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Section B Chapter Wise .

Chapter 1 . Concept and Role of Mutual Fund


1. Profit / Loss earned incurred by a Mutual fund scheme
a) Shared by AMC and the investor according to pre agreed ratio.
b) Belong to the investor .
c) Belong to the AMC.
d) Shared by the trustee and the investor according to the pre agreed ratio.
2. In case of losses in a Mutual fund scheme , investor may have to bear amount higher than that
invested ?
a) True
b) False .
3. The pool of money mobilized by Mutual fund house to accommodates investor varied preference is
called
a) Unit Capital .
b) Mutual Fund corpse .
c) Mutual fund scheme
d) Unit Reserve .
4. Which of the following is / are the advantage of Mutual Fund ?
a) Wealth Generation through Professional Management
b) Exposure to wide range of security with smaller investment .
c) Benefit of economy of scale
d) All of the above .
5. Funds that combine the feature of close ended and open ended funds are called .
a) Flexible Funds
b) Hybrid Funds
c) Interval Funds
d) Balanced Funds .
6. Passive Funds is expected to .
a) Beat the return of the index .
b) Furnish the return of the market index .
c) Keep the cost low .
d) Both c and d.
7. Gold Funds and Gold Sector funds are the same type of funds .
a) True
b) False .
8. Thematic Funds is a variant to
a) Diversified Fund .
b) Sector Fund
c) Balanced Fund
d) Equity Fund .

9. Investor in international funds invest in a .. which is re invested in a


a) Feeder fund , host fund .
b) Host Fund , feeder fund .
c) Local fund , international fund .
d) International Fund , Local Fund .

10. In which of the following do , debt funds not invest?


a) Government Debt Structure .
b) Corporate Paper .
c) Financial Institution Bonds .
d) Equity of a Private company .
11. Funds Which invest only in Stock comprising an index and aim to give return commensurate with
the index return are called ..
a) Index funds .
b) Active funds .
c) Dormant Funds
d) None of the above .
12. Mutual fund can be defined as ..
a) A link between the saving public and capital market .
b) An active participant in promoting good corporate Governance , investor protection.
c) A participant that has brought in liquidity into the financial system .
d) All of the above .

13. A Mutual Fund investment are guided by the ..


a) AMC
b) Board of Trustee
c) Investment objectives.
d) Unit Holders .
14. Gilt funds
a) have no risk at all .
b) have interest Risk but no Credit Risk.
c) Have credit risk but no Interest rate Risk.
d) Have Credit risk , Interest Risk , and reinvestment risk.

15. In India , Mutual Fund scheme are not permitted to invest in commodities ?
a) True
b) false .

16. Exchange traded fund are open ended funds


a) That are open for sale and repurchase by the fund anytime .
b) that trade in the stock exchange .
c) That trade in over the counter exchange .
d) All of the above .

17. Commodity Sector funds are not permitted to operate in india .


a) True
b) False .
18. A close ended Mutual Fund has a fixed
a) NAV
b) Tenure
c) rate of return .
d) Number of Distributor .
19. An open ended Mutual Fund is one that has
a) An option to invest in any kind of security .
b) Units available for sale and repurchase at all times .
c) An upper limit on its NAV.
d) A fixed fund size .

20. Gold Sector Funds are a type of .


a) Gold Funds
b) Equity Sector Funds .
c) Debt Funds
d) Equity Diversified Funds .

21. Monthly Income Plan have to decide a dividend every month ?


a) True
b) false .

22. Floating rate debt securities means ..


a) Debt Securities Whose rating changes from time to time .
b) Debt securities where interests rate payable by the issuer changes in line with the market .
c) debt security which offer multiple interest Rate structure .
d) Debt Securities Which have no maturity period .

23. . Are funds where the funds manager has the flexibility to choose the investment portfolio
a) Actively managed Funds.
b) Flexible asset Allocation Funds .
c) Fixed diversified allocation funds .
d) Diversified funds.

24. Of these Which is an example of a passive fund management Strategy ?


a) Duration Management
b) Buy and Hold
c) Credit Selection.
d) Prepayment Selection.

25. A NAV of equity Income / dividend yield scheme tends to fluctuate higher than other equity scheme
?
a) True
b) false

26. Fixed maturity Plan are


a) Open ended funds
b) Close ended funds
c) Interval funds
d) Hybrid Funds

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B
B
C
D
C
D
B
B
A
D

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A
D
C
B
A
B
B
B
B
B

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B
B
A
B
B
B

Chapter 2. . Fund Structure and Constituent .


1) The following is not a duty of the Board of trustee of Mutual Fund ?
a) Raise the maximum possible amount of assets in each scheme floated by the fund .
b) Ensure the investor interest are safeguarded.
c) The management of the fund is in accordance with SEBI regulation.
d) Ensure the AMC has proper system procedure and key personnel in place.
2) Which of the following can be a sponsor of a Mutual Fund ?
a) Indian Public Sector Bank
b) domestic Financial Institution.
c) Foreign financial Institution.
d) All of the above .
3. Prior approval of . Is required before a person is appointed as director on the board of the
AMC.
a) Trustee
b) Sponsors
c) SEBI
d) Unit Holder
4. Appointment of an AMC can be terminated
a) Majority of the trustee.
b) 75% of Unit holder
c) Both of the above
d) None of these .
5. The AMC should have minimum net worth of ..
a) 100 cr
b) 50 cr
c) 10 cr
d) 50 lacs.
6. The auditor of the scheme of Mutual Fund and the AMC has to be different ?
a) True
b) False
7. XYZ ltd , a custodian has 4 director out of which 1 director is also a director of the sponsor company
and another director is 50% shareholder of Sponsors associate company , can XYZ ltd be appointed for
the Sponsor of the Mutual Fund .
a) Yes
b) NO
8. If a Sponsors control or more share of a custodian , then they cannot be appointed for the
mutual fund operation of the Sponsors ?
a) 20%
b) 75%
c) 40%
d) 50%

