Restrict all the amounts of the fund to be invested in overseas Answer A market. To maximize potential investment returns, some investors investing in UTS borrow the application money to invest, expecting the rate of Answer C return from investing in UTS will exceed the borrowing cost, thus In limiting exposure, the portfolio of the UTS is inadvertently giving rise to additional profit. This is known as leveraging investment diversified over a wide spread of investments. (Chapter 2, page 2-11) in UTS. (Chapter 1, page 1-6) 6) The following are the characteristics of Syariah UTS except; 8) The statements below are about Management Expense Ratio (MER) of a particular fund in UTS except A. The main objective of Syariah UTS (or Islamic UTS) is to provide an alternative investment options for investors who is sensitive to A. In calculating MER, auditor fee is considered as one of the Syariah Principle. expenses of the fund. B. The returns of Syariah UTS will also avoid the incidence of riba or B. MER shows the fees and expenses that the fund incurred in the usury interest. year. C. The stocks of Syariah UTS will exclude companies involved in C. Formula of MER = (fees + recovered expenses) X 100% activities, products or services related to conventional banking, Average Fund Size insurance, financial services, gambling, alcoholic beverage and D. The lower the MER, the lower the return that the investor will get non-halal food products. from that fund. D. The Syariah fee is borne by the investor themselves in investing in Syariah UTS. Answer D The low MER indicates that the UTMC may be managing its operating Answer D costs efficiently for its fund size. (Chapter 1, page 1-32) Syariah fee is not borne by the investor but it is borne by the Management. 9) Compounded annual return is an annual compound rate of return achieved by an investment over its holding period. Assuming an 7) “Leveraging” into an investment means investor has put in lump sum of RM 250,000 capital to invest in UTS X that produced 80% total return over 10 years. Calculate A. Borrowing funds to invest to gain maximum exposure, expecting what is compounding rate p.a. for UTS X for the past 10 years? that the rate of return on investment will exceed the borrowing cost, thus giving rise to additional profit. A. 6.05 % C. 9.05% B. Lowering the risk of investing especially in unit trust. B. 7.02% D. 8.02% 2 Set 1 Questions & Answers 010808 Answer A A. A fee based on the Selling Price of the Fund paid by the unit holder Capital = RM 250,000 to the unit trust manager for ongoing management of the unit trust Profit (80%) = RM200, 000 fund. Where FV = Future Value, RM 450,000 B. A fee based on the Gross Net Asset Value of the fund paid by the PV = Present Value, RM 250,000 unit holder to the trustee for ongoing management. i = rate of return C. A fee based on the Gross Net Asset Value of the Fund paid by the n=period, 10 years unit holder to the unit trust manager for ongoing management of the unit trust fund. FV= PV ( 1+i) n D. A fee based on the Net Asset Value of the Fund paid by the unit RM 450,000 = RM250,000 ( 1 + i ) 10 holder to the trust manager for ongoing management of the unit 1.8 = (1 + i) 10 trust fund. 10 √1.8 = ( 1 + i) 1.0605 =1 + i Answer C i = 6.05% UTMC are usually entitled under the deed of UTS to receive an annual management fee calculation on the Gross NAV of UTS. The fee is paid out 10) During the year-end of Fund S, the fund managers sold of UTS assets and is therefore borne by investors on the basis of the number investments with gross proceeds of RM 2,653,843 and purchased of units each hold. (Chapter 1, page 1-30) additional investments at a gross cost of RM 946,632. The average fund size during the year was RM 5,244,789. Calculate the PTR Question 12 and 13 for the year-end ended 31 December 200X. 12) Net Asset Value is RM250,000 while units in circulation is A. 0.26 times C. 0.34 times 1,000,000 units for fund ABC. Calculate the NAV per unit for B. 0.33 times D. 0.25 times Fund ABC. Answer C A. RM0.25 C. RM0.24 PTR= ½ x [total investment acquisitions + total investment disposal] B. RM0.27 D. RM0.23 Average Fund Size Answer A PTR = ½ x [946,632 + 2,653,843] NAV/unit = RM250,000/1,000,000 5,244,789 = RM0.25 = 0.34 times (34%) 13) Assume that Mr. Z wants to invest RM32,000 into Fund ABC. Calculate the number of units he will get from the 11) UTMC is entitled under the deed of UTS to receive an annual investment.