CMFAS Collective Investment Schemes M3 2

Question 1

What is a fund's prospectus?

Accepted Answer

A legal document detailing the fund's objectives, risks, fees, and terms

Answer

A prospectus is a legal document that provides comprehensive information about the fund, including investment objectives, strategies, risks, fees, and terms.

Question 2

What is the sales charge (front-end load) for a unit trust?

Accepted Answer

A fee charged when you buy units, deducted from the investment amount

Answer

A front-end load or sales charge is a commission deducted upfront from the investment amount when purchasing units.

Question 3

What is a money market fund?

Accepted Answer

A fund that invests in short-term, low-risk instruments like treasury bills

Answer

A money market fund invests in short-term, highly liquid, low-risk instruments such as treasury bills, certificates of deposit, and commercial paper.

Question 4

What is an equity fund?

Accepted Answer

A fund that primarily invests in stocks/shares

Answer

An equity fund primarily invests in stocks (equities) of companies, aiming for capital growth over the long term.

Question 5

What is a balanced fund?

Accepted Answer

A fund that invests in a mix of equities and fixed income

Answer

A balanced fund invests in a combination of equities and fixed-income securities, aiming to provide both growth and income while managing risk.

CMFAS Practice Test

CMFAS Practice Test

CMFAS Collective Investment Schemes M3 2