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Question 1
a) Explain the main features of a unit trust.
Question 2
“And it is not without reason that the popularity of unit trusts has increased in the past five
years or so. Here’s why: There is a better chance of you picking a positive yielding unit
trust than of you picking a winning stock.”
(Extracted from The Straits Times 28 May 2005)
List four advantages of investing in a unit trust instead of investing directly in the share
market.
2. Professional Managers
• the fund managers have the knowledge, skills and access to timely information
and updated research on economic industry and company trends to manage a
portfolio of various types of investments
3. Diversification of risk
• funds are typically invested in a variety of financial instruments across
geographical region which ensures that their performances are not solely
depended on a single security
4. Liquidity/Marketability of units
• units are fully marketable since the fund managers are obliged to sell and re-
purchase the units
• In contrast, shares and bonds can only be traded when there is a match in price
and volume between ready buyers and sellers.
Question 3
Sandra is planning to invest in a unit trust and approaches you for advice. She would like
to know more about investing in unit trust.
(b) Elaborate on the factors she needs to consider when selecting the fund.
Question 4
(a) Which are the major regions (and key markets) for the greatest growth in wealth
management? What is the estimated sum and number of US$ millionaires?
(b) What are the historical reasons and current factors that the article mentioned are
favourable conditions for Singapore to be a global wealth management hub?
Historical/Current factors:
• Historic trade between Middle East and Asia since first millennium AD,
Europeans came in only 15th century.
• Current factors: Include pro-active MAS, good regulatory framework
that is conductive to the industry, well-established and legal British laws
and international accounting standards, excellent IT and physical
infrastructure and good quality of life.
(c) Do you agree with the article’s profiling of the key wealth creators? Why or why
not?
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