9. The trust that manage the Mutual Fund is appointed by


a) Ministry of Finance
b) RBI
c) SEBI
d) Sponsors of the Mutual Fund .
10. A transfer in the management of a close ended scheme does not require the consent of .
a) Unit Holder
b) SEBI
c) Trustee
d) AMC
11. The Board of trustee of a Mutual Fund .
a) Act as Protector of Investor interest.
b) Directly manage the portfolio of security .
c) Do not have right to dismiss the AMC
d) Cannot supervise and direct the working of AMC.
12. There can be multiple custodian of a Mutual fund Scheme ..
a) True
b) False
13. An AMC cannot invest in its own scheme without disclosing it ..
a) to the trustee.
b) to the Sponsors
c) to the unit holder
d) in the offer document .
14. Almost 50 % of director in the AMC should be independent of ..
a) Sponsors .
b) Sponsor including subsidiary .
c) Sponsors including subsidiary of the trustee.
d) Sponsors and the Trustee.
15. A Mutual Fund scheme can be launched by ..
a) The trustee
b) The Sponsors .
c) The AMC
d) AMC on behalf of the trustee.
16. The Agreement between the trustee and the AMC is known as .
a) Trust deed.
b) Investment & management agreement .
c) Agreement to manage Portfolio.
d) AMC appointment letter .

17. How much % of Unit holder is needed for termination of AMC ?


a) 51%
b) 75%
c) 85%
d) Above a) only

18. Transfer agent of a Mutual Fund are not responsible for


a) issuing and redeeming unit of Mutual Fund .
b) Updating Investor records .
c) Preparing Transfer document
d) Investing the funds in security markets.

19. The fund Sponsor should have a sound financial track record of ..
a) 7 years
b) 12 Month
c) 5 years
d) 3 years.
20. As per SEBI regulation , who acts as the protector of unit holder interest ?
a) Trustee
b) SEBI
c) Ministry of Finance
d) Compliance officer

21. To Transfer the management of a scheme one AMC to another , the consent of the following is
required ..
a) SEBI
b) Unit Holder
c) Both SEBI and Unit Holder
d) None of the these .
22. Distribution channel are critical element in the distribution of Mutual Fund in India .
a) True
b) False
23. XYZ ltd a custodian has 20 shareholder out of which ABC ltd a sponsor company holds 60%
share . Can XYZ ltd be appointed for ABC ltd Mutual Fund operation ?
a) Yes
b) No

24. AMC usually appoint all the other except custodian .


a) True
b) False

25. Sponsor of a Mutual Fund has no direct or indirect interest in the AMC of the said fund ?
a) True
b) False

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A
D
A
C
C
A
B
D
D
D

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A
A
D
C
D
B
B
D
C
A

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C
A
B
A
B

Chapter 3. . Legal and Regulatory Environment


1. The AMFI code of ethics has been framed to be followed by the ..
a) Mutual Fund Investment
b) Stock market Investor
c) Asset management Companies
d) Mutual Fund distribution.

2. Distributors are required to abide by a code of conduct as prescribed by SEBI , this code is based on
..
a) AGNI
b) AMFI
c) ARN
d) ACE
3. In case of ongoing transaction (Other than NFO) statement of account is to be sent to investor within

a) 10 working days of investment


b) 5 Business days of closure of the NFO.
c) 10 working days of the end of the quarter .
d) 10 Business days of closure of the NFO.

4. NAV and repurchase price of a Mutual fund other than FOF scheme , are to be updated in AMFI and
Mutual Fund website within
a) 9 PM the same day
b) 9 AM next day
c) 12 noon next day .
d) 7 PM same day .

5. The term self dealing in Mutual Fund means


a) Buying or selling in any security ahead of transaction of the fund with access to insider information.
b) Engaging into transaction with the fund to get unfair benefit at the cost of unit holder money .
c) doing personnel trading with the investment of the Mutual fund scheme .
d) Making personnel investment with unit holder money .

6. In case of delay in despatching dividend warrants/ redemption cheques beyond the time limit
prescribed , the AMC has to pay the investor
a) Penalty of Rs 5000 Each .
b) Interest @15%
c) Rs 100 extra as late fee.
d) Interest @ 1%.

7. Scheme Portfolio statement should be published within .


a) Within 1 month from the close of Each half year .
b) Within 3 month from the close of the financial year.
c) Within 1 month from close of the financial year.
d) Within 3 month from close of each half year.

8. An open ended scheme can change its fundamental attributes ..


a) By obtaining the consent of at least 75% of Unit Holders.
b) By allowing unit holders to exit the scheme after six month without exit load.
c) By information each unit holder individually of the proposed change and by allowing them to exit
the scheme without any exit load.
d) After obtaining prior approval from SEBI.

9. Investor of a Mutual Fund scheme cannot sue the


a) Trustee
b) AMC
c) Sponsors
d) Mutual Fund Trust.

10. If Investor claim unclaimed dividend / redemption proceeds within a period of 3 years , they get the
payment based on .
a) NAv at the time claiming the amount .
b) face value of unit or NAV at the time of claiming the amount whichever is less.
c) Prevailing NAV i.e after adding the income earned on the unclaimed money .
d) Amount determined by the AMC.

11. Investor of a Mutual fund scheme already matured are not entitled to any proceeds of illiquid
security recovered later at any point of time ?
a) True
b) False .

12. Guaranteed return mutual fund scheme is not possible


a) True
b) False .

13. Buying or selling of any security by the key personnel of the Mutual Fund ahead of transaction of
the fund , with access to insider information is called ..
a) Self trading
b) Insider trading
c) Front Trading
d) Self dealing

14. The AMC should encourage concentration of investment transaction through very few selected
brokers .
a) True
b) false

15. Unit Holder right to information includes


a) Obtaining from trustee any information having an adverse effect on their investment .
b) Inspecting major document of a Fund .
c) Receiving of a copy of the annual financial statement of that fund .
d) Approving investment decision of the fund .

