CUTE EXAM QUESTION (Set 1)

1. What are closed-ended unit trusts?

A. The price fluctuates within the day

B. They are not property trust fund
C. They are Islamic unit trusts
D. The units are not listed on the bursa Malaysia

Fund W X
Investment RM1,500 RM 1,500
NAV RM 0.27 RM 0.80
MER 1.5% 0
Exit fee 0 2%

2. Encik Azman invested in Fund W & Fund X with RM1,500 each for 7 years. Assume that Fund W
has a MER charge of 1.5% per annum, fund X has an exit fee of 2% and both funds have the same
returns. Encik Azman will gain more from Fund X. Is this statement TRUE?

A. True
B. False because Fund W and Fund X have the same return
C. False because of the different fees imposed on both funds
D. None of the answers are correct

3. i) If given tax rate is 20% and inflation rate of 5%, what is the effective rate of return after tax
and inflation? Assume that the return rate is 10%.

A. 3%
B. 3.5%
C. 4%
D. 4.5%

ii) From the above answer which statement is correct?

A. The higher the tax, the higher the return on unit trust investment
B. The higher the investors are paying the marginal tax rate, the higher the effective rate of
return
C. The taxes paid by the unit trust schemes have no impact on the returns as the incomes
generated have already been taxed at sources
D. Inflation can erode purchasing power

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 4. Investor A & Investor B started investing with RM64,000 with the rate of return of 8.5% p.a for
investor A. A few year later, both of them received RM128,000 each. However investor B
received the returns faster by 1.27years. When did investor B receive her/his return?

A. 8.47 years
B. 9.77 years
C. 7.20 years
D. 10.0 years

5. If both investor A & investor B invested RM64,000 and take same number of years as investor B
to double their money. What is the rate of return p.a for both investors?

A. 8.47%
B. 10%
C. 12%
D. None of the above option is correct

6. The alternative investments besides unit trust are :

I. Cash & Fixed Deposits
II. Direct Share investments
III. Direct property investments
IV. Financial derivatives products
V. Offshore investments

A. None of the above

B. All of the above
C. I, II, III, IV
D. I,II,III

7. Generally these are the advantages of unit trusts :-

I. Diversification through broad based portfolio
II. Diversification across asset types
III. Easy to purchase
IV. Liquidity
V. Dollar cost averaging principle can be applied to lower the average cost per unit
VI. Guaranteed mid to long term capital gain

A. I,III,IV,V
B. I,II,III,IV,V

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 C. II,III,IV,V
D. All of the above
8. What is the most important element an investor should consider before deciding to invest in any
investment?

A. Confidence
B. Risk
C. Intelligence
D. Professionalism

9. Puan Rahimah wants to gain exposure to the commercial property market in Kuala Lumpur but
with only a small amount of money RM 5,000, she was not able to invest at all. Which is a good
investment alternative for her?

A. Invest in equity index fund

B. Invest in any open ended fund
C. Invest in fixed income fund
D. Invest in real estate property trusts

10. Which of the following are the disadvantages of financing unit trusts?

I. Interest rate fluctuations

II. Call margin
III. Default payment
IV. Premature redemption
V. Late redemption

A. All the above

B. II,III,IV
C. I,II,IV
D. I,II,III,IV

11. The contents of prospectus include:-

I. Expiry date
II. Investment objective
III. Investment strategy
IV. Transaction information
V. Rules of unit trust industry
VI. Authorized investment
VII. Auditors reports

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 A. I,II,III,IV,V
B. I,II,III,VI,VII
C. II,III,V,VI,VII
D. I,II,III,IV,VI
12. The code of ethics and standards of professional conduct form the _______________ .

A. Minimum standards of conduct

B. Maximum standards of conduct
C. Normal standards of conduct
D. Actual standards of conduct

13. Below are closed ended fund features, EXCEPT:-

A. Prices fluctuate throughout the day from time to time

B. Property trust fund is not a closed ended fund
C. Investors can only trade their unit through exchange
D. Listed fund is a closed ended fund

14. What are the channels of complaint available to investors of unit trust schemes?

A. Unit trust consultant (UTC) or PDUT

B. Unit trust management company (UTMC)
C. Federation of investment Managers Malaysia (FIMM or FMUTM)
D. All the above

15. Islamic fund CANNOT invest in the followings:-

I. Conventional banking stock

II. Gambling stock
III. Alcohol stock
IV. IT stock

A. I, II, III, IV
B. II, III
C. II,III,IV
D. I, II, III

16. Generally fixed income funds are said to have lower risks than equity funds. What can be
expected from the return of these funds?

