amfi quiz modified version1
TRANSCRIPT
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Basics and Evolution of Mutual
Funds
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A mutual fund is not
A company which manages an investmentportfolio
A portfolio of stocks, bonds and other securities
A pool of funds used to purchase securities onbehalf of investors
A collective investment vehicle
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In India a mutual fund is constituted as
A) partnership firm
B) trust
c) company
D) government corporation
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Mutual Funds can be defined as
A) a link between the saving public and the
capital markets
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
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" In USA, a mutual fund is constituted as"
A) trust
B) investment company
C) company
D) none of the above
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UTI was the only capital market intermediary
A) 1964 to 1988.
B) 1963 to 1988.
C) 1964 to 1992.
D) None of the above
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Unit holder of a MF owns
A) share in AMC
B) proportionate ownership
C) no ownership
D) none
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Which was the first diversified equity
investment scheme in India?
A) SBI magnum
B) master share
C) MEP-91
D) mastergain92
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Which of the following started the first non-
UTI mutual fund ?
A) financial institutions
B) co-operative societies
C) public sector banks
D) private sector banks
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Which of the following has the largest
investor base?
A) ulip
B) mastershare of uti
C) us-64
D) sbi magnum
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US-64 of UTI :
a) Is quoted in the stock market
b) Has fixed price of sale / repurchase
c) Its sale / repurchase price is declared by UTI
for a specific period
d) Its Price is determined by market forces
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Which is the first Indian offshore fund?
a) India Growth Fund
b) India Fund
c) India Infrastructure Fund
d) None of the above
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Which of the following is untrue
A) UTI was set up in 1963
B) UTI was formed by RBI
C) UTI was established by an act of parliament
D) UTI was not given a monopoly
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A close ended mutual fund has a fixed
A) NAV
B) fund size
C) rate of return
D) number of distributors
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Which of the following is not a Mutual Fund
characteristic?
a) Diversified portfolio
b) Careful research and monitoring of the market
c) Substantial capital
d) Expertise in stock market
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Which of the following benefits are not available in aMutual Fund
A) diversification
B) tax efficiency
C) ability to construct the desiredportfolio
D) professional fund management
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The following characteristic is not present in an openend fund
A) facility to the investor to buy or sell
back units to the fund
B) regular declaration of NAV
C) regular disclosure of portfolio
D) A fixed unit corpus for the life of the scheme
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Index funds aim to :
A) beat all market indices
B) beat a specific market index
C) track a specified index subject to a
small tracking error
D) invest in well researched stock to beat the
popular indices
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Which of the following statements isfalse
A) gilt funds have the least credit risk among various types
of funds
B) gilt funds nav will not fluctuate irrespective of interest
rate movements
C) gilt funds would not face the risk of defaulting unless the
government defaults on its payments
D) gilt funds are ideal for investors whose prime aim is
capital preservation with highest safety of principal amount.
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How is UTI different from other MFs ?
A) Can borrow internally and abroad
B) Can hire, lease
C) Can underwrite
D) All of the above
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UTIs Traditional Debt Strategy has been
A) Credit Selection.
B) Duration Management.
C) Buy and Hold.
D) Prepayment Prediction
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The 1999 Union Government Budget helped
the Mutual fund industry by :
A) Regulating the practices of the MF industry
B) Approve the Code of Ethics suggested by AMFI
C) Exempting all mutual fund dividends from
income tax in the hands of investors
D) None of the above
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Mutual Funds
Conceptual Framework
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A sponsor of a mutual fund may be compared to
A) a director in a company
B) a chief executive of a company
C) a promoter of a companyD) An equity shareholder in a company
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The Indian Trust Act provides for the
following structure/s -
A) board of trustees, which will safeguard the
interests of the beneficiaries
B) trustee company, which will safeguard theinterests of the beneficiaries
C) both the above
D) none of the above
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Mutual funds in India can invest in -
A) transferable securities in the capital and money
markets
B) gold
C) real-estate
D) all of the above
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As per SEBI guidelines, investments by all funds of an AMC inequity shares or equity related instruments of a singlecompany are restricted to
A) 25% of nav
B) 10% of nav
C) 5% of nav
D) no restriction from sebi
Th f ll i i i b ll d b
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The following entities may be allowed by
funds to act as their agents
A) individual agents
B) banks
C) distribution companies
D) all of the above
If a unitholder does not agree to merger
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If a unitholder does not agree to merger,
he/she
A) is allowed to exit only in ces
B) is allowed to exit only in oes
C) is allowed to exit in oes and ces
D) is allowed to exit only by sebi
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A Trustee can be a Trustee of another mutual
fund if
A) sebi approval is obtained
B) he/she is an independent trustee in both mutual
funds
C) the sponsor has no objections
D) cannot be a trustee of another mutual fund
Th AMFI bj ti d t i l d th
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The AMFI objectives does not include the
following
A) to improve standards of mutual fund industry
B) to regulate the stock markets along with sebi in
tandem
C) to create awareness about mutual funds
D) to emphasize on ethical and moral trade practices
If it h ld d t ith f t l f d /
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If a unit holder does not agree with a merger of mutual fund /
AMC with another mutual fund / AMC then he/she can??
A) opt for withdrawal in open-end scheme
B) opt for withdrawal only when sebi allows so
C) opt for withdrawal in open-end or closed-end
scheme
D) none of the above
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The NAV of each scheme should be updated
on AMFI's website
A) every quarter
B) every month
C) every hour
D) every day
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SEBI restricts mutual fund investments incompanies forming part of the same group as
the AMC. This is :
A) not true
B) in the interest of investor protection
C) applied only to some mutual funds, not all
D) not favorable to investors at all
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What is the minimum stake that a sponsor needs to
hold in the Asset Management Company?
A) no stake required
B) 25%
C) 40%
D) 50%
Th i i b f t t h d t
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The minimum number of trustees who need to
be independent persons is -
A) one-third
B) two-thirds
C) three-fourths
D) one-half
Which of the following is not a right of the trustee
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Which of the following is not a right of the trustee
A) To appoint the AMC with prior approval of SEBI
B) approve each of the schemes floated by the AM
C) ask SEBI to audit AMC to ensure compliance
with regulations
D) take remedial action if they believe the conduct ofthe AMC is not in accordance with SEBI
regulations
Issuing and redeeming the units of a
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Issuing and redeeming the units of a
mutual fund is the role of :
A) the custodian
B) the transfer agent
C) the trustees
D) the bankers
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Which of the following statements is false?
A)a custodian may be an associate company of
the sponsors
B) a custodian is required to be registered with
sebi
C) a custodian handles securities in terms of
physical delivery and safe keeping
D) the custodian is appointed by the board of
trustees
Wh t d di l i f
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What does disclosure norms in case of
Borrowing policy of the Mutual Fund Consist
of ?