16. The NAv of each scheme should be updated on AMFI web sites .
a) Every Quarter .
b) Every Month
c) Every Hour
d) Every day

17. When a Scheme name implies investment in a particular kind of security or sector then it should
invest at least . Of its corpus in that security or sector ?
a) 90%
b) 80%
c) 65%
d) 40%
18. An entity holding 5 % or more of the total corpus of any mutual fund scheme are called ..
a) Sponsors
b) Preferred investor
c) Dominant Unit Holders
d) Significant Unit Holders
19. Mutual Fund house can also vanish with no protection being available to investor ?
a) True
b) False
20. Guaranteed return Mutual fund Scheme are permissible if ..
a) Stated in the offer document .
b) Offer document is approved by SEBI containing such Guaranteed return .
c) Adequate resource are maintained to fulfil the guarantee.
d) All of the above .
21. Investor can appoint up to nominee for any mutual fund scheme ?
a) Two
b) three
c) five
d) One .
22. Dividend or redemption proceeds once not claimed can not be claimed further by the investor ?
a) True
b) false

23. A prospective investor ..


a) has the same status as a unit holder of a fund .
b) can sue AMC/ trustee
c) has no legal recourse .
d) All of the above .
24. What is the periodicity for submitting the report by AMC to trustee ?
a) Monthly
b) Bi- Monthly
c) Half yearly
d) Quarterly

25. NAv and repurchase price of FOF mutual fund scheme are to be updated in AMFI and Mutual fund
web site within ..
a) 9 PM same day
b) 8 PM same day
c) 3 Pm same day
d) 10 Am next day .

26. In case of a mutual fund transaction , statement of account at the request of investor is to be sent
within
a) 10 Working days of the investment
b) 5 Business days of closure of the NFO
c) 5 working days
d) 10 business days of closure of the NFO

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C
A
A
A
B
B
A
C
D
C

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B
B
C
B
D
D
C
D
B
D

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B
B
C
C
D
C

Chapter 4. . Offer Document .


1) The AMC announce the . From the scheme re opening date ?
a) Dividend
b) Portfolio Details
c) Financial results
d) Sale and repurchase Price of a Mutual Fund Scheme .

2. Detailed information regarding any Mutual Fund scheme is available from the ..
a) AMC head office
b) SEBI
c) Offer document of the Scheme
d) Advertisement of the scheme .
3. SID in a Mutual industry means .
a) Saving investment Distribution.
b) Systematic investment and distribution .
c) Scheme ID.
d) Scheme Information document .

4. the due diligence certificate that must be submitted to SEBI along with the draft offer document can
not be signed by .
a) The managing Director of the AMC
b) The executive director of the AMC
c) The compliance Officer
d) The investor relation officer

5. Cover page of SID does not contains


a) Name & contact information of the sponsor
b) Face value of the units being offered .
c) SID updation date
d) Standard Clauses

6. Through SID and SAI are two separate document , but in legal technically SAI is part of the SID
a) True
b) False

7. Which of the following is not true of Key information Memorandum ?


a) It is an abridged version of offer document .
b) It is not issued by AMC.
c) It is supplied with application form .
d) It contains the term of issue .

8. For any change in fundamental attributes , AMC needs to advertise


a) in Television
b) in any local newspaper where the head of AMC is situated .
c) in an English daily newspaper having Nationwide circulation and in a news paper published in the
language of the region where the head office of the Mutual fund is located .
d) No need for advertisement .

9) The ideal source of information on investment plans and investor relation services offered by the
fund is .
a) SID and SAI
b) Advertisement about the scheme
c) Financial Journal
d) The scheme annual report .

10) Already exiting Mutual fund , launching a new scheme should furnish condensed financial
information in SAI for
a) Scheme launched prior to this new scheme .
b) Scheme launched in last 3 financial year .
c) Scheme launched in last 5 financial year .
d) Scheme launched in the last 18 month .

11. Summarised form of SID and SAI is called ..


a) Abridged SID and SAI
b) Summarized SID and SAI
c) Key information memorandum
d) Synopsis of SID and SAI .

12. Any Change in SID other than for change in the fundamental attributes should be immediately
.
a) Updated in SID within 3 Month .
b) Updated in SID within 3 month from the end of financial year .
c) Attached as addendum and distributed along with SID until the SID is updated .
d) Updated in SID before the end of financial year .

13. Specific disclosure is required for regarding the guarantee given by AMC or Sponsor to
distribute income at the assured rate , and to redeem the capital invested to the unit holder .
a) Close ended Scheme
b) Monthly income scheme
c) Dividend yield Scheme
d) Assured return scheme

14. The offer document of a Mutual fund is vetted by SEBI but not actually approved.
a) True
b) False

15. If a scheme is launched in the first 6 month of the financial year then the first update of the SID is
due within .
a) 6 month from the end of financial year .
b) the end of the financial year .
c) 3 month form the end of financial year .
d) 6 month from the end of next financial year .

16. If a scheme is launched in the second 6 month of the financial year then the first update of the SID
is due within .
a) 3 month from the end of financial year .
b) 6 month from the end of next financial year .
c) 6 month from the end of financial year .
d) 3 month from the end of next financial year .

17. Draft SID is available for viewing in SEBI`s websites for


a) 15 Working days
b) 30 working days
c) 21 Working days
d) 7 Working days .

18. A mutual fund scheme was launched on February 2010 , then the first updates of SID is due within
.
a) June 2010
b) September 2010
c) March 2011
d) June 2011

19. Whether the Scheme is closed or closed ended is a fundamental attribute ?


a) True
b) False

20. Standard risk factor are the ones ..


a) Which are uniformly applicable for any mutual fund scheme .
b) Different for different scheme .
c) Which is made by the standard committee .
d) None of the above .
21. Any pending cases or penalties levied on the Sponsor or AMC should be disclosed in the offer
document ?
a) True
b) False

22. Which of the following is not a valid information in SAI ?


a) Profiles of Key personnel .
b) Contact information of service providers .
c) Investment Valuation norms .
d) Data of opening and closing number of investor complaint for previous 2 financial year .

