amfi questions[1]

8/3/2019 AMFI Questions[1]

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Practice Questions for AMFI Test

1. A close-ended mutual fund has afixed :

a. NAV b. fund sizec. rate of returnd. number of distributors

2. The maximum load that a fund cancharge is determined by the :

a. AMC b. SEBI

c. AMFId. distribution agents based on

demand for the fund

3. The amount required to buy 100units of a scheme having an entry loadof 1.5% and NAV of Rs.20 is :

a. Rs.2000 b. Rs.2015

c. Rs.1985d. Rs.2030

4. A gilt fund is a special type of fundthat invests :

a. in very high quality equity only b. in instruments issued by

companies with a sound track record

c. in short-term securities

d. in government securities only

5. Of the following fund types, thehighest risk is associated with

a. Balanced Funds b. Gilt Fundsc. Equity Growth Funds

d. Debt Funds

6. The NAV of a mutual fund :a. is always constant

b. keeps going up at a steady ratec. fluctuates with market price

movementsd. cannot go down at all

7. An open-ended mutual fund is onethat has :

a. an option to invest in any kindof security

b. units available for sale andrepurchase at all times

c. an upper limit on its NAVd. a fixed fund size

8. An investor in a close-endedmutual fund can get his/her money

back by selling his/her units:a. back to the fund b. to a special trust at NAVc. on a stock exchange where the

fund is listedd. to the agent through which

he/she subscribed to the unitsof the fund

9. The "load" charged to an investor

in a mutual fund isa. entry fee

b. cost of the paper on which theunit certificates are printed

c. the fee the agent charges to theinvestor


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d. the expenses incurred by fundmanagers for marketing amutual fund scheme

10. A mutual fund is owned bya. the Govt. of India

b. SEBIc. all its investorsd. AMFI

11. Units from an open-ended mutualfund are bought

a. on a stock exchange b. from the fund itself

c. from AMFId. from a stock broker

12. A mutual fund is nota. owned jointly by all investors

b. a company that managesinvestment portfolios of highnetworth individuals

c. a pool of funds used to purchase securities on behalf of investors

d. a collective investment vehicle

13. "Load" cannot be recovereda. at the time of the investor's

entry into the fund b. as a fixed amount each year c. at the time the investor exits the

fund

d. from the fund's distributionagent

14. The most important advantage of a money market mutual fund is

a. quick capital appreciation b. high regular income

c. safety of principald. no loads

15. Some close-ended funds arequoted at a discount to their NAV

becausea. of high expense ratios

b. investors do not expect thecurrent NAV to be sustained infuture

c. the repurchase price fixed bythe fund in lower than the NAV

d. of the inherent risk involved ininvesting in such type of funds

16. The NAV of each scheme should be updated on AMFI's website

a. every quarter b. every monthc. every hour d. every day

17. Debt funds targeta. low risk and stable income

b. protection of principalc. high growth with risk d. long term capital appreciation

18. In which of the following do debtfunds not invest

a. government debt instruments b. corporate paper c. financial institutions' bonds

d. equity of private companies

19. Which of the following risks donot affect a debt fund

a. default by issuer on payment of interest or principal


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b. price fluctuations of the debtsecurities

c. share price movementsd. interest volatility

20. Assured return or guaranteedmonthly income plans are essentially

a. Hybrid funds b. Growth Fundsc. Debt/Income fundsd. Sector funds

21. A Fixed Term Plan Series isa. an open-ended fund

b. a close-ended fundc. a fixed term bank depositd. a fixed term corporate bond

22. NAVs of equity funds are notaffected by

a. Stock market movements b. Events affecting the

industry/sector in which thefund has invested Happeningsin the companies in which thefund has invested

c. real estate prices

23. The greatest potential for growthin capital is offered by

a. debt funds b. gilt fundsc. growth funds

d. balanced funds

24. A Systematic Withdrawal Plan,allows investors to get back the

principal amounts invested in additionto the income on investment

a. True

b. False

25. Which of the following is untrueof an automatic reinvestment plan?

a. The plan allows for automaticreinvestment of all income andcapital gains

b. Automatic reinvestment allowsfor accumulation of additionalunits of the fund

c. The major benefit of automaticreinvestment is compounding

d. The benefit of automaticreinvestment is often lost on

account of the heavy loadcharge on the reinvestment

26. Constraints imposed by mostfunds on check writing are:

a. Account balance should not fall below the minimum capitalrequired

b. Checks issued must be for atleast the minimum amountspecified

c. Number of checks per monthmust not exceed a specifiednumber

d. Both a & b above

27. The performance of a fund islargely measured by the success of

a. the marketing function

b. the operations functionc. the portfolio market functiond. none of the above

28. Generally invest ina. unlisted

b. market-traded


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c. thinly tradedd. privately placed

29. Which of the following is not anequity instrument

a. preference shares b. equity warrantsc. ordinary debenturesd. convertible debentures

30. The drawback of an ordinaryshare is

A. possibility of capitalappreciation

B. ownership privilege of thecompany

C. guaranteed dividend incomeD. no guaranteed income or

security

31. An owner of preference shares isgiven which of the following rights

a. voting rights b. fixed dividend income from

post-tax profitsc. voting rights and unlimited

dividend incomed. no guaranteed rights

32. Market capitalisation of acompany is calculated by multiplyingthe number of outstanding shares by

a. R.10

b. Face value of each sharec. Current market value of each

shared. dividend yield

33. The Price/Earnings (P/E) Ratio isan important measure of a company's

anticipated performance. It iscalculated using:

a. Market price and dividend b. Market price and earning per

sharec. Market capitalisation and

dividendd. Market price and face value

34. A company whose earnings arestrongly related to the state of economy is known as

a. Economy stocks b. Cyclical Stocks

c. Value Stocksd. Growth stocks

35. A Growth stock refers to shares of a company whose earnings are

projected to grow at the normalmarket rates

a. True b. False

36. Which of the following isgenerally true for a growth stock

a. steady capita appreciation andsteady dividends yields

b. high capital appreciation andhigh dividend yields

c. high capital appreciation butlow dividend yields

d. steady capital appreciation but

high dividend yields

37. Shares of companies with largecapital market capitalisation

a. have greater growth potential b. are more liquidc. are not available


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d. none of the above

38. Dividend yield for a stock isa. dividend per share

b. dividend per face valuec. dividend per share to current

market priced. none of the above

39. Value stocksa. have high current dividend

yield b. yield high growth in earningsc. are currently under valued

d. none of the above

40. A better performance than thereturn on index is given by

a. passive fund manager b. an active fund manager c. all fund managersd. non fund manager

41. A change in key personnelespecially the fund manager of anAMC does not necessitate a revisionof the offer document

a. True b. False

42. If fresh litigation cases or adjudication proceedings are referred

by SEBI against the fund sponsors or

a company associated with thesponsors, then the offer documentneeds to be revised

a. True b. False

43. The offer document need not be

revised if the management or thecontrolling interest in the AMCchange

a. True b. False

44. An AMC cannot explain adversevariations between expense estimatesfor the scheme on offer and actualexpenses for past schemes in

a. financial newspapers b. business channels on TVc. the offer documentd. AMFI newsletter

45. Information on estimatedexpenses to be incurred by a schemeis not found in the offer document,

but in brochures of the funda. True

b. False

46. When comparing a fund's performance with that of its peer group, the following cannot becompared

a. Two debt funds with 5 year maturities

b. A broad-based equity fund withan IT Sector Fund

c. A bond fund with a bondd. A government securities fund

with a government security

47. An AMC must explain adversevariation between expense estimatesfor the scheme on offer and actual

a. expenses for past schemes in b. financial newspapersc. business channels on TV


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d. offer documente. AMFI Newsletter

