CCM Unit Trust Practice Questions - SEC Sri Lanka Certificate in Unit Trust (CCM) Exam - CCM Unit Trust Practice Questions - SEC Sri Lanka Certificate in Unit Trust (CCM) Exam

Question 1

Which of the following best defines a Collective Investment Scheme (CIS) under the Securities and Exchange Commission of Sri Lanka Act No. 19 of 2021?

A partnership where partners are personally liable for all business debts and capital investments A scheme where investor funds are pooled and managed by a fund manager to acquire property/assets, with investors sharing the risk and return A deposit scheme offered exclusively by licensed commercial banks with fixed interest rate guarantees A public limited company where investors purchase shares directly on the secondary market of the Colombo Stock Exchange

Correct Answer:

A scheme where investor funds are pooled and managed by a fund manager to acquire property/assets, with investors sharing the risk and return

Question 2

What is a primary advantage of investing in an open-ended unit trust compared to direct stock market investment for a retail investor in Sri Lanka?

It provides instant diversification across multiple securities, reducing unsystematic risk It guarantees a higher return than the Colombo Stock Exchange's ASPI index every year It grants the investor direct voting rights in the annual general meetings of the underlying companies It exempts the investor from all market-related risks and price fluctuations

Correct Answer:

It provides instant diversification across multiple securities, reducing unsystematic risk

Question 3

An open-ended unit trust differs from a close-ended unit trust in Sri Lanka primarily because the open-ended trust:

Has a fixed number of units in issue that trade only on the secondary market of the Colombo Stock Exchange Is prohibited by the SEC from investing in debt securities like Treasury Bills Continually issues and redeems units directly with investors based on the Net Asset Value (NAV) per unit Does not have a Trustee to oversee the fund manager's actions

Correct Answer:

Continually issues and redeems units directly with investors based on the Net Asset Value (NAV) per unit

Question 4

Which of the following risks represents a systematic risk that cannot be eliminated by diversifying a unit trust's portfolio?

A sudden increase in inflation and interest rates across the Sri Lankan economy The risk that a single corporate bond issuer in the portfolio will default A labor strike that halts operations at a specific manufacturing company in the fund Incompetent management decisions at one of the commercial banks whose shares are held in the fund

Correct Answer:

A sudden increase in inflation and interest rates across the Sri Lankan economy

Question 5

Why does pooling money in a unit trust give a small retail investor access to a more diversified portfolio than they could typically build on their own?

Because the fund guarantees that every underlying security will rise in value Because the combined capital of many unit holders is large enough to be spread across many different securities and asset classes Because the SEC reimburses any losses suffered by individual retail unit holders Because each unit holder is allowed to personally select the individual stocks the fund must buy

Correct Answer:

Because the combined capital of many unit holders is large enough to be spread across many different securities and asset classes

Question 1

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Prepare with the CCM Unit Trust Practice Questions - SEC Sri Lanka Certificate in Unit Trust (CCM) Exam practice quiz. This question bank includes 100 questions covering unit, trust, lanka, managing, and company. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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CCM Unit Trust Practice Questions - SEC Sri Lanka Certificate in Unit Trust (CCM) Exam

This practice set contains 100 questions from the matching question bank and focuses on unit, trust, lanka, managing, and company. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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CCM Unit Trust Practice Questions - SEC Sri Lanka Certificate in Unit Trust (CCM) Exam

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