(Service charge paid separately). management fee. What is an annual management fee? A. 118,518.52 units B. 128,000.00 units 3 Set 1 Questions & Answers 010808 C. 133,333.33 units Trustee Fee = 22,050 –21,200 D. 139,130.43 units Trustee fee = RM 850 Answer B 15) A UTMC declared a unit split of 1:10. The NAV pre unit split is No. of units held upon investment = Investment Amount RM 500,000,000. Units in the circulation pre unit split are NAV/unit 250,000,000 units. What is the NAV per unit after the split? = RM32,000 A. RM 1.71 C. RM1.80 RM0.25 B. RM 1.70 D. RM1.82 = 128,000.00 units. Answer D NAV before the split RM 500,000,000 14) Compute the Trustee fee from the MER calculation of Fund A. Units in circulation before the split 250,000,000 units NAV per unit RM 2.00 Auditor’s fee RM 200 Management fee RM15, 000 NAV after the split RM 500,000,000 Printing annual report RM 500 Units in circulation after the split 275,000,000 units Printing interim report RM 500 (250,000,000 + 25,000,000) Other expenses RM 5,000 NAV per unit RM 1.82 Trustee fee ? 16) __________ is a fee charged by a UTMC to an investor in UTS Average fund size is RM 1,500,000 and the MER is 1.47%. who sells his or her units in the UTS. A. RM 800 C. RM700 A. Exit Fee C. Initial service charge B. RM850 D. RM750 B. Initial offer price D. Annual management fee Answer B Answer A MER = [fees + recovered expenses] x 100 Average Fund Size 17) The NAV is RM380,000 while units in circulation is 1,400,000 units for Fund XYZ. Assume that Mr. B wants to sell his units, 1.47% = [RM 200 + 15,000 + 500+500+5,000+ Trustee fee] calculate the amount that he will receive if he sells 15,000 units. RM 1,500,000 (Use 3 decimal points for calculation) 1.47% = [RM 21,200 + Trustee fee] A. RM3,750 C. RM3,600 RM1, 500,000 B. RM4,065 D. RM3,450 22,050 = 21,200 + Trustee Fee Answer B 4 Set 1 Questions & Answers 010808 NAV/unit = RM380,000/1,400,000 A UTC can be an insurance agent and it is not the requirement from the = RM0.271 (3 decimal points) Federation. (Chapter 2, page 2-22) Repurchase amount = units repurchased x NAV/unit = 15,000 units x RM0.271 20) UTC Y knows that providing superior service to his clients is of = RM4,065.00 paramount importance. The success of his relationship can be measured in qualitative terms which are reflected by the actions 18) “This UTS is having at least 75% exposure in the investment of listed below except: real estate, single-purpose companies, real estate-related assets or liquid assets; with at least 50% of assets to be invested in real A. The high quality of on going reporting and customer care estate or single-purpose companies and the remaining 25% of B. Not responding to requests and complaints made by investor assets invested in other real estate-related assets, non-real estate- C. The ease with which transactions can be made related assets or asset-backed securities” D. The depth of knowledge of customer service staff of UTMC, Which of the following UTS best suit to the illustration above? IUTA, and UTC A. Managed Funds C. Islamic Funds Answer B B. Listed REIT D. Equity Funds It should be – the responsiveness to requests and complaints made by investor (Chapter 1, page 1-37) Answer B Listed REIT (Real estate investment trust) is the UTS that best suit to 21) Unitholder F is a first-time investor and has purchased UTS XYZ the illustration of the paragraph. (Chapter 2, 2-13) from UTC B, on Tuesday, 2 May 2006. After returning home, he met some friends who have experiences in UTS investment. Prior 19) What are the eligibility requirements for an authorized person who to his discussion with his friends, he started to feel that he did not is an individual? fully understand the purchase and he also felt that UTC B has misled him by focusing more on past performance of UTS XYZ. I at least 21 years of age What is your advice to Unitholder F? II has attained at least Grade 3 in SPM (or its equivalent as determined by a body approved by the SC or a recognized self- A. Unitholder F cannot do anything at all as the purchase has been regulatory organization)) made. III obtain a pass on a qualifying examination conducted by a body B. Unitholder F should wait for the right time to repurchase all his approved by the SC or a recognized self-regulatory organization. units IV must not be an insurance agent or life insurance agent C. Unitholder F can exercise his “cooling-off” right which is an opportunity to reconsider his purchase. A. I,II,III C. I and III D. Unitholder