48. Information on estimatedexpenses to be incurred by a schemeis not found in the offer document,

but in brochures of the funda. True

b. False49. The offer document and keyinformation memorandum containfinancial information for

a. all schemes of all mutual fundsin the capital market

b. all schemes launched by the

particular fund during the last 3fiscal years

c. none of the schemesd. companies in which investment

is proposed50. The functions and responsibilitiesof the sponsor, AMC, trustees andcustodian of the mutual fund are listedin

a. offer document only b. key information memorandumc. both offer document and key

information memorandumd. none of the above

51. Information about trusteeship feesis included in the offer document but

not in the key informationmemorandum

e. True

f. False

52. The following information aboutthe constitution of the mutual fund isfound in both the offer document andkey information memorandum

e. activities of the sponsor

f. summary of trust deed provisions

g. name and addresses of the board of trustees

h. all of the above

53. The investment objectives of thefund an investor selects for investment

e. are of no relevancef. should be the same as his own

investment objectivesg. change with market movementsh. change with change in the

AMC's key personnel

54. The investment policies listed outin the offer document of a fund do notinclude

e. the type of securities in whichthe scheme will invest

principallyf. asset allocation patterng. policy of diversificationh. the specific securities in which

the fund will invest

55. If a scheme's name implies that itwill invest primarily in a particular type of security or in certainindustry/sector, then it should investatleast the following percentage of itstotal assets in the indicated type of

security/industry/sector e. 100%f. 80%g. 65%h. 40%

56. For assured return schemes,


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information about the guarantor's networth which justifies the guarantor'sability to meet any shortfalls in thereturns assured under the scheme can

be found ine. the offer documentf. the key information

memorandumg. both (a) and (b)h. none of the above

57. The names and background of key personnel of the AMC

e. need not be disclosed to

investorsf. are of no relevance as they may

changeg. are disclosed in the offer

documenth. are declared in newspaper

advertisements

58. The minimum amount to beraised, and the maximum targetamount

e. are not known before the offer is concluded

f. can be decided based oninvestor response to the offer

g. are defined as per SEBIRegulations before the offer ismade

h. need not be disclosed in the

offer document

59. The circumstances for refund of investment in the initial offer and

period within which refund must becarried out are not specified in the

offer document, but only on theapplication

e. Truef. False

60. Offer related information requiredto be listed in the offer document andkey information memorandumincludes

e. dates of opening, closing,earliest closing, allotment anddespatch of certificates

f. procedure for transfer andtransmission of units

g. both the aboveh. neither of the above

61. In the offer document, funds arerequired to make disclosuressummarising associate transactionsand their impact on the performanceof the scheme for the last

e. one fiscal year f. 2 fiscal yearsg. 3 fiscal yearsh. 5 fiscal years

62. The circumstances under which ascheme shall be wound up are to bedescribed in the offer document at thetime of the initial launch of thescheme itself

e. True

f. False

63. The following do not form a partof the investment procedure describedin an offer document


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e. various plans under the scheme(e.g. dividend reinvestment

plant)f. minimum initial (and

subsequent) investmentg. details of who can investh. details of other competing

mutual funds

64. A scheme's policy on dividendsand distribution

e. is decided by the fund manager as per is market outlook

f. can be changed to suit the

requirements of the AMCg. need not be consistenth. should be disclosed at the time

of initial launch

65. SEBI restricts mutual fundinvestments in companies forming

part of the same group as the AMC.This is:

e. not truef. in the interest of investor

protectiong. applied only to some mutual

funds, not allh. not favourable to investors at

all

66. A disclosure should be made inthe offer document if an AMC has

invested more than the following percentage of its net assets in groupcompanies

e. 50%f. 40%g. 25%h. 10%

67. Mutual funds are allowed to borrow

e. freely to meet their requirements

f. for investment purposesg. only to meet redemption

demandsh. not allowed at all

68. As a part of borrowing policy, thefollowing need not be disclosed in anoffer document

e. purpose and circumstances of

borrowingf. regulatory limits on borrowingg. potential risk to AMC and unit-

holdersh. names of lenders

69. Valuation norms for non-tradedsecurities should be disclosed

e. at the end of every financialyear

f. every quarter g. in the offer document at the

time of launch of the schemeh. should not be disclosed, being

confidential information

70. Procedure for redemption or repurchase need not

e. be described in the offer

documentf. include how redemption or

repurchase price of units would be determined

g. include names of centres whereredemption can be effected


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h. indicate the redemption or repurchase price as at the endof the current fiscal year

71. The fund need not describe itsaccounting policies in the offer document as these are of no use to aninvestor

e. Truef. False

72. The accounting policies of a fundshould be in accordance with

d. GAAP

e. SEBI regulationsf. ICAI Guidelinesg. American GAAP

73. Tax treatment of investments doesnot

e. form a section in the offer document

f. describe the tax elementsapplicable to investors whoinvest in the fund

g. form a section in the keyinformation memorandum

h. offer tax advice to investors

74. Documents available to investorsfor inspection do not include

c. Memorandum and Articles of Association of AMC

d. consent of auditors and legaladvisors

e. investment management reportsf. reports based on which actual

investments are made

75. Investors' rights under a schemeare

e. uniform for all schemes of allfunds

f. not definedg. listed in the offer documenth. available with stock exchanges

76. The offer document for a schemeshould describe how the NAV of thescheme is to be computed

e. Truef. False

77. An offer document contains anAMC's investor grievance's historyfor the past

e. one fiscal year f. 2 fiscal yearsg. 3 fiscal yearsh. six months

78. Any pending cases or penaltieslevied on the sponsors or AMCshould be disclosed in the offer document

e. Truef. False

79. Who among the following are noteligible to invest in MF

e. Indian Companies

f. Banksg. Non Banking Finance

Companiesh. Foreign Citizens

80. NRIs are eligible to invest inMutual Funds


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a. True b. False

81. The most important link betweenMutual Fund and Investors is

e. Governmentf. SEBIg. Fund distributorsh. AMFI

82. Are Overseas Corporate Bodiesallowed to invest in Mutual Funds

e. Nof. Yes

g. if Ministry of Finance approvesh. if AMFI approves

83. Who among the following are notInstitutional Investors

e. Banksf. Resident Individualsg. Provident Fundsh. Non Banking Finance

Companies

84. It is compulsory to use fundagents/intermediaries for investingMFs

e. Truef. False

85. Generally, which category of investors need advice for Investing in

Mutual Fundsc. Non Banking Finance

Companiesd. Insurance Companiese. Foreign Institutional Investorsf. Individuals

86. Most eligible investors of MutualFunds can broadly be grouped intoeither individual or institutionalinvestors

e. Truef. False

87. Commission rates or loadsapplicable to big investors and smallinvestors are

e. samef. differentg. not charges to either

h. none of the above

88. What document Mutual Funddistributors need to refer for findingout eligible category of investors in a

particular Mutual Fund Schemee. SEBI Regulations Manualf. AMFI bookletg. Offer documenth. RBI Guidelines

89. As per AMFI figures, how manyagents approximately, are there inIndia selling Mutual Funds

e. 50000f. 100000g. 75000h. 150000

90. Which Mutual Fund has majorityof the agents selling its Mutual Fundunits in India

e. LIC Mutual Fundf. UTI Mutual Fundg. SBI Mutual Fundh. None of the above


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91. Mutual Fund agents/distributorsare not allowed to sell FinancialProducts other than Mutual Funds

c. Trued. False

92. Are Mutual Fundagents/distributors in India required to

pass any examination to qualify to sellMutual Fund Units

c. Yes, a test conducted by AMFId. Yes, a test conducted by SEBIe. No

f. a Post Graduate universitycourse

93. How many major distributor Companies are there in India sellingMutual Fund units

c. approximately 9d. approximately 11e. approximately 10f. approximately 25

94. The offer document is not a legaldocument

e. Truef. False

95. A copy of all changes in the offer document has to be filed with SEBI

c. True

d. False

96. The legal responsibility for theaccuracy of the statements made inthe offer document lies with

e. SEBIf. the AMC

g. AMFIh. the Company Law Board

97. Though the offer document of ascheme is prepared as per SEBIRegulations and is filed with SEBI,SEBI does not certify the accuracy or adequacy of the document

f. Trueg. False

98. The following need not becovered in a Key InformationMemorandum

c. Risk Factorsd. Opening, Closing and earliest

Closing Date of the offer e. Disclaimer Clausef. Functions and responsibilities

of the sponsor, trustees, AMCand Custodian responsibilities

99. The front page of an offer document need not cover

e. opening, closing and earliestclosing date of the offer

f. disclaimer clauseg. legal and regulator complianceh. price of units

100. A "glossary" of Defined Termsmust be included in the offer document

e. Truef. False

101. Standard risk factors are notg. market drivenh. common to all schemes


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i. of relevance to novice investors j. new to a regular investor

102. The risk of a scheme's NAVmoving up or down on the basis of capital market movements is astandard risk factor

i. True j. False

103. Past performance of asponsor/AMC mutual fund is notindicative of the future performanceof the scheme. This is

i. not true j. a standard risk factor for all

schemesk. a scheme-specific risk factor l. applicable only to gilt funds

104. Risk arising from a scheme'sinvestment objective/strategy and

proposed asset allocation isi. not present

j. common to all schemesk. specific to that schemel. not applicable to debt funds

105. In an assured returns scheme, if assurance is only for a limited period,it must be stated in the offer documentthat there is no guarantee for sustaining the assured return for the

remaining duration of the schemei. True

j. False

106. If the AMC is managing a fundfor the first time, this information can

be found in

i. newspapers j. SEBIk. AMFI Newsletter l. Offer document

107. A compliance officer i. stands guarantee to the

information contained in theoffer document

j. belongs to SEBIk. cannot certify that the AMC's

legal and proceduralobligations are fulfilled

l. cannot be appointed by the

AMC

108. The due diligence certificate thatmust be submitted to SEBI along withthe draft offer document cannot besigned by

i. the managing director of theAMC

j. an executive director of theAMC

k. the compliance officer l. Investor relations officer

109. A due diligence certificate doesnot certify that

g. the draft offer documentforwarded to SEBI is inaccordance with SEBIregulations

h. all legal requirementsconnected with launching of thescheme have been compliedwith

i. disclosures made in the offer document are true, fair andadequate


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j. the AMC guarantees a good performance

