Unit Trust Quiz 3 - Advance

1. Your financial planner have told you that you have a shortfall of retirement fund and that you need to save now in an investment fund that can give you 9.50% return per annum. Anything lower than this would not be able to meet your retirement fund upon your retirement age 20 years from now. Which of this investment instrument would you choose to invest ?

2. Usually saving rate in the Fixed Deposit scheme in financial institutions is 3.10% per annum. The published inflation rate is about 4.00%. Would you still put all your savings in that Fixed Deposit account? Which of the below answers best suit the Investment's best practice?

3. The statement ' Regular topping up investment during market down promises low holding cost'. This is true because when the holding cost is low, the variance between it and the selling price when the market moves up is hugh. However, timing of market is quite impossible. How do you view this with respect of reaping high return? 

4. In your first year of unit trust investment, there is no positive return therefore you cannot achieve your aim. In your second year, if distribution is declared and re-invested, your units now increase. Subsequently, every year your units will increase as distribution is declared and re-invested. If you don't make any new top-up or redemption, your units will expand,irrespective of market condition. Investors practice this regular top-up because of the units expansion. However, throughout your holding period of the units, the cost per unit remain the same. It never changes eventhough the number of units expanded due to distribution declared and re-invested. True or false?

5. Why is the 'Dollar cost average' concept so important in unit trust investment scheme?

6. You invested RM 50000 to buy Fund XYZ at 25 sen a unit on March 1,2012. During growth in market, the fund price moves up to 27sen on March 28,2012. You again buy this fund with an investment of RM20000. What is the per unit holding cost before and after March 28,2012.(Assuming there is no sales charges and redeemption of units) 

7. Your Unit trust consultant have told you that your risk tolerance profile is an aggressive type. This should match with the type of funds your consultant picked for you. Which one of the below best describes the funds chosen for an aggressive type investors?

8. Mr. Thaksin has RM 120000 in his account 1 of his EPF savings and RM 80000 in account 2. According to the EPF rule, Thaksin has to keep basic savings of RM 60000  and anything excess of this can be invested in approved unit trust funds. Exactly, how much can he invest in unit trust scheme and how frequent can he do so?

9. From question 2, if the price on March 31,2012 is RM 0.2900 a unit and you redeem all units. How much money will you receive? (Assuming there is no tax)

10. When your return in unit trust investment sways farther from your aim, switching strategy is applied. Switching strategy cost money, therefore it should be used carefully to avoid depletion of income. Which of the statement below is  true?