A. Usually lower than equity fund

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 B. Usually higher than equity fund
C. Consistently higher that equity fund
D. None of the optional answers are correct

17. Which of the following category of unit trust is likely to depreciate most when the overall stock
market falls?

A. Equity trust
B. Property trust
C. Fixed income trust
D. Money market trust

18. i) Last year’s expenses for Chan family was RM25,000. This year expenses are RM26,125. Assume
that the inflation rate unchanged for next year, what is the amount of expenses estimated for
next year?

A. 25,225.50
B. 27,300.63
C. 27,333.23
D. 26,300.60

ii) If the investment return is 5% , marginal tax return is 20% and based on above question
inflation rate, what is the effective return after tax and inflation?

A. 3%
B. 0.15%
C. -0.5%
D. -1.5%

19. Another term for Selling price to investor is called _________ .

A. Bid price
B. Offer price
C. Repurchase price
D. Exit price

20. Arrange accordingly from the highest risk fund to the lowest risk fund.

i. Equity Fund
ii. Money Market Fund

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 iii. Balanced Fund
iv. Hedge Fund

A. i, ii, iii, iv
B. iv, i, iii, ii
C. iii, iv, ii, i
D. i, iv, iii, ii

21. Dollar cost average is

A. Buy low sell high

B. Buy high sell low
C. Regular investment at a fixed amount of money
D. Buy fixed unit every time

22. What is the purpose of UT performance table?

A. For SC to regulate the funds.

B. For FMUTM to regulate the funds.
C. Segregation of funds into different categories according to the fund size.
D. To provide investors with the same means to monitor and evaluate the performance of the fund.

23. Which of the below describes open ended funds?

A. The price fluctuates within the day.

B. The fund manager has to buy back from the investor.
C. Transactions are through stock broker.
D. They are property trust.

24. Generally, a unit trust that has 80% of its assets invested in growth stocks would be most
appropriate type of 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 producing savings for an 86 year old
D. None of the optional answer is correct

Question 25, 26 & 27

NAV cum-distribution for a unit trust fund is RM200million. Unit in circulation is 380million units and the
fund manager is charging a 5% initial service charge. (Please use 3 decimals for calculation purpose)

25. If the distribution declared is 3.5 cents per unit, how much is the NAV price per unit ex-distribution?

A. RM0.49 C. RM1.86
B. RM0.52 D. RM1.96
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26. Based on the above answer and assume that a client invested RM10,000 ex-distribution, how many
units will she get for her investment?

A. 20,408.16 units C. 5,120.33 units

B. 19, 436.34 units D. 5,102.04 units

27. If the initial service charge is reduced from 5% to 3% and based on the selling price ex-distribution,
how much savings can the client get, given the same investment amount in previous question?

A. RM326.53 C. RM327.95
B. RM184.93 D. RM200.00

28. Daily NAV of UTS are available through

A. UT pricing tables published in the major newspapers

B. Call UTMC
C. Visit UTMC and branches
D. All of the above

29. In year 1995, En. Jamal put RM50,000 in an investment that earned him 9% per annum. Supposing
the investment is able to deliver the above yearly return for the past as well as the coming year, when
will his money double?

A. Year 2000 C. Year 2005

B. Year 2003 D. Year 2007

Question 30 & 31
Number of units held before unit split: 18,000 units
Total value of investment before unit split : RM6,000.
Unit split ratio: 1 : 3

30. How many units will the investor hold after the unit split exercise?

A. 24,000 units C. 16,000 units

B. 18,000 units D. 6,000 units

31. What is her total investment value after the unit split exercise?

A. RM2,000 C. RM8,000
B. RM6,000 D. None of the above

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32. Based on the latest performance table, Mei Ling enthusiastically tells you “Look! The OMG Small Cap
Fund was up to 36% last month, I think this fund may be best for me to invest.” Knowing that choosing a
fund merely based on 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 funds performance in medium and long term.

II. Her own financial goal and decide how much risks she can afford to take.
III. Suitability of fund investment objectives and risks with her own investment goal and risk profile.
IV. Total fees and charges imposed by the fund and service level provided.