A) circumstances under which borrowings will be
resorted to
B)regulatory limits on borrowings
C)expected sources of borrowing and possible
collateral used if any ,
D)all of the above
Whi h f th f ll i dditi l ti it
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Which of the following additional activity can an
Asset Management Company undertake?
A) advisory services
B) financial consulting
C) both the above
D) none of the above
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LEGAL AND REGULATORYENVIRONMENT
i f f i i f
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Which of the following is a self-regulatory
organization
A) SEBI
B) RBI
C) NATIONAL STOCK EXCHANGE
D) AMFI
The SEBI(Mutual Fund) Regulations came
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The SEBI(Mutual Fund) Regulations came
into being in the year :
A) 1994
B) 1992
C) 1996
D) 1997
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The organization responsible for a
comprehensive set of regulations for all
mutual funds in India is:A) RBI
B) SEBI
C) AMFI
D) SHCIL
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Unit-holders have the right to inspect
A) Trust Deed
B) Investment Management Agreement
C) Memorandum and Articles of association of AMC
D) all the above
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A mutual fund unit holder can sue
A) AMC
B) SPONSOR
C) TRUSTEES
D) ALL OF THE ABOVE
A close-ended scheme of a mutual
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A close ended scheme of a mutualfund is not governed by
A) exchange rules of the stock exchange
where it is listed
B) listing agreement between the fundand the stock exchange
C) guidelines issued by the ministry of
commerceD) companies act provisions relating to
transactions in securities
A transfer in the management of a close ended
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A transfer in the management of a close ended
scheme does not require the consent of
A) Unit holders with 75% voting rights
B) Sebi
C) Trustees
D) Amc
For a scheme to be able to change its fundamental
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For a scheme to be able to change its fundamentalattributes it must obtain the consent of
A) 50% of unit-holders
B) 50% of trustees
C) 75% of unit-holders
D) none of the above
Which of the following is not a unit-holders
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c o t e o o g s ot a u t o de sright
a) Proportionate right in beneficial owner-
ship of a schemes assetsb) Obtain from the trustees information that
may have an adverse beaming on their
investmentc) Inspect major documents like trust deed,
AMC Agreement, Custodian Agreement,
etc.d) Be informed of any planned sale of scripts
held in the portfolio
In case of guarantee of an Assured Return who is
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In case of guarantee of an Assured Return who is
responsible for meeting the shortfall in case the
return is not achieved :
A) The AMC
B) The fund manager
C) The trustees
D) The sponsor
Which of the following organisation should an
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Which of the following organisation should an
investor approach in case of grievance against a
mutual fund ?
A) CONSUMER PROTECTION COURT
B) COMPANY LAW BOARD
C) AMFI
D) SEBI
Which of the following information does a fund need
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Which of the following information does a fund need
not release to SEBI on a periodic basis?
A) copies of audited annual statements of accounts
for each scheme
B) copies of six-monthly un-audited accounts
C) reasons for sale/purchase of funds holdings
D) quarterly portfolio statement
Stock exchanges are regulated by which of the
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g g y
following?
A) SELF REGULATED
B) SEBI
C) AMFI
D) RBI
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Bank owned Mutual Funds are supervised by
A) SEBI
B) AMFI
C) RBI
D) BOTH A AND C
What % of investors must agree, to demand
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g ,
that a scheme be wound up?
A) 75%
B) A simple majority
C) Only Trustees can wind up a scheme
D) 25%
Half-Yearly Portfolio Statement has to be
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y
published or circulated to the Unit holders
within
A) 2 months from the close of each half-year
B) 1 month from the close of each half-year
C) 15 days from the close of each half-year
D) none of the above
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MUTUAL FUND ACCOUNTING
The expenses charged to a fund are calculated on
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The expenses charged to a fund are calculated on
A) average weekly net assets
B) average monthly net assets
C) average quarterly net assets
D) year end net assets
Transaction costs include all expenses related
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Transaction costs include all expenses related
to trading such as
A) Brokerage commissions paid
B) Stamp duty on transfers
C) Registrars and custodians fees
D) All of the above
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The load charged to an investor in a mutual
fund is :
A) The entry fee
B) The expenses incurred by fund managers for
marketing a scheme
C) Cost of paper on which unit certificates are
printed
D) The fee the agent charges to the investor
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What is mark to market?
a) Valuing investments at cost price
b)Valuing investments at market price
c)Valuing investments at cost or market price
whichever is lower
d)Valuing investments at cost or market pricewhichever is higher
E ti i d fi d
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Expense ratio is defined as
A) Net investment income/net assets for the period
b) Total assets of fund/total investment
c) Ratio of total expenses to average net assets of the
fund
d) Ratio of total expenses to NAV of the fund
"L d i
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"Load is
a) A charge borne by Fund
b) A charge borne by AMC
c) A charge borne by investor
d) A charge borne by Trustees
R i E i l d
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Recurring Expenses include
a) Penalties and fines
b) Interest on delayed payment to unit holders
c) Depreciation on fixed assets
d) Marketing and selling expenses of a scheme
The rate of wealth tax on mutual fund units
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The rate of wealth tax on mutual fund unitsis
a) 10%
b) 20%
c) 30%
d) MF units are exempt from wealth tax
A debt security will be categorized as a
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thinly traded security if trading value
during 30 days prior to valuation date is
less than :
a) 10 crores
b) 15 crores
c) 20 crores
d) 5 crores
Which one of the following is not a
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g
component of book value per share ?
A) Share capital
B) Secured loans
C) Reserves and Surplus
D) Outstanding Share Capital
A security having term to maturity less than
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y g y
182 days to be valued on :
a) Last traded price
b) Amortised - purchase yield
c) Amortised - last traded yield
d) Amortised - straight line basis
I I d f d h l b
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In Index funds the expenses are low because
a) The fund manager does not want a large trackingerror
b) The equity research expenses are not incurred
c) SEBI regulations stipulate lower expenses for index
fundsd) To complete against the actively managed funds
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If a fund has Rs.110 Crores Corpus and 11 crores
i i A i
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Units its NAV is
a) Rs.11
b) Rs. 9
c) Rs. 10
d) Rs. 10.75
A fund charges 2% entry load its NAV is Rs.15. An
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A fund charges 2% entry load its NAV is Rs.15. An
investor invests Rs.15,000. How many units
will he/she get ?
a) 1,000
b) 980.39
c) 980
d) 1020.40
C l l ti
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Calculations
The correct answer is B as :
Rs 15,000 / (15 + {2% of 15}) =
Rs 15,000 / (15 + 0.3) = 980.39
A f d h 1 5% it l d A i t h ld
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A fund charges 1.5% exit load. An investor holds1000 units. The investor wants to redeem
today and the NAV is Rs.20.What amount will he/she get ?
a) 20,000
b) 20,300
c) 17,000
d) 19,700
C l l ti
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Calculations
The correct answer is D as :
1000 x (20{1.5% of 20}) =
1000 x (200.3} = 19,700
An open-end fund was purchased when its NAV
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An open end fund was purchased when its NAV
was Rs 20 . Sixteen months later, its NAV was Rs
22. The annualised NAV change is :
a) 8%
b) 7%c) 7.5%
d) 8.5%
Calculations
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Calculations
The correct answer is c) as :
({[2/20] /16} x 12) x 100 = 7.5%
A closed-end equity fund has average weekly net
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assets of Rs 200 crores. As per SEBI Regulations,
the AMC can charge the fund with investment
advisory fees upto:
a) Rs. 2.25 crores
b) Rs 2 crores
c) Rs 2.5 crores
d) Rs 3 crores
Calculations
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Calculations
The correct answer is A because :
1.25 crores of 1st Rs.100 crores of net assets and 1% ofthe balance = Rs. 2.25 crores.