23. The minimum number of investor requirement for an open ended scheme shall be complied
a) Only During NFO
b) during NFO or if not complied within such extended stipulated period .
c) Within each subsequent calendar quarter thereafter on an average basis .
d) Both b and c

24. If an investor of an open ended Mutual Fund scheme holds 25% or more of the corpus of the
scheme , the maximum time limit he should get to rebalance his holding is
a) 1 Month
b) 15 days
c) 1 month normal times plus 15 days notice period thereafter .
d) No time limit allowed .

25. Penalties or action taken against the foreign sponsor shall be disclosed in the SID .
a) Only to the extent of jurisdiction of the country Where principal activities of the sponsor is carried
out .
b) Only to the extent of Jurisdiction of the country where the headquarter of the sponsor is situated .
c) Only to the extent of top 10 monetary penalties during last 3 years .
d) All of the above .

26. The function and responsibility of the sponsor , AMC , trustee and custodian of the Mutual Fund
are listed in
a) Statement of Additional Information. (SAI)
b) Key information Memorandum (KIM)
c) Both SAI and KIM
d) Scheme information document

27. Which of the following is not the fundamental attributes of a Mutual Fund Scheme ?
a) Liquidity provision such as listing , repurchase , redemption.
b) Portfolio break up with minimum and maximum asset allocation.
c) Name and contact detail of the key personnel .
d) Type of the scheme open ended / close ended / Interval Scheme.

28. If an investor of an open ended mutual fund scheme holds 25% or more of the corps of the scheme ,
he should .
a) Exit from the scheme .
b) Rebalance his holding to bring it down below 25%.
c) Buy the balance of the corpus of the scheme th make up holding 100%
d) do nothing

29. Any change in SID should be .


a) Advertised in English news paper having nation wide circulation.
b) Advertised in a regional language news paper of the region where the head office of the mutual fund
is situated .
c) Mention in the website of the Mutual Fund .
d) All of the above .

30. In case of change in the fundamental attributes , the SID has to be updated
a) 3 month from the end of financial year .
b) 3 month from the end of next financial year .
c) 6 month from the end of financial year .
d) Immediately after the lapse of 30 days exit window given to investor to exit the scheme .

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D
C
D
D
A
A
B
C
A
B

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C
C
D
A
C
D
C
D
A
A

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A
D
D
C
D
A
C
B
D
D

Chapter 5. . Fund distribution & channel Management .


1. For Investor to correctly compare performance of different funds , SEBI advertising code includes
..
a) Uniform computation of yield .
b) Uniform presentation of yield .
c) Identical time period
d) All of the Above .

2. In display advertisement the statutory disclaimer Mutual fund is subject to market risk Should be

a) Displayed in back letter of at least 8 inches height in white background .


b) Covering 10% of the display are in white background .
c) Either of the above
d) Both of the above .
3. can only give basic information about Mutual fund registered with SEBI ..
a) Display advertisement
b) Tombstone advertisement
c) Audio Visual Advertisement
d) Audio Advertisement .
4. MF regulations prescribe .
a) The minimum commission of the distributor .
b) The maximum commission of the distributor .
c) The minimum and maximum commission of the distributor .
d) Neither the minimum nor the maximum commission to distributor .

5. In which of the following advertisement type risk factor of Mutual fund investment may not be
mentioned ?
a) Audio visual Advertisement
b) Display advertisement
c) Product launch Advertisement
d) Tombstone advertisement

6. According to SEBO advertisement code for fund that have been in existence for more than a year ,
annualized return has to be furnished for .
a) 1 yr , 3 yr , 5 yr and since launch .
b) 1 yr , 5 yr and since launch.
c) 1 yr , 3 yr and since launch
d) 1 yr, 3 yr and 5 yr .

7. Commission paid by the AMC to distributor consist of .


a) Upfront Commission
b) Trail Commission
c) Performance Commission
d) All of the above

8. A ranking entity , which is a subsidiary of the AMC of Mutual fund can provide ranking of AMC
scheme in performance advertisement ..
a) True
b) false

9. In performance advertisement , the return calculation should be made on ..


a) Absolute basis
b) Compounded annualized basis
c) Quarterly basis
d) Simple average basis .

10. .. of Mutual fund shall not be used other than launching or re launching of scheme ..
a) Product launch advertisement
b) Display advertisement
c) Audio Advertisement
d) Tombstone advertisement

11. To empanel with the AMC or to become agent of a distributor who is already empanelled with
AMC is compulsory in order to sell Mutual fund products .
a) True
b) False

12. An AMC of a Mutual fund is bound by the act of its distributor or agent
a) True
b) false

13. AMC pay a trail commission for the period the investment is held in the scheme ?
a) True
b) False

14. A mutual fund advisor cannot advertise or issue publicity material other than that provided by the
AMC or pre approved by the AMC .
a) True
b) False

15. SEBI regulate the minimum and maximum commission that the distributor can earn
a) True
b) false

16. Distributor cannot claim commission on their own investment .


a) True
b) False .

17. In performance advertisement the compounded annualized return shall be shown for .
a) The last three successive year .
b) The last year only .
c) The last 1 year , 2 year and since launch .
d) The last 1 year , 3 year and 5 year and since launch .

18. Trail commission takes into account valuation gained earned on units .
a) True
b) False .

19. Every AMC follow one specific commission structure and do not vary between schemes or plans ..
a) True
b) False

20. Distributor can claim upfront commission directly from the investor
a) True
b) False .

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D
C
B
D
D
A
B
B
B
A

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A
A
A
A
B
A
D
A
B
A

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Chapter 6. . Accounting valuation and Taxation


1. State Which of the following statement is true ?
a) Higher the appreciation in the investment portfolio , Higher would be the NAV.
b) Higher the expense higher would be NAV .
c) Higher the interest dividend and capital gain earned by the scheme higher would be the NAV.
d) Lower the appreciation in the investment portfolio lower would be NAV.

2. What is mark to market ?


a) Valuing investment at cost price .
b) Valuing investment at Market price .
c) Valuing investment at cost or market price which ever is lower .
d) Valuing investment at cost or market price whichever is higher .

3. Exit load applicable to big investors and small investor are


a) Same
b) Different
c) Not changed to either
d) None of the above .