A. I and II C. I, II and III

B. II and III D. All of the above
33. After discussing to a potential investor, the UTC finds out that the investor can accept high risk, is
looking for long-term capital gain and short term income. Which of the fund stated below is suitable for
this investor?

A. Growth Fund C. Income Fund

B. Balanced Fund D. Bond Fund

34. Sheila wants to be a millionaire. If she has RM500,000 and can earn 8% per annum, how long would
it take to achieve her goal?

A. 8 years
B. 9 years
C. 10 years
D. 11 years

35. Which one of the following stated below is the most likely benefit you will get with a diversified
portfolio that includes stocks, bonds and money market funds?

A. Higher returns that you get with a portfolio that is not diversified
B. The ability to balance both risk and return in achieving your financial goals.
C. A guarantee that your portfolio will not suffer if the stock market falls.
D. All of the above.

36. Which will increase the overall risk?

A. Shifting from bonds to stocks

B. Shifting from stocks to bonds
C. Shifting from stocks to money market
D. Shifting from stocks to FD

37. Customer A invests in a one off investment of RM10,000. Customer B invests RM300 every month.
The above ways of investment are called:

A. Lump sum investment

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 B. One stop investment
C. Regular Savings
D. Lump sum and regular savings investment

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Questions 38,39 & 40
An investor had invested a single amount of money in a unit trust fund at RM0.50 per unit in the first
year and subsequently purchased another 10,000 units at RM0.52 per unit in second year. At the end of
third year, he decided to redeem his investment at buying price RM0.60 per unit and the total proceeds
was RM15,000.

38. How many units was he entitled for the investment he made in the first year?

A. 15,000 units
B. 25,000 units
C. 35,000 units
D. None of the above is correct

39. What is the total amount of money he had invested in the first and second year?

A. RM7,500 C. RM12,700
B. RM5,200 D. None of the above is correct

40. Upon redemption in the 3rd year, calculate the raw return of the investment that he made in the 1st
year. (Assume no distribution was paid during the period).

A. 15%
B. 18%
C. 20%
D. 100%

41. NAV of equity trust fund

A. Will fluctuate in respect to changes in the prices of equity index component stocks
B. Will fluctuate in respect to changes in interest rate only
C. Will not change at all to the ups and downs of the stock market
D. None is correct

42. A listed company is known as:

A. Open-Ended trust
B. Universal Trust
C. Closed-Ended Trust
D. Regional Trust

43. Assume that the investment return is 10%, tax rate is 20% and the inflation rate is 5%, what is the
effective rate of return?

A. 5% B. 4% C. 3% D. 2%

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44. In general, which of the following category of unit trust is likely to depreciate most when the overall
stock market falls?

A. Property trust C. Equity trust

B. Fixed-income trust D. Money market trust

45. Generally prospectus of a unit must be renewed ________

A. Every two years C. Every month

B. Every six months D. Every year

46. Mr. X wants to invest RM 200,000.00 in a unit trust fund. What is the maximum amount can he
borrows from a financial institution for the investment?

A. RM134,000.00 C.RM120,000.00
B. RM66,000.00 D. RM80,000.00

47. Dollar cost averaging is:

A. A strategy whereby investors buy more units when prices are high
B. A strategy whereby investors buy less units when prices are low
C. A systematic and regular investment of a fixed amount of money
D. A strategy for customers to invest all their capital at one time rather than on a regular basis.

48. What is unit trust scheme?

A. Form of collective investments that allow investors with similar objectives to pool their savings.
B. An investment portfolio which only contains one type of asset
C. Form of collective investments whereby the unit holders are the shareholders of the company
they have invested in
D. An investment portfolio whereby the investors of the particular UTS will purchase the securities
in the portfolio directly

49. For the Financial Year Ended 30 Dec 200X, the financial statement of ABC Fund shows that the
following expenses were incurred:

Management Fees - RM1, 340,999

Trustee Fees - RM 730, 173
Auditors Fee - RM 172, 641
Bank charges & other expenses - RM 361, 594

i) The average Fund Size for ABC fund during the year was RM 250, 492, 853. Calculate the MER of the
fund for the year ended 30 Dec 200X.

