Advisor Module AMFI Mock Model Test Paper University Question paper

[ganeshbala]

1. An investor in a closed-end mutual fund can get money back before maturity by selling units
a. Back to the fund
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

2. A closed-end mutual fund has a fixed
a. NAV
b. Tenure
c. Rate of return
d. Number of distributors

3. A mutual fund is owned by
a. The Govt. of India
b. SEBI
c. All its investors
d. AMFI

4. Who is the primary guardian of unit holders funds?
a. The AMC
b. The Sponsor
c. The Trustees
d. The Custodians

5. The limit on maximum entry or exit load that a fund can charge is determined by the
a. AMC
b. SEBI
c. AMFI
d. Distribution agents based on demand for the fund

6. Which of the following is not true for Equity Linked Savings Schemes?
a. Investors can claim an income tax benefit
b. There is a lock-in period before investment can be withdrawn
c. There are not specific restrictions on investment objectives for the fund managers
d. These funds cannot invest in shares of listed companies

7. The fund sponsors should have a sound financial track record of
a. 7 years
b. 12 months
c. 5 years
d. 3 years

8. The agreement between the Trustees and the AMC is known as
a. Trust Deed
b. Investment Management Agreement
c. Agreement to manage Portfolio
d. AMC appointment letter

9. A closed-end scheme of a mutual fund is not governed by
a. Exchange Rules of the stock exchange where it is listed
b. Listing Agreement between the fund and the stock exchange
c. Guidelines issued by the Ministry of Commerce
d. Provisions of Companies Act, 1956 relating to transactions in securities

10. After dividend declaration, unit-holders are entitled to receive dividend within a period of
a. One week
b. 30-days
c. 42-days
d. Six weeks

11. The Board of Trustees of the UTI does not have nominees from
a. RBI
b. LIC
c. IDBI
d. The Bombay Stock Exchange (BSE)

12. The "Capital" of a scheme does not include
a. Unit capital
b. Reserves
c. Borrowing
d. Net worth of the AMC

13. The most important source of information for a prospective investor in mutual fund is
a. Offer document
b. Annual Report of the AMC
c. Economic Times
d. AMFI Newsletter

14. The offer document issued by mutual funds does not serve the purpose of
a. Announcing the launch of the scheme
b. Giving detailed information about the scheme
c. Explaining the risk factors of the scheme
d. Giving the fund manager's investment outlook for the next quarter

15. The offer document for a scheme remains valid even if
a. The AMC is reconstituted
b. Entry or exit loads are changed
c. The scheme's NAV changes
d. New plans are added to existing schemes

16. Standard risk reactors are the ones
a. Which are uniformly applicable for any mutual fund scheme
b. Different for different schemes
c. Which are made by a "standards" committee
d. None of the above

17. The offer document containing the details of a new scheme is first registered with the
a. AMFI
b. SEBI
c. Bombay Stock Exchange
d. Ministry of Finance

18. A scheme's policy on dividends and distribution
a. Is decided by the fund manager as per the market outlook
b. Can be changed to suit the requirements of the AMC
c. Need not be consistent
d. Should be disclosed at the time of initial launch

19. The following need not be covered in a Key Information Memorandum
a. Risk Factors
b. Opening and earliest closing date of the initial offer
c. Disclaimer clause
d. Functions and responsibilities of the sponsor, trustees, AMC and Custodian responsibilities

20. The following are not termed as "sales practices"
a. Agents commission
b. Before-and after-sales service to investors
c. Advertising of schemes
d. Stock broking

21. Which of the following sales practices is prescribed by regulation
a. AMFI Code of Ethics
b. SEBI Advertising
c. AMFI's Code for Agents
d. None of the above

22. Which of the following document, a Mutual Fund distributor needs to refer to find out eligible category of investors in a particular Mutual Fund Scheme
a. SEBI Regulations Manual
b. AMFI booklet
c. Offer document
d. RBI Guidelines

23. Which of the following is not true
a. Companies can invest in mutual fund schemes
b. Registered societies can invest in mutual fund schemes
c. NRI can not invest in mutual fund
d. HUF can invest in mutual fund

24. Listed equity shares are to be valued at
a. The average price of the share in NSE
b. The lowest price of the day in BSE
c. Cost price or current market price whichever is lower
d. The last traded price in the stock exchange where the security is principally traded


25. As per SEBI (Mutual Fund) Regulations, 1996 an asset shall be classified as NPA if
a. Interest warrant bounces twice
b. The issuer refuses to repay interest
c. If the interest/installment becomes overdue for a period of 180 days
d. If the interest/installment becomes overdue for a period of one quarter


26. For a open-end fund, the repurchase price should not be lower than
a. NAV
b. 95% of NAV
c. 93% of NAV
d. 97% of NAV

27. For a no-load fund , the AMC can change an investment management fee not exceeding
a. 3.50%
b. 4.00%
c. 2.25%
d. 0.50%

28. A funds NAV is affected by
a. Purchase and sale of investment securities
b. Valuation of all investment securities held
c. Accrual of income or expense
d. All of the above

29. If an investor switches from one scheme to another scheme within the same mutual fund
a. No load will be charged
b. Only entry load will be charged in the new scheme
c. Only exit load will be charged in the old scheme
d. Depends on AMC and varies between different AMC

30. Which of the following is untrue of an automatic reinvestment plan?
a. The plan allows for automatic reinvestment of all income and capital gains
b. Automatic reinvestment allows for accumulation of additional units of the fund
c. The major benefit of automatic reinvestment is compounding
d. Its benefit is often lost on account of the heavy load charge on the reinvestment

31. A passive fund manager
a. Researches stocks extensively
b. Does not buy and sell stocks often
c. Does not have to go through the process of stock selection
d. Does not have to track stocks

32. Coupon of a debt security refers to
a. A piece of paper attached to the certificate
b. The return-on investor would earn
c. The rate of interest paid on par value of the bond
d. None of the above