F should terminate UTC B’s services immediately. B. I,II,IV D. All of the above Answer C Answer A As a safeguard to an investor who may have purchased units without fully understanding the UTS purchased, or who may have been misled 5 Set 1 Questions & Answers 010808 by UTC, SC has imposed upon UTMC an obligation to provide an B. Other income received. investor with an opportunity to reconsider his/her purchase (‘cooling- C. Realised capital gains from the sale of investments. off’ right) (Chapter 3, page 3-6) D. All of the above 22) Unitholder Z received an Annual Report on the performance of Answer D UTS B which he invested in. Listed below are the major contents Realised income or gains comprises of dividend income received of the Annual Report which he will come across except: (derived from investment in quoted and unquoted shares of company), interest income received (derived from investments in quoted and I. Average Annual Return over one, three and five years, and since unquoted fixed income securities, money market instruments and launch. placement), other income received and realized capital gains from the II. UTS B’s investment objectives and policies. sale of investments. (Chapter 3, page 3-11) III. Auditor’s Report IV. Risk Disclosure Statement. Question 24 and 25 V. Cooling-Off Right. 24) Before 1 January 2007, Azmi has RM189,345 in A/C 1. A. II and IV only RM94,672.50 in A/C 2, and RM31,557.50 in A/C 3. After 1 B. I, II, III only January 2007, each sub-account has: C. III, IV, V only D. IV and V only A. Account 1 : 220,902.50 ; Account 2 : 94,672.50 B. Account 1 : 284,017.50 ; Account 2 : 31,557.50 Answer D C. Account 1 : 189,345.00 ; Account 2 : 126,230.00 Risk Disclosure Statement is signed by a client as to prove that he is D. Account 1 : 157,787.50 ; Account 2 : 157,787.50 fully explained and understood the risks involved in leveraging his investment. UTC are required to attach the original Risk Disclosure Answer C Statement signed by the investor to the application of units, after which Account 1: 189,345; Account 2 : 94,672.50 + 31,557.50 = 126,230 it is to be filed by UTMC for record and inspection purposes, and to forward a copy to the investor. (Chapter 3, page 3-10, 3-21 & 3-22) 25) Azmi has been approached by UTC F from UTMC Z to transfer Cooling-Off Right are not included in Annual Report, instead must be his savings from EPF to UTS C managed by UTMC Z on 3 disclosed in the prospectus of UTS. (Chapter 3, page 3-6) February 2008. He is 28 years old and the basic savings for him is RM14,000. However, the savings he has in account 1 is 23) The UTMC will determine (with trustee’s approval), the total RM20,000. How much is the maximum amount can he invest from amount of income of UTS to be distributed. The amount available EPF? for distribution from UTS may include only realised income/gains and after deducting expenses and taxation. Which of the following A. RM6,000.00 C. RM14,000.00 is realised income/gains? B. RM1,200.00 D. RM20,000.00 A. Dividend and interest income received. 6 Set 1 Questions & Answers 010808 Answer B C. Investor holding units in UTS acquired with EPF-source Account 1 balance : RM20,000 application money is able to sell units at any time and in the Baisc Savings : RM14,000 normal manner, without the completion of EPF Form KWSP Eligible amount : RM6,000 9F(3). Maximum amount to be transferred to UTS D. Any distributions accruing to unitholders from EPF-source (20% of eligible amount) : RM1,200 application money are automatically reinvested. 26) Upon agreeing to transfer his amount from Account 1 balance to Answer B UTS C, what are the documents which Azmi has to provide UTMC Proceeds from the disposal of units cannot be repaid to investor as it is Z? paid directly to the EPF to be re-credited to member’s Account 1. I. the completed EPF application form [Form KWSP 9F (AHL)]. 