A. 1.07% B. 1.03% C. 1.08% D. 1.04%

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ii) A decrease in the MER calculated from the above indicates:

A. The Unit Trust Management Company (UTMC) must be overpaid for the administrative expenses
B. The UTMC is managing the total fees and expenses well
C. The annual management fee must be revised downward
D. The UTMC is not managing the total fees and expenses well

For Questions 50 & 51

Initial investment = RM80,000.00
Rate of return = 10%
Ongoing management fee = 1.5%
Service charge = 5%

50. What is the return of the investment after 3 years? (Use 4 decimal points for your calculation)

A. RM97,074.80 C. RM97,174.80
B. RM97,318.10 D. RM101,156.00

51. Assume that the ongoing management fee is 1% instead of 1.5%, what is the value of investment
after 3 years? (Use 4 decimal points for your calculation)

A. RM98,666.67 C. RM90,516.00
B. RM98,420.00 D. RM95,280.00

52. What do you understand about unit split?

A. It affects the NAV of the UTS

B. It affects the value of a unitholder’s investment
C. It does not affect the NAV of the UTS or the value of a unitholder’s investment.
D. None of the optional answers are correct

53. What happens when a unit split of 1:2 is declared?

A. The units in circulation doubled

B. The unit price doubled
C. The unit price decreases proportionately
D. None of the optional answer is correct

54. Mr. A says, “Oh! XYZ fund is really good. I shall invest in this fund to get a high return in 3
years’ time!” Upon hearing this, A UTC should advise Mr. A which of the following?

A. The fees & services for the particular fund

B. The possible risk involved
C. To go through the prospectus

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 D. All of the above is correct

55. A buyer is not sure if should invest in UTS. An agent should:

A. Advise the buyer to contact the agent once has made decision
B. To go through the prospectus together and leave the prospectus with the buyer to decide
C. Should ignore the buyer as this is a waste of time for the agent
D. Show the buyer some brochures and to take it back after that to be used for the next
appointment with a different prospect

56.
NAV AMOUNT INVESTED
0.50 RM1500.00
0.60 RM1500.00
0.70 RM1500.00

Calculate the average unit cost for the above investment.

A. RM0.59 B. RM0.95 C. RM0.78 D. RM0.64

57. Given that the NAV per unit at the beginning of the day is RM0.65, and the NAV per unit at the end of
the day is RM0.66. Investor Z decides to redeem 10,000 units. Based on Forward Pricing, how much will
it cost?

A.RM6,500.00 B. RM6,000.00 C. RM6,600.00 D. RM10,000.00

58. The Malaysian Unit Trust Funds Performance Table is a useful tool because it…

A. Allows performance to be tabled at meetings held by the Securities Commission

B. Taps into the fund manager’s credibility
C. Summarizes investment performance for the industry and allows for easy comparison
D. Enables the public to understand the fees and charges

59. Which statement regarding the EPF Members Withdrawal Investment Scheme is correct?

A. The maximum age for the qualified member is 60

B. Members can withdraw funds from the EPF once in every two months
C. Investment can be made with any unit trust scheme
D. Balance in Account 2 is not eligible for this scheme

60. Which of the following statement is correct?

A. The income of real estate investment trusts (REITs) is mainly derived from the rental income and
capital appreciation of the property held by the trust

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 B. The portfolio of a real estate investment trust (REIT) can be switched to equities easily as the
assets are highly liquid
C. Real estate investment trusts (REITs) are not allowed to be listed
D. Unlisted unit trusts are not allowed to invest in real estate investment trusts (REITs)

61. 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 a specific collection of shares
C. A collection of investments which cannot be sold without permission of the owners
D. Another term used to describe a unit trust scheme

62. What would you not normally expect to find in the annual report of a 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

63. When was the first unit trust management company set up in Malaysia?

A. 1949 B. 1950 C. 1959 D. 1960

64. Investors who invested in unit trusts with borrowed money:

A. Will only make profit if returns from their investment are higher than the cost of their loans
B. Will not be affected by changes in the base lending rate set by their end-financiers
C. Are guaranteed to make profit in longer term
D. Need to keep on investing until the loan is fully settled

65. 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 equity index fund

B. Invest in fixed income fund
C. Invest in any open-ended funds
D. Invest in real estate property trusts

66. 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.

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 A. Spot and Installment Plans
B. Lump Sum Investment and Regular Savings Plan
C. Lump Sum Investment and Contractual Plans
D. Fixed Investment and Installment Plans

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67. Generally, what are the possible forms of return on investment can an investor expect from investing
in unit trusts?