An equity fund has Rs 1000 crores average weeklynet assets nder management the ma im m
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net assets under management, the maximum
expenses it can charge to the fund is:
a) Rs. 25 croresb) Rs. 20.50 crores
c) Rs. 22.5 crores
d) Rs. 60 crores
Calculations
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Calculations
The correct alternative is b) as :
{2.5% of Rs 100 crores}+{2.25% of Rs 300crores}+{2.0% of Rs 300 crores}+{1.75% of Rs 300crores} = Rs 20.50 crores
A debt fund has Rs 1500 crores average weekly net
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assets under management, the maximum expenses
it can charge to the fund is:
a) Rs. 20.50 crores
b) Rs. 25.50 crores
c) Rs. 28.00 crores
d) Rs. 29.25 crores
An open-end scheme floated on load basis maycharge its initial issue expenses to the scheme
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charge its initial issue expenses to the scheme
as follows:
a) Full amount on the first day
b) Amortise the expenses over the first 10 years
c) Amortise the expenses over the first 5 years
d) Amortise the expenses over the first 3 years
The value of non-traded securities is assessed
i hi h f h f ll i
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in which of the following ways
A) A good faith basis
B) The last traded price
C) Evaluated by SEBI
D) Average share price of its competitors
Investment of up to Rs.10,000 in an equity linked
i h (ELSS) lifi f t b t f
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savings scheme(ELSS) qualifies for tax rebate of
A) 20%
B) 15%
C) 25%
D) 10%
An investment of Rs.100,000 with Rs.10,000
in an equity linked savings scheme(ELSS) and
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in an equity linked savings scheme(ELSS) and
the rest in an Infrastructure scheme would get
a tax rebate of :A) Rs. 25,000
B) Rs. 10,000
C) Rs.18,000
D) Rs.40,000
Calculations
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Calculations
(20% of Rs.10,000) + (20% of Rs.80,000) = Rs.18,000
What is the rate of tax on Long Term Capital
G i i f MF it ?
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Gains in case of MF units ?
A) 20% after indexation
B) 10% without indexation
C) Either A or B
D) Higher than A or B
A Mutual fund declares Re 1 as
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distribution.The income in the hands of unit
holders is
a) taxable at 20%
b) not taxable in the hands of unitholders
c) Information is inadequate to assess tax
liability
d) Income tax will be assessed as per
unitholders liability
Which of the following is not true as per SEBI
?
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norms?
a) unrated securities are not to be valued
b) Bonds are valued at YTM
c) Equity shares are valued at closing price in the
market on the valuation date
d) Benchmarking for Valuation used
The accounting policies of a fundshould be in accordance with
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should be in accordance with
a) GAAP
b)SEBI regulations
c) ICAI Guidelines
d) American GAAP
Liabilities in the balance sheet of a mutual fund
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are
a) In the form of long-term loans
b) Strictly short term in nature
c) Combination of long term and short term
d) Not allowed as per regulations
Investments made by a mutual fund onbehalf of investors are accounted as
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behalf of investors are accounted as
Assets
Liabilities
Capital
None of the above
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Measuring & Evaluating FundPerformance
An investor can assess his funds performance
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to
a) The performance of another mutual fund
b)The performance of overall stock market
c) The performance of similar financial products andschemes available in the market
d) All of the above
An equity scheme is 90 days old. To compute
yield it can use
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yield, it can use
a) Absolute returns
b) Simple annualized returns
c) Compounded annualized returns
d) All of the above
A unit of an open-ended fund waspurchased when its NAV was Rs 20 At
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purchased when its NAV was Rs 20. Atyear end, its NAV was Rs 22. In the
interim period the dividend distributionwas Rs 4 per unit. The funds simple totalreturn was
a) 25%
b) 30%
c) 20%
d) 31%
Calculations
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Calculations
b) is the correct answer because :
[(4+2)/20] x 100 = 30%
The maximum term to maturity of Money
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The maximum term to maturity of Money
Market Instruments is
a) 1 year
b) 6 months
c) 3 months
d) 1 month
"D ration" refers to
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"Duration" refers to
a) Change in valuation of debt and equity with respect to
change in interest rates
b) Change in valuation of debt securities with respect to
change in interest rates
c) Change in valuation of debt securities with respect to
change in BSE sensex
d) Term to maturity of any debt instruments
Dividend Yield of a Company is the ratio of :
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p y
a) Dividend per share upon Face Value per share
b) Dividend per share upon Book Value per share
c) Dividend per share upon Market Price per share
d) Dividend per share upon replacement cost per
share
In the case of a rating downgrade, the yield
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applicable to the instruments downgraded
would
a) Rise
b) Fall
c) Remain the same
d) The two are not related
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Returns in terms of NAV growth should be
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interpreted in light of
a)Investment objective of the fund
b) Current market conditions
c) Alternative investment returns
d) All of the above
Benefit of economies of scale is reaped by
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Mutual Funds because of
a) portfolio diversification
b) reduction of risks
c) large volumes of tradesd) None of the above
The mobilization of funds by Mutual Fund
i d t i i th f
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industry is in the range of
a) 5% to 6% of GDS
b) 2% to 4% of GDS
c) 7% to 10% of GDSd) 25% to 40% of GDS
The largest corpus of investable
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funds in India is with
a) Bank-owned mutual funds
b) Private Sector mutual funds
c) UTI
d) Insurance Companies
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Portfolio turnover rate of a fundmeasures the
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measures the
a) Size of the fund's portfolio
b) Amount of buying and selling done
by the fundc) The average number of units sold by
the fund in one day
d) None of the above
When comparing a fund's performance withthat of its peer group,the following cannot
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p g p, gbe compared
a) Two debt funds with 5 year maturities
b) A broad-based equity fund with an IT
Sector Fundc) A bond fund with a bond
d) A government securities fund with a
government security
When comparing performance of two
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When comparing performance of twofunds, the following need not be similar
a) Risk profiles
b) Investment objectives
c) Fund size
d) Fund managers
A person would prefer a bank deposit to a
mutual fund only when :
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mutual fund only when :
A)The investor has no considerations for other
investment aspects other than safety
B) The returns on bank deposits are high
C) The yield on mutual funds are higher than bank
deposits
D) None of the above
The responsibilities of a unit-holderdo not include :
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a) Monitor his investments carefully
b) Being aware of information that
affects his investment in a major way
c) Carefully studying the offer document
d) Taking decisions about where the fund
managers should invest
The most important reason for an investorto prefer a bank deposit to a Mutual fund is
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to prefer a bank deposit to a Mutual fund is
a) The credit worthiness of the bank
b) Because the bank does not invest in
securitiesc) That the bank offers a guarantee
d) All of the above
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Investment Management
A Certificate of Deposit is issuedby
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by
A) Government
B) Corporates
C) Banks
D) Trusts
Commercial Paper is issued by
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A) Mutual funds
B) Banks
C) PSUs
D) Corporates
A Mutual Funds investments are guided by
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A) AMC
B) Board of trustees
C) Investment objectives
D) Unit-Holders
Index funds fall under the category of :
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A) Active fund management
B) Passive fund management
C) Either of the two
D) None of the above
Which of the following debtinvestments need not be rated
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a) Corporate bonds
b) Commercial paper
c) Company depositd) Debt fund
Yield curve is also known as
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a) Curve of Interest
b) Term Structure of Interest Rates
c) Curve that yields
d) None of the above
Which of the following is not true aboutpassive portfolio management ?