33. Certificates of Deposits (CDs) are issued by
a. Regional Rural Banks
b. Corporate
c. Scheduled commercial banks
d. None of the above

34. Value stocks
a. Have high current dividend yield
b. Yield high growth in earnings
c. Are currently under valued
d. Both a & c above

35. Mutual funds are allowed to lend
a. Loans
b. Securities
c. Physical assets
d. None of the above

36. An owner of preference shares is given which of the following rights
a. Voting rights
b. Fixed dividend income from post-tax profits
c. Voting rights and unlimited dividend income
d. No guaranteed rights

37. When interest rates for similar maturities are 11%, a bond with a 9% coupon rate will sell
a. Above par
b. Below par
c. At par
d. At a price unrelated to the interest rates for similar securities

38. To compare bonds with different coupon rates, maturities and prices, investors would use
a. Current yield
b. Technical analysis
c. Yield to maturity
d. Fundamental analysis

39. Yield curve is also known as
a. Curve of Interest
b. Term Structure of Interest Rates
c. Curve that yields
d. None of the above

40. As per SEBI norms, a fund's investments, in the equity shares of any one company are restricted to
a. 25% of Net Assets
b. 10% of Net Assets
c. 50% of Net Assets
d. 100% of Net Assets

41. Transaction costs include
a. All expenses related to purchase and sale of securities
b. All expenses charged to the fund
c. Distribution expenses
d. None of the above

42. The Expense Ratio is of least importance in which of the following
a. Debt fund
b. Index fund
c. Equity fund
d. Liquid fund

43. Turnover rates would be most relevant to analyze the performance of
a. Equity funds
b. Index funds
c. Debt funds
d. Value funds

44. Portfolio turnover rate refers to
a. Ratio of sales to the net assets of the fund
b. Ratio of purchases to the net assets of the fund
c. Ratio of sales or purchases (which ever is lower) to net assets of the fund
d. Ratio of sales or purchases (which ever is higher) to net assets of the fund

45. The rule of 72 is used to
a. Calculate entry load of a scheme
b. Calculate the period in which an investment will double at a given rate of return
c. Calculate the rate at which money will grow to double in a given period
d. Both b and c

46. If there is an entry load in a scheme, the investors return
a. Will increase to the extent of load
b. Will not change because there will not be any exit load
c. Will reduce to the extent of load
d. None of the above

47. As per SEBI, mutual funds can borrow for short term to the extent of
a. Total net assets
b. 50% of net assets
c. 25% of net assets
d. 20% of net assets

48. When selling a mutual fund, a good agent would never
a. Describe the past performance of the scheme
b. Compare the fund with other mutual funds
c. Assure a rate of return
d. Compare the fund with other financial products

49. Which of the following is not a characteristic of company fixed deposit?
a. A higher rate of interest
b. Higher risk
c. Unfavorable effect of tax
d. Very high liquidity

50. Which of the following represent indirect investments?
a. Investment in a mutual fund
b. Investment in shares
c. Investment in bank deposit
d. Investment in post office schemes

51. The most important reason for an investor to prefer a bank deposit to a mutual fund is
a. The creditworthiness of the bank
b. Because the bank does not invest in securities
c. That the bank offers a guarantee
d. All of the above


52. The constraint on financial planning due to insufficient resources can be remedied to some extent by
a. Decreasing the standard of living
b. Disciplining children
c. Disciplined monthly budgeting
d. None of the above

53. Structural characterization of an equity fund include
a. Costs of investing
b. The specific securities in which the fund has invested
c. The number of employees of the AMC
d. All of the above

54. Listing of shares at a stock exchange ensures
a. Guaranteed returns
b. Long term capital appreciation
c. Low risk
d. High liquidity

55. Mutual fund investors should be advised to expect
a. Low post tax returns
b. Dramatic results
c. Better returns than every other available option
d. Only realistic wealth accumulation goals

56. Once a financial advisor works out ideal Asset Allocation, it can be used for all his investors
a. True
b. False

57. A retired person generally needs a greater proportion
a. Debt funds
b. Equity funds
c. Money Market funds
d. All of the above

58. A fund with a high beta coefficient gives greater returns in a rising market, and is more risky in a falling market
a. True
b. False

59. In which type of schemes should an unmarried professional working in HLL invest
a. Scheme investing 80% in debt securities
b. 50% in equity funds and 50% in income funds
c. At least 75% in equity funds having a higher P/E Ratio than the market
d. All the money in a balanced fund

60. The best equity fund, relative to others, would have
a. Higher Ex Marks, lower Beta and higher Gross Dividend Yield
b. Higher Ex Marks, higher Beta and higher Gross Dividend Yield
c. Lower Ex Marks, lower Beta and lower Gross Dividend Yield
d. Lower Ex Marks, higher Beta and higher Gross Dividend Yield


61. An investor wishes to switch between a money market mutual fund
and an equity fund. What would you advise him?
a. It would be better to stick to one type of fund, the one that meets his investment objective
b. He should keep switching parts of his investment from the equity fund to the money market fund as the market rises & switch back to the equity fund when the market falls
c. He should switch from the money market fund to the equity fund in a rising market and switch back to money market fund when the market falls
d. None of the above

62. If a charitable trust approaches a distributor for investment in MF, the distributor should
a. Accept the application without wasting time
b. Reject the application outright
c. Refer to the offer document
d. Accept the application as a direct application

63. Beta of an equity fund measures its
a. Performance
b. Risk
c. Both the above
d. None of the above

64. The basis of genuine investment advice should be
a. The current market situation
b. The agent commissions paid by different funds
c. Financial planning to suit the investor's needs
d. Planning to complete the agent's annual targets

65. One of your friends who have invested in a mutual fund is about to get Australian citizenship. What would you advise?
a. He should transfer the investment to his relative
b. He should get RBI approval for continuing
c. He can continue to hold as PIO are allowed to invest in mutual funds in India
d. He should immediately redeem his investment since foreign citizens are not eligible investors

