CUTE MOCK 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 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

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 years 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

For internal circulation and training purposes only 1

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, IV, V
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
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

For internal circulation and training purposes only 2

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

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

For internal circulation and training purposes only 3

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

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

For internal circulation and training purposes only 4

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

i. Equity Fund
ii. Money Market Fund
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

For internal circulation and training purposes only 5

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

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

For internal circulation and training purposes only 6

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

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

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
For internal circulation and training purposes only 7
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%

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.

For internal circulation and training purposes only 8

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%

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

For internal circulation and training purposes only 9

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
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

For internal circulation and training purposes only 10

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
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.

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

For internal circulation and training purposes only 11

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

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.

For internal circulation and training purposes only 12

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

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

For internal circulation and training purposes only 13

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

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

For internal circulation and training purposes only 14

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
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

For internal circulation and training purposes only 15

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.

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
For internal circulation and training purposes only 16
 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
5) B 50) B
6) B 51) A
7) B 52) C
8) B 53) D
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
42) C 88) B
43) C 89) A
44) C 90) C

For internal circulation and training purposes only 17

CUTE Mock Exam Question (Set 2)

Question 1
__________ 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) Buying Price (B) Offer Price

(C) Service Charge (D) Redemption Price

Question 2
An investor wants to gain exposure to the commercial property market in Kuala Lumpur but with only a
small amount of money (approximately RM 5,000), she was not able to invest at all. Which is a good
investment alternative for her?

(A) Invest in real estate property trusts (B) Invest in equity index fund
(C) Invest in any open-ended funds (D) Invest in fixed income fund

Question 3
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) Show her the excellent performance record of the unit trust fund and tell her that the performance
will repeat in the future
(B) Let the potential investor have a prospectus and walk through with her
(C) Show her the marketing brochure and take them back as you need to show the brochure to another
investor
(D) Comfort her by letting her know that unit trust is an investment with no risk.

Question 4
Fixed-income funds are generally said to have lower risks than equity funds.
Hence, what can be expected of the returns from these funds?

(A) None of the optional answers are correct

(B) Usually lower than equity funds
(C) Consistently higher than equity funds
(D) Usually higher than equity funds

Question 5
The best way for investors to minimise the impact of the initial service charge on unit trust investment is
to:

(A) Only purchase aggressive growth fund

(B) Buy and sell units as often as they can
(C) Adhere to a long-term buy and hold strategy; making sure that the units purchased match their
long-term investment objectives
(D) Invest as regular as possible and avoid lump-sum investments

Question 6
In a haste to close sales, you may inadvertently say the wrong things.
Which of the following is (are) not the right proposition(s) to use?

(A) All of the optional answers are not the right propositions
(B) “It is safe to invest now. The market is going up and you will definitely make profits”
(C) “You’ll get free insurance or gifts and I can add on some additional units for you”
(D) “No money is not a problem because you can apply for a loan”
For internal circulation and training purposes only 18
Question 7
If 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) Income fund (B) Growth fund

(C) Balanced fund (D) Bond fund

Question 8
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) All of the optional answers are correct (B) I & II

(C) II & III (D) I & III

Question 9
“Halal” stocks do not invest in companies involved in activities, products or services related to the
following:

I. Conventional banking
II. Telecommunication
III. Gambling
IV. Alcoholic beverages

(A) I, II, III & IV (B) II only

(C) I, III & IV (D) III & IV

Question 10
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) Fixed Investment and Instalment Plans

(B) Spot and Instalment Plans
(C) Lump Sum Investment and Contractual Plans
(D) Lump Sum Investment and Regular Savings Plans

Question 11
Which of the following can be found in the prospectus of a unit trust fund?

I. Investment objectives
II. Authorised investments
III. Fees and charges
IV. Trust expenses

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

For internal circulation and training purposes only 19

Question 12
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) All of the optional answers are correct (B) I & II

(C) II & III (D) I & III

Question 13
The main purpose of a prospectus is:

(A) To outline the profile of the target investors

(B) To provide potential and existing investors with all the necessary information to make an informed
decision
(C) To highlight the projected returns of the unit trust scheme
(D) To outline the marketing plan of the unit trust scheme

Question 14
What do you understand by the term “Call Margin” in relation to financing of unit trust investment?

(A) It is type of charges imposed on futures contract

(B) It is the amount an investor might have to pay his/her financier if the credit exposure of a unit trust
loan falls beneath a certain level
(C) It is the financier’s marked-up margin imposed on top of the based lending rate applicable for the
unit trust loan
(D) It is type of processing fees imposed by the financier in relation to financing of unit trust investment

Question 15
Generally, prospectus of a unit trust fund must be renewed __________.

