| 1. Forward pricing of units means that | |
| a) units are priced at the next valuation point, meaning that buyers and sellers don't know the price they are paying/receiving until after that point | |
| b) units are priced at the last valuation point, meaning that the price which buyers pay and sellers receive may not be the same as the price at the time they transact | |
| c) units can only go up in price during one trading session | |
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| 2. When a fund is said to be 'open-ended fund' it means that: | |
| a) its shares are listed on the Stock Exchange | |
| b) the number of shares or units is fixed | |
| c) the number of shares or units can be increased or decreased by the managers | |
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| 3. Who is the legal owner of a trust's assets | |
| a) the trustee | |
| b) the investment manager | |
| c) the auditor of the fund | |
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| 4. The 'cancellation price' on a unit trust is | |
| a) the penalty you pay when you sell your units | |
| b) the maximum allowable unit price at which investors can buy units | |
| c) the minimum unit price at which the managers can buy back units from investors | |
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| 5. The 'creation price' on a unit trust is | |
| a) the daily price at which the trust's managers offer to sell units to investors who want to buy them | |
| b) the daily price at which the trust's managers offer to buy units from investors who want to sell them | |
| c) the maximum price at which the trust's managers can sell units, calculated as (Net Asset Value + dealing costs)/number of units + the initial charge | |
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| 6. Which of the following statements is true of Capital Gains Tax? | |
| a) unit trust and OEIC funds are liable for CGT on realised gains | |
| b) investors are liable for CGT on disposals of their fund holdings, provided that their total realised gains for the tax year from all sources exceed the annual exemption | |
| c) fund switches do not count as disposals for CGT purposes | |
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| 7. What is the maximum amount that a unit trust or OEIC can invest in a single company? | |
| a) 10% of the fund's assets | |
| b) an amount which keeps the trust's holding, as a percentage of the company's share capital, under 10% | |
| c) not more than 16% of the trust's assets | |
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| 8. What is meant by pound cost averaging? | |
| a) an investment strategy where all the capital available is invested at once | |
| b) a strategy of investing a capital sum in stages, as a precaution against rising unit or share prices | |
| c) a strategy of investing a capital sum in stages as a precaution against falling prices | |
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| 9. Which of the following statements are true of passive fund management? | |
| a) passive fund managers assemble share portfolios that they believe will outperform a benchmark market index | |
| b) passive fund managers assemble portfolios that replicate the performance of a benchmark index | |
| c) index tracker funds always outperform actively managed funds | |
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| 10. Which of the following statements are true? | |
| a) OEIC shares are single-priced whereas unit trusts are dual priced | |
| b) an OEIC is set up like a trust fund whereas a unit trust has a corporate structure | |
| c) an OEIC is an open-ended investment fund whereas a unit trust is a closed ended fund | |
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| 11. The dilution levy on an OEIC is | |
| a) an exit charge for selling your shares in the fund too early | |
| b) an extra charge made if you buy very small numbers of shares in an OEIC | |
| c) a discretionary charge on buyers or sellers who incur dealing costs for the fund managers | |
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| 12. Independent Financial Advisers | |
| a) represent the product providers rather than the investor | |
| b) represents the investor but can only recommend the products of one provider | |
| c) represents the investor and can recommend products from all providers | |
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| 13. Which of the following is true of the cooling-off period? | |
| a) if you cancel your investment within the cooling off period, but prices of units have fallen during that time, you get a refund at the ruling offer price, not the price originally paid | |
| b) if prices fall during the cooling off period you can cancel your investment and get back the money you paid | |
| c) if you cancel your investment during the cooling off period and prices of units have risen, you will be refunded at the ruling offer price, not at the price you originally paid | |
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