110. In developed countries, animportant Mutual Fund marketingchannel is through

i. Insurance Companies j. Banksk. Non-Banking Finance

Companiesl. Retail Distributors

111. Emerging or new channel for distributors/marketing of Mutual Fund

in India isi. Insurance Companies

j. Banksk. Qualified Mutual Fund agentsl. Direct Sales agents of

respective mutual funds

112. Mutual Funds often use their own employees to mobilise fundsfrom

g. retail investorsh. High Networth

individuals/institutionalinvestors

i. all investors j. foreign investors

113. Retail distribution channels are acritical element in the distribution of

mutual funds in Indiai. True

j. False

114. "Sales Practices" cover thefollowing areas

i. desirable marketing practices

j. agents' responsibilities to theinvestor

k. ethical code of conductl. all of the above

115. The following are not termed as"sales practices"

i. agents commission j. before-and after-sales service to

investorsk. advertising of schemesl. stock broking

116. Sales practices are never

mandated by regulators, but arisefrom convention only

i. True j. False

117. Agents are compensated bymutual funds

i. through salaries j. through commissionsk. through an annual feel. not in cash but in kind

118. In India the minimum or maximum commissions payable todistributors are not prescribed by law,

but are decided using the fund's owndiscretion

i. True j. False

119. Lowest commissions are paid oni. Equity funds

j. tax benefit schemes of mutualfunds

k. debt funds


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l. long-term investments inmutual funds

120. Excess distribution expenses areto be borne by the

i. AMC j. unit holdersk. SEBIl. AMFI

121. To cover fund distributionexpenses, open ended funds

g. charge a fee from agentsh. charge entry and exit loads

from investorsi. create a reserve

j. sell investments

122. Trail commission means payingh. no commission at alli. the entire commission up-front

j. part of the commission up-frontand the balance in phases

k. the entire commission after fiveyears

123. Sub-brokers serve as agents of the principal broker and a mutual fundis not answerable for their activities

i. True j. False

124. In India, Mutual fund agents' rate

and services are at present defined byg. SEBI rulesh. stock exchange bye-lawsi. AMFI rules

j. convention

125. Along with the application, it ismandatory to distribute

i. investment rebate j. offer documentk. key information memoranduml. none of the above

126. To sell funds effectively, anagent need not

g. be fully aware of the importantcharacteristics of the scheme

h. know his/her client's risk profile

i. give after sales service j. offer large investment rebates

127. For investors to correctlycompare performance of differentfunds SEBI's advertising codesinclude

i. uniform computation of yields j. uniform presentations of

dividendsk. identical time periodsl. all of the above

128. SEBI's advertising code mandatethat all performance calculations in afund's advertisement should be based

g. NAVh. the NSE Fifty Indexi. the BSE Sensex

j. none of the above

129. An agent's appointment by afund

i. requires SEBI's approval j. is a lengthy and cumbersome

process


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k. is mandatorily preceded by anAMFI test

l. does not require any approval

130. An investor does not haverecourse to his agent in case of errors,

problems or the quality of theinvestment

c. Trued. False

131. An agent can offer and sell afunds's units at

i. any price he chooses

j. a price determined bycompetition among agents

k. a price based on demand for that fund's units

l. the public offering pricecurrently in effect

132. All buy orders through an agentdo not become valid till the fundaccepts and confirms the orders

i. True j. False

133. When an agent purchases, offersor sells units, ensuring compliancewith applicable regulations is theresponsibility of

i. the fund j. the agent

k. AMFIl. SEBI

134. The terms of appointment of a broker by a fund are

g. laid down by SEBIh. laid down by AMFI

i. not uniform to all funds j. none of the above

135. The code of ethics for mutualfunds published by AMFI

g. is mandatoryh. is in the form of recommended

practicesi. is unfavourable to investors

j. does not cover distribution andselling practices

136. The AMFI code of ethics doesnot cover the following prescriptions

g. Adequate disclosures should bemade to the investors

h. Funds should be managed inaccordance with statedinvestment objectives

i. conflict of interest should beavoided in dealings withdirectors or employees

j. each investment decisionshould be approved byinvestors

137. Distribution and sales practicesare only partly regulated by SEBI at

presenti. True

j. False

138. Which of the following

distribution channels is preferred by private mutual funds

i. Individual Agents j. Small Distribution companiesk. established distribution

companiesl. the Internet


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139. Which of the following sales practices is prescribed by regulation

i. AMFI Code of Ethics j. SEBI Advertisingk. AMFI's Code for Agentsl. None of the above

140. In a mutual fund investors'subscriptions are accounted for as

i. liabilities j. depositsk. unit capitall. none of the above

141. Investments made by a mutualfund on behalf of investors areaccounted as

e. assetsf. liabilitiesg. capitalh. none of the above

142. Liabilities in the balance sheet of a mutual fund are

g. in the form of long-term loansh. strictly short term in naturei. combination of long term and

short term j. not allowed as per regulations

143. Net Asset Value (NAV) of amutual fund scheme is defined as the

schemesg. assets minus liabilitiesh. assets per uniti. assets minus liabilities per unit

j. none of the above

144. The day on which NAV iscalculated by a fund is known as

g. computation dateh. valuation datei. record date

j. book closure date

145. A funds NAV is affected bye. Purchase and sale of investment

securitiesf. valuation of all investment

securities heldg. units sold or redeemed

h. all of the above

146. When computing NAV of fundSEBI requires accrual of major expenses to be accounted

i. quarterly j. annuallyk. on a day to day basisl. when actually paid

147. If a fund calculates NAV daily, itwill include all the transactionconcluded up to

h. last week i. last two days

j. previous dayk. today

148. For a open-ended fund,the

repurchase price should not be lower than

g. NAVh. 95% of NAVi. 93% of NAV

j. 97% of NAV


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149. For a close-ended fund, therepurchase price should not be lower than

i. NAV j. 95% of NAVk. 93% of NAVl. 97% of NAV

150. For a scheme that has a load, theAMC can change an investmentmanagement fee not exceeding

g. 1.50%h. 2.00%

i. 1.25% j. 0.50%151. Initial expenses of launching

schemes should not exceedk. 15% of amount receivedl. 10% of amount raisedm. 6% of amount raisedn. 5% of the amount raised

152. Which of the following expensescannot be charged to the scheme

k. Audit feesl. costs related to investor

communicationm. winding costs for terminating

the schemen. penalties and fines for

infraction of laws

153. Which of the following are nottrue for Equity Linked SavingsSchemes?

m. Investors can claim an incometax rebate

n. There is a lock-in period beforeinvestment can be withdrawn

o. There are not specificrestrictions on investmentobjectives for the fundmanagers

p. These funds cannot invest inequity

154. Which of the following is nottrue for Index Funds

m. These funds invests in theshares that constitute a specificindex

n. The investment in shares is inthe same proportion as in the

indexo. These funds take only the

overall market risk p. These funds are not diversified

155. The structure which is requiredto be followed by mutual funds inIndia is laid down by

k. Financial Ministryl. Securities & Exchange Board

of India (SEBI)m. Fund Sponsor n. Association of Mutual Funds of

India (AMFI)

156. The Board of Trustees of amutual fund:

m. act as a protector of investors'interests

n. directly manage the portfolio of securities

o. do not have the right to dismissthe AMC

p. cannot supervise and direct theworking of the AMC


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157. The AMC of a mutual fundcannot

m. undertake advisory services or financial consulting

n. cannot invest the funds ingovernment paper

o. act as a trustee of more thanone mutual fund

p. cannot invest the funds insecurities

158. The trust that manages a mutualfund is appointed by

m. The Finance Ministryn. R.B.Io. SEBI

p. The sponsor of that mutualfund

159. The custodian of a mutual fund:k. is appointed for safekeeping of

securitiesl. need not be an entity

independent of the sponsorsm. not required to be registered

with SEBIn. does not give or receive

deliveries of physical securities

160. Transfer Agents of a mutual fundare not responsible for

m. issuing and redeeming units of

the mutual fundn. updating investor recordso. preparing transfer documents

p. investing the funds in securitiesmarkets

161. Distributors or agents

m. can distribute several mutualfunds simultaneously

n. cannot appoint sub-agents or sub-brokers

o. should be only individuals notcompanies or banks

p. should not be an employee or associate of the AMC

162. A transfer in the management of a close-ended scheme does not requirethe consent of

k. unit holders with 75% votingrights

l. SEBIm. Trusteesn. AMC

163. The fund sponsor has tocontribute

k. nothing to the AMCl. the total networth of the AMCm. atleast 40% of the AMC's

networthn. exactly 50%

164. The sponsor of a mutual fundmay be compared to

m. a director in a Companyn. the Chief Executive of a

Companyo. Promoter of a Company

p. an equity shareholder in a

Company

165. Issuing and redeeming units of amutual fund is the role

m. the custodiann. the transfer agento. the trustees


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p. the bankers

166. The fund sponsors should have asound financial track record of

k. 7 yearsl. 12 monthsm. 5 yearsn. 3 years

167. The networth of an assetmanagement company should begreater than

m. Rs.100 Croresn. can be decided by the Sponsor

o. should be atleast Rs. 10 Croresat all times

p. should be greater than Rs.10Crores

168. The AMC and directors areanswerable to

k. Stock Exchangesl. The Board of Trusteesm. Agents and distributorsn. Stock Brokers