66. As per Boggle, asset allocation for older investors in accumulation phase should be
a. 30% equity; 70% debt
b. 40% equity; 60% debt
c. 50% equity; 50% debt
d. 70% equity; 30% debt

67. A steady holding of investments in an equity fund's portfolio indicates
a. Long-term orientation
b. Lower transaction costs
c. Both the above
d. None of the above

68. An investor should not invest in a mutual fund if
a. He expects a customized portfolio
b. He is able to carry out detailed investment research and monitor the stock market
c. Both the above
d. None of the above
69. Which of the following is not true about the buy and hold strategy
a. It is preferred by a many investors
b. It does not involve rebalancing
c. It is very beneficial as investors may exit from poor performers and invest in better ones
d. All of the above

70. The highest risk is associated with one of the following kind of funds
a. Balanced Funds
b. Gilt Funds
c. Equity Growth Funds
d. Debt Funds

71. The lowest risk exists in which of the following?
a. Gilt funds
b. Diversified debt fund
c. Liquid fund
d. Conservative bond fund

72. Which of the following is not false about a mutual fund?
a. Open ended funds can be sold in secondary market
b. Closed ended fund do not have a fixed tenure
c. Open ended funds do not calculate their NAV on every business day
d. The NAV of a closed ended fund has to be calculated at least once in a week

73. Which of the following investment is not made by debt funds?
a. Government debt instruments
b. Corporate paper
c. Financial institutions' bonds
d. Equity of private companies

74. Which of the following is not true for a mutual fund?
a. The mutual fund is owned by all the investors
b. Mutual fund gives a diversified portfolio to investors
c. The objectives of investors of a mutual fund are diverse
d. The mutual funds do not invest in real estate

75. The amount required to buy 100 units of a scheme having an entry load of 1.5% and NAV of Rs.20 is
a. Rs.2000
b. Rs.2015
c. Rs.1985
d. Rs.2030

[ganeshbala]

AMFI Advisor Module AMFI AMFI Model Mock Test University Question paper

Q1 Capital Employed is equal to _________. [ 2 Marks ]
(a) Fixed Assets + Current Assets +Current Liabilities
(b) Fixed Assets + Current Assets - Current Liabilities
(c) Fixed Assets - Current Assets + Current Liabilities
(d) Fixed Assets - Current Assets - Current Liabilities
(e) I am not attempting the question

Q2 If a client buys shares worth Rs. 2,55,000 and sells shares worth Rs. 3,45,000 through a broker, then the maximum brokerage payable to the broker is _____________. [ 2 Marks ]
(a) Rs. 20000 (b) Rs. 15000 (c) Rs. 25000 (d) Rs. 10000 (e) I am not attempting the question

Q3 Return on Total Asset is equal to __________. [ 2 Marks ]
(a) Gross Income/Average Total Asset
(b) Average total asset/Gross Income
(c) Return on Equity/Average total Asset
(d) Net income /Average Total Asset
(e) I am not attempting the question

Q4 Which of the following is a benefit of participation in a depository? [ 1 Mark ]
(a) No stamp duty on transfer of securities.
(b) Elimination of risks associated with physical certificates such as bad delivery, fake securities, etc.
(c) Nomination facility.
(d) All of the above
(e) I am not attempting the question

Q5 The benchmark stock market index of India is ________. [ 1 Mark ]
(a) Dow Jones (b) Nikkei 225 (c) S&P 500 (d) the Nifty (e) I am not attempting the question

Q6 Which of the following is not true about offer of shares through normal public issue? [ 2 Marks
(a) In normal Public issue, investors bid for shares at the floor price or above and after the closure of the process the price is determined for allotment of shares.
(b) In case of the normal public issue the demand for an issue is known at the close of the issue.
(c) In case of offer of shares through normal public issue price at which securities will be allotted is known to an investor in advance .
(d) None of the above
(e) I am not attempting the question

Q7 At 8% annual inflation rate, an item costing Rs. 100 today, would cost Rs. _______ after one year. [ 3 Marks ]
(a) Rs. 108 (b) Rs. 118 (c) Rs. 208 (d) Rs. 98 (e) I am not attempting the question

Q8 At 6% annual inflation rate, an item costing Rs. 100 today, would cost Rs. _______ after two years. [ 3 Marks ]
(a) Rs. 224 (b) Rs. 112.36 (c) Rs. 122.46 (d) Rs. 124.30 (e) I am not attempting the question

Q9 The Margin which takes care that all daily losses must be met by the investor by depositing of further collateral by the close of business, the following day is known as _________. [ 1 Mark ]
(a) Mark to Market Margin (b) Minimum Margin (c) Cross Margin (d) Initial Margin
(e) I am not attempting the question

Q10 What is the present value of Rs. 6000 receivable after two years at a discount rate of 5% under continuous discounting? [ 2 Marks ]
(a) Rs. 5429.02 (b) Rs. 6000 (c) Rs. 5700 (d) Rs. 6300 (e) I am not attempting the question

Q11 What is the dividend yield of ABC Co Share having a face value of Rs 100, market value of 360 and an annual dividend of Rs 10? [ 1 Mark ]
(a) 1% (b) 2.77% (c) 10% (d) 4% (e) I am not attempting the question

Q12 Earnings Per Share (EPS) is calculated by _________. [ 2 Marks ]
(a) Gross Profit / No. of equity shareholders
(b) Net Profit / No. of equity shareholders
(c) Gross Profit / No. of Ordinary shares outstanding
(d) Net Profit / No. of Ordinary shares outstanding
(e) I am not attempting the question

Q13 Which amongst these is not a Debt market instrument? [ 1 Mark ]
(a) Public Sector Units bonds (b) Corporate Securities (c) FIIs (d) Government Securities (e) I am not attempting the question

Q14 Which rate of return accounts for intra-year compounding? [ 2 Marks ]
(a) Effective (b) Stated (c) Both of the above (d) None of the above (e) I am not attempting the question