(A) Every two years (B) Every month

(C) Every year (D) Every six months

Question 16
An investor bought 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) I, II & III (B) II only

(C) II & IV (D) I & II

For internal circulation and training purposes only 20

Question 17
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) II, I, III, IV (B) I, III, II, IV

(C) II, III, I, IV (D) IV, I, III, II

Kindly use the following information to answer the questions.

Hasnah invested all the money that she collected from her parents and relatives during Hary Raya in
Fund A and Fund B on 13 January 200X. The unit prices at the close of business on the day and other
information related to her investments are as follows:

Fund A Fund B
Total Invested RM 1,000 RM 1,000
NAV per unit RM 0.2700 RM 0.8295
Selling Price per unit RM 0.2700 RM 0.8295
Buying Price per unit RM 0.2700 RM 0.8295
Initial Sales Charge 5% 0%
Exit Fee 0% 2%
Pricing Policy Forward Forward

Question 18
Calculate the total number of units received by Hasnah for her investments made in Fund A (W) and
Fund B (X) respectively.

(A) None of the optional answers are correct

(B) W = 3,527.33 units; X = 1,205.55 units
(C) W = 3,407.41 units; X = 1,145.27 units
(D) W = 3,703.70 units; X = 1,265.82 units

Question 19
An existing investor Mary decided to sell all her 5,000 units in Fund B on the same day, how much would
she receive from her redemption?

(A) RM 1,417.50 (B) RM 4,064.55

(C) RM 1,350.00 (D) RM 4,147.50

Question 20
With the above information, Hasnah’s friend Rose 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 achieved
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) None of the comment is acceptable

(B) Yes, she is perfectly right
(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 than those of Fund B if both of the funds achieved
the same rate of returns
(D) Not really. Although Fund A is cheaper than Fund B, the values of her investment in either one of
the fund will still be the same if both of the funds achieved the same rate of returns.

For internal circulation and training purposes only 21

Question 21
Which of the following is a function of Federation of Malaysian Unit Trust Managers (FMUTM)?

(A) A governing body which regulates the investment made by the unit trust management company
(B) Reviews all promotional materials prior to release to the public
(C) Provides a common platform for unit trust management companies to discuss issues in the industry
(D) Develops all the guidelines that asset management companies comply to and to report to the
Compliance Authority if non-compliance is found.

Question 22
If NAV of a fund is RM 1.0000, the initial charge is 1.5% and no exit fee is imposed, how much would an
investor receive if he redeems 10,000 units?

(A) None of the optional answer is correct (B) RM 9,850

(C) RM 10,150 (D) RM 10,000

Question 23
Maximum margin on unit trust financing is fixed at:

(A) 85% (B) 50%

(C) 79% (D) 67%

Question 24
Risk/return characteristics can vary significantly between two funds.
Which of the following statement is not a correct comparison of the risk/return trade-off between
investing in a Capital Growth Fund (G) and a Capital Protection Fund (P)?

(A) Expect a lower return from P because the fund takes less risk
(B) G’s returns are potentially higher than P’s because G is less risky
(C) P’s losses are potentially less because it takes less risk
(D) G needs to adopt a riskier investment strategy to achieve potentially higher returns

Question 25
The unit trust funds that are available in the market could be designed to meet the following investor
requirement(s):

(A) All of the optional answers are correct (B) Long-term savings
(C) Retirement Fund (D) Children’s education

Question 26
A collective investment scheme is:

(A) Another term used to describe a unit trust scheme

(B) A type of fund that allows anyone to collect money from others, much like people collect money for
charity
(C) A collection of investments which cannot be sold without permission of the owners
(D) An investment fund which invests only in a specific collection of shares

Question 27
In marketing unit trust schemes, providing quality services includes:

(A) All of the optional answers are correct

(B) Being responsive to customers’ requests, queries and complaints
(C) Providing convenient choices in handling investors’ cash and payments
(D) Providing clear and precise reporting
For internal circulation and training purposes only 22
Question 28
Daily Net Asset Values of unit trust schemes are available through:

(A) All of the optional answers are correct

(B) Referring to the unit trust pricing tables published by major newspapers
(C) Visiting the Unit Trust Management Company’s head office or its branches
(D) Calling the Unit Trust Management Company

Question 29
Prices of listed close-ended trusts are determined in the following manner:

(A) The Investment Committee sets the daily prices

(B) The total value of the assets is divided by the number of units in circulation
(C) The Unit Trust Management Company computes the daily prices upon close of business day
(D) Prices are determined by the demand and supply in the market such as Bursa Malaysia where the
trust is listed

Question 30
A unit split in effect does not add value to the unit trust investors’ investment holdings, but _______.