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A) their objective is to offer a return that is equal to the
return on a selected market index
B) the choice of the sample of stocks is important
C) the fund manager does not have to keep fund
expenses as low as possible
D) the fund manager does not have to go through process
of stock selection
Which of the following is not a balanced fund ?
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a) 90% equity 10% debt
b) 65% equity 35% debt
c) 35% equity 65% debt
d) 50% equity 50% debt
Maximum permissible investment by a mutual fund in money
market securities during the first 6 months from allotment of
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units in an IPO is -
a) 100 per cent
b) 60 per cent
c) 50 per cent
d) Depends on whether it is an equity scheme or
a debt scheme
Which of the following is applicable to the
debt market in India ?
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A) The debt market is a wholesale market
B) There are large players like banks, financial
institutions and mutual funds
C) Government securities are traded on a large scale
D) All of the above
Which of these issuers cannot issueCertificates of Deposit?
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a) Scheduled Commercial Banks
b) NBFCs
c) Regional Rural Banks
d) Financial Institutions
Market Capitalization refers to :
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a) Total turnover of a Company
b) Employee turnover in a Company
c) Total external debt outstanding of the Company
d) Total number of equity shares outstanding
multiplied by market price of shares
For debt schemes, SEBI restricts the investment
in rated investment grade debt instruments by a
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in rated investment grade debt instruments by a
single issuer to
a) 25% of NAV
b) 15% of NAV
c) 10% of NAV
d) 5% of NAV
A bond with a coupon rate of 9% when
interest rates for similar maturities are 11%
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interest rates for similar maturities are 11%
will sell
a) Above par
b) Below par
c) At par
d) At a price which is not related to interest rates for
similar maturities
At what rate is Tax deducted at source in Bank
Fixed Deposits in case of a Resident Indian ?
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Fixed Deposits in case of a Resident Indian ?
a) 10
b) 10.2
c) 20.4
d) 30
Yield and price of a bond move
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a) In opposite directions
b) Together in the same directions
c) In an unrelated fashion
d) In accordance with the inflation index
Treasury bills are issued by
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a) A companys treasury departmentb) Nationalized banks
c) RBI on behalf of the Government
d) PSUs
How many PPF Accounts can a single person
open as per the prevailing laws ?
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open as per the prevailing laws ?
a) 2
b) 3
c) 1
d) 4
A bond with face value Rs. 1000 and coupon rate of
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A bond with face value Rs. 1000 and coupon rate of
10% is quoted in the market at Rs 1200. The current
yield on this bond is :
a) 10%
b) 8%
c) 8.33%
d) 30%
Calculations
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The correct answer is c) as :
{10% x 1000 / 1200} = 8.33%
A mutual fund under all its schemes takentogether will not own more than ___% of listed
shares of companies in the same gro p as the
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shares of companies in the same group as the
sponsora) 5%
b) 10%
c) 15%d) 25%
The most important factor to look for in caseof corporate fixed deposits is :
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A) Credit rating of deposit and of the company
B) The yield
C) The rate of return
D) None of the above
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Can a mutual fund transfer investments from
one scheme to another
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one scheme to another
a) Yes. Only with prior approval of SEBI
b) No
c) Yes. Only up to 10% of total investments
d) Yes. Provided the transfer is at the current marketrate
MFs can trade in derivatives subject to which
of these conditions
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of these conditions
A) Only for hedging and portfolio balancing.
B) Must disclose to investors that they will be using
derivatives.
C) MFs can not trade in derivatives without special
permission
D) Both A and B
Value funds invest in :
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A) Equity shares with high p/e ratio
B) Equity shares with low p/e ratio
C) Equity shares of companies which stand for value
based business practices
D) None of the above
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Equity Linked Savings Scheme has the
following feature
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following feature
a) It entitles the unit holder for tax rebate
b) The investment is locked in for 3 years
c) A minimum stated level of investments is made inequity related instruments
d) All of the above
Which of the following is true as per SEBI
norms for debt investment?
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norms for debt investment?
a) Investment of rated investment grade of a company
should not exceed 15% of NAV
b) In case of rated as well as unrated but below
investment grade, debt investment in a company
should not exceed 10% of NAV
d) For all companies investment not to exceed 25% of
NAV
d) All of the above
The additional yield required toaccount for the risk of default by the
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borrower is known as
a) Yield plus
b) Yield spread
c) Yield extrad) Yield premium
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Fund Distribution & Sales Practices
Mutual funds in India are open to investmentby all of the following except
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A) FIIs registered with SEBI
B) Foreign citizens/entities
C) Non-Resident Indians (NRIs)
D) Overseas Corporate Bodies (OCBs)
Mutual fund having its own direct marketing canmarket the product through
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A) BANKS & FIS
B) DISTRIBUTORSC) EMPLOYEES
D) ALL OF THE ABOVE.
Commissions are not paid to distributors for
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a) Any out of pocket expenses incurred which
attracting investors
b) For bringing in the investors to the fund
c) To provide extra returns to the investors
d) all of the above.
Which of the following sales practices isprescribed by regulation ?
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A) AMFI Code of Ethics
B) SEBI Advertising Code
C) AMFIs Code for Agents
D) None of the above
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An agent's appointment by a fund
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a) Requires SEBI's approval
b) Is a lengthy and cumbersome
processc) Is mandatory preceded by an
AMFI test
d) Does not require any approval
An NRI holds Units in a Mutual Fund. What should he do
with his holding if he takes up a foreign citizenship?