169. The role of an AMC is to act as1. promoters2. investment managers3. distribution agents4. regulators

170. A change in the following key

people does not materially impact the performance of the fund

m. Fund sponsorsn. Trustees of the fundo. Fund Manager

p. Members of the AMFICommittee

171. To transfer the management of ascheme from one AMC to another, theconsent of the following is required

k. SEBIl. Unit holdersm. both SEBI and unit holdersn. none of the above

172. As per SEBI's principles, theAMC and the Board of Trustees of afund should belong to the samesponsors

l. True

m. False

173. After UTI, the first mutual fundswere started by

k. private sector banksl. public sector banksm. financial institutionsn. non-banking finance companies

174. The highest authority among thefollowing is the

k. SEBIl. Company Law Boardm. RBIn. Ministry of Finance

175. The entity that SEBI does notregulate is

m. share registrars

n. mutual fundso. stock exchanges

p. non-banking finance companies

176. The accounts and all other records of an AMC are filed with

k. AMFI


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l. Registrar of Companiesm. Agents' Associationn. UTI

177. A close-ended scheme of amutual fund is not governed by

m. Exchange Rules of the stock exchange where it is listed

n. Listing Agreement between thefund and the stock exchange

o. guidelines issued by theMinistry of Commerce

p. Companies Act provisionsrelating to transactions in

securities

178. The entry of mutual funds inIndia was initiated by mutual fundsset up by

k. Public Sector Banksl. Private Sector mutual fundsm. Unit Trust of Indian. mutual funds set up by

insurance companies

179. For a close-ended scheme tochange its fundamental attributes, itmust obtain the consent of

m. 50% of unit holdersn. 50% of trusteeso. 75% of unit holders

p. none of the above

180. The largest corpus of investablefunds in India is with

e. Bank-owned mutual fundsf. Private Sector mutual fundsg. UTIh. Insurance Companies

181. The Board of Trustees of theUTI does not have nominees from

m. RBIn. LICo. IDBI

p. The Bombay Stock Exchange(BSE)

182. UTI Cannot providek. corporate financel. engage in real estate and

property development businessm. provide merchant banking

servicesn. invest in securities

183. The "Capital" of a scheme doesnot include

m. unit capitaln. reserveso. borrowing

p. networth of the AMC

184. Which of the following are Self Regulatory Organisations

k. Bombay Stock Exchangel. SEBIm. AMFIn. RBI

185. A Self Regulatory Organisationcan regulate

k. all entities in the marketl. only its own members in a

limited waym. its own members with total

jurisdictionn. no entity at all


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186. The amount of authority enjoyed by a

1. self-regulatory organisation isdefined by

2. the apex regulatory authority3. company law board4. its own members5. RBI

187. The role of AMFI in the mutualfunds industry is not to

k. promote the interests of the unitholders

l. set a Code of Ethicsm. regulate mutual fundsn. increase public awareness of

mutual funds in the country

188. The rights of investors in amutual fund scheme are laid down in

m. the Offer Document of thatscheme

n. Quarterly Reportso. Annual Reports

p. marketing brochures

189. Unit holders of a mutual fundscheme do not have a right to

m. proportionate ownership of thescheme's assets

n. dividend declared for thatscheme

o. dividend declared for other schemes of the mutual funds

p. income declared under thatscheme

190. After dividend declaration, unit-

holders are entitled to receivedividend within

m. one week n. one montho. 42 days

p. six weeks

191. Unit holders' right to informationdoes not include

i. obtaining from the trustees anyinformation having an adverseeffect on their investments

j. inspecting major documents of a fund

k. receiving of a copy of theannual financial statements of that fund

l. approving investment decisionsof the fund

192. Shortfalls in the case of assuredreturns schemes are met

k. by sponsors of such schemesl. only if the offer document

specifically provided such aguarantee by a named sponsor

m. the Government of Indian. AMFI

193. Unit-holders aggrieved by aFund or AMC can get redressed from

k. Consumer Courtsl. SEBI

m. AMFIn. RBI

194. If the Directors of an AMCcommit fraud, Unit-holdersinvestments' cannot be protected by


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the Department of Company Affairsand the Company Law Board

k. Truel. False

195. The responsibilities of a unit-holder do not include:

i. Monitor his investmentscarefully

j. being aware of information thataffects his investment in amajor way

k. carefully studying the offer document

l. taking decisions about wherethe fund managers shouldinvest

196. UTIs scheme US-64 falls under the purview of SEBI

m. Truen. False

197. UTI was set up byl. SEBIm. AMFIn. A special acto. RBI

198. Bank owned Mutual Funds aresupervised by

k. SEBIl. RBI

m. jointly by SEBI & RBIn. AMFI

199. Investor does not have the rightto receive any interest from an AMCif his redemption proceeds are notdespatched within 10 working days

m. Truen. False

200. If an investor failed to claim hisredemption proceeds within 3 years,he can claim the proceeds at

k. Par l. Prevailing NAVm. the on the date he has applied

for redemptionn. 15% below the prevailing NAV

201. After closure of the initial offer an open ended scheme, on going sales

and repurchases must start within

o. One week p. 30 daysq. 45 daysr. 180 days

202. For scheme to be able to changeits fundamental attributes, it mustobtain the consent of

o. 50% of the unit holders p. 50% of the trusteesq. 75% of the unit holdersr. none of the above

203. The prospectus or Offer Document containing the details of new scheme is first registered with the

q. AMFIr. SEBIs. Bombay Stock Exchange

t. Ministry of Finance

204. The offer document issued bymutual funds does not serve the

purpose of q. announcing the scheme


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r. giving detailed informationabout the scheme

s. inviting the the investorst. giving the fund manager's

investment outlook for the nextquarter

205. The prospectus of a close-endedfund is issued

o. every year p. only once at the time of issueq. every quarter r. every six months

206. Fundamental attributes of scheme

q. do not include the objective of the scheme

r. can be changed without theinvestor's approval or knowledge

s. include the terms of the schemet. are not necessary for deciding

whether to invest in the schemeor not

207. The offer documentq. contains the terms of issuer. gives no information relevant

for making an investmentdecision

s. is not the operating documentdescribing the scheme

t. cannot be called a referencedocument

208. SEBI does not require thefollowing to be included in the offer document issued by a mutual fund

q. details of the Sponsor and theAMC

r. Description of the Scheme &investment objective/strategy

s. Investors' Rights and Servicest. Performance of other mutual

funds

209. 'Key Information Memorandum'is

o. an abridged version of the offer document

p. the Memorandum & Articles of Association of the AMC

q. a sheet containing historical NAVs of other fund schemes

r. Annual Report of the AMC

210. The offer document for a schemeremains valid even if

q. the AMC is reconstitutedr. entry or exit load are changeds. the scheme's NAV changest. new plans are added to existing

schemes

211. The offer document has to befully revised and updated

q. every six monthsr. once in two yearss. every quarter t. every month

212. An addendum giving details of material change in the offer documentshould be circulated

o. distributors/brokers p. unit holdersq. SEBIr. all of the above


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213. Which of the following is nottrue for offer documents of open-ended schemes

o. it is first issued at the time thescheme is launched

p. it is registered with SEBIq. it has to be revised periodicallyr. it need not be revised at all

214. All important disclosures that themutual fund is required to make, byregulation, are contained in the offer document

q. Truer. False

215. The offer document issued whenan open-ended scheme is launched isvalid for all times, until amended

q. Truer. False

216 The most important source of information for a prospective investor is

o. offer document p. Annual Report of the AMCq. Economic Timesr. AMFI Newsletter

217 The offer document need not bestudied by an investor before

investing in a schemeq. Truer. False

218 The offer document is not a legaldocument

o. True

p. False

219 Initial issue expenses are chargedto a scheme in the first year itself

m. Truen. False

220 Scheme-wise annual report of amutual fund need not be

q. sent to all unit-holdersr. forwarded to SEBIs. published as an advertisementt. stock exchanges

221 Mutual funds value their investments

o. at purchase price p. on a mark-to-market basisq. at par r. at book value

222 Investors are totally exempt from paying any tax on the dividendincome they receive from mutualfunds

n. Trueo. False

223 Income distributed to unit-holders by a debt fund is liable to dividenddistribution tax

o. True p. False

224 A close-ended has averageweekly net assets of Rs 200 crore.As

per SEBI regulations, the AMC cancharge the fund with investment andadvisory fees upto:

o. Rs 2.25 crore


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p. Rs 2.00 croreq. Rs 2.50 crorer. Rs 3.00 crore