Q15 ___________ is a good indicator of the stock market behaviour. [ 1 Mark ]
(a) Reliance (b) TISCO (c) Infosys (d) Nifty index (e) I am not attempting the question

Q16 Market Capitalisation is _____________. [ 2 Marks ]
(a) Value of shares of the company held by Foreign Investors
(b) No. of shares issued by a company multiplied by it's market price
(c) Value of shares held by promoters of the company
(d) Value of shares in the company held by the public
(e) I am not attempting the question

Q17 What is the present value of Rs 10000 receivable after 1 year discounted at 10% p.a.? [ 2 Marks ]
(a) 11000 (b) 10000 (c) 9000 (d) 9090.9 (e) I am not attempting the question

Q18 What factor/s affect the interest rate? [ 3 Marks ]
(a) Government borrowings (b) Supply of money (c) Inflation rate
(d) All of the above (e) I am not attempting the question

Q19 Which of the following needs to be considered by an investor, while investing? [ 3 Marks ]
(a) Assess risk-return profile of the investment.
(b) Know the liquidity and safety aspects of the investment.
(c) Obtain written documents explaining the investment.
(d) All of the above (e) I am not attempting the question

Q20 Money market mutual funds can invest in _______. [ 3 Marks ]
(a) treasury bills (b) certificate of deposits (c) commercial paper (d) All of the above
(e) I am not attempting the question

Q21 Which of the following is not true about a debt instrument? [ 1 Mark ]
(a) It signifies a ownership right in the company.
(b) It carries interest paying obligation.
(c) It has a fixed maturity.
(d) None of the above
(e) I am not attempting the question

Q22 Which type of corporate action splits the existing shares of a particular face value into smaller denominations? [ 1 Mark ]
(a) Stock Split (b) Bonus Issue (c) Buy Back (d) Right Issue (e) I am not attempting the question

Q23 How many securities are there in Nifty index? [ 1 Mark ]
(a) 30 (b) 100 (c) 500 (d) 50 (e) I am not attempting the question

Q24 Which of the following is TRUE about Primary Markets? [ 2 Marks ]
(a) Primary Markets are markets where commodities are sold.
(b) Primary Market is the place where public can buy and sell securities from one another.
(c) Primary Markets refer to the mobilization of funds from the public by corporates through the issue of shares / debentures.
(d) Primary Markets are places where only short term instruments are traded.
(e) I am not attempting the question

Q25 The future value of a Rs.10,000 investment done today, which gives an annual rate of return of 20% per annum, after one year should be ____________. [ 3 Marks ]
(a) Rs. 12,200 (b) Rs. 12,500 (c) Rs. 12,000 (d) Rs. 12,640 (e) I am not attempting the question

Q26 Which of the following problems have been eliminated by Depositories? [ 1 Mark ]
(a) Reduction in the share transfer time to the buyer.
(b) Risk of stolen, fake, forged shares.
(c) Stamp duty on transfer of shares in dematerialized form.
(d) All of the above
(e) I am not attempting the question

Q27 Which of the following is not a benefit of investing in mutual funds? [ 2 Marks ]
(a) Investment in Mutual funds leads to diversification of holdings.
(b) Mutual funds are managed by professional fund managers.
(c) Mutual Funds regularly provide investors with information on the value of their investments.
(d) None of the above
(e) I am not attempting the question

Q28 Funds which invest only in the stocks comprising an index and aim to give returns commensurate with the index returns are called _________. [ 2 Marks ]
(a) Index Funds (b) Active Funds (c) Dormant Funds (d) None of the above
(e) I am not attempting the question

Q29 Depositories are like banks for securities. [ 1 Mark ]
(a) TRUE (b) FALSE (c) Dormant Funds (d) None of the above (e) I am not attempting the question

Q30 At 12% annual inflation rate, an item costing Rs. 100 today, would cost Rs. _______ after one year. [ 3 Marks ]
(a) Rs. 114 (b) Rs. 112 (c) Rs. 102 (d) Rs. 113
(e) I am not attempting the question

Q31 The future value of a Rs.10,000 investment, which gives an annual rate of return of 20% per annum, after two years would grow to _________ (assume discrete compounding) [ 3 Marks ]
(a) Rs. 14,400 (b) Rs. 14,000 (c) Rs, 14,250 (d) Rs. 14,500
(e) I am not attempting the question

Q32 An investment should provide an after-tax return which is ________. [ 3 Marks ]
(a) at least higher than the rate of inflation (b) less than the rate of inflation
(c) equal to the rate of inflation (d) None of the above
(e) I am not attempting the question

Q33 Which of the following is not true about ADR? [ 1 Mark ]
(a) ADR represents the foreign shares of the company held on deposit by a custodian bank in the company's home country.
(b) ADRs may be used in public or private markets inside or outside US.
(c) ADRs do not eliminate the currency risk associated with an investment in a non-U.S. company. (d) An ADR is a U.S. dollar denominated form of equity ownership in a non-U.S. company. (e) I am not attempting the question

Q34 What are the segments of Securities Market? [ 1 Mark ]
(a) Primary market and Secondary market
(b) New issues market (c) Primary market (d) Secondary market
(e) I am not attempting the question

Q35 Which instrument among these is considered the most challenging and rewarding investment option, when compared to other investment options? [ 3 Marks ]
(a) Equity (b) Fixed Deposit (c) Bonds (d) Treasury Bill
(e) I am not attempting the question

Q36 'Bid' means the _____________. [ 3 Marks ]
(a) Seller's price (b) Traded Price (c) Market price (d) Buyer's price
(e) I am not attempting the question

Q37 Profit and Loss account of a company shows _______. [ 2 Marks ]
(a) The revenues and expenses during particular period of time.
(b) The revenues and expenses of the company at a particular point of time.
(c) The financial position of the company at a particular point of time.
(d) None of the above (e) I am not attempting the question

Q38 Which instrument among these have historically shown to give the highest returns when invested over long periods? [ 3 Marks ]
(a) Debentures (b) Equity (c) Fixed Deposit (d) Bank Deposit
(e) I am not attempting the question