28) As an investor, Lily is aware of other investment opportunities that II. one certified true copy of the client’s identity card (IC) exist besides UT investment and as a UTC, your role is to advise photocopied on A4-sized paper, with both the front and reverse of Lily on the features of each investment. Choose the correct the IC photocopied on the same face of the paper. statement which describe them. III. the client right and left thumbprints affixed on the above photocopy. I. Cash and Fixed Deposits – not suitable for medium to long-term IV. completed application form from UTMC Z for UTS C. investment and usually offer lower relative returns due to lower V. Risk Disclosure Statement signed by investor. risk. II. Direct Share Investment – requires sound financial knowledge and A. I, II, IV only time in order to gain profit. B. I, II, III only III. Direct Investment in Property – small investor having difficulty to C. I, II, III, IV only gain exposure to it as large amounts of capital are required. D. All of the above IV. International investments – investment is affected by tax and other regulations, costs of managing and accounting for currency Answer C exposure. Investor has to provide the documents as stated in I, II, III, IV. Risk V. Financial Derivative Products – an avenue to earn potentially very Disclosure Statement is not needed as investor is investing through the high returns (or losses) without large capital outlays but small EPF Investment Scheme and not loan financing. investor is not really equipped to analyze derivative products as sound knowledge and understanding is needed. 27) After a few years of investment, Azmi wishes to sell his units in UTS C. Which of the following is false? A. I, II, III only B. I, II, III, IV only A. The repurchase proceeds paid by UTMC Z will be directly credited C. II, III, IV, V only into member’s Account 1. D. All of the above B. Proceeds from the disposal of units will be repaid to investor. Answer D 7 Set 1 Questions & Answers 010808 All of the alternative investment tools and their features are correctly the responsibility of everyone in the organization. He benefits in explained. (Chapter 3, page 3-25 to 3-27) many ways from compliance except 29) An investment in UTS can be used to meet longer term needs A. An enhanced reputation and easier to attract clients and increase except business. B. A reduced risk of litigation by clients. A. For home purchase. C. The opportunity for UTC to update their knowledge of legal and B. To meet children’s future education costs. other relevant obligations. C. Can make fortune overnight as in direct share investment. D. An increase in client complaints. D. To build up a retirement fund. Answer D Answer C It should be a reduction in client complaints. Longer term needs including home purchase, meeting children’s future education costs and building up a retirement fund. Making fortune 33) As a UTC, Shirley has to adhere to the UTC Code of Ethics which overnight is not a longer term need. (Chapter 3, page 3-30) outlined by the followings except: I. Honesty, Dignity and Integrity 30) As required by SC, the content of the annual report of UTS should II. Appropriate Designation or Title include the following except; III. Advertisements and Promotional Materials IV. Appointment of qualified persons A. Financial Statements of UTS C. Unitholder’s right V. Fair Dealing B. Manager’s Report D. Auditor’s Report A. I, II, III only Answer C B. II, III, IV only Not required in Annual Report C. III, IV, V only D. All of the above 31) If a customer is unsatisfied with UTC ‘s marketing ethics, a customer can direct their complaints through these channels Answer B except; Appropriate Designation or Title, Advertisements and promotional materials, appointment of qualified persons are the Standards of A. UTMC C. Ministry of Finance Professional Conduct for UTC. (Chapter 4, page 4-9 & 4-10) B. FMUTM D. Securities Commission 34) A complaint may be referred by the FMUTM’s Executive Director Answer C to the FMUTM Council. The Council may within __________ refer the complaint to an appointed Investigating Committee to 32) As a registered UTC, Charles is aware of the importance in ascertain if the complaint is valid or has any substance. complying to regulations, procedures and rules, and compliance is 8 Set 1 Questions & Answers 010808 A. 14 business days B. 6 business days I. Protect an individual’s assets from the effects of inflation C. 14 calendar days II. Ensure an adequate income, when it is needed D. 6 calendar days III. It gives an individual “peace of mind” in regard to financial situation Answer A IV. It guarantees higher return for an individual in the future. The FMUTM Council may within 14 business days refer the complaint to an appointed Investigating Committee. (Chapter 4, page 4-10) A. I, II, III C. I, III, IV B. I, II, IV D. II, III, IV 35) Why is compliance an advantage to UTC? Answer A A. Enable them to update their knowledge as well as further enhanced IV. Financial planning can’t guarantee higher return for an individual. their