4. Initial issue expense of Mutual fund scheme has to be borne by .


a) Investor
b) Sponsor
c) AMC
d) There cannot be any initial issue expense .

5. Which of the following recurring expense cannot be charged to the scheme ..


a) Service tax
b) Software development expense
c) Fee to trustee
d) Scheme advertising expenses .

6. A fund declare NAV does not include loads


a) True.
b) False

7. The maximum entry load that could be charged by a Mutual Fund scheme is ..
a) 6%
b) 7%
c) 2.25%
d) SEBI has banned the entry load .

8. The NAV of an equity fund 36. The fund charged 1% as exit load . If an investor wants to withdraw
Rs 100000 from the Fund , What is the Number of Units he will repurchase ?
a) 2750.2750
b) 2777.7778
c) 2690.9955
d) 2805.8361

9. All expense and income accrued up to valuation date shall be considered for valuation . Some minor
expenses needs not to be so accrued , provided their affect on the NAV is not more than
a) 2%
b) 1.5%
c) 0.5%
d) 1%

10. Short term capital gains tax arises if investment in Mutual fund units are held for a period of
a) Less than 3 years .
b) One year or more
c) Three year or more
d) Less than 1 year .

11. The basic rate of dividend distribution tax on debt funds (Other than liquid Fund ) payable for
investor other than individual/ HUF is .
a) 20%
b) 15%
c) 12.5%
d) 25%

12. TDS on the dividend distribution or repurchase proceed to non resident investor is payable at the
rate of
a) As prescribed in Income tax act where DTAA applicable at lower of IT Rate or DTAA rate.
b) As prescribed in income Tax
c) As prescribed in DTAA
d) No TDS on non resident investor .

13. .. for valuation of not traded / thinly traded securities when such securities represents
more than 5% of the net asset of a scheme ?
a) An independent valuer has to be appointed.
b) Valuation of peer group companies is to be considered.
c) Book value is to be considered .
d) Face value is to be considered .

14. For the purpose of valuing a Mutual fund portfolio , Equity share which are not traded / thinly
traded are valued on the basis of ..
a) Earning per share .
b) Book value
c) Valuation of peer group companies.
d) All of the above .

15. A fund`s NAV is affected by


a) Purchase and sale of investment security
b) Valuation of all investment security held.
c) Units sold or redeemed.
d) All of the above.

16. NAV for is to be calculated up to 4 decimal place .


a) Equity and balanced Fund .
b) Index fund
c) Liquid Fund
d) Index fund , Liquid Fund and other debt fund .

17. NAV for index funds liquid funds and other debt funds is to be calculated up to
decimal point .
a) Maximum 4
b) At least 2
c) Maximum 2
d) At least 4

18. Annual report has to be published within . Months of accounting date .


a) Four
b) Six
c) Three
d) Nine

19. Mutual Fund scheme are permitted to keep repurchase price lower than the NAV ?
a) True
b) False

20. A fund of fund do not charge recurring expense more than .. of the net average asset of
the scheme ?
a) 2%
b) 1.5%
c) .75%
d) 3%

21. As per SEBI guidelines dividends can be paid


a) Out of accrued Profit .
b) Out of free reserve.
c) Out of distributable reserve.
d) Irrespective of Profit or Loss.

22. The maximum load that a fund can charge is determined by the
a) AMC
b) SEBI
c) AMFI
d) distribution agent based n demand for the fund .

23. The exit load charged to investor in excess of 1% should be ..


a) Repaid to investor on whom it is charged .
b) Transferred to Investor education fund .
c) Utilized by AMC to meet selling expense.
d) Credited back to the scheme .

24. A liquid fund has average weekly net asset of Rs 800 Cr . As per SEBI regulation the AMC can
charge the fund with management fee upto
a) 2.25 Cr
b) 2 Cr
c) 2.5 Cr
d) NIL.
Wrong answer .

25. An index scheme cannot charge recurring expense more than of the net average assets of
the scheme .
a) 2.25%
b) 2%
c) 1.75%
d) 1.5%

1
2
3
4
5
6
7
8
9
10

B
B
A
C
B
A
D
D
D
D

11
12
13
14
15
16
17
18
19
20

A
A
A
D
D
D
A
B
A
C

21
22
23
24
25
26
27
28
29
30

C
B
D
D
D

Investor Service Chapter 7 .


1. PAN card is not compulsory for ..
a) Micro SIP
b) STP
c) Minor
d) Investment through Power of attorney holder .

2. NRI/PIO Mutual fund application on repatriable basis should be by cheque on ..


a) Reserve Bank of India
b) NRE Account
c) NRO account
d) SEBI.

3. The applicable NAV for a sale transaction of liquid fund where application has been received within
12 noon would be assuming funds available for utilization on the same day ..
a) Closing NAV of the day preceding next Business day .
b) Closing NAV of the day preceding the day on which funds are available for utilization.
c) Closing NAV of the day immediately preceding the date of application.
d) Closing NAV of day application is received .

4. The applicable NAV for a sale transaction of equity fund accounting to Rs 1 Cr or less where
application has been received after 3 PM with local cheque / DD would be
a) Closing NAV of day funds are available for utilization.
b) Closing NAV of day preceding next Business day .
c) Closing NAV of next Business day .
d) Closing NAV of day application is received .
5. Option available to Mutual Fund Investor is / are .
a) Dividend Pay out option.
b) Dividend reinvestment option.
c) Growth Option
d) All of the above .

6. Which of the following is true of an automatic reinvestment or a growth plan.?


a) The Growth plan allow for the automatic reinvestment of all income and capital gain.
b) Automatic reinvestment allows for accumulation of additional units of the funds .
c) The major benefit of automatic reinvestment is compounding .
d) An investor who subscribe to the growth option under a scheme can later change to a dividend
option .
e) all of these.
7. Debt fund investor who is in need of cash at regular interval is better off by choosing .
a) Daily Dividend payout plan.
b) Monthly dividend payout plan.
c) Systematic investment plan.
d) Systematic Withdrawal plan.