Q39 The lenders use ______________ ratio to assess debt servicing capacity of a firm. [ 2 Marks ]
(a) Interest Coverage ratio (b) Debt-Asset Ratio (c) Acid-test Ratio (d) Current Ratio
(e) I am not attempting the question

Q40 _______ funds do not have a fixed date of redemption. [ 2 Marks ]
(a) Open ended funds (b) Close ended funds (c) Diversified funds
(d) Both A and B (e) I am not attempting the question

Q41 'Ask' means the ________. [ 3 Marks ]
(a) Buyer's price (b) Seller's price (c) Market price (d) Traded Price (e) I am not attempting the question

Q42 ________________ is maintained by NSE to make good investor claims, which may arise out of non-settlement of obligations by the trading member, who has been declared defaulter, in respect of trades executed on the Exchange. [ 1 Mark ]
(a) Investor Education and Reimbursement Fund (IERF)
(b) Investor Reimbursement Fund (IRF)
(c) Investor Education and Protection Fund (IEPF)
(d) Investor Protection Fund (IPF)
(e) I am not attempting the question

Q43 At 10% annual inflation rate, an item costing Rs. 100 today, would cost Rs. _______ after one year. [ 3 Marks ]
(a) Rs.101 (b) Rs. 110 (c) Rs.115 (d) Rs. 109 (e) I am not attempting the question

Q44 What is the present value of Rs. 3000 receivable after two years at a discount rate of 5% under continuous discounting? [ 2 Marks ]
(a) Rs. 3150 (b) Rs. 2714.51 (c) Rs. 2850 (d) Rs. 2970 (e) I am not attempting the question

Q45 The future value of a Rs.12,000 investment made today, which gives an annual rate of return of 10% per annum, after one year should be _________. [ 3 Marks ]
(a) Rs. 12,200 (b) Rs. 12,500 (c) Rs. 13,200 (d) Rs. 13,100 (e) I am not attempting the question

Q46 Nifty index is used in _________. [ 1 Mark ]
(a) Derivatives (b) Index Funds (c) Exchange Traded Funds (ETFs) (d) All of the above
(e) I am not attempting the question

Q47 Demutualisation of stock exchanges refer to _________. [ 3 Marks ]
(a) the legal structure of an exchange whereby the ownership, the management and the trading rights at the exchange are segregated from one another
(b) the legal structure of an exchange whereby the ownership and the management at the exchange are segregated from one another
(c) the legal structure of an exchange whereby the ownership, the management and the trading rights at the exchange vests in one person
(d) None of the above
(e) I am not attempting the question

Q48 Which securities can an investor invest in? [ 1 Mark ]
(a) Shares (b) Debentures (c) Mutual Funds (d) All of the above (e) I am not attempting the question

Q49 _____________ gives the buyer the right, but not the obligation to sell a given quantity of underlying asset at a given price on or before a given future date. [ 1 Mark ]
(a) Put Option (b) Forward (c) Future (d) Call Option (e) I am not attempting the question

Q50 The holders of which instrument are members of the company and have voting rights? [ 3 Marks ]
(a) Treasury Bill (b) Commercial Paper (c) Debenture (d) Equity (e) I am not attempting the question

[ganeshbala]

1. An equity fund with weekly average net assets of Rs. 1400 crore may change maximum ongoing expenses (excluding issue/redemption expenses) to the extent of
a. Rs. 35.00 crore
b. Rs. 26.75 crore
c. Rs. 27.50 crore
d. 19.75 crore

2. A close-end equity fund has average weekly net assets of Rs. 200 crores. As per the SEBI Regulation, the AMC can charge the fund with investment and advisory fees upto:
a. Rs. 2.25 crores
b. Rs. 2 crores
c. Rs. 2.5 crores
d. Rs. 3 crores

3. Which of the below is a short-term capital asset?
a. Unit of MF held for a period of not more than one year preceding the date of transfer
b. Unit of MF held for a period of less than one year preceding the date of transfer
c. Unit of MF held for a period of less than three years preceding the date of transfer
d. Unit of MF held for a period of not more than three years preceding the date of transfer

4. In a no load debt fund of corpus 200 Crores, what could be the maximum investment management charges?
a. 2 crore
b. 2.25 crore
c. 3.25 crore
d. 4.25 crore
e. 5.25 crore

5. Which of the following SEBI restrictions applies to a scheme's investment in unlisted shares?
a. A closed-end scheme may invest a maximum of 10% of its NAV in unlisted shares
b. An Open-end scheme may invest a maximum of 5% of its NAV in unlisted shares
c. (1) & (2) above
d. None of these

6. An investor purchased units in an approved mutual fund on Juanuary'01 2006, for Rs. 4, 00,000.00. He sold the units on December 15, 2007 for Rs.6,00,000.00. Calculate the capital gains taxes paid by him without the benefit of indexation (ignore taxation).
a. Rs.20, 000.00
b. Rs.40, 000.00
c. Zero
d. Depends on the investor's tax bracket

7. Entry load is used for meeting
a. Distribution Expenses
b. Marketing & Promotion
c. None of the above
d. Both


8. A systematic withdrawal plan is ideal for:
a. Investors with growth as the main investment objective
b. Investors who wish to benefit from market fluctuations
c. Investors who prefer a regular income stream
d. Investors who are not sure about themselves

9. Up to what extent unlisted equity shares can be held in an Equity fund?
a. 10% in Closed Ended fund
b. 5% in open ended fund
c. Both a and b
d. None of the above.