reputation (Chapter 5, page 5-2) B. So that UTS investment will perform better C. Enable them to be promoted 38) UTC plays an important role in investment planning for the clients. D. In order for them to pass the exam Thus, what SHOULD NOT be the UTC’s role in order to reduce clients’ confusion and concern about investment decisions? Answer A (Chapter 4, page 4-2) A. Educating clients that investment decisions are preceded and based on investment strategies that are established to meet financial goals 36) Below are the parties registered with FMUTM except; within a certain time frame B. Advising clients to invest by loan financing if they have no money I. UTMC C. Advising clients on the investment strategies such as dollar-cost II. UTC averaging to build up their investment III. IUTA D. Discussing and recommending investment classes or specific IV. Investor investments A. I, II, & III Answer B B. IV only UTC can’t directly or indirectly encourage clients to invest with loan C. I, II & III financing, and should educate clients about the risk of loan financing. D. None of the above (Chapter 1, page 1-6) Answer B 39) Identify the key elements in relation to the concept of personal Investor is not registered with FMUTM. (Chapter 4, page 4-5) financial planning 37) Which of the following are the benefits of an effective financial I. It is a process planning? II. Is comprehensive 9 Set 1 Questions & Answers 010808 III. Seeks maximum utility = 11% - 2.2% IV. Recognises the individual = 8.8% V. Maximising the returns for agents Effective rate of return after tax and inflation = 8.8% - 4.8% = 4% VI. Acknowledges the cycles of life 42) Based on questions 42 and 43, what is/are the conclusion(s) that A. I, III, IV, V, VI C. I, II, IV, V, VI can be made? B. I, II, III, IV, VI D. II, III, IV, V, VI I. Inflation rate will erode the effective rate of return Answer B II. Tax rate will not erode the effective rate of return Refer to page 5-2 for features of personal financial planning. (Chapter III. In order to have a positive effective rate of return, one has to 5, page 5-2) ensure that the rate of return after tax is greater than inflation rate For question 40 and 41, A. I, III C. I, II B. III only D. I, IV Tax rate : 20% Inflation rate : 4.5% Answer A Rate of return : 11% Tax and inflation will erode the effective rate of return, to have a positive effective rate of return, have to ensure that the return after tax 40) What is the effective rate of return after tax and inflation? is greater than the inflation rate. (Chapter 5, page 5-12) A. 4.5% C. 4.3% B. 4% D. 4.2% 43) A house costs RM 150,000 in year 1990 but increased to RM 300,000 in year 2006. What is the inflation rate after these 15 Answer C years? Return after tax = 11% - (11% x 20%) = 11% - 2.2% A. 4.8% C. 4.5% = 8.8% B. 4.3% D. 4.6% Effective rate of return after tax and inflation = 8.8% - 4.5% = 4.3% Answer A 41) Assume that the inflation rate raise up to 4.8%, what is the 72 = 4.8% effective rate of return? 15 A. 4.5% C. 4.3% 44) What is the difference between the value of RM135,500 in 4 years’ B. 4% D. 4.2% and 5 years’ time with an inflation of 4.5% pa.? Answer B A. RM7,374.85 C. RM7,438.78 Return after tax = 11% - (11% x 20%) B. RM7,271.38 D. RM7,598.59 10 Set 1 Questions & Answers 010808 Answer B 4 years 5 years Compounding factor (1+i)n (1+i)n = (1 +4.5%)4 = (1+4.5%)5 = (1 + 0.045)4 = (1+0.045)5 = 1.192519 = 1.246182 Real value after RM135,500 x (1 + 4.5%) 4 RM135,500 x (1 + 4.5%) 5 = RM135,500 x (1 + 0.045) 4 = RM135,500 x (1 + 4.5%) 5 = RM161,586.27 = RM168,857.65 Difference RM168,857.65– RM161,586.27 = RM7,271.38 For questions 45 and 46, FV = PV (1 + i)n = RM113,207.55(1 + 10.6%)5 Lump sum investment : RM120,000.00 = RM113,207.55(1 + 0.106)5 Initial entry cost : 6% = RM187,348.85 On-going management fee : 1.4% Rate of return : 12% Value of the investment after 5 years is RM187,348.85 45) What is the value of the investment after 5 years? 