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A) he redeems
B) he continues
C) he transfers the units to his mother, who
resides in india
D) none of the above
Securities Dealers have the following function
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in an AMC:
A) take investment decisions
B) formulate investment proposalsC) execute trades on behalf of the fund
D) none of the above
Excess distribution expenses are to beborne by the
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y
A) AMC
B) unit holders
C) SEBID) AMFI
An agent can offer and sell a fund'sunits at
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units at
A) Any price he/she chooses
B) A price determined by competition
among agents
C) A price based on demand for that
fund's units
D) The public offering price currently ineffect
AMFI code of ethics broadly covers thefollowing areas
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a) management of the fund ought to be in the interest
of the unit-holders
b) high standards of service are expected from funds
c) both a and b
d) neither a nor b
A good agent will never sell on considerationof
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a) Past record of the scheme
b) Comparative features of other MFs
c) assured rate of dividendd) None
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The Offer Document
Offer document is issued by
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A) AMC
B) Sponsor
C) Either of the above
D) None of the above
Filing fees for Offer Document with SEBI is :
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A) Rs. 25,000 per Offer Document
B) Rs. 25,000 per Scheme
C) Rs. 10,000 per Scheme
D) Rs. 10,000 per Offer Document
A Constant performance review can be madefrom all these except
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A) NEWSPAPER
B) OFFER DOCUMENT
C) RESEARCH PAPER
D) NEWSLETTER
Which is not true about KIM
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A) KIM is a concise format offer document
B) KIM is given by AMC
C) KIM shows the health of a fundD) none of the above
The following do not form a part of the investmentprocedure described in an offer document
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A) various plans under the scheme (e.G.Dividend
reinvestment plan)
B) minimum initial (and subsequent) investmentC) details of who can invest
D) details of other competing mutual funds
The front page of an offer documentneed not cover
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A) opening, closing and earliest closing
date of the offer
B) disclaimer clauseC) legal and regulator compliance
D) price of units
Key Information Memorandum is
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A) An abridged version of the offer
document
B) The memorandum & articles ofassociation of the AMC
C) A sheet containing historical navs of
other fund schemesC) annual report of the AMC
An addendum giving details of material change inthe offer documents should be circulated to
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A) DISTRIBUTORS/BROKERS
B) UNIT HOLDERS
C) SEBID) ALL OF THE ABOVE
A disclosure should be made in the offer document ifan AMC has invested more than the following
percentage of its net assets in group companies
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percentage of its net assets in group companies
A) 50%
B) 40%
C) 25%
D) 10%
The prospectus of a close-endedfund is issued
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A) Every year
B) Only once at the time of issue
C) Every quarterD) Every six months
Which of the following is not true for offerdocuments of open-ended schemes
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A) It is first issued at the time the
scheme is launched
B) It is registered with SEBIC) It has to be revised periodically
D) It need not be revised at all
Which of the following information would not beavailable in mutual fund offer document
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A) details of the sponsor and the amc
B) description of the scheme and the investment
objectiveC) historical statistics
D) statistics of funds of other amcs in the same class
of funds
An offer document needs to be published
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A) at the time of launching the scheme
B) whenever there is any material change
C) offer document once published cannot be printed
subsequently
D) none of the above
The following are not required to be disclosed in theabridged offer document
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A) initial issue expenses
B) annual recurring expenses
C) transaction expenses
D) none of the above
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Investor Services
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A Systematic Investment Plan is the best
example of
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a) Rupee Cost Averaging
b) Value averaging
c) Buy & Hold
d) None of the above
Most equity scheme Unit holders redeem their
units
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a) Zero times per year
b) Five times per yearc) Twelve times per year
d) Nine times per year
To meet redemption payments the MutualFund can :
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A) borrow 10% of the net assets of the scheme for 1
year
B) borrow 15% of the net assets of the scheme for 1.5years
C) borrow 20% of the net assets of the scheme for 0.5
years
D) borrow 5% of the net assets of the scheme for 2 years
Which is untrue regarding Loans against
Mutual Fund units?
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A) Sebi regulation permits the mutual funds to giveloans against their units
B) Sebi regulation prohibits mutual funds themselves
from giving loan against units
C) Several banks lend to investors against mutual
fund units held by them
D) Banks are usually inclined to sanction higher
amount against unit holding in liquid schemes
A difference between AIPs and VAPs is
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A) No difference
B) Only AIP offers Rupee cost averaging
C) Only VAP is contractually binding
D) Only AIP is contractually binding
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An investor can ask for
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a) Trust deed
b) Memorandum
c) Offer documentd) All
Which of the following is untrue ofan automatic reinvestment plan ?
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a) The plan allows for automatic reinvestment
of all income and capital gains
b) Automatic reinvestment allows for
accumulation of additional units of the fundc) The major benefit of automatic reinvestment
is compounding
d) The benefit of automatic reinvestment is
often lost on account of the heavy load
charge on the reinvestment
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Tax benefits from
investment in Mutual Funds
A fund acquires 100 shares in Company A for Rs 5000, it
buys another 150 shares in the same Company for Rs7000. Later it sells 50 shares for Rs 3500. What is the
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gain/loss on the sale?
a) Rs. 1100
b) Rs. 1000
c) Rs. 1167d) Rs. 1500
Calculations
The correct answer is a) as because :
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)
Average cost price of 1 share = 12,000/250 = Rs 48Sale price of 1 share = 3,500/50 = Rs 70
Hence, Total gain on sale = 22 x 50 =
Rs 1100
Tax law definition of Capital Gains is
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A) Sale considerationCost of Acquisitions
B) Sale consideration + (Cost of Acquisitions + Cost
of Improvements)
C) Cost of transfer
D) Sale Consideration(Cost of Acquisition + Costof Improvements + Cost of transfer)
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Calculations
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The correct alternative is b) as :
125,000 (75,000*351/281) = 31,317
An investor purchased 5000 units of a mutual fundon June 15 , 1995 for Rs. 12.50. He sold them on
April 14 , 1999 for Rs. 45.75. What are the capital
gains chargeable to tax? ( Cost of Inflation Index for
-
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1995-1996 was 281 and for 1999-2000 was 389)
A. Rs 142,250
B. Rs.142,350
C. Rs.142,450
D. Rs.142,550
An investor purchased 2000 units of a mutual fundon April 1 , 1992 for Rs 10.50. He sold them on
April2, 2000 for Rs. 26.75. What are the capital
gains chargeable to tax? ( Cost of Inflation Index for
f )
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1992-1993 was 223 and for 2000-2001 was 406)
A. Rs. 15, 230
B. Rs. 15, 240
C. Rs. 15, 250
D. Rs. 15, 260
An investor purchased 5000 units of a mutual fundon May 6 , 1998 for Rs. 15.50. He sold them on
April15, 1999 for Rs. 25.75. What are the capital
gains chargeable to tax? ( Cost of Inflation Index for
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1998-1999 was 351 and for 1999-2000 was 389)
A. Rs. 51, 250
B. Rs. 52, 250
C. Rs. 53, 350
D. Rs. 54, 450
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An investor purchased 1000 units of a mutual fundon April 15 , 1996 for Rs. 13.75. He sold them on
April 25 , 1999 for Rs. 32.75. What are the capital
gains chargeable to tax? What is the amount of
capital gains tax that he will pay ? ( Cost of Inflation
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capital gains tax that he will pay ? ( Cost of Inflation
Index for 1996-1997 was 305 and for 1999-2000 was389)
A. 19000 and 1995
B. 15210 and 3194
C. 18250 and 1995
D. 18250 and 3194
An investor purchased 1000 units of a mutual fund
on April 10 , 1998 for Rs 23.50. He sold them on
June 14, 2000 for Rs.34.50. What are the capital
gains chargeable to tax? (Cost of Inflation Index for
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gains chargeable to tax? (Cost of Inflation Index for
1998-99 was 351 and for 2000-01 was 406)
A. Rs.7100
B. Rs.7200
C. Rs.7300
D. Rs.7400
An investor purchased purchased 5000 units of amutual fund on September 20, 1998 for Rs 14.50. He
sold them on April 1 , 2000 for Rs 28.65. What are
the Capital gains gains chargeable to tax? What is
the amount of capital gains tax that he will pay? (
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the amount of capital gains tax that he will pay? (
Cost of Inflation Index for 1998-99 was 351 and for2000-01 was 406)
A. Rs. 70750 and 7428.75
B. Rs. 59400 and 12484
C. Rs. 59500 and 12484
D. Rs. 59500 and 12474
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Financial Planning
What is Financial Planning?