225 A passive fund manager q. researches stocks extensivelyr. does not buy and sell stocks

oftens. does not have to go through the

process of stock selectiont. does not have to track stocks

226 A fund manager managing anindex fund

o. has to keep fund expenses low p. does not have to research

stocksq. does not have to balance his

portfolior. none of the above

227 A growth manager looks for q. high current incomer. undervalued stockss. above average earnings growtht. none of the above

228 A value manager does not look for

o. stocks that are currentlyundervalued in the market

p. stocks whose worth will berecognised by the market in the

long termq. high current yieldr. long term capital appreciation

229 From an investor's viewpoint, themost important is

q. a fund's investment style

r. performance of the funds. the fund manager's judgementt. none of the above

230 Fundamental analysis involvesi. checking the foundations of the

company's factory building j. research into the operations and

finances of the companyk. studying the company's share

pricesl. none of the above

231. Which of the following is not

considered for technical analysisq. historical data on the company's

share pricer. the company shares' trading

volumes. current market sentimentt. the company's regulatory

environment

232. Quantitative analysis is morelikely to be done to evaluate a

particular sector or industry rather than any specific stock

o. True p. False

233. Fundamental analysis forms the basis to decide

q. when to buy a given share

r. whether to buy a given share or not

s. whether to use technicalanalysis or quantitative analysis

t. whether the company's factorycan withstand earthquakes


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234. Technical analysis guides thedecision on

o. whether to buy or sell p. the right time to buy or sellq. whether company's technical

personnel are adequatelyqualified

r. none of the above

235. Which of the following is not aninvestment philosophy

o. capitalising on economic cycles p. focusing on growth sectors

q. capitalisationr. finding value stocks

236. When expecting a fall in market price, fund managers can reduce theloss in portfolio value by

k. speculatingl. not buying and selling shares at

all for some daysm. using equity derivativesn. giving TV interviews to

improve sentiment

237. Equity derivative instruments areo. shares

p. bondsq. contractsr. notes

238. A futures contract allows one to buy or sell the underlying shares, butneed not result in delivery

q. Truer. False

239. Derivatives cannot be based onmarket indices

q. Truer. False

240. In a mutual fund, the overalldecisions on allocating money to

particular industries/sectors are taken by

q. equity analystsr. fund managerss. security dealerst. trustees

241. Continuous tracking of thecompanies in which a mutual fund hasinvested is done by

m. continuous tracking systemsn. equity analystso. trustees

p. security dealers

242. Security dealers of a mutual fundo. guard the cabin of the fund

manager p. execute buy and sell orders for

the fundq. decide which shares to buy or

sellr. none of the above

243. As per SEBI's requirements each

scheme of a mutual fund should havea different fund manager

o. True p. False

244. Debt securities bought at a


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discount to their face value aregenerally

m. interest bearingn. zero coupon bondso. paying interest at a floating rate

p. none of the above

245. In India, a large part of debtsecurities pay interest on

m. a floating rate basisn. a fixed rate plus a variable

portiono. a fixed rate

p. zero coupon basis

246. The Indian debt market is largelywholesale in nature

o. True p. False

247. In the wholesale debt market, thelargest proportion of trading is seen in

1. Government Securities2. Corporate Bonds3. T-Bills4. PSU Bonds

248. The largest proportion of tradesdone in the wholesale debt market isaccounted by

o. mutual funds p. foreign banksq. Indian banks

r. financial institutions

249. Certificates of Deposits (CDs)are issued by

o. Regional Rural Banks p. Corporatesq. Scheduled commercial banks

r. none of the above

250. Commercial Paper is issued byCorporate bodies

o. to meet short-term workingcapital requirements

p. to finance the acquisition of long term capital assets

q. to retire long term debtr. to pay dividend

251. Government securities are issuedthrough the RBI

s. Truet. False

252. The yield on Treasury Bill (T-Bill) us determined by

s. the Government of Indiat. auctionu. the State Governmentsv. floating rate method

253. Which of the following are notnormally found in the portfolio of adebt fund

u. long-dated GovernmentSecurities

v. Corporate debenturesw. bonds issued by financial

institutionsx. certificates of deposit issued by

banks

254. Which of the following do notrepresent the amount an investor of adebt security will be paid uponmaturity

u. par valuev. face valuew. fair value


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x. redemption value

255. Coupon of a debt security refersto

s. a piece of paper attached to thecertificate

t. the return on investor wouldearn

u. the amount rate of interest paidon par value of the bond

v. none of the above

256. Which of the following do notapply to the term 'maturity' of a debt

security?u. the date on which the

certificates becomes oldv. the term of the bondw. the date of redemptionx. the date on which the issuer has

to repay the amount

257. Call or put provisions are used tomodify the fixed maturity of debtsecurities

u. Truev. False

258. A call provision in a debt issueallows the issuer to

u. call out the names of theinvestors

v. redeem the debt on maturity

w. extend the tenure of the debtx. redeem the debt before maturity

259. A put provision in a debt issueallows

1. investor to put away thecertificates in safe depositvaults

2. investors to redeem debt prior to maturity

3. issuers to redeem debt prior tomaturity

4. investors to extend the tenureof debt

260. Current yield relates interest on asecurity to

u. its current market pricev. its face value

w. its fair valuex. the current price of T-Bills

261. To compare bonds with differentcoupon rates, maturities and prices,investors would use:

u. current yieldv. technical analysisw. yield to maturityx. fundamental analysis

262. When interest rates rise, bond prices

1. also rise2. fall3. are not affected4. fluctuate either up or down

263. Yield curve is also known as

s. Curve of Interestt. Term Structure of Interest

Ratesu. Curve that yieldsv. none of the above


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264. An important indicator of expected trends in interest rates is

s. The Economic Timest. the Sensexu. the Yield Curvev. the Chief Minister's Speech

265. It may not be possible to reinvestinterest received at the same rate as

principal. This is known ass. reinvestment risk t. inflation risk u. interest-rate risk

v. call risk

266. A bond's rating indicates itss. reinvestment risk t. default risk u. inflation risk v. interest-rate risk

267. If a bond cannot be sold at a price near its value, it means thatinvestment in this bond has

s. high liquidity risk t. high default risk u. low liquidity risk v. inflation risk

268. The additional yield required toaccount for the risk of default by the

borrower is known as

q. yield plusr. yield spreads. yield extrat. yield premium

269. A high credit rating does notmean

o. high yield spread p. high perceived safetyq. low yield spreadr. low risk premium

270. If 10-year government securities Neil 10% and a 10-Year fixed depositin a company yields 12%, the yieldspread is

u. 12%v. 22%w. 10%x. 2%

271. The "duration" of an interest- bearing bond is

s. longer than its maturityt. less than its maturityu. equal to its maturityv. the quality of paper used for the

certificate

272. A bond with a coupon of 9%when interest rates for similar maturities are 11% will sell

p. above par q. below par r. at par s. at a price unrelated to the

prevailing interest rate

273. Changes in foreign exchangerates have no bearing on interest rates

q. Truer. False

274. Inflation and interest rates areinversely proportional

s. Truet. False


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275. Investment policies of a mutualfund are determined by

u. the fund manager v. the AMC managementw. the marketing department based

on what distributors wantx. the investors

276. Which of the following measuresare not taken by SEBI for protectinginvestors of mutual funds

s. mandating minimum levels of diversification for mutual funds

t. ensuring that the funds are notused to favour a few companies

u. tracking the securities that eachfund has invested in

v. ensuring that the funds areinvested in approved securitiesonly

277. As per SEBI norms, a fund'sinvestments, in the equity shares of any one company are restricted to

u. 25% of NAVv. 10% of NAVw. 50% of NAVx. 100% of NAV

278. A mutual fund manager is notallowed to sell short when he expectsa crash in the market

s. Truet. False

279. In a mutual fund, having manyschemes, al securities bought can beheld in a general account and

transferred later to various schemes toattain certain profit or loss objectives

u. Truev. False

280. A mutual fund may invest inshort-term deposits of scheduledcommercial banks

m. Truen. False

281. Mutual funds are allowed to lendu. loansv. securities

w. physical assetsx. none of the above

282. In case of listed securities of group companies of the sponsor,mutual fund is not allowed to invest

q. 25% of its net assetsr. 10% of its net assetss. at allt. >5% of net assets

283. A mutual fund may transfer investments from one scheme toanother

u. not at allv. at current market ratesw. at cost pricex. at a fixed premium over market

rate

284. Interest Rate Risk for an Indiandebt fund can be reduced by using

s. Futurest. Optionsu. Interest Rate Swapsv. none of the above


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285. The Interest Rate ForecastingUnit of a debt fund is generallymanned by

s. technicianst. statisticiansu. economists & econometriciansv. accountants

286. AMCs need not maintain recordsin support of each investment decision

o. True p. False

287. When interest rates for similar maturities' bonds are 11%, bond witha 9% coupon rate will sell

s. above par t. below par u. at par v. at a price unrelated to the

interest rates for similar securities

288. The most suitable measure for afund's performance does not dependon the

s. type of fundt. investment objective of the

fundu. financial market conditionsv. amount invested by investor

289. If the NAV of an open-endedfund was Rs.16 at the beginning of the year and Rs.22 after 13 months,the annualised change in NAV is

s. 6.0%t. 34.6%u. 40.6%

v. 37.5%

290. Change in NAV as a measure of fund performance is more suitable for

u. growth fundsv. income fundsw. funds with withdrawal plansx. none of the above

291. The difference between NAVchange and total return as measures of fund performance is

q. noner. total return takes dividend into

account while NAV changedoes not

s. total return does not take NAVsinto account

t. total return does not take thetime period into account

292. The most suitable measure of fund performance for all fund types is

s. NAV Changet. Total Returnu. Total Return with reinvestmentv. none of the above