46) Assumed that the on-going management fee is 1.5% instead of 1.4%, what is the value of investment after 5 years? A. RM187,348.85 C. RM183,544.34 B. RM186,674.39 D. RM185,647.93 A. RM185,831.99 C. RM185,342.77 B. RM186,831.89 D. RM186,503.41 Answer A Using the formula FV = PV (1 + i)n Answer D PV, Working money = RM120,000/(1+6%) Using the formula FV = PV (1 + i)n = RM113,207.55 PV, Working money = RM120,000/(1+6%) = RM113,207.55 i, Effective rate of return = 12% - 1.4% i, Effective rate of return = 12% - 1.5% = 10.6% = 10.5% n, no, of years = 5 n, no. of years = 5 11 Set 1 Questions & Answers 010808 FV = PV (1 + i)n interest income must be avoided in Syariah-based fund’s deed and = RM113,207.55(1 + 10.5%)5 prospectus. = RM113,207.55(1 + 0.105)5 = RM186,503.41 Answer C Not every report needs to include Syariah Adviser’s report, only Value of the investment after 5 years is RM186,503.41 Interim and Annual report need to include such report. (Chapter 6, page 6-5) 47) Which are the strategies undertaken to develop the Islamic capital market? 49) Which of the following statement, regarding Syariah-based UTS, is false? I. Creating a viable market for the effective mobilization of Islamic funds A. Wakalah (agency) contract exists between Unitholders and II. Enhancing the value recognition of the Malaysian Islamic capital Trustee, it states that trustee is acting for and on behalf of the market internationally unitholders to be the custodian of the trust funds and to safeguard III. Facilitating the development of a wide range of innovative and the interests of unitholders. competitive products and services related to the Islamic capital B. Wadiah Yad-Dhamanah (guaranteed custody) contract exists market between Unitholders and UTMC, it states that the owners of the IV. Increasing the pool of Islamic capital market expertise units are the Unitholders; the custodian is the UTMC and the contract will take place when UTMC receives payment for the A. I, II, III C. I, III, IV investment. B. II, III, IV D. All of the above C. Musyarakah contract exists between the unitholders to deal with specified investments, with the view that the profit derived would Answer D be shared among them according to capital contribution or any (Chapter 6, page 6-2) other agreed profit-sharing ratio. D. Wadiah Yad-Dhamanah (after the units are created) contract exists 48) Which of the following statement, regarding a Syariah-based UTS, between unitholders and trustee and it takes place once the UTMC is false? receives payment from unitholders. A. UTMC is required to appoint Syariah Committees to ensure that Answer D the Syariah-based UTS is administered accordance with Syariah Wadiah Yad-Dhamanah (after the units are created) contract between requirements. unitholders and trustee exists once the unitholders purchase the units B. Syariah Committees are registered with the SC and renewable and the depositing of investment by the UTMC with the trustee. every 3 years. (Chapter 6, page 6-7) C. Every report of the Syariah-based UTS needs to include Syariah committees /Syariah Adviser’s report. D. Terminologies used in conventional deed and prospectus which are not in line with Syariah such as interest-based instruments and 12 Set 1 Questions & Answers 010808 50) Which of the following statement regarding “Syariah-non B. Members of Syariah Committees must possess the necessary compliance risk” is valid? qualifications, expertise and experience, particularly in fiqh muamalah and Islamic jurisprudence A. This risk occurs when the UTMC accidentally invests in Syariah- C. All of the members of Syariah Committees must be employed as non compliant securities. full-time officers to be responsible for Syariah matters relating to B. This risk occurs when the Syariah-compliance security reclassified the funds as Syariah-non compliant security D. Syariah Committee Members/Adviser must consists at least three C. This risk occurs when the UTMC do not invest according to the members who are individuals and independent of the management Syariah requirements company D. This risk occurs when the conventional UTS invests in Syariah- compliant securities Answer C A minimum of one Syariah committee must employed as full time Answer B officer in order to responsible for Syariah matters relating to the Syariah-non compliance risk specifically occurs when a Syariah- Syariah-based UTS. (Chapter 6, page 6-11) compliant security is reclassified as a Syariah-non compliant security. (Chapter 6, page 6-8) 53) Which of the following statement regarding Syariah Compliance Review is false? 