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Identifying the varying needs for money.
Planning ones saving and investment in amanner the enables one to achieve the pre-
specified goal.
Both of the above.
None of the above.
Who is a professional financial planner?
Understands the universe of investment options.
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Well informed on the risk and return attributes ofinvestment options.
Advises investors in financial planning andenables them to choose the right option suitingtheir risk profile.
All of the above
What are the attributes of a good financialplanner?
Sound understanding of the universe of
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Sound understanding of the universe of
investment products, their risk and returnattributes, past performance, and the behaviourof portfolios of asset classes.
Good grounding in tax planning and estateplanning.
Ability to convert life-cycles of investors intoneeds and preferences for financial products.
All of the above.
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What are the steps involved in FinancialPlanning?
Establish and define the relationship with the client.
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p
Define clients goal.
Understand ability to save and need for cash flows.
Understand the risk tolerance of clients.
Understand the tax liability and requirements of clients.
Create asset allocation path.
Review and rebalancing.
Important responsibilities of investors in thefinancial planning exercise?
Should set measurable financial goals.
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Should understand the impact of financial decisions on their
cash flows and their income.
Should be willing to revise and re-balance their portfolios with
changing market conditions, performance and their changing
needs.
Investors benefit immensely by starting early and being
systematic and disciplined in their approach.
What is wealth cycle classification of investors?
INVESTMENT PREFERENCESFINANCIAL NEEDSSTAGE
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Wealth preservation.Preference for low risk products
Medium to long termSudden wealthsurge
Low liquidity needs. Ability totake risk and invest for the longterm
Long term investment ofinheritance
Inter-generationaltransfer
Liquid and medium terminvestments. Preference forincome and debt products
Higher liquidity requirementsReaping stage
Liquid and medium terminvestments. Lower riskappetite
Near term needs for funds aspre-specified needs draw closer
Transition stage
Growth options and long termproducts. High risk appetite
Investing for long term identifiedfinancial goals
Accumulation stage
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The basis of genuine investmentadvice should be
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a) The current market situation
b) The agent commissions paid by
different funds
c) Financial planning to suit the
investor's situation
d) Planning to complete the agent'sannual targets
What are the other investment instrumentsissued by govt, available to retail investors?
Public Provident Fund (PPF)
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Public Provident Fund (PPF).
RBI Relief Bonds.
Other government schemes.
- Indira Vikas Patra
- Kisan Vikas Patra
- Post office saving
Public Provident Fund ( PPF ):
15 year deposit product offered through banks.
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Interest fixed by government and is paid onmonthly balances.
Minimum investment of Rs. 100 per year has to bemade. Maximum investment has been recently
capped at Rs. 60,000 per year. Tax benefits under section 88 of the IT Act are
available.
- 20% tax rebate on investment made up to Rs.
60,000, is available for investors with taxableincome of upto Rs. 1.5 lakh per annum.
Contd: ( PPF )
Investors with taxable income above Rs.1.5 lakh
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and below Rs. 5 lakh, can invest upto Rs.60,000and avail a tax rebate of 10%.
No tax rebate are allowed for investors with
taxable income above Rs.5 lakhs.
Both interest receipts and withdrawal of principalare exempt from tax.
Limited liquidity is available. Investors can draw
upto 50% of their 4th year balances, from the 7th
year onwards.
RBI Relief Bonds :
Issued by banks on behalf of the RBI, these bonds
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y
are borrowing of the central government.
Interest is fixed by the government and is paid
semi-annually.
Interest income is fully exempt from tax.
Transferable by endorsement and delivery.
Other Government Schemes :
Indira Vikas Patra & Kisan Vikas Patra :
- Instruments with fixed interest issued by central
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- Instruments with fixed interest issued by centralgovernment, and sold by post office.
- Interest is taxable.
- Investor identity is protected and investment in cash ispossible.
Post office saving and Recurring deposits :
- Both are government guaranteed deposits, with fixedrate of interest.
- Not transferable.
- Attractive for their safety and cash investmentoptions.
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What are the financial planning strategies thatcan be recommended to investors?
Rupee cost averaging.
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p g g
Value averaging.
Jacobs rebalancing strategy.
Grahams 50:50 portfolio re-balancing.
What is Bogles strategic asset allocation?
Older investors in the distribution phase:
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- 50% equity : 50% debt
Younger investors in the distribution phase:
- 60% equity : 40% debt
Older investors in the accumulation phase:
- 70% equity : 30% debt
Younger investors in the accumulation phase:
- 80% equity : 20% debt
The steps in developing a model portfolio for aninvestor?
Develop long term goals.
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Determine asset allocation.
Determine sector distribution.
Select specific fund managers and their schemes.
Model portfolios recommended for investorsaccording to their life cycle stages:
Young unmarried professionals :
50% in aggressive equity funds
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50% in aggressive equity funds.
25% in high yield bond funds, growth and incomefunds.
25% in conservative money market funds.
Young couple with 2 incomes and 2 children:
10% in money market funds.
30% in aggressive equity funds.
25% in high yield bond funds and long term growth funds.
35% in municipal bond funds.
Contd:
Older couple single Income : 30% in short term municipal funds
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30% in short term municipal funds
35% in long term municipal funds
25% in moderately aggressive equity
10% emerging growth equity
Recently retired couple : 35% in conservative equity funds for capital preservation /
income
25% in moderately aggressive equity for modest capitalgrowth
40% in money market funds
What is the recommended portfolio for investorsin accumulation phase?