10. Calculate the current yield on a G.Sec with at par value of Rs. 1000, coupon of 11% and market price of Rs. 1010.
a. 11.20%
b. 10.89%
c. 11.21%
d. 12.20%

11. An index fund managers tries
a. To beat the market by superior stock selection
b. To beat the market by superior market timing
c. To beat the market by superior asset allocation
d. None of these

12. Cyclical stocks command,
a. Relatively lower P/E ratio, and have higher dividend payouts
b. Relatively higher P/E ratio, and have higher dividend payouts
c. Relatively higher P/E ratio, and have lower dividend payouts
d. Relatively lower P/E ratio, and have lower dividend payouts

13. A mutual fund is not allowed to invest in the sponsor company,
a. >25% of its net assets
b. >10% of its net assets
c. Not at all
d. >5% of net assets

14. Which of the following is applicable to the debt market in India?
a. The debt market is a wholesale market
b. There are large players like banks, financial institutions, mutual funds, etc
c. Government securities are traded on a large scale
d. All of the above

15. Current yield relates interest on a security to
a. Its current market price
b. Its face value
c. Its fair value
d. The current price of T-Bills




16. Which of the following measures are not taken by SEBI for protecting investors of mutual funds?
a. Mandating minimum levels of diversification for mutual funds
b. Ensuring that the funds are not used to favour a few companies
c. Tracking the securities that each fund has Invested in
d. Ensuring that the funds are invested in approved securities only

17. Portfolio characteristics of a fund can be judged by looking into Fund's ......
a. Cash position
b. Concentration for checking its largest holdings
c. Portfolio turnover
d. All of these

18. Which benchmarks are used for evaluating fund performance?
a. Stock market indices such as S&P CNX Nifty, Sensex Etc.
b. Performance of other mutual funds
c. Return offered by other financial products or investment options
open to the investor
d. All of these

19. A portfolio turnover of 200 percent implies that.........
a. On an average a security stays in the portfolio for 6 months
b. On an average a security stays in the portfolio for 12 months
c. On an average a security stays in the portfolio for 36 months
d. On an average a security stays in the portfolio for 48 months

20. A fund has a front –load of 1% and back-end load of 0.5%. The investor enters at NAV of Rs.10 and exits at NAV of Rs.12.The return of investment earned by him is...
a. 20%
b. 18.22%
c. 18.5%
d. None of these

21. How many scripts does Nifty constitute?
a. 40
b. 30
c. 100
d. None of the above

22. For evaluating sectoral funds, the preferred benchmark would be the
a. BSE Sensex
b. S&P CNX Nifty
c. BSE 200
d. S&P CNX Sectoral Indices

23. An investor can assess the performance of his mutual fund by comparing it with the performance of
a. Other mutual fund of the same type
b. The stock market
c. Other financial products
d. All of the above
24. When comparing a fund's performance with that of its peer group, the following cannot be compared
a. Two debt funds with 5 year maturities
b. A broad-based equity fund with an IT Sector Fund
c. A bond fund with a bond index
d. A government securities fund with a government security

25. CRISIL evaluates
a. Risk
b. Default possibility of the fund house
c. Performance of the different mutual funds
d. Performance of a particular fund

26. Fundamental qualities of a good financial planner are
a. Building trust with the client by understanding their needs
b. Good knowledge of all financial products and taxation related issues
c. Balanced, independent and ethical thinking
d. All of the above
e. None of the above

27. Financial Planning is
a. investing assets to receive the highest rate of return possible
b. is a process aimed at identifying financial needs of a client and planning investments that allows meeting future financial goals of the investor
c. keeping taxes as low as possible
d. planning to retire with the maximum income possible

28. The objective of the financial planning is to ensure
a. Right amount of money is available in the right hands at the right point in future to achieve an individual's financial goals
b. That tax payable is as low as possible
c. One understands that technicalities of the financial market
d. One does not require the expertise of the financial advisers

29. Direct investment in stock markets can be a better option over investing through mutual funds if
a. The investor wants better returns than those offered by mutual funds
b. The investor has large capital, knowledge and resources for research
c. The investor has identified a bullish phase in the stock market
d. The investor wants to invest for the long term

30. As a financial planner, which of your following clients would you strongly advise to start investing for retirement?
a. 26 year old unmarried executive with 2 yrs experience in a job
b. 30 year old executive supporting a family of wife, child and mother
c. 30 year old executive with his wife working as well
d. 31-year-old unmarried son of a wealthy businessman.

31. How does a financial planner help his client?
a. By picking up cheque and application forms from the client
b. By identifying client needs, recommending the correct asset allocation and providing him service, that would help investors in making investments
c. By researching and identifying individual stocks or bonds for the client's portfolio
d. By tracking the economy and government policies.

32. Financial planner's income should be generally linked to:
a. Performance of the scheme he sells
b. Man-hours spent with the client
c. A fixed annual fee
d. None of the above

33. One of the following should not be recommended by a financial planner as a sound investment objective?
a. Saving for the client's children's education
b. Doubling the investment in 3 years
c. Purchase of a new car
d. Purchase of a new home

34. The power of compounding is best realized by investing in:
a. Income funds with dividend option
b. Equity funds with growth/reinvestment option
c. Balanced funds with dividend option
d. None of the above

35. Value averaging means
a. Keeping the target value of investment constant by investing the amount by which the investment value has gone down.
b. Investing the same amount of funds regularly
c. Investing in one lump sum amount
d. None of these

36. A criticism of rupee-cost averaging is
a. Investment is for the same amount at regular intervals
b. Over a period of time, the average purchase price will work out lower than if one tries to guess the market highs and lows
c. It does not tell you when to buy, sell or switch from one scheme to another
d. Rupee cost averaging has no serious shortcomings

37. Which of the following strategies is an example of the combined approach of Rupee Cost and Value Averaging?
a. When the investor sets a target value for his investments in an Equity fund
b. When the investor invests a fixed sum each month in a Liquid Fund
c. When the investor invests regularly in a Liquid Fund
d. When the investor invests regularly in a Liquid Fund , sets a target for an Equity Fund, then invests more in Equity Fund if its value declines and books profits when its value exceeds the target value

38. If you maintain a flexible ratio of asset allocation, would you
a. Rebalance the Debt/Equity allocation periodically?
b. Rebalance the Debt/Equity allocation very frequently?
c. Generally avoid portfolio rebalancing?
d. Keep fixed percentages of equity and debt investments at all times?