51) Which is/are the risk(s) that will impact only for Syariah-based UTS rather than conventional UTS? A. The SC will gather the information from annual financial reports, survey forms, and through inquiries made to the respective I. Risk of non compliance company’s management before determining the company’s status II. Market risk from the Syariah perspective III. Country risk B. The SC will revised every three months on the classification of IV. Default risk compliance securities and non-compliance securities C. The companies which their core activities involved in conventional A. I only C. I, III insurance will classified as non-compliant securities B. III, IV D. IV only D. Subject to certain conditions, companies whose activities are not contrary to Syariah principles will be classified as compliant Answer A securities. This risk will only impact Syariah-based UTS, and it occurs when a Syariah complaint security is reclassified as a Syariah-non compliant Answer B security. (Chapter 6, page 6-8) The SC will revise every six months ( last Friday of April and October every year). (Chapter 6, page 6-13) 52) Which of the following statement is false? A. The appointment of the member of the Syariah Committee/Syariah Adviser must be approved by SC 13 Set 1 Questions & Answers 010808 54) When was the first Islamic bond launched in Malaysia? Syariah Committee needs to ensure that the fund is managed and administered in accordance with Syariah Principles. (Chapter 6, page 6- A. 1990 C. 1988 12) B. 1989 D. 1992 57) Which of the following items is not the responsibility for Syariah Answer A Committee / Syariah Adviser in order to ensure that the It was first launched by Shell MDS Sdn Bhd in the year 1990. (Chapter management of the Syariah-based UTS complies with Syariah 6, page 6-3) requirement? 55) What is the meaning of Musyarakah in Syariah contracts? A. Annual and interim report B. Deed A. It is a contract between investor (unitholders) and fund manager to C. Prospectus deal with specified investment at the agreed profit-sharing ratio D. Unitholders information B. It is a contract among investors (unitholders) to deal with specified investment at the agreed profit-sharing ratio Answer D C. It is a contract for fund manager to deal with specified investment Unitholders information are not the item which Syariah Committee is at the agreed profit-sharing ratio responsible for checking. (Chapter 6, page 6-12) D. It is a contract for trustee to deal with specified investment at the agreed profit-sharing ratio 58) What is the Syariah contract – BAI means in relation to unitholders and UTMC? Answer B Musyarakah contract exist between the investors (unitholders) to deal A. Contract of sale and purchase executed between Trustee and with specified investment, with the view that the profit derived would Unitholders be shared among them according to capital contribution or any other B. Contract of sale and purchase executed between UTMC and agreed profit-sharing ratio (Chapter 6, page 6-7) Unitholders C. Contract of sale and purchase executed between Trustee and 56) What is the major duty of Syariah Committee/ Adviser? UTMC D. None of the above A. Syariah committee are allowed to act on fund’s manager behalf and to decide which investment that the UTS should invest in Answer B B. Syariah committee need to report to SC regularly every 3 months BAI simply means the contract of sale and purchase executed between C. Syariah committee need to ensure that the fund is managed and the unitholders and the UTMC, which is usually on cash payment basis administered in accordance with Syariah Principle (Chapter, page 6-7) D. Syariah committee should handle any complaint raised by the unitholders Answer C 14  Set 1 Questions & Answers 010808 59) Ms. Alyssa received a Distribution Warrant as following: Trustee Company Bhd. Trustee of DEF Balanced Fund Distribution Warrant Warrant No No of Units Year Ended Distribution No Payment Date 765432 12,000.00 30 August 200X 78 6 October 200X TAXABLE TAX NON NON DISTRIBUTION NET PAYABLE INCOME MALAYSIAN FOREIGN ALLOWABLE TAXABLE EQUALISATION EXPENSES 32.00 8.96 - 17.00 305.75 (a) (b) Calculate the Distribution Equalisation (a) amount if Undistributed Income for DEF Balanced Fund is RM175,000 and NAV of the Fund is RM70,000,000. A. RM30.00 C. RM3,000.00 B. RM300.00 D. RM30,000.00 60) Calculate the Net Payable (b) which will be received by Ms. Alyssa. Answer A Distribution Equalisation = Undistributed Income A. RM341.79 NAV B. RM611.79 C. RM3,311.79 = RM175,000 D. RM30,311.79 RM70,000,000 E. Answer A = RM0.0025/unit (for every unit sold, RM0.0025 will be set aside to equalize the earlier Taxable Income 32.00 unitholders’ distribution) (Malaysian tax) (8.96) (Non Allowable Expenses) (17.00) Thus, RM0.0025/unit x 12,000 units = RM30.00 Non Taxable 305.75 Distribution Equalisation (if any) 30.00 341.79 15