(A) Is used to re-classify the fund to “Penny-Stocks” fund

(B) Makes sure that the fund managers are able to earn their fees
(C) Is used to enlarge the fund size in Ringgit term
(D) Is used by unit trust management company to lower the NAV per unit, thus enabling new investors
to invest in the fund

Question 31
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 that choosing a
fund merely based on best record in the previous month is not in her best interest; what other aspects
would you advise her to look into before investing in the fund?

I. Consistency of the fund’s performance in medium and long term

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

(A) All of the optional answers are correct (B) I & II

(C) I, II & III (D) II & III

Question 32
Which of the following forms the minimum standards of conduct expected of registered Persons Dealing
in Unit Trusts (PDUT) and are intended to be a guide to ascertain whether a registered PDUT is acting in a
manner which continue to satisfy the Minimum Standards for Registration?

(A) None of the optional answer is correct

(B) Code of Ethics and Professionalism
(C) Code of Ethics and Standards of Professional Conduct for Multi-level Marketing
(D) Code of Ethics and Standards of Professional Conduct

For internal circulation and training purposes only 23

Question 33
In general, which of the following type of unit trust is likely to depreciate most when the overall stock
market falls?

(A) Property trust (B) Equity trust

(C) Money Market trust (D) Fixed-income trust

Question 34
What type of investments would you most expect to find in an aggressive growth fund:

(A) Investments in capital guaranteed life insurance products

(B) Investments in properties with regular income
(C) Shares of technology companies recently listed on the stock exchange
(D) Cash

Question 35
“Market risks” is a type of risks involved in investing in equity unit trusts and it means:

(A) None of the optional answer is correct

(B) 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
(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) Poor management of the scheme will jeopardise the investment of unit holders through the lost of
their capital invested in the scheme

Question 36
The best way to help investors go through the prospectus is to begin with:

(A) Members of Investment Committee (B) Key Data

(C) Profile of the Board of Directors and key Management Staff (D) Fees and Charges

Question 37
A listed trust is commonly known as a:

(A) Regional Trust (B) Open-ended Trust

(C) Closed-ended Trust (D) Universal Trust

Question 38
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) All of the optional answers are correct (B) I & II

(C) I, III & IV (D) I, II & III

For internal circulation and training purposes only 24

Question 39
What is (are) the basic quantity(ies) of a professional Persons Dealing in Unit Trusts (PDUTs)?

(A) All of the potential answers are correct

(B) Give timely and accurate information
(C) Provide on-going advisory and services
(D) Keep abreast on the latest development in the unit trust industry

Question 40
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 been professionally trained in the field of fund management
(B) Someone who has bought and sold many investments in his lifetime
(C) Someone who always manages in excess of RM 500 million
(D) A friend who always recommends the best stocks to buy

Question 41
Generally, a unit trust that has 80% of its assets invested in growth stocks would be the most appropriate
type of investment for the preparation of:

(A) None of the optional answer is correct

(B) A college fund for an 18-year-old
(C) An income-producing savings for an 86-year-old
(D) An individual retirement fund for a 52-year-old

Question 42
What is (are) the most important benefit(s) you will get from creating a diversified portfolio that includes
stocks, bonds and money market funds?

(A) All of the optional answers are correct

(B) A guarantee that the portfolio won’t suffer if the stock market falls
(C) The ability to balance both risk and return in achieving one’s financial goals
(D) Higher returns than the portfolio that is not diversified

Question 43
An investor has invested a total of RM 200,000 in a unit trust fund. Assume that he has obtained up to
the maximum margin on financing, how much has he obtained from the end financier to finance his
investment?

(A) None of the optional answer is correct (B) RM 66,000

(C) RM 200,000 (D) RM 134,000

Question 44
In all investment-related industries, what is the most important component for investors to have in the
product they are purchasing?

(A) Relationship (B) Performance

(C) Risk (D) Confidence

For internal circulation and training purposes only 25

Question 45
Which of the following offer(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) None of the optional answer is correct (B) I, II & III

(C) I & II (D) I & III

Please use the following information to answer the questions.

A family spent RM 25,000 on goods and services last year and RM 26,125 this year. Assume that the
pattern, value of consumption and the inflation rate remain unchanged.

Question 46
How much money will the family need next year to maintain the same living standard as this year?

(A) None of the optional answer is correct (B) RM 27,301

(C) RM 26,125 (D) RM 27,250

Question 47
Based on the above inflation rate, if an investor earns a 5% return for his investment, his marginal tax is
20%, what is his effective return after tax and inflation?

(A) -0.3% (B) 15%

(C) -0.5% (D) -15%

Question 48
Which of the following are parties to a unit trust scheme?