8. NAv of a scheme helps in deciding an investor whether he should go for ..


a) Automatic reinvestment plan.
b) Systematic withdrawal plan.
c) Systematic Transfer plan.
d) None of these .

9. What is difference between SIP and VAP ?


a) SIP is systematic investment plan and VAP is value averaging plan.
b) No difference .
c) VAP is modified version of SIP that allow the investor flexibility with respect to amount and
frequency of investment .
d) SIP is systematic investment and VAP is withdrawal plan.

10. . Option enables investor to give standing instruction to the fund to initiate a
transaction when a condition is met ?
a) ECS
b) SIP
c) Trigger
d) SWP

11. Which of the following measure are not taken by SEBI for protecting investor of Mutual Fund ?
a) Mandating minimum level of diversification for Mutual fund .
b) Ensuing that the funds are not used to favour a few companies .
c) Tracking the security that each fund has invested in
d) Ensuring that the funds are invested in approved securities only .

12. Foreign entities can invest in Mutual fund of India Through ..route ?
a) OCB route.
b) FII
c) Either of the above
d) None of the above .

13. In case of death of unit holder , the units get transferred to the nominee automatically without
calling for any evidence ?
a) True
b) False

14. Person in high tax bracket are better off in choosing dividend payout option than those in lower tax
bracket for debt funds ?
a) True
b) False

15. Document available to investor for inspection do not include ..


a) Memorandum and articles of association of the AMC.
b) Consent of auditor and legal advisor .
c) Investment management report .
d) Report based on which actual investment are made .

16. In a dividend re investment option of a mutual fund scheme , new units are allowed to investor at

a) Ex dividend NAV
b) Cum dividend NAV
c) NAV prevailing prior to dividend declaration.
d) NAV prevailing on the date of declaration of dividend .

17. A systematic withdrawal plan is ideal for ..


a) Investor with growth as the main investment objective .
b) Investor who wish to benefit from market fluctuation.
c) Investor who prefer a regular income stream.
d) Investor who are not sure about themselves .

18. The applicable NAV for a sale transaction of equity fund amounting to Rs 1 Cr or above would be
.
a) Closing NAV of day funds are available for utilization .
b) Closing NAV of day preceding next Business day .
c) Closing NAV of next Business day .
d) Closing NAV of the day .

19. A scheme Policy on dividend and distribution .


a) is decided by the fund manager as per the market outlook.
b) can be changed to suit the requirement of the AMC.
c) Need not be consistent .
d) Should be disclosed at the time of initial launch.

20. Which of the following is true of systematic withdrawal plan (SWP).


a) It allows investor to make systematic withdrawal from the fund .
b) It is suitable for investor seeking regular Income .
c) SWP is similar to Monthly Income Plan.
d) Only 1 & 2 .

21. The need for regular income is better met through a systematic withdrawal plan than dividend
payout option ?
a) True
b) False .

22. A switch transaction is not a sale transaction under the income tax regulation ?
a) True
b) False

23. In option of a Mutual fund scheme the NAv capture the full value of Portfolio gains ?
a) Dividend
b) Dividend re investment
c) Growth
d) Bonus

24. The NAv of a Mutual fund scheme post dividend declaration but prior to its payment is
a) Ex dividend NAV
b) Cum dividend NAV
c) Ex declaration NAv
d) Cum declaration NAV

25. The NAv of a Mutual fund scheme post dividend payment is ..


a) Ex dividend NAv
b) Cum dividend NAv
c) Ex declaration NAV
d) Cum declaration NAv

1
2
3
4
5
6
7
8
9
10

A
B
C
C
D
E
D
D
C
C

11
12
13
14
15
16
17
18
19
20

C
B
B
A
D
A
C
A
D
D

21
22
23
24
25
26
27
28
29
30

A
B
C
B
A

Chapter 8 - Return risk and Performance of Fund .


1. The historical price is calculated by using the formula ..
a) Average earning of last 5 years / No of ordinary Share Outstanding .
b) market price per share / No of ordinary share outstanding .
c) Total earning / No of ordinary share outstanding .
d) Net worth / No of ordinary share outstanding .

2. . Stock tends to grow faster than the economy and in correction phase falls faster too
a) Volatile
b) Emerging
c) Growth
d) Value .

3. The Bottom up approach of Portfolio building is also called ..


a) Value investing
b) Growth investing
c) Stock Picking
d) Sector selection.

4. Money market security have a maturity period of ..


a) 3 years
b) 6 month
c) Less than a year.
d) less than a Month .
5. The difference between the yield on gilt and the yield on a non Government debt security is called its
..
a) Premium
b) Yield Spread
c) Coupon rate
d) Risk premium .

6. Simple total return takes into account the reinvestment of the dividend ..
a) True
b) False
7. A growth Stock refer to a share of a company whose earning are projected to grow at the normal
market rates
a) True
b) False

8. The SEBI prescribed means of measuring return is ..


a) Simple return
b) Annualized return
c) Compounded return
d) Compounded annual Growth rate .

9. The real estate Price shoots up when .


a) The economy Improves .
b) The infrastructure development takes place .
c) The interest Rate falls .
d) All of the above .

10. .. are applicable fro debt scheme ?


a) Modified Duration
b) Weighted average maturity.
c) Yield Spread
d) All of the above .

11. When expecting a fall in the price , fund manager can reduce the loss in portfolio value by ..
a) Speculating
b) Abstaining from market for some days .
c) using equity derivative .
d) Selling the entire holding .

12. Non systematic risk in an equity portfolio can be ..


a) Managed by adopting good stock picking technique .
b) Managed by diversification.
c) Managed by good fund management
d) Managed by investing in bluechip companies only .

13. Volatility in a Mutual fund portfolio is caused by .


a) Investment in blue chip Stock.
b) Idle cash lying with the fund .
c) Investment in high rated bonds .
d) None of these .

14. Which of the following is not true ?


a) Standard deviation measure the fluctuation of a fund return around a mean level .
b) Standard deviation is relevant for both debt and equity fund .
c) R square measures how much of a fund fluctuation is attributable to movement in the overall market
d) Beta of less than one mean that the fund is more volatile than the market .

