Explanation: The correct answer is (b) Decrease the investment returns. When investing in a foreign country with a higher inflation rate, Mr. M’s investment returns can be decreased. Higher inflation tends to erode the purchasing power of a currency over time, which can reduce the value of the investment returns when converted back to his domestic currency.

Explanation: The correct answer is (b) Ms. N converts the warrant into shares of the issuing company. When Ms. N exercises her warrant, it means she chooses to convert the warrant into shares of the issuing company at the predetermined conversion price. By exercising the warrant, she acquires the shares of the company.

Explanation: The correct answer is (c) Potential for total loss of investment. One of the primary disadvantages of using warrants for investors is the potential for a total loss of investment. If the price of the underlying asset does not reach or exceed the warrant’s strike price during the warrant’s lifetime, the warrant may expire worthless, resulting in a complete loss of the initial investment made to purchase the warrant.

Explanation: The correct answer is (b) To hedge against foreign exchange risk. The main purpose of a currency swap is to hedge against foreign exchange risk. Currency swaps involve the exchange of principal and interest payments in one currency for the equivalent in another currency. They are commonly used by businesses and investors to manage their exposure to foreign exchange rate fluctuations.

Explanation:
The correct answer is (b) The total assets of the fund minus liabilities, divided by the number of units. Net Asset Value (NAV) represents the per-unit value of a unit trust and is calculated by subtracting the trust’s liabilities from its assets and dividing the result by the number of units outstanding.

Explanation:
The correct answer is (a) Market risk. Investing in a Unit Trust with a diversified portfolio of stocks exposes investors to market risk, which is the risk of loss due to fluctuations in stock prices in the overall market.

Explanation:
The correct answer is (b) Representing the interests of unit holders. The Trustee’s primary function is to represent and safeguard the interests of unit holders, ensuring that the Unit Trust operates in accordance with its trust deed and regulatory requirements.

Explanation:
The correct answer is (b) NAV per unit decreases. When a Unit Trust declares a dividend distribution, the fund’s assets decrease due to the payment of dividends, resulting in a decrease in the Net Asset Value (NAV) per unit.

Explanation:
The correct answer is (c) Defining the rights and obligations of unit holders. The Unit Trust Deed specifies the rights and obligations of unit holders, providing a legal framework for the trust’s operation and ensuring compliance with regulatory requirements.

Explanation:
The correct answer is (c) Interest rate risk. Investing in bonds with varying maturities exposes a Unit Trust to interest rate risk, as changes in interest rates can impact the prices of the bonds held in the portfolio.

Explanation:
The correct answer is (d) REITs are traded on stock exchanges. Unlike traditional real estate investments, REITs are traded on stock exchanges, providing investors with a way to invest in real estate assets through a publicly traded security.

Explanation:
The correct answer is (c) Regular income distributions to unit holders. Business Trusts often distribute a significant portion of their income to unit holders, providing a regular income stream, which can be attractive to income-seeking investors.

Explanation:
The correct answer is (b) Managing the day-to-day operations of the REIT. The REIT Manager is responsible for overseeing the day-to-day operations of the REIT, including property management, acquisitions, and ensuring compliance with regulatory requirements.

Explanation:
The correct answer is (c) Tenant turnover risk. Investing in a REIT specializing in residential properties exposes investors to tenant turnover risk, as vacancies or changes in occupancy rates can impact rental income.

Explanation:
The correct answer is (d) Making investment decisions on behalf of the trust. The Fund Manager is responsible for making investment decisions on behalf of the Unit Trust, implementing the investment strategy outlined in the trust’s deed.

Explanation:
The correct answer is (c) Suspend dividend distributions to unit holders. In challenging financial situations, a Business Trust may choose to suspend dividend distributions to conserve cash and address liquidity concerns.

Explanation:
The correct answer is (c) Business Trusts have a fixed lifespan. Unlike Unit Trusts, Business Trusts often have a fixed lifespan, and their termination is specified in the trust deed. This distinguishes them from Unit Trusts, which can operate indefinitely.

Explanation:
The correct answer is (a) The process of creating new units for the trust. Unitization refers to the process of creating new units in a Unit Trust, typically in response to new investments or additional capital contributions by existing unit holders.

Explanation:
The correct answer is (b) To control the size of the trust’s assets. Implementing a soft close helps control the size of a Unit Trust’s assets, preventing it from becoming too large to efficiently manage the underlying investments.

Explanation:
The correct answer is (c) REITs focus exclusively on real estate investments. Unlike Business Trusts, REITs typically focus solely on real estate-related assets, such as properties and mortgages, providing investors with exposure to the real estate sector.

Explanation:
The correct answer is (a) REITs must distribute at least 90% of their taxable income to unit holders. The 90% Rule requires REITs to distribute a significant portion of their taxable income to unit holders to maintain their tax-advantaged status.

Explanation:
The correct answer is (c) Obtain a waiver from regulatory authorities. In some cases, a REIT can seek a waiver from regulatory authorities to exceed the 10% limit on non-real estate assets for specific transactions.

Explanation:
The correct answer is (a) Specifying the roles and responsibilities of the trust manager. The Deed Poll of a Business Trust outlines the roles, responsibilities, and powers of the trust manager, providing guidance on the management of the trust.

Explanation:
The correct answer is (c) Interest rate risk. Even in low-risk government bond portfolios, investors should be mindful of interest rate risk, as fluctuations in interest rates can impact the prices of bonds, affecting the overall value of the Unit Trust.

Explanation:
The correct answer is (c) Providing a regular and sustainable income stream. The Distribution Policy of a Business Trust aims to provide unit holders with a regular and sustainable income stream by distributing a portion of the trust’s income.

Explanation:
The correct answer is (b) Separating real estate assets from non-real estate assets. The asset segregation requirement mandates that REITs keep their real estate assets separate from non-real estate assets, maintaining a clear distinction between the two.

Explanation:
The correct answer is (c) Amend the trust’s deed to include the new asset class. Before investing in a new asset class not specified in the trust’s deed, the fund manager should seek to amend the trust’s deed to include the new asset class, ensuring compliance with regulatory requirements.

Explanation:
The correct answer is (c) Existing unit holders have the right to purchase additional units before they are offered to external parties. The “right of first refusal” gives existing unit holders the opportunity to purchase additional units before they are offered to external investors, allowing them to maintain or increase their ownership stake.

Explanation:
The correct answer is (b) Decreased NAV per unit. Holding illiquid assets can impact a Unit Trust by reducing its ability to quickly convert assets into cash. This may result in a decrease in Net Asset Value (NAV) per unit, affecting the overall value of units held by investors.

Explanation:
The correct answer is (c) Adjusting the Net Asset Value (NAV) of the ETF. The Creation and Redemption process allows authorized participants to create or redeem ETF units, helping to keep the ETF’s market price in line with its Net Asset Value (NAV).