39. Which of the following is the best investment option for the purpose of getting the maximum benefits of compounding?
a. 12% interest paid yearly
b. 6% interest paid every 6 months
c. 3% interest paid every quarter
d. 1% interest paid monthly

40. Asset allocation of a portfolio should be re-evaluated every time there is change in the...
a. Family size and requirement
b. Job of the investor
c. Dramatic change in the market condition
d. All of these

41. The biggest disadvantage of investment in real estate is
a. Less potential for capital appreciation
b. High purchase risk
c. Depreciation in value as time passes
d. Value gets eroded due to inflation

42. Many investors prefer Bank deposits because.
a. Bank deposits offer higher return other investment option
b. They are considered safe and liquid.
c. Bank deposits offer higher capital appreciation
d. Bank deposits offer better tax rebates schemes

43. Market risk can be effectively managed by:
a. Investing with a short term horizon
b. Investing in debt funds
c. Investing in high price shares
d. Investing regularly with a long term perspective to smoothen out the effects of volatility in market price

44. A small investor can build a diversified portfolio by
a. Buying one share each of all listed companies
b. Investing in a mutual fund
c. Borrowing enough money to buy shares of well-managed companies
d. None of the above

45. The difference between debenture and bond is:
a. 1.Bonds are issued by corporations and debentures are issued by PSUs
b. Bonds are unsecured and debentures are secured.
c. Bonds are backed by loans and debentures are backed by assets
d. None of the above.








46. An income fund scheme invests in debenture of a company. What is the relationship of MF investor with that company?
a. Debenture holder
b. Shareholders
c. Creditors
d. No relationship

47. If beta is higher than 1, the fund is:
a. Less volatile than market
b. More volatile than market
c. Equally volatile than market
d. No relation

48. Volatility in a mutual fund portfolio is caused by .........
a. Investment in blue chip stocks
b. Idle cash lying with the fund
c. Investment in high rated bonds
d. None of these

49. Which is a better investment option while selecting an equity fund?
a. Ex Marks -75%, Beta – 0.9, Gross Dividend Yield 8%
b. Either 1 or 3
c. Ex Marks – 80%, Beta- 0.9, Gross Dividend Yield – 8%
d. Ex Marks – 90%, Beta- 0.8, Gross Dividend Yield – 9%

50. An investor asks you in what order he should list the following schemes, going from the scheme with the least risk to the one with the highest risk – 1. Balanced Fund, 2. A Stock Index Fund, 3. A Liquid Fund, 4. An IT Sector Fund.
a. 1,2,3,4
b. 1,3,4,2
c. 3,1,2,4
d. 2,3,1,4

51. As per Jacob's recommendation low risk fund portfolio is likely to have.
a. 50% invested in Government Securities Funds and 50% invested in Money Market funds
b. An equal split between Government Securities Funds, Growth Funds and Index Funds
c. Equal investments in Aggressive Growth Funds, Value Funds, Sector Funds and Debt Fund
d. A mix of Balanced and Growth

52. For which of the following would you consider " average maturity" as an important factor in selecting the right one for the investor?
a. A debt fund
b. A balanced fund
c. A money market or liquid fund
d. Both a and b above

53. Which of the following is recommended by Jacob for a Low Risk portfolio?
a. 50 % Growth and Income fund + 50% Money Market fund
b. 50% Growth funds + 50% index fund
c. 50% Government Securities fund + 50% Money Market fund
d. 50% Sector Funds + 50 % Money Market fund

54. Which of the following is not a specialty fund?
a. Sector fund
b. Mid cap /small cap fund
c. Foreign securities fund
d. Gilt fund

55. The emergence of Private Funds in Indian Mutual Fund industry came in which Phase of Mutual Funds history?
a. Phase 2 during the period 1987 to 1993
b. Phase 3 during the period 1993 to 1996
c. Phase 4 during the period 1996 to 1999
d. Phase 5 during the period 1999 to 2004

56. Which of the following is incorrect?
a. An equity fund would invest in ordinary shares, preference shares and warrants
b. A bond fund would mainly buy debt instruments
c. An index fund is indexed to inflation index
d. A sector fund invests in the shares of companies in a particular industry

57. Mutual fund pay commission to their agents:
a. As an incentive for having brought in an investor
b. As compensation for his before and after sales service to the investor
c. To off set any direct expenses that they may incur on sale of units
d. All of the above

58. Board of Trustees appoint Custodians for...
a. Making payment to bankers on behalf of the fund
b. Selling units of a mutual fund
c. Safekeeping of physical securities of the mutual fund or participating in any clearing system.
d. None of these

59. By What name is the Phase of year 2004 onwards of mutual fund industry known?
a. Growth and SEBI Regulation
b. Emergence of Large & uniform industry
c. Emergence of Private funds
d. Consolidation & growth

60. Which of the following can be a true statement?
a. NAV of debt instruments fluctuates more that liquid
b. Gilt securities are less riskier that other debt securities
c. Equity is more risky
d. All of the above

61. Who is responsible for the redressal and handling of investor complaints?
a. Fund Trustees
b. The AMC
c. Registrar
d. SEBI




62. Who is responsible for filing details of the fund's portfolio with SEBI?
a. Registrar of the fund
b. Fund trustee
c. Custodian
d. The Fund manager

63. For a person to qualify as a sponsor, he must
a. Contribute at least 40% of the AMC's net worth
b. Should be carrying on business in financial services for at least 5 years prior to registration
c. Should have a sound financial track record
d. All of the above
e. None of the above

64. Board of Trustees appoint Custodians for
a. Making payment to bankers on behalf of the fund
b. Selling units of a mutual fund
c. Safe keeping of physical securities of the mutual fund or participating in any clearing system
d. None of the above

65. Who is the primary guardian of unit holders' funds/assets
a. The AMC
b. The Trustees
c. The Registrars
d. The custodians

66. The fundamental attributes can be changed in an open-ended scheme by following methods
a. Informing all unit holders individually and offering them exit without any load
b. Voting of 75% of the unit holders.
c. Paper Advertisement in daily newspaper
d. Both 1 and 3.