15. Sharpe ratio of a equity scheme can be compared with the Sharpe ratio of debt Fund ?
a) True
b) false

16. An investor buy a mutual fund units at 24.65 . he subsequently receives a dividend of 13.25% ,
Which he reinvest in fund at the prevailing NAV of Rs 24.35. At the end of the year NAv of the fund
is Rs 25.75. What is the rate of return to the investor ?
a) 11.13%
b) 15.67%
c) 13.79%
d) 10.155

17. Which of the following is the disadvantage of standard deviation as a measure of Risk?
a) Standard deviation measure total risk , not just market risk.
b) It is based on past return , Which does not necessarily indicate further performance c) It is an
independent number .
d) All type of funds can be measured with standard deviation .
18. Scheme return and investor return from the scheme may differ due to ..
a) Loads
b) taxes
c) Both of the above .
d) Never ever .

19. Alpha measures the


a) Scheme return
b) Scheme optimal return .
c) Risk premium
d) Funds manager performance .

20. helps in assessing under performance or out performance .


a) Beta
b) CAGR
c) Benchmark
d) Alpha

21. What would be suitable benchmark to evaluate a close ended debt fund ?
a) BSE Sensex.
b) I sec Si bex
c) Crisil Composite Bond Index.
d) S & P CNX Nifty.

22. MIBOR is based on ..


a) International Money Market
b) Government Security Market
c) Short Term Money market
d) Corporate Bond market .
23. Higher the Sharpe Ratio , better is the scheme performance .
a) True
b) False

24. The Risk of a Scheme NAV moving up or down on the basis of capital market movement is
a) An investment attribute
b) Scheme specific risk.
c) Standard Risk
d) Credit Risk .

25. Benchmark of a Mutual fund scheme can be changed by ..


a) The sponsors .
b) SEBI
c) The AMC in consultation with the trustee.
d) Trustee.

26. State Which of the following statement is true ?


a) Interest rate sensitivity of a debt security is lower if its maturity period is higher .
b) Lower modified duration implies higher interest sensitive risk in a debt portfolio .
c) Systematic risk of an equity portfolio is measured by its modified duration.
d) Higher the weighted the average maturity of a debt security is , higher would be its interest
sensitivity .

27. In a floater , when the market yield goes up , the issuer


a) Redeems the security
b) Pays lower interest .
c) Pays higher Interest .
d) Incur losses .

28. State Which of the following statement is false ?


a) In a floater , When the market yield goes up , the issuer pays higher interest.
b) In a floater , when the market yield goes down , the issuer pays lower interest.
c) A debt security With longer maturity fluctuate more than Short tenor security .
d) The value of floating rate security fluctuate more than fixed rate security.

29. State Which of the following statement is true ?


a) There is a direct relationship between yield and value of debt security .
b) A debt security of shorter maturity would fluctuate a lot more as compared to longer tenor maturity .
c) Credit risk and yield on debt security is inversely related .
d) Higher the credit risk higher would be the yield spread .

30. For choosing an appropriate benchmark to measure a scheme performance , all of the following are
required .
a) The composition and size of the portfolio .
b) The investment objectivity
c) Historical data of fund performance .
d) The nature of investment .

31. Which of the following statement is an adequate description of reality ?


a) When compared to gilt funds , securities in diversified debt fund have higher risk of default.
b) Growth and risk are associated with equity fund .
c) Long term debt fund have higher NAV fluctuation when compared to money market funds .
d) All these statement describe reality adequately .

32. If a Bond cannot be sold at a price near its value , it means that investment in this bond has ..
a) High liquidity risk
b) High default risk
c) Low liquidity risk
d) Inflation risk.

33. Mutual fund are permitted to use derivative for


a) Leveraging
b) Hedging against risk.
c) Re balancing of portfolio.
d) both b and c .

1
2
3
4
5
6
7
8
9
10
11

D
D
D
D
B
B
B
D
D
D
C

12
13
14
15
16
17
18
19
20
21
22

B
D
D
B
D
B
C
D
C
C
C

23
24
25
26
27
28
29
30
31
32
33

A
C
C
D
C
D
D
C
D
B
D

Chapter 9 - Scheme Selection .


1) The NAv of a close ended scheme are usually quoted . At the stock exchange .
a) At a premium to NAV
b) At a discount to NAV
c) At par
d) Either of the above .
2. Passive funds are expected to offer return .
a) Above the market return .
b) in line with the market
c) below the market return .
d) As per Government bond yield .
3. Portfolio turnover ratio is
a) Total sales / Net Assets
b) Total Purchase / Net assets .
c) Total Purchase and Sales/ Net Assets .
d) Total Purchase and Sales / Average net asset

4. A High portfolio turnover in an equity fund means .


a) The fund is very active in market .
b) Transaction cost are high .
c) The fund may be quite risky .
d) All of the above .

5. A better gold ETF is the one which


a) Gives decent return consistently .
b) is managed by reputed AMCs.
c) Offer facility of converting the Gold ETF into Physical ETF.
d) Tracks the Gold Price better .
6. A portfolio turnover of 200% implies that an average security stays in a portfolio for .
a) 6 Month
b) 12 Month
c) 48 Month
d) 36 Month
7. A debt fund investor should give more attention to . Before selecting a debt scheme ?
a) Fund house reputation and track record .
b) Portfolio Composition.
c) Scheme Performance
d) Weighted average maturity .
8. Market Risk can be effectively managed by .
a) Investing with Short term horizon .
b) Investing in debt fund .
c) Investing in price Share .
d) Investing regularly with a long term perspective to smoothen out the effect of volatility in market
Price .

9. Investor looking for regular income from equity scheme are better off in investing in dividend
payout plan than investing in growth plan with systematic withdrawal plan , due to .
a) Cumbersome and time taken process of repurchase .
b) Chance of incurring capital Loss is more for SWP.
c) the money don`t grow with SWP.
d) Tax effect , as dividend is tax free whereas the redemption from equity scheme attracts STT as well
capital gains .