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Diversified Equity : Sector and balanced funds 65 80%
Income and gilt funds :
15 30%
Liquid funds and bank deposits :
5%
What is the recommended portfolio for investorsin distribution phase?
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Diversified Equity and balanced funds: 15 30%
Income funds :
65 80%
Cash funds :
5%
What are the steps in selection of anequity fund?
Classify into broad categories that signify their risk and
return characteristics.
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Classify the funds on the basis of their fund manager
style.
Evaluate the performance of the scheme.
Understand the structural characteristics of the scheme:
Size of the fund
Fund age
Portfolio managers experience
Costs of investing
Understand the portfolio characteristics of the scheme.
What are the steps in selection of a bondfund?
Fund age and size.
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Relative yield.
Costs.
Quality of the portfolio.
Average maturity.
What are the steps in selection of amoney market fund?
Lower expense ratios
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Lower expense ratios.
Higher credit quality of the portfolio
Yield
An open ended mutual fund is one that has
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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
"Because the fund stands ready to redeemunits at any time, units in an open-end fund
are always worth their"
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a) Net Asset Value
b) Asset Revenue.
c) Selling price
d) Par value.
A mutual funds balance sheet on the liabilityside has
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a) Single class of capital
b) Two classes of capital
c) Debt and equity
d) Only debt
A 55 year old retired person with 25% equityand moderate risk appetite should be advised
to invest in:
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a) Balance fund
b) Value fund
c) Diversified equity fund
d) Growth fund
A 55 year old retiree is in stage
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a) Accumulation stage
b) Growth stage
c) Distribution stage
d) Income stage
Which one of the following statement is false?
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a) Beta of 1 means the fund moves along with the
market.
b) Higher beta portfolios gives higher return in bull
market and higher loss in the bear market.
c) Lower beta portfolio gives lower returns in the bull
market and lower loss in the bear market
d) Higher beta portfolios gives lower return in bullmarket and lower loss in the bear market
A Fixed Term Plan Series is
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a) An open-ended fund
b) A close-ended fund
c) A fixed term bank deposit
d) A fixed term corporate bond
A value manager does not look for
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a) Stocks that are currently undervaluedin the market
b) Stocks whose worth will be recognized
by the market in the long term
c) High current yield
d) Long term capital appreciation
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Continuous tracking of the companies inwhich a mutual fund has invested in equities
is done by
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a) Continuous tracking systems
b) Equity analysts
c) Trustees
d) Security dealers
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An actively managed equity fundexpects to
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a) Be able to beat the benchmarks
b) Earn the same returns as the
benchmark
c) Have no benchmarks
d) Under perform when compared
with the benchmark
An investor approaches you to build his
portfolio.How will you build it?
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a) Selection of sector, selection of fund managers and
schemes, classification of assets"
b) " Classification of assets, Selection of sector, selection
of fund managers and schemes"c) " Selection of fund managers and schemes, Selection
of sector, Classification of assets"
d) " Selection of sector, classification of assets, selectionof fund managers and schemes"
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" When interest rates rise, a Debt fund"
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a) increases in value
b) decreases in value
c) is not affected by interest rate
d) None of the above
Which of the following is not acharacteristic of company fixed
deposits
) h h f
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a) A higher rate of interest
b) Higher risk
c) Unfavorable effect of tax
d) Very high liquidity
If an investor failed to claim hisredemption proceeds within 3 years,
he can claim the proceeds at
) P
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a) Par
b) Prevailing NAV
c) The NAV on the date he has applied
for redemption
d) 15% below the prevailing NAV
Which of the following is notconsidered for technical analysis
) Hi t i l d t th ' h
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a) Historical data on the company's shareprice
b) The company shares trading volume
c) Current market sentiment
d) The companys regulatory
environment
A put provision in a debt issueallows
) I t t t th tifi t i
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a) Investor to put away the certificates insafe deposit vaults
b) Investors to redeem debt prior to
maturity
c) Issuers to redeem debt prior to
maturity
d) Investors to extend the tenure of debt
To compare bonds with different coupon
rates, maturities and prices, investors
would use:
) C t i ld
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a) Current yield
b) Technical analysis
c) Yield to maturityd) Fundamental analysis
A high P/E multiple in comparison to averagemarket multiple could be of a
) V l f d
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a) Value fundb) Growth fund
c) Balanced fund
d) Equity diversified fund
"For which of the following instruments iscredit rating desirable?"
) T bill i d b th G t f I di
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a) Treasury bills issued by the Government of India
b) Medium term dated securities issued by the
Government of India
c) Insurance policies issued by the LIC
d) Debentures issued by the private corporate sector
A credit selection debt strategy is defined asthe following:
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A) Buying high yielding debt securities that give
adequate returns on the overall portfolio.
B) Altering average duration of bonds depending onmarket predictions.
C) Buy/Sell in anticipation of change in credit rating
D) None of the above
According to Bogle, the strategic allocationfor older investors in accumulation phase
should ideally be
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a) 50/50
b) 60/40
c) 70/30
d) 80/20
Quantitative Analysis may use :
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a) Share price data
b) Mathematical modelsc) Financial performance data
d) All of the above
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Selecting the Right InvestmentProducts for Investors
Factors to be considered while investing in anequity fund are
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a) Past Returns
b) Portfolio Managers experience
c) Cost of investing
d) All of the above
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What is the risk measure of a debt fund ?
A) Duration Weighted average maturity of debt
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A) Duration = Weighted average maturity of debt
instruments
B) Duration= Longer and shorter maturity / 2
C) Duration= Weighted average of credit rating
D) Duration = Weighted average beta of the debtfunds
A high portfolio turnover means :
A) The fund is very active in the market
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A) The fund is very active in the market
B) Transaction costs are high
C) A high risk is involved as per the investmentobjectives
D) All of the above
A longer maturity has the following impacton its price risk in case of interest rate
fluctuation
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a) Risk increases with longer maturity
b) Risk decreases with longer maturity
c) Price risk depends solely on credit rating of theissuer
d) None of the above
What is the measure of market risk?
a) Mean
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a) Mean
b) Beta
c) Standard Deviation
d) Alpha
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The following investments are not affected by
price risk in case of interest rate movement
a) Company debentures
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a) Company debenturesb) Institutional bonds
c) Mutual funds
d) Floating rate bonds
Ex-Marks (or R-Squared factor) of a fund
measures :
A) How much of a funds NAV movement is due to
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A) How much of a fund s NAV movement is due tothe market index movement
B) How a funds NAV movement relates to the
market index movement
C) How much of a fluctuation has occurred in a
funds NAV over a historical period
D) How many marks a Credit rating agency accords
to a fund
Ex-marks with 100 % could be for the
following fund:
a) Growth fund
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a) Growth fund
b) Index fund
c) Value fund
d) Balanced fund
Past performance of a sponsor/AMCmutual fund is not indicative of the future
performance of the scheme. This is
a) Not true
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a) Not true
b) A standard risk factor for all
schemes
c) A scheme-specific risk factor
d) Applicable only to gilt funds
There is no contractual guarantee forrepayment of principal or interest to an
investor
a) Bank deposit
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a) Bank deposit
b) Debt fund
c) Secured debentures
d) All of the above
Equity price risks are
a) Company specific
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a) Company specific
b) At Market level
c) Sector specific
d) All of the above
It may not be possible to reinvest interestreceived at the same rate as principal. This is
known as
a) Reinvestment risk
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a) Reinvestment risk
b) Inflation risk
c)
Interest-rate riskd) Call risk
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Which of these credit ratings signifies
"Highest Safety"?