I. Distribution
II. Capital appreciation
III. Interest

A. I & II
B. I & III
C. II & III
D. All of the optional answers are correct

68. In 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

69. Which of the following is the most appropriate thing to do if you meet a person who has never
invested in unit trusts and does not feel comfortable to invest in unit trusts?

A. Let the potential investor has a prospectus and go through with her
B. Comfort her by letting her know that unit trust is an investment with no risk
C. Show her the marketing brochure and take them back as you need to show the brochure to
another investor
D. Show her the excellent performance record of the unit trust fund and tell her that the
performance will repeat in the future.

70. Unit trusts offer an effective way to pursue lifetime financial goals with advantages that would be
difficult to achieve by lay persons who invest on their own. The advantages include:

I. On-going professional fund management

II. Diversification of assets with reduced risks
III. Can be bought and sold easily
IV. More favorable transaction costs for unit trusts due to large investment amount
V. Flexibility to switch between different type of funds (applicable to certain unit trusts)

A. I, II & III
B. I, II, III & IV
C. I, II, III, & V
D. All of the optional answers are correct

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71. “Market risks” is a type of risks involved in investing in equity unit trusts and it means:

A. Stock values underlying the Net Asset Value (NAV) of the unit trust scheme fluctuates in
response to the activities of individual companies and general market or economic conditions.
Such movements will cause the NAV or prices of units to fall as well as rise.
B. Poor Management of the scheme will jeopardize 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 trusts scheme dropped drastically
D. None of the optional answer is correct.

72. One of the major benefits of investing in unit trusts is to gain access to the experience of a
professional fund manager. Which term best describes a professional fund manager?

A. Someone who has bought and sold many investments in his lifetime
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 field of fund management

73. Unit Trust Management Company (UTMC) must issue a prospectus for each of its unit trust schemes.
The UTMC is required to:

A. Issue a prospectus at least once a year

B. Provide complete information
C. Send a copy to any potential investor who request a copy
D. All of the optional answers are correct

74. Risk/return characteristics can vary significantly between two funds. Which of the following
statement is not correct comparison of the risk/return trade-off between investing in a Capital Growth
Fund (G) and a Capital Protected Fund (P)?

A. G’s return is 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

75. 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 & II C. I, III & IV

B. I, II & III D. All the optional answers are correct

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76. 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 benefits from diversification of portfolio
C. The investor is able to consistently reap high returns of investment
D. It is easy for investor to select good company

77. A unit split in effect does not add value to the unit trust investors’ investment holding, but________.

A. Makes sure that the fund managers are able to earn their fees
B. Is used by unit trust management company to lower the NAV per unit, thus enabling new
investors to invest in the fund
C. Is used to enlarge the fund size in Ringgit term
D. Is used to re-classify the fund to “Penny-Stocks” fund

78. Dollar-Cost Averaging is:

A. A strategy that entails buying low and selling high

B. A way to purchase unit trust funds and minimize the service charge
C. A systematic way of regular investment with fixed amount of money
D. A way to sell unit trust funds and to minimize the capital gains

79. How can an investor hedge against inflation?

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 inflation rate
IV. Maximize the benefits of effective financial planning

A. I & III C. I, III & IV

B. III & IV D. I, II, III & IV

80. Please identify features of an open-ended unit trust.

I. It is a collective investment scheme that provides 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. II & III
D. All of the optional answers are correct

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81. Which of the following best describes “Aggressive Growth Fund”?

A. The fund will invest primarily in stocks which earn significant dividend income
B. The fund will 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.

82. 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 profile of board of directors
C. To redeem units
D. To select shares for the unit trust scheme’s portfolio

83. Which of the following statement is not valid?

A. Investors are entitled to receive unit trust certificate or statement for his investment
B. Unit trusts are professionally managed by the unit trust management company
C. Unit holders directly purchase the securities in the investment portfolio of the unit trust
D. Value of a unit will fluctuate

84. The best way for investors to minimize the impact of the initial service charge on unit trust
investments is to:

A. Buy and sell units as much as they can

B. Invest as regular as possible and avoid lump-sum investments
C. Adhere to a long-term buy and hold strategy; making sure that the units purchases match their
long-term investment objectives
D. Only purchase aggressive growth fund

