QUESTION ONE

$[20$ Marks$]$

a$)$ Briefly differentiate between Retail investors and Institutional Investors, with five $(5)$ points.

$[10$ Marks$]$

b$)$ Financial planning is an important aspect for any investor before undertaking an investment decision. Bricfly discuss the steps involved in financial planning.

$[5$ Marks$]$

c$)$ Briefly discuss, with five $(5)$ points, the advantages and disadvantages of Institutional Investors to an economy.

$[5$ Marks$]$

QUESTION TWO

$[20$ Marks$]$

a$)$ Briefly discuss, with four $(4)$ points, the importance of Mutual Funds to a country's economy.

$[8$ Marks$]$

b$)$ Mr$.$ Semiono is considering an investment of $1ZS25,600,000$ in a mutual fund for the purpose of adding to your retirement income. You expect to retire $35$ years from now. You are choosing between Wekeza Maisha Fund and Jikimu Fund, which are operated by UTT AMIS. Wekeza Misha Fund has no initial charge, an annual management charge of $0\mathrm{.}7\%$ of the value of the Fund an average annual share dealing costs of $0\mathrm{.}4\%$ and pays annual tax at the rate of $20\%.$

Jikimu Fund fund has an initial charge of $4\%$ of the investment, an annual management charge of $1\mathrm{.}5\%$ of the value of the Fund, an average annual share dealing costs of $0\mathrm{.}8\%$ and pays deferred tax at the rate of $10\%.$

You have read that over the long term, the average real rate of retum on a balanced portfolio of shares has been $8\%$ p$.$a$.$ You expect that performance to continue for the next $35$ years. On the assumption that the funds match the general market performance:

Required

a$)$ What will be the value of Wekeza Maisha Fund after $35$ years?

$[4$ Marks$]$