293. The expense ratio used for measuring fund performance is anindicator of

q. product market conditionr. growth in the economy

s. prevalent market practicest. the fund's efficiency

294. The Expense Ratio as a measureof a fund's performance is defined bya fund's


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q. total expenses and average netassets

r. total expenses and total assetss. average expenses and average

net assetst. none of the above

295. While computing the ExpenseRatio for a fund, brokeragecommissions on the fund'stransactions are not included in thefund expenses

q. Truer. False

296. The Expense Ratio is not of utmost importance in case of

q. Debt fundr. Index funds. Equity fundt. Bond fund

297. The Expense Ratio is notaffected by

p. fund sizeq. average account sizer. portfolio compositions. stock market conditions

298. The Income Ratio as a measureof a fund's performance is defined bythe fund's

s. total income and total assets

t. net investment income and netassets

u. total income and net assetsv. none of the above

299. The Income Ratio is more

suitable for evaluating the performance of

s. Equity Fundst. Growth Fundsu. Regular Income Fundsv. Index Funds

300. Portfolio turnover rate of a fundmeasure the

s. size of the fund's portfoliot. amount of buying and selling

done by the fundu. the average number of units

sold by the fund in one day

v. none of the above301. A high turnover rate for a fund

indicatesu. high transaction costsv. greater efficiencyw. high returns to the investor x. a rising market

302. Turnover rates would be mostrelevant to analyse the performance of

w. equity fundsx. growth fundsy. debt fundsz. value funds

303. Transaction costs includey. all expenses related to tradingz. all expenes charged to the fundaa. distribution expenses

bb.none of the above

304. Which of the following are notincluded in Transaction costs?

y. brokerage commissionsz. stamp duty on transfersaa. custodians fees


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bb.agent commissions

305. Which of the followingtransaction costs are not quantified inthe offer document

w. brokerage commissionsx. dealer spreadsy. custodian's feesz. registrar's fees

306. The size of a fund has no bearingon its performance

y. Truez. False

307. As per SEBI, mutual funds can borrow for short term to the extent of

w. total net assetsx. 50% of net assetsy. 25% of net assetsz. 20% of net assets

308. Which of the following is of norelevance in evaluating a fund's

performancey. The performance of the stock

market as a wholez. The performance of other

mutual fundsaa. The returns given by other

comparable financial products bb.The change in wholesale price

index

309. The choice of an appropriate benchmark for evaluating a fund's performance depends on

s. the fund manager t. the investment objective of the

fund

u. SEBIv. AMFI

310. An actively managed equity fundexpects to

y. be able to beat the benchmarksz. earn the same returns as the

benchmark aa. have no benchmarks

bb.underperform when comparedwith the benchmark

311. For evaluating funds, the preferred benchmark would be the

y. BSE Sensexz. S&P CNX Niftyaa.BSE 200

bb.S&P CNX Sectoral Indices

312. To evaluate a close-ended debt-fund, a suitable benchmark would be

s. BSE Sensext. I-Sec's I-BEXu. interest on bank fixed deposits

of similar maturityv. S&P CNX Defty

313. When comparing performance of two funds, the following need not besimilar

w. Risk profilesx. Investment objectivesy. Fund size

z. Fund managers

314. Which of the following is false?w. ROI is a measure similar to

Total Return withReinvestment of distribution


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x. Total Return withReinvestment of distributionsassumes reinvestment at NAVon the distribution date

y. As a measure of performance,Total Return withReinvestment of distributionseeks to overcome theshortcomings of simple TotalReturn

z. Because of its simplicity,simple Total Return is preferredin practice to Total Return withReinvestment of distribution

315. The basis of genuine investmentadvice should be

1. the current market situation2. the agent commissions paid by

different funds3. financial planning to suit the

investor's situation4. planning to complete the

agent's annual targets

316. Financial goals do not includew. buying a homex. winning a sports gold medaly. planning for retirementz. saving for child's education

317. Financial planning allows a person

w. to become a billionairex. to achieve financial goals

through proper management of finances

y. to invest in foreign countriesz. none of the above

318. Financial plans do not alter inany way the amount of tax an investor

pays as the tax is on his incomeu. Truev. False

319. Which of the following workswith an investor on his overallfinancial situation

s. Tax Advisor t. Financial Planner u. Insurance Agentv. Financial Advisor

320. A financial planner takesresponsibility for the financial well-

being of his/her clientsy. Truez. False

321. Financial planners and their clients should focus on

w. allocating funds to asset classes(e.g. debt, equity etc.)

x. allocating funds to individualsecurities

y. tracking stocks which they feelhave potential

z. none of the above

322. Within an asset class, whichindividual security to invest in should

be decided byt. the financial planner u. the investor himself v. a professional fund manager w. an objective advisor

323. Financial Planning comprises


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s. defining a client's profile andgoals

t. recommending appropriateasset allocation

u. monitoring financial planningrecommendations

v. all of the above

324. Financial planning is relevantonly for high networth individuals

u. Truev. False

325. Financial planning does work for

older clientsy. Truez. False

326 Financial planning is primarilytax planning

w. Truex. False

327 In financial planning, allresponsibility ends with the financial

planner and the client has noresponsibilities

y. Truez. False

328 The constraint on financial planning due to insufficient investableresources can be remedied to some

extent byu. decreasing the standard of

livingv. disciplining childrenw. disciplined monthly budgetingx. none of the above

329 In the growth option offered bymutual funds, the number of unitsheld by an investor increases becauseof

w. growth in net asset value i.e.capital appreciation

x. reinvestment of dividend whichis like compounding

y. interest received on the fund'sassets

z. none of the above

330 To maximise returns on

investment, once an investor buys intoa fund, he/she should hold on to it nomatter what happens

o. True p. False

331 If an investor keeps investing afixed amount at regular intervals, theaverage cost of his purchases willalways be less than if he makesinvestment at irregular periods

y. Truez. False

332. Which of the following lets aninvestor book profits in a risingmarket and increase holdings in afalling market

u. Fixed Rates of Asset Allocation

v. Flexible Ratio of AssetAllocation

w. Investment without any assetallocation plan

x. Buy and Hold Strategy


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333. A Flexible Ratio of AssetAllocation means

y. continuously changing the ratioof various assets in the

portfolioz. not doing any re-balancing and

letting the profits runaa. active switching

bb.none of the above

334. The strategy advisable for aninvestor to maximise investmentreturn in the long run is

w. buy and hold on to investmentsfor a long time

x. liquidate poorly performinginvestments from time to time

y. liquidate good performinginvestments fro time to time

z. switch from poor performers togood performers

335. A criticism of rupee-costaveraging is

w. Investment is for the sameamount at regular intervals

x. Over a period of time, theaverage purchase price willwork out higher than if onetries to guess the market highsand lows

y. It does not tell you when to

buy, sell or switch from onescheme to another

z. Rupee cost averaging has noserious shortcomings

336. In India, individual investors donot have direct access to

q. capital market instrumentsr. real estates. bulliont. money market instruments

337. Which of the following entitiescan given loans against securities

w. UTIx. Banksy. Mutual fundsz. none of the above

338. Which of the followinginvestment products do not give

guarantee for return or capitalw. Bank depositsx. Pubic provident fund (PPF)y. National Savings Certificates

(NSC)z. Units of a mutual fund

339. The biggest advantage of investment in gold is

w. High returnsx. High appreciation in valuey. Low Purchase pricez. Hedge against inflation

340. The biggest disadvantage of investment in real estate is

y. Less potential for capitalappreciation

z. High purchase price

aa. Depreciation in value as time passes

bb.Value gets eroded due toinflation

341. Which of the following is not anadvantage of bank deposits?


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aa.5 years bb.6 yearscc.7 yearsdd.8 years

353. The annual yield on RBI Relief Bonds is

cc.9.5%dd.9.5% before taxee. 8.5% before taxff. 8.5% after tax

354. Individual investors do notnormally invest in Government

Securities becausecc. individual investors re not

allowed to invest inGovernment Securities

dd.the amount required for investment is very large

ee. safety of principal is notguaranteed

ff. none of the above

355. The amount an insurancecompany would pay to the nominee if a policyholder died is known as the

aa.premium bb.sum assuredcc. face valuedd.real value

356. Dividends distributed by mutual

funds areaa. taxed at source

bb.taxed in the hands of theinvestors

cc. are subject to capital gains taxdd.are tax-free in the hands of the

investor

357. Investing through mutual fund isa better option than investing directlyin the stock market becauseidentifying stocks is a difficult processagents get commissions on mutual fund investmereturned are guaranteed by mutual fundsall of the above