85. What is one of the functions of FIMM?

A. Reviews all materials prior to release to the public

B. Generates all the guidelines that unit trust companies comply to and to report to the Compliance
Authority if non-compliance is found
C. Provides a common platform for unit trust companies to discuss issues in the industry
D. A governing body which regulates the investment made by the unit trust management Company

86. The fund manager of unit trust scheme is allowed to charge a management fee, the fee is

A. Mainly used to cover the management expenses incurred by the manager in managing the
scheme
B. Also known as a fee charged by the trustee

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 C. Levied by the fund manager on the investment made by investors to cover the commission paid
to agents
D. Used for the purpose of registering the unit holders with the trustee
Question 87 & 88

87. Assume that the asset allocation of fund X and fund Y are as follows:

Fund X Fund Y
Equity Market 70% 0%
Money Market 10% 85%

Fund X is most appropriate to be classified as:

A. Equity Fund B. Fixed Income Fund

C. Property Fund D. Money Market Fund

88. Which statement is correct?

I. Interest rate decreased, value fund Y will be more adversely affected

II. Interest rate decreased, value fund Y will be more positively affected
III. Value fund X will be more positively affected when the stock market is increasing

A. I only C. II & III

B. I & III D. All correct

89. Which of the following is (are) true about a 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 the equity fund
III. Fund prices will fall when interest rate rise
IV. No matter when you redeem your investment, you will get back at least your principal amount
or capital you have invested

A. II & III
B. I & III
C. I,II & III
D. All of the optional answers are correct

90. Which of the following is NOT TRUE?

A. Generally, the portfolio of unit trust investment is determined by fund manager.

B. A unit trust is an investment mechanism which allows investor who shared similar investment
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 the ownership of the fund is divided into
units.

For internal circulation and training purposes only 21 Understanding Unit Trust
For internal circulation and training purposes only 22 Understanding Unit Trust
91. Capital Growth Fund (G) Capital Protected Fund (P)

Which of the following statement is NOT TRUE?

A. G has better returns than P because of less risk

B. P has less loss because of less risk
C. P has less return because of less risk
D. G has an aggressive risk strategy to get better potential returns

92. Adam has invested RM5,000 in ABC Growth Fund managed by ABC Unit Trust Management Bhd.
Adam now owns ______________________.

A. RM5,000 worth of shares in ABC Unit Trust Management Bhd.

B. RM5,000 worth of units of entitlement in the ABC Growth Fund
C. RM5,000 worth of direct ownership of investment portfolio held by ABC Growth Fund
D. All of the optional answers are correct

93. Raw return is:

A. A form of measure which is superior to the annualised return

B. The only return measure that accounts for the value of time
C. The best measure for unit trust return
D. A measure that shows the total return achieved by holding the investment over the entire period
between buying and selling

94. One of your friends tells you, “By the time I retire in Year 2020, I believe the Kuala Lumpur Composite
Index (KLCI) will be many times what it 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 Balanced Fund because its investment returns are less volatile than the KLCI
B. For such a long investment horizon, don’t worry, buy any fund
C. Buy a Growth Fund because it can give him a return better than the KLCI by Year 2020
D. Buy an Index Tracking Fund using KLCI as the benchmark

95. What happens when a unit split of 1:2 is declared?

A. The units in circulation doubled

B. The unit price doubled
C. The unit price decreases proportionately
D. None of the optional answer is correct

96. Which of the following should be included in the computation of net asset value of a unit trust fund?

A. The units in circulation doubled Auditors’ fees

B. The value of the equity investments in the unit trust scheme

For internal circulation and training purposes only 23 Understanding Unit Trust
 C. All the above
D. Trustee fees
Answer
1) A 45) D 91) A
2) A 46) A 92) B
3) i) A 47) C 93) D
ii) D 48)A 94) D
4) C 49) i) D ii) B 95) C
5) B 50)B 96) D
6) B 51)A
7) B 52)C
8) B 53)C
9) D 54)D
10) D 55)B
11) D 56)A
12) A 57)C
13) B 58)C
14) D 59)D
15) D 60)A
16) A 61)D
17) A 62)D
18) i) B 63)C
ii)C 64)A
19) B 65)D
20) B 66)B
21) C 67)A
22) D 68)D
23) B 69)A
24) D 70)D
25) A 71)A
26) B 72)D
27) B 73)D
28) D 74)A
29) B 75)D
30) A 76)A
31) B 77)B
32) D 78)C
33) A 79)B
34) B 80)A
35) B 81)C
36) A 82)D
37) D 83)C
38) A 84)C
39) C 85)C
40) C 86)A
41) A 87)A

