1. Chapter 1 - Theory (Quiz 1)

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 favourable transaction costs for unit trusts due to large investment amount

                 V.     Flexibility to switch between different type of funds (applicable to certain unit trusts)

• I, II & III

• I, II, III & IV

• I, II, III, & V

• All the optional answers are correct

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?

• Someone who has bought and sold many investments in his lifetime

• A friend who always recommends the best stocks to buy

• Someone who always manages in excess of RM500 million

• Someone who has been professionally trained in the field of fund management

Below is/are the responsibilities of UTMC, EXCEPT

• Maintain proper accounting record of unit trust

• lssue unit trust certificate or statement for unit holder

• Process sales and repurchase unit trust

• Act as custodian for the assets of unit trust

Which of the following is not the right of unit holders?

• To obtain information about the unit trust scheme and its performance

• To receive profile of board of directors

• To redeem units

• To select shares for the unit trust scheme’s portfolio

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?

• Let the potential investor have a prospectus and walk through with her

• Comfort her by letting her know that unit trust is an investment with no risk

• Show her the marketing brochure and take them back as you need to show the brochure to another investor

• Show her the excellent performance record of the unit trust fund and tell her that the performance will repeat in the future

The main purpose of a prospectus is:

• To provide potential and existing investors with all the necessary information to make an informed decision

• To outline the marketing plan of the unit trust scheme

• To highlight the projected returns of the unit trust scheme

• To outline the profile of the target investors

Responsibilities and obligations of UTMC:

I. process application

II. custodian of assets of unit trust scheme

III. maintain holder registrar

IV. regulates the unit trust industry

• I, II, III & IV

• I & III

• I, III & IV

• I only

Under whose name would the assets of unit trust scheme have registered?

• Investor

• Stockbroking company

• Trustee

• UTMC

Which of the following is true for a Deed?

I.    Deed stipulates the rights and obligations of the manager, rights and duties of the trustee and the right of the unit holders

II.    Deed stipulates the maximum fees UTMC can charge to investor

III.    The life span of a deed is normally 10 years

IV.    Deed must be registered with Securities Commission.

• I, II, IV

• I, II, III

• III only

• All the optional answers are correct

What is the principal documents that governs the UTS?

• Certificate of Entitlement

• Auditor Report

• Deed

• Investigating Accounting Report