10. A close ended Scheme is quoted on the Stock exchange at discount to its NAv when ..
a) The market Are bearish.
b) Investor perceive that the fund will be unable to maintain the NAv
c) the asset of the fund are undervalued .
d) None of the above .

11. The maximum exit load that could be charged to investor as per SEBI regulation is
a) 5%
b) 1%
c) 7%
d) 2%

12. Arbitrage fund is suitable for .


a) Limiting the risk associated with the equity market .
b) Getting decent return like debt fund .
c) Getting tax benefit like equity funds .
d) All of the above .

13. A high Portfolio turnover for a fund indicates .


a) That the fund is active .
b) Higher transaction cost .
c) Both of the above .
d) None of the above .

14. Debt fund with long term investment carry higher risk of capital loss .
a) True
b) false

15. An investor buys units in a fund that has given excellent return in the past , but his expectation are
not met . as the fund does not perform well this year , the Investor can ,,,,
a) Sue the AMc
b) Sue the trustee
c) Sue the agent/ distributor
d) None of the above .

16. Portfolio turnover rate refer to ..


a) Ratio of purchase or sales to the net asset of the funds .
b) ratio of total purchase and sales to the net asset of the funds .
c) Ratio of sales or purchase ( Which ever is lower ) to net assets of the funds .
d) Ratio of sales or purchase ( which ever is higher ) to net assets of the funds .

1
2
3
4
5
6
7
8
9
10

B
B
D
D
D
A
D
D
D
B

11
12
13
14
15
16

C
D
C
A
D
B

Chapter 10 - Selecting the right Investment Product.


1) The New Pension scheme is managed by
a) One
b) Six
c) Three
d) Four

2. While choosing between a Bank deposit and a debt income fund , the investor must consider ?
a) Credit rating of a bank.
b) Quality of a Mutual Fund scheme .
c) His investment objectivity and risk appetite.
d) All of these .

3. The biggest advantage of investment in gold is .


a) High Return
b) High appreciation in value .
c) Low Purchase price
d) Hedge against inflation .

4. Gold and real estate are attractive investment option only in high inflation economies ?
a) True
b) False

5. Thee new pension scheme do not offer equity investment product ?


a) True
b) false

6. Gold feature are considered to be an alternative and superior route of investing in gold then Gold
ETF .
a) True
b) False

1
2

B
D

3
4

D
A

5
6

B
B

Chapter 11 - helping Investor with Financial Planning .


1. Which of the following will not require financial planning ?
a) A 40 year old doctor with substantial saving .
b) A retiree Who is currently getting an income of 4,000 but would want Rs 10,000 a month .
c) An old person wanting to transfer all wealth to his grand children.
d) A young professional aged 26 year.

2. Investor in stage prefer long term risky investment .


a) Transition
b) Accumulation
c) Distribution
d) Reaping

3. A 55 year old investor Who is employed and earning well , can be said to be in
a) Accumulation phase
b) Transition stage
c) Distribution stage
d) Inter generational wealth transfer stage .

4. An investor who gets sudden wealth should ideally invest the sum immediately into ..
a) Stock exchange
b) Bank fixed deposit
c) diversified equity scheme of Mutual Fund .
d) Liquid Scheme of Mutual Fund .

5. As per wealth cycle guide , during the accumulation stage .


a) The client looks to build wealth.
b) The client goals are approaching .
c) Client cashes out .
d) Client feel the need to take care of the next generation.

6. Person needs to get into the habit of saving from Young unmarried stage itself
a) True
b) false

7. if an investor keeps investing a fixed amount at regular interval the average cost of his purchase
will always be less than if he makes investment at irregular periods
a) true
b) false
wrong choice .

8. Which of the following represents the transition phase ?


a) Investor has no need for investment income .
b) Investor has long term horizon.
c) Investor cannot take risk .
d) Investor financial goal are approaching .

9. Accumulation Wealth cycle approach is best for following class of investor ?


a) Retirement stage
b) Married with 2 Kids.
c) About to approach retirement
d) Young married .

10. Financial Planning involves .


a) Studying financial management
b) Managing the risk of investing .
c) Financing the client`s investments.
d) None of the above .

11. Long term investment commitment should be started from .


a) Transition
b) accumulation
c) Reaping
d) Inter generational transfer .

12. To ensure that the right amount of money is available at the right time to meet the various financial
goal of the investor , one should make appropriate ..
a) saving
b) Systematic investment plan.
c) Lump Sum investment
d) Financial Planning .

13. A comprehensive financial plan set out needs no further review or monitoring as it is a one time
exercise .
a) True
b) False .

14. Which of the following strategies is an example of the combined approach of Rupee cost and value
averaging .
a) When Investor sets a target value for his investment in an equity fund .
b) When investor invest a fixed sum each month in a liquid fund .
c) When the investor invest regularly in liquid fund .
d) When the investor invest regularly in liquid fund , sets a target for an equity fund , then invest more
in equity fund , if its value decline and book profit when its value exceeds the target value .

15. Asset Allocation for a financial planner means .


a) Determining how much is to be invested in each security .
b) How much investment should be distributed between different asset classes.
c) How the investment should be distributed between different Mutual funds having the same risk
profile .
d) How a fund a manger distribute his investment within a scheme .

1
2
3
4
5
6
7
8
9
10

C
B
B
D
A
A
A
D
D
B

11
12
13
14
15

B
D
B
D
B

Chapter 12 - Recommendation Model Portfolio .


1. Risk appetite of an investor can be understood through .
a) Risk analysis
b) Evaluation of financial status .
c) Risk profiling
d) Evaluation of Socio Economic condition.

2. A very high proportion of investment in all type of equity fund is advisable for investors .
a) In distribution phase .
b) In accumulation phase .
c) In transition Phase .
d) Who are wealth preserving affluent individual .

3. Retired investor should ..


a) Not draw down on their capital.
b) Not invest in security which bear risk of capital erosion.
c) Continue holding a major portion of their holding in equity growth funds.
d) Never invest in equity .

Answer

1
c

2
b

3
B