For internal circulation and training purposes only 24 Understanding Unit Trust
 42) C 88) B
43) C 89) A
44) C 90) C

Calculation (Set 1)

3. ERR after inflation and tax = 10% - 5% - (10% x 20%)

= 5% - 2%
= 3%

4. Investor A:
N = ____72____________ = 72 = 8.47 years
Given rate of return 8.5

Investor B = 8.47 – 1.27 = 7.20 years

5. n = ____72____________
i (Given rate of return)

72
7.2 = i

i = 10%

18. Present value = RM 25,000.00, n = 1, Future Value = RM26,125.00

i) Calculate the compounding rate p.a.

FV = PV ( 1+ i ) 1
RM26,125 = RM25,000 ( 1 + i ) 1
1.045 = ( 1 + i )1
1.045 = 1 + i
0.045 = i
4.5% = i

Amount of expenses estimated for next year = RM 26,125 + 4.5% = RM27,300.625

ii) Effective rate of return = return - inflation rate – (return x tax rate)
= 5% - 4.5% - (5% x 20%)
= 0.5% - 1%
= - 0.5%

25) f
NAV per unit cum-Distribution = RM200million/380million units = RM0.526
NAV per unit ex-Distribution = RM0.526 – RM0.035 = RM0.491

26)
Amount invested
= RM10,000
(1+5%)
For internal circulation and training purposes only 25 Understanding Unit Trust
= RM10,000 = RM9523.810
(1.05)

Number of units’ ex-distribution

= Amount invested
NAV per unit ex-Distribution
= RM9523.810
0.49
= 19,436.35 units

27) Difference between Working money (with 5% service charge) and Working money (with 3% service
charge)
= RM10,000 – RM10,000
(1.05) (1.03)
= RM9523.810 – RM9708.738 = RM184.93
30)
Pre US Post US
3 4
18000 units 4/3 x 18000 units = 24000 units

34)
Number of years = 72 = 9 years
8

38) Number of units 3rd year = RM15,000 = 25,000 units

RM0.60
Number of units 1st year = 25,000 units – 10,000 units = 15,000 units

39)
1st year investment = 15,000 units x RM0.50 = RM7,500
2nd year investment = 10,000 units x RM0.52 = RM5,200
Total = RM7500 + RM5,200 = RM12,700

40)
1st year investment = RM7,500

Redemption of 1st year investment

= 15,000 units x RM0.60
= RM9,000

Raw return
= (RM9,000-RM7,500) X 100 = 20%
RM7,500

43)
ERR after inflation and tax = 10% - 5% - (10% x 20%) = 5% -2% = 3%

46)
The maximum amount can he borrows = RM 200,000 x 67% = RM 134,000
For internal circulation and training purposes only 26 Understanding Unit Trust
49) i)
MER = Total Expenses X 100
Average fund size
= RM 2,605, 407 X 100
250,492,853
= 1.04%

50)
Initial investment = RM80,000.00

Working money = RM80,000/(1.05) = RM76,190.48

Value end of year 3 = working money x ( 1 + i )n

= RM76,190.48 x ( 1 + [ 10% - 1.5% ] )3
= RM76,190.48 x ( 1 + 0.085 )3
= RM76,190.48 x ( 1.085 )3
= RM76,190.48 x 1.2773
= RM97,318.10

51)
Value end of year 3 = working money x ( 1 + i )n
= RM76,190.48 x ( 1 + [ 10% - 1% ] )3
= RM76,190.48 x (1.09)3
= RM76,190.48 x 1.2950
= RM98,666.67

56)
Total amount invested = RM4500.00

Amount
NAV
Invested Units
0.5 RM1500 1500/0.50 = 3000
0.6 RM1500 1500/0.60 = 2500
0.7 RM1500 1500/0.70 = 2142.86
Total RM4500 7642.86

Average unit cost

= RM4500.00
7642.86
= RM0.5887
= RM0.59

57)
Redemption amount = 10,000 units x RM0.66 = RM6,600

For internal circulation and training purposes only 27 Understanding Unit Trust
For internal circulation and training purposes only 28 Understanding Unit Trust