I. Unit Trust Management Company II. Trustee

III. Investment Manager IV. Unit holders

(A) All of the optional answers are correct (B) II & IV

(C) I, II & IV (D) II, III & IV

Question 49
An index fund is:

(A) A fund that has composition closely resembles that of the relevant index such as KLCI
(B) Listed as one of the component securities in the Kuala Lumpur Stock Exchange Composite Index
(KLCI)
(C) A fund that ensures returns will always be above KLCI
(D) Actively managed by buying and selling stocks upon careful and rigorous stock analysis and selection

Question 50
Which of the following fund is best described by this statement?
“The unit trust fund is managed in accordance with Syariah Principles and aims to maximise capital
returns over medium to long-term by investing mainly in equities listed on the Bursa Malaysia”

(A) Fixed-Income Fund (B) Balanced Fund

(C) Property Fund (D) Islamic Fund

For internal circulation and training purposes only 26

Question 51
In order to enhance professionalism in marketing of unit trusts:

(A) It is important to recommend to potential clients the best performing unit trusts regardless of the
suitability of her risk profile to the fund
(B) It is irrelevant what promises are made to clients with respect to investment returns
(C) It is important to observe as many marketing leads as possible
(D) It is important to provide superior service to clients and attend to their needs

Question 52
Which of the following statement is correct?

(A) Unlisted unit trusts are not allowed to invest in real estate investment trusts (REITs)
(B) The income of real estate investment trust (REITs) is mainly derived from the rental income and
capital appreciation of the property held by the trust
(C) Real estate investment trusts (REITs) are not allowed to be listed
(D) The portfolio of a real estate investment trust (REIT) can be switched to equities easily as the assets
are highly liquid

Question 53
Which of the following best describes the disadvantage of financing investments of a unit trust fund
through borrowing?

(A) None of the optional answer is correct

(B) In a rising market, the value of the investment in unit trust fund and the loan borrowed rises
(C) In a falling share market, the value of the investment in unit trust fund may be decreasing whilst the
loan liability remain constant, or increasing. The effect of this may result in the need to increase the
collateral to the financial institution
(D) The value of the investment in unit trust fund does not fluctuate with share market prices, but the
loan financing does

Question 54
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)

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

Question 55
The Unit Trust Scheme (UTS) can only invest in securities that:

(A) Are well diversified in the global markets

(B) Guarantee the highest returns with minimum risks
(C) Have small market capitalisation with great potential for capital appreciation in the long run
(D) Have been authorized in the Deed of the UTS

For internal circulation and training purposes only 27

Question 56
Which of the following is (are) investment alternative(s) to unit trusts?

(A) All of the optional answers are correct (B) Fixed deposits
(C) Property (D) Direct shares investment

Kindly use the following information to answer the questions.

Cik Zarina and Encik Hamzah took part in a millionaire contest and won RM 64,000 cash respectively.
Both of them decided to invest their cash prizes at the same time as follows:

Zarina Hamzah
Investment A RM 64,000 RM 0
Investment B RM 0 RM 64,000
RM 64,000 RM 64,000

Question 57
Suppose that Investment A provides an average annual return of 8.5% and the value of Encik Hamzah’s
investment doubled approximately 1.27 years earlier than those of Cik Zarina, what is the average annual
return of Investment B?

(A) None of the optional answer is correct (B) Approximately 7.39%

(C) Approximately 10.00% (D) Approximately 9.77%

Question 58
Suppose that the amount of the cash won by them is RM 128,000 each and all else being unchanged,
what is the average annual return of Investment B?

(A) None of the optional answer is correct (B) Approximately 14.78%

(C) Approximately 20.00% (D) Approximately 19.54%

Question 59
If the investment return is 10% per annum, marginal tax rate is 20% and inflation rate is 5% per annum,
what is the effective return after tax and inflation?

(A) 2.5% (B) 3%

(C) 5% (D) 4%

Question 60
From previous question, it is clear that inflation can erode one’s purchasing power. How can an investor
hedge against inflation?

(A) None of the optional answer is correct

(B) Cut down all the unnecessary expenses and keep the money at home
(C) Invest the money in an instrument that can generate higher returns than the inflation rate
(D) Lower the tax rate of the investment

For internal circulation and training purposes only 28

Answer:

1. B 31. A
2. A 32. D
3. B 33. B
4. B 34. C
5. C 35. B
6. A 36. B
7. B 37. C
8. B 38. A
9. C 39. A
10. D 40. A
11. D 41. A
12. B 42. C
13. B 43. D
14. B 44. C
15. C 45. C
16. A 46. B
17. D 47. C
18. B 48. A
19. B 49. A
20. C 50. D
21. C 51. D
22. D 52. B
23. D 53. C
24. B 54. A
25. A 55. D
26. A 56. A
27. A 57. C
28. A 58. A
29. D 59. B
30. D 60. C

For internal circulation and training purposes only 29