CMFAS Collective Investment Schemes M3

Question 1

What is a collective investment scheme (CIS)?

Accepted Answer

A scheme where funds from multiple investors are pooled and professionally managed

Answer

A personal savings account

Answer

A type of insurance

Answer

A government subsidy programme

Question 2

Who manages the investments in a unit trust?

Accepted Answer

A professional fund manager

Answer

The unitholders themselves

Answer

The stock exchange

Answer

The government

Question 3

What is the role of a trustee in a unit trust?

Accepted Answer

To safeguard the assets of the fund and protect unitholders' interests

Answer

To manage investments

Answer

To sell units to investors

Answer

To set the fund's investment strategy

Question 4

What is the difference between an open-ended and a closed-ended fund?

Accepted Answer

Open-ended funds continuously issue and redeem units; closed-ended funds have a fixed number of units

Answer

There is no difference

Answer

Closed-ended funds have lower fees

Answer

Open-ended funds are riskier

Question 5

What is the management fee in a unit trust?

Accepted Answer

An ongoing fee charged by the fund manager for managing the fund

Answer

A one-time setup fee

Answer

A penalty for early withdrawal

Answer

A tax on investment returns

Question 6

What does diversification mean in the context of CIS?

Accepted Answer

Spreading investments across different assets to reduce risk

Answer

Investing all money in one stock

Answer

Investing only in bonds

Answer

Concentrating investments in one sector