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a) A
b) AA+c) AAA
d) AA
Equity Warrants differ from Stock Options inthat :
a) They are compulsorily converted into equity while
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a) They are compulsorily converted into equity while
options are not
b) They are issued by the company while stock
options are not
c) They do not have a predetermined conversion
price like options.
d) None of the above
MMMF is most likely to invest in :
A) Corporate bonds
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B) Equity shares
C) Rated instruments
D) G-Sec of less than 1 years maturity
Which of the following are not Speciality
Funds?
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a) Sectoral Funds
b) Corporate Bond Fund
c) Gilt Fund
d) Income Fund
An equity fund that aims to capture the most
actively traded stocks invests in
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a) small cap stocks
b) large cap stocks
c) technology stocks
d) all of the above
Historically, benchmarking of Funds in Indiawas done by comparing
Historically, benchmarking of Funds in Indiawas done by comparing
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a) Bank Interest Rates in India
b) US Interest Rates
c) Either of the two
d) Neither of the two
The steps involved in selection of Equity fund
are
a) " Selection of sector, selection of fund managers
and schemes classification of assets"
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and schemes, classification of assets
b) " Classification of assets, Selection of sector,
selection of fund managers and schemes"
c) " Selection of fund managers and schemes,
Selection of sector, Classification of assets"
d) " Selection of sector, classification of assets,
selection of fund managers and schemes"
"In which of the following markets, can
individuals not participate directly?"
a) Call money market
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a) Call money market
b) Badla market at the BSE
c) Equity market at the NSE
d) Debt market at the NSE
Which of the following is not true forIndex Funds
a) These funds invests in the shares that
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a) These funds invests in the shares thatconstitute a specific index
b) The investment in shares is in the
same proportion as in the indexc) These funds take only the overall
market risk
d) These funds are not diversified
Indira Vikas Patra is an investmentproduct popular with
a) Rural investors
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a) Rural investorsb) Investors in high tax bracket
c) Urban investors
d) Risk taking investors
The tenure of an Indira Vikas Patrais
a) 7 years
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) 7 yearsb) 6 years
c) 5 years
d) 3 years
e amoun an nsurance company
would pay to the nominee if apolicyholder died is known as the
a) Premium
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) Premiumb) Sum assured
c) Face value
d) Real value
Which of the following is generallytrue for a growth stock
a) Steady capital appreciation and steadydi id d i ld
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Steady capital appreciation and steadydividends yields
b) High capital appreciation and high
dividend yieldsc) High capital appreciation but low
dividend yields
d) Steady capital appreciation but highdividend yields
The biggest disadvantage ofinvestment in real estate is
a) Less potential for capital
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) Less potential for capitalappreciation
b) High purchase price
c) Depreciation in value as time
passes
d) Value gets eroded due to inflation
A Fund that stands ready to buy and sell units
at any time is a :
a) Closed-end fund
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)
b) Open stock fund
c) Mutual closed fund
d) Open -end fund.
Which of the following is not a common
classification group for stocks?
A) Cyclical stocks
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y
B) Recovery stocks
C) Growth stocks
D) Value stocks
The difference between ordinary and
preference shares is
A) Preference shares dont pay any dividend
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p y y
B) Preference shares entitle the holder to fixed
dividends subject to availability of profits after
tax
C) Only ordinary shares entitle the holder to voting
rights
D) Both B and C
An Investor in a close-ended mutual fund canget his/her money back by selling his/her units
a) back to the fund
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)
b) to a special trust at NAV
c) on a stock exchange where the fund is listed
d) to the agent through which he/she subscribed to
the units of the fund
Government Securities typically pay interest
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a) Annually
b) Quarterly
c) Do not pay interest
d) Semi-annually
Money market instruments do not cover :
a) Commercial paper & Certificate of Deposit
b) Call & Notice money
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) y
c) Treasury Bills
d) Government Securities having 10 year
maturity
Debentures differ from fixed deposits in respectof
a) Interest rates
b) Security
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b) Security
c) Liquidity
d) End use of funds
Which of the following are important criteria forcomparison of fund performance ?
a) Portfolio composition
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) p
b) Maturity profile
c) Fund size
d) All the above
A 25 year old MBA has joined as ManagementTrainee in HLL. He approaches you for advice
on investing his monthly savings. Theinvestments are long term in nature What
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g y ginvestments are long term in nature. Whatasset allocation would your suggest?
a) 100% investment in equity schemes
b) Investment in bank and company deposits
c) 70/30 allocation between equity and debtschemes
d) 100% investment in debt schemes
Two funds A & B have identicalreturns history. Fund A has a higherstandard deviation than fund B.Which fund is suitable for a riskaverse investor?
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averse investor?
a) Fund Ab) Fund B
c) The above information has no relevance to the riskmeasure of funds
d) Since the data is only for the past period, once cannotdraw conclusion based on it
Which is a better investment option whilst
selecting an equity fund?
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a) Ex Marks- 80%, Beta- 0.9, Gross Dividend Yield- 8%
b) Ex Marks- 90%, Beta- 0.8, Gross Dividend Yield- 9%
c) Ex Marks- 75%, Beta- 0.9, Gross Dividend Yield- 8%
d) Either 1 or 3
There are 2 equity funds A & B with beta co-efficient of0.70 & 1.30 resp. A risk averse investor seeks youradvice on the choice between these 2 funds. Whichwould you suggest:
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a) Fund A
b) Fund B
c) 50:50 allocation between the 2 funds
d) None of the above
Which of the following Fixed Deposit can berecommended to investor ?
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a) Company giving highest returns without Rating
b) Company giving moderate returns with highest
Ratings
c) Company paying maximum brokerage
d) Well Known companies FD
For which of the following funds would you
consider average maturity as an important
factor in selecting the right one for the
investor ?
A) A D bt F d
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A) A Debt Fund
B) A Balanced Fund
C) A Money Market or Liquid Fund
D) Both A and C
An investor in need of regular income should
not select :
A)A bank deposit
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B) A debt fund
C) An equity growth fund