358. A small investor can build adiversified portfolio by

aa. buying one share each of alllisted companies

bb.investing in a mutual fund

cc. borrowing enough money to buy shares of well-managedcompanies

dd.none of the above

359. Which of the following is not anadvantage of mutual fund investmentover direct investment

cc. Higher liquiditydd.Lower transaction costsee. Greater convenienceff. guaranteed returns

360. There is no contractual guaranteefor repayment of principal or interestto an investor in

w. bank depositx. debt fundy. secured debentures

z. all of the above

361. Which of the following debtinvestments is not rated

cc. Corporate Bondsdd.Commercial Paper ee. Company Deposit


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ff. Debt Fund

362. Gold and real estate are attractiveinvestment options only in highinflation economies

cc. Truedd.False

363. Direct investment in stock market can be a better option thaninvesting through mutual funds if theinvestor

w. wants better returns than thoseoffered by mutual funds

x. has large capital, knowledgeand resources for research

y. has identified a bullish phase inthe stock market

z. wants to invest for the longterm

364. Deciding on strategies such aslong-term compounding, costaveraging, value averaging, activeswitching, all depend on the

aa. stock market situation on date bb.amount of money to be

investedcc. investor's risk tolerancedd.phase through which the

economy is passing

365. Financial Planning involves

aa. studying financial management bb.managing the risks of investingcc. financing the client's

investmentsdd.none of the above

366. Greater returns come only from

assuring higher risks, and a higher risk portfolio guarantees higher returns

w. Truex. False

367. The risk tolerance of an investorsis independent of

aa.his age bb.his incomecc. the stock market movementsdd.his job security

368. A sector fund is a

aa. low risk fund bb.moderate risk fundcc. high risk funddd.low-to-moderate risk fund

369. International funds invest invarious and so are low risk funds

w. Truex. False

370. Investment in gold is a hedgeagainst inflation but investment in a

precious metal fund falls in the highrisk category

w. Truex. False

371. By their very nature, growthfunds are considered as high risk

fundsaa.True

bb.False

372. Short Term bond funds areaa. low risk funds

bb.moderate risk funds


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418. A debt fund's age and size arenot important when selecting a fundfor investment

y. Truez. False

419. Debt schemes are popular because

y. the Indian Stock Market isalways going down

z. the returns are more predictableaa. most investors are always in

debt

bb.all of the above

420. Yield-to-maturity of a debtfund's portfolio is more importantwhen the investment objective is

cc. current incomedd.total returnee. liquidityff. all of the above

421. Compared to equity funds,income margins for debt funds are

ee.narrowff. higher gg.the samehh.almost nil

422. Debt funds with long-terminvestments carry higher risk of

capital loss bb.Truecc.False

423. The differerentiating factor among debt funds of comparablematurity and quality is

aa. gross yields bb.costscc. fund agedd.tenure of the fund manager

424. Dstribution tax should be takeninto into account when computing netreturns from

aa. equity funds bb.debt fundscc. both the abovedd.none of the above

425. All debt fund investors are

exposed to risk of principal lossee.Trueff. False

426. Running a money market mutualfund requires more of

cc. credit analysis skillsdd.equity analysis skillsee. patienceff. trading skills

427. Which is the most important inselecting debt fund for better return

ee. past performanceff. level of interest ratesgg.fund expertisehh.the securities in which it has

invested

428. Investors should be advised toavoid investing in a debt fund with a

cc. lower rated portfolio and higher expense ratio

dd.higher rated portfolio and lower expense ratio


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ee. lower rated portfolio and lower expense ratio

ff. lower rated portfolio and higher expense ratio

429. An ideal money market mutualfund must have

cc. lower returnsdd.lower expense ratioee. low quality of investmentsff. all the above

430. Circumstances that might causean investor to change the composition

of his portfoliou. cyclical changes in economyv. unforeseen economic changes

affecting the portfolio's preferred sectors

w. both the abovex. none of the above

431. If a charitable trust approaches adistributor with an application for investment in a mutual fund, thedistributor should

ee. accept the application withoutwasting time

ff. reject the application outrightgg.refer to the offer documenthh.accept the application as a

direct application

432. An application form for investment in a mutual fund isavailable with

cc. the offer documentdd.the abridged annual reportee. the key information

memorandum

ff. a bank challan

433. An aggrieved unit-holder of amutual fund can sue

gg.the AMChh.the trusteesii. the sponsor if returns have been

guaranteed by them jj. none of the above

434. As per SEBI regulations for valuation of investments held bymutual funds, a security is considered"non-traded" when it

ee. has not been traded for 60 days prior to valuation

ff. has not been traded for 30 days prior to valuation

gg.is not listed on any stock exchange

hh.is held by the mutual fundwithout buying or selling

435. An Ex-Mark of 100% is possiblefor

cc. a growth funddd.an aggressive growth fundee. an index fundff. a balanced fund

436. A trail commission is justifiedwhen

w. an investor cancels his

investmentx. the investor redeems his

investment in a very short timey. an agent invests his own

money, not that of a clientz. an agent sells many mutual

funds


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437. Of the following, which type of fund would have a higher P/Emultiple in comparison to the averagemarket multiple

ee. A Value Fundff. A Growth Fundgg.An Index Fundhh.Could be any of the above

three, one cannot generalise

438. Which of the following is nottrue as per SEBI Regulations for DebtFunds?

ee. Investment in rated debtsecurities of a single issuer should not exceed 15% of NAV

ff. Total investment in unrateddebt securities of a single issuer should not exceed 25% of NAV

gg.Total investment in unrateddebt securities belowinvestment grade should notexceed 25% of NAV

hh.Total investment in rated debtsecurities below investmentgrade should not exceed 25%of NAV

439. A Money Market Mutual Fund ismost likely to invest in

ee. Corporate Bondsff. Equity Shares

gg.Government Securities withmaturity less than 1 year

hh.All of the above

440. Of the following, which would be suitable for a retiree with a modestrisk appetite

gg.Value Fundhh.Diversified Equity Fundii. Growth Fund

jj. Balanced Fund

441. A high portfolio turnover for afund indicates

cc. that the fund is activedd.higher transaction costsee. both the aboveff. none of the above

442. Unit Trust of India's US-64Scheme

ee. is listed on stock exchangesff. has a fixed price for sale and

repurchasegg.has its sale and repurchase

price declared periodicaly byUTI

hh.has its price determined bymarket forces

443. The Indian debt marketcc. is Wholesale in naturedd.comprises large players like

financial institutions and banksee. witnesses large scale trading in

government securitiesff. all of the above

444. A fund that charges a load is better than a no-load fund

cc.Truedd.False

445. An AMC can approach investorseither directly or with the help of

aa. individual agents


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bb.banks and non-banking financecompanies

cc. distribution companiesdd.all of the above

446. Which of the following is truefor Equity Linked Savings Scheme(ELSS)

aa. A tax rebate is available toinvestors in these schemes

bb.The investment has to belocked in for 3 years

cc. The minimum amount for investment is fixed

dd.All of the above

447. A prospective investor z. has the same status as a unit-

holder of a fundaa. can sue the AMC/trustee

bb.has no legal recoursecc. all of the above

448. An investor can assess the performance of his mutual fund bycomparing it with the performance of

cc. other mutual fund of the sametype

dd.the stock marketee. other financial productsff. all of the above

449. Unrated securities in the

portfolio of a mutual fund are not to be valued

ee. Trueff. False

450. An exit load guarantees a higher return

aa.True bb.False

451 Bonds held in the portfolio of amutual fund are valued at yield to

maturityee.Trueff. False

452 The Valuation of non-tradedequity shares is done at the trading

price 30 days prior to valuation dateii. True

jj. False

453 If a unit-holder does not agree tothe merger of his fund with another,he has not exit option

kk.Truell. False

454. The most important factor look for when investing in a corporatefixed deposit is the

kk.yieldll. rate of interestmm. credit rating of the

depositnn.none of the above

455. The most important reason for aninvestor to prefer a bank deposit to amutual fund is

gg.the credit worthiness of the

bank hh.because the bank does not

invest in securitiesii. that the bank offers a guarantee

jj. all of the above

456. A deep discount bond


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ii. is always sold at a discount toits issue price

jj. bears interest annuallykk.is redeemed at a price much

higher than issue pricell. bears interest at varying

interests

457. A mutual fund in India is aii. body corporate

jj. companykk.trustll. an asset management company

458. When selling a mutual fund, agood agent would never

kk.describe the past performanceof the scheme

ll. compare the fund with other mutual funds

mm. assure a rate of returnnn.compare the fund with other

financial products

459. An investor buys one unit of afund at an NAV of Rs.20. He receivesa dividend of Rs.3 when the NAV isRs.21. The unit is redeemed at an

NAV of Rs.22. Total Return isee.25.71%ff. Rs.27.51gg.21.27%hh.Rs.21.75

460. A fund sells 100 units of facevalue Rs.10/- at an NAV of Rs.12.25.How much would be credited to unitcapital?

ii. Rs.1225 jj. Rs.225

kk.Rs.1000ll. none of the above

461. When a scheme with assuredreturns is being launched, which of the following need not be published inthe offer document?

ii. Means of fulfilling theguarantee

jj. Information for all schemeslaunched by the fund in the past

kk.comparison with other mutualfunds

ll. Investment objective

462. Mutual fund units can bedistributed by

ee. trustees of the fundff. the AMCgg.Non-banking finance

companieshh.banks

463. A debt fund distributes 10%dividend. How much tax does theinvestor have to pay on this dividend?

ii. 10% jj. 12%kk.20%ll. None

464. A debt fund distributes a 10%dividend. How much tax does the

fund have to pay?ii. 10%

jj. 12%kk.10.2%ll. None


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465. How many scrips is the NIFTYconstitutes of

cc.40dd.100ee.30ff. none of the above

466. Which of the following is thefirst step in financial planning

ii. Asset Allocation jj. Selection of fundkk.Studying the features of a

scheme

ll. None of the above

467. Why should one buy aninsurance policy?

gg.It gives high current returnshh.It gives good capital

appreciation over its termii. It should be bought due to the

need for insurance and not asan investment

jj. All of the above

468. SEBI Regulations for MutualFunds were formulated in

aa.1992 bb.1993cc.1995dd.1996

469. Expenses incurred by a fund for printing of Key InformationMemorandum can be amortised over

cc.10 Yrsdd.5 Yrsee.15 Yrsff. Cannot be amortised

470. A mutual funds' investments areguided by the

gg.AMChh.Board of Trusteesii. Investment Objectives

jj. Unit holders

471. UTI was the only mutual fundfor the period

ii. 1984 to 1988 jj. 1963 to 1988kk.1964 to 1992ll. none of the above

472. Investors who follow the fixedAsset Allocation approach

dd.maintain balance in their portfolio by liquidating a partof the position in the asset classwhich has given higher returnand reinvesting in the other asset class which has lower return

ee. are not disciplinedff. increase their equity position

when equity prices tend toclimb

gg.none of the above

473. An investor should not invest ina mutual fund if

ee. his capital base is large

ff. he is able to carry out detailedinvestment research andmonitor the stock market

gg.both the abovehh.none of the above


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474. Mutual fund can benefit fromeconomies of scale because of

ee. portfolio diversificationff. risk reductiongg.large volume of tradeshh.none of the above

475. Which of the following is adisadvantage suffered by a mutualfund investor?

gg.High liquidityhh.diversificationii. no tailor made portfolio

jj. low investment

476. A disadvantage suffered bymutual fund investor is that he has nocontrol over the costs of investing

gg.Truehh.False

477. Which of the followingstatements about UTI is untrue

ii. It was set up in 1963 jj. It was formed by RBIkk.It was established by an act of

Parliamentll. It was not given a monopoly

status

478. Which scheme has the largestinvestor base?

gg.ULIPhh.UTI Mastershareii. US-64

jj. SBI Magnum

479. Which was the first diversifiedequity investment scheme in India

gg.SBI Magnumhh.UTI Mastershareii. MEP-91

jj. Mastergain-92

480. The private sector was granted permission to enter the mutual fundindustry in

y. 1992z. 1993aa.1998

bb.1995

481. The first non-UTI mutual fund

wasii. SBI MF

jj. LIC MFkk.Canbank MFll. Indian Bank MF

482. The organisation responsible for a comprehensive set of regulations for all mutual funds in India is

gg.RBIhh.SEBIii. AMFI

jj. SHCIL

483. The 1999 Union GovernmentBudget helped the Mutual Fundindustry by

kk.regulating the industry practices

ll. exempting all mutual funddividends in the hands of investors from income tax

mm. approving the code of ethics formulated by AMFI

nn.doing away with all regulationsfor mutual funds


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484. During the period 1992-99, themobilisation of funds by the mutualfund industry was about

ii. 5% - 6% of gross domesticsavings

jj. 2% - 4% of gross domesticsavings

kk.7% - 10% of gross domesticsavings

ll. 25% - 40% of gross domesticsavings

485. Which of the following about

Public Providend Fund (PPF) areuntrue

gg.50% of the balance of the 4thyear can be withdrawn in the7th year

hh.The interest is tax freeii. The rate of interest is 12% p.a.

jj. contributions upto Rs.60000 areeligible for tax rebate

486. A close-ended scheme is quotedon the stock exchange at a discount toits NAV when

aa. the markets are bearish bb.investors perceive that the fund

will be unable to maintain the NAV

cc. the assets of the fund areundervalued

dd.none of the above

487. Which of the following is afundamental attribute of a mutualfund scheme

ii. The names and addresses of theregistrars and custodians

jj. The nature of the scheme beingincome bearing

kk.The specified stocks in thescheme's portfolio

ll. The name and address of thecompliance officer

488. Offer Document of a mutualfund is

ii. required by investors jj. required by the AMC for its

own referencekk.required as per SEBI

regulations

ll. not mandatory as per SEBI

489. The units of a scheme being soldand repurchases as per the procedurelaid down is one of the fundamentalattributes of a scheme

ii. True jj. False

490. The steps involved in theselection of an equity fund for investment are

kk.sector selection, assetclassification, selection of fundmanagers and schemes

ll. sector selection, selection of fund managers and schemes,asset classification

mm. asset classification,

sector selection, selection of fund managers and schemes

nn.selection of fund managers andschemes, sector selection, assetclassification


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491. Compounding of interest is bestexplained by a

gg.balanced fundhh.growth fundii. value fund

jj. income fund

492. From whom can a unit-holder seek redressal if his complaint is notentertained by the mutual fund

ii. AMC jj. Board of Trusteeskk.SEBI

ll. RBI

493. An investor wishes to switch between a money market mutual fundand an equity fund. What would youadvise him?

gg.It would be better to stick toone type of fund, the one thatmeets his investment objective.

hh.He should keep switching partsof his investment from theequity fund to the moneymarket fund as the market risesand switch back to the equityfund when the market falls

ii. He should switch from themoney market fund to theequity fund in a rising marketand switch back to money

market fund when the marketfalls

jj. none of the above

494. For choosing an appropriate benchmark to measure a scheme's

performance, all of the following arerequired except

ee. the composition and size of the portfolio

ff. the investment objectivegg.historical data of fund

performancehh.the nature of investments

495. Which of the followingcharacterise the fund that a risk averseinvestor should choose

ee. Gross dividend yield 15% Beta1.5, Ex-Marks 90

ff. Gross dividend Neil 10%, Beta1, Ex-Marks 70

gg.Gross dividend yield 11%, Beta0.9, Ex-Marks 80

hh.Gross dividend yield 12%, Beta1.2, Ex-Marks 80

496. A mainstream diversified debtfund is most affected by

ee. reinvestment risk ff. liquidity risk gg.interest rate risk hh.default risk

497. If yields fall, a debt fundmanager will do all of the followingexcept

dd.sell short maturity securitiesand buy long maturity

securitiesee. see that the fund's average

duration becomes longer thanthe market's average duration

ff. sell long duration securities and buy short duration securities


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Answers to Practice Question

Q. No

Ans Q. No Ans Q. No Ans Q. No Ans Q. No Ans

1 b 51 a 101 d 151 c 201 b2 b 52 d 102 a 152 d 202 d3 d 53 b 103 b 153 d 203 b4 d 54 d 104 c 154 d 204 d5 c 55 c 105 a 155 b 205 b6 c 56 c 106 d 156 a 206 c7 b 57 c 107 a 157 c 207 a8 c 58 c 108 d 158 d 208 d

9 d 59 b 109 d 159 a 209 a10 c 60 d 110 b 160 d 210 c11 b 61 c 111 b 161 a 211 b12 b 62 a 112 c 162 d 212 d13 d 63 d 113 a 163 c 213 d14 c 64 d 114 d 164 c 214 a15 b 65 b 115 d 165 b 215 a16 d 66 c 116 b 166 d 216 a17 b 67 c 117 b 167 c 217 b18 d 68 d 118 a 168 b 218 b19 c 69 c 119 c 169 b 219 b20 c 70 d 120 a 170 d 220 d21 b 71 b 121 b 171 c 221 b22 d 72 b 122 c 172 b 222 a23 c 73 d 123 a 173 b 223 b24 a 74 d 124 d 174 d 224 a25 d 75 c 125 c 175 d 225 c26 d 76 a 126 d 176 b 226 a27 c 77 c 127 d 177 c 227 c

28 b 78 a 128 a 178 c 228 c29 c 79 d 129 d 179 c 229 b30 d 80 a 130 a 180 c 230 b31 b 81 c 131 d 181 d 231 d32 c 82 b 132 a 182 b 232 a33 b 83 b 133 b 183 d 233 b34 b 84 b 134 c 184 c 234 b