67. Bank owned Mutual Funds are supervised by
a. SEBI
b. RBI
c. Jointly by SEBI & RBI
d. AMFI

68.The role of AMFI in the mutual funds industry is not to
a. Promote the interests of the unit holders
b. Set a Code of Ethics
c. Regulate mutual funds
d. Increase public awareness of mutual funds in the country

69. Which of the following is an example of Merger of two AMCs?
a. Birla and Alliance
b. Zurich and HDFC
c. Apple and Birla
d. HB And Taurus.


70. Which of the following is an example of Scheme Take over?
a. Birla and Alliance
b. Zurich and HDFC
c. Apple and Birla
d. HB And Taurus.

71. Which of the following is an example of AMC Take over?
a. Birla and Alliance
b. Apple and Birla
c. HB And Taurus.
d. None of the above.

72. One of the following is NOT required to be disclosed in the offer document. Which one?
a. Details of Sponsor/Trustees
b. Investors rights and services
c. Performance of the other Mutual Funds
d. Description of the scheme and investment objective

73. A Charitable Trust wants to invest in Mutual Funds. What would you do?
a. Accept the application from with the cheque
b. Refuse to accept the application
c. Refer to the Offer document of the scheme to confirm that a charitable trust is allowed to invest
d. Accept the application form, without the cheque, and forward it for final acceptance by the fund / AMC

74. The investor cannot plead ignorance of procedures while investing in a mutual fund because
a. Mutual fund is a risky investment
b. The law does not permit the investor to sue the trust
c. While applying the investors signs an agreement stating they have read and understood the terms and conditions
d. An investor is expected to be careful while investing
e. Mutual fund is based upon trust

75. Along with the application, it is mandatory to distribute
a. Offer document
b. Key information memorandum
c. Prospectus
d. None of the above

[ganeshbala]

1. Insider trading means:
a. Personal trading transactions done by anyone associated with a Mutual Fund
b. Personal transaction done by anyone with knowledge of the fund decision in the security
c. Personal trading transaction without prior approval of the AMC
d. Personal trading transaction done by an insider of an AMC/Fund

2. Fund merger involving 2 or more schemes of different AMCs requires consent of unit holders with X% voting rights. X is:
a. 50
b. 100
c. 51
d. 75

3. What makes mutual fund the single most important financial instrument as a financial planner?
a. Mutual Funds help in portfolio diversification and risk reduction
b. Mutual Funds help in doubling investment
c. Both the above
d. None of the above

4. Select which of the following is an example of unethical behaviour?
a. Fund distributor buying shares that he knows are part of the fund portfolio recommended to investors
b. Fund employee buying shares that he knows the fund has decided to buy
c. Fund trustee owning a share portfolio of his own
d. Fund manager buying shares in his own name

5. A mutual fund launches a new scheme. 10 crore units are issued. An entry load of 2.25% of the face value during the New Fund Offer period is mentioned in the Offer Document. Issue expenses are 8 cr. How much of this would be borne by the scheme?
a. 6 cr
b. 3.75 cr
c. 2.25 cr
d. 8 cr

6. Which of the following is true?
a. KIM is abridged offer document
b. OD is abridged shareholder agreement
c. KIM is abridged Investment Management Agreement
d. OD is abridged KIM

7. A young couple has 2 incomes and 2 children. Jacob's recommendation to them would be:
a. 100% equity funds
b. 10% money market, 50-60% aggressive equity and 30-40% conservative bond funds
c. 25% debt 75% equity growth funds
d. 80% debt and 20% equity funds






8. Role of the custodian is:
a. Managing the fund's distribution channel
b. Making investments on behalf of the Fund Managers
c. Handling payment of investments with bankers
d. Safe keeping of securities or participating in the clearing system on behalf of the mutual fund

9. A person enters a fund at NAV of 22. 18 months later the NAV is 24. The annualized percent change in NAV is:
a. 9%
b. 5.56%
c. 9.09%
d. 6.06%

10. During the reaping phase the investor looks to:
a. Building wealth
b. Cashing out
c. Transferring wealth
d. All of the above

11. In the offer document "unit & offer" describes the nature and significant attributes of the units under offer. Which of the following is not covered under this:
a. Minimum amount to be raised
b. Period under which refund should be carried out
c. Circumstances under which refund may take place
d. Maximum target amount to be raised

12. A mutual fund is:
a. A partnership
b. A pass through vehicle
c. A private trust
d. An association of persons

13. Only one of the following is required to pass the AMFI examination:
a. Trustees
b. Officers of SEBI working in the Mutual Fund department
c. Employees in a call center dealing with mutual fund investors
d. Fund managers

14. An investor claims that the PPF is a superior instrument to Mutual Funds. An argument to defend investment in a Mutual Fund over PPF is:
a. Mutual Fund will surely yield a better return than PPF
b. A mutual fund offers the potential for higher income and capital appreciation
c. The capital investment is safer in a Mutual Fund
d. A Mutual Fund investment is less volatile

15. An NRI wishes to invest in a Mutual Fund. Which of the following is true?
a. He cannot apply has he will be paying in Foreign Currency
b. Need not take individual permission as RBI has granted general permission in this regard
c. The investor has to apply to RBI seeking permission as he will be paying in foreign currency
d. Cannot apply as it is open to Indian residents only

16. The cut-off time for redemption request kept by an AMC is 3:00 pm. An application for redemption received at 3:01pm
a. Redemption will be based on next day NAV but no exit load will be charged
b. Redemption will be based on next day NAV
c. Applicant will be asked to resubmit the request 10 am the next day
d. The same day NAV will apply since the gap is less than 30 minutes from cut-off time

17. Duration of a bond means the percent change in:
a. Price with change in yield
b. Price as a result of stock market fluctuations
c. Price with change in coupon rate
d. None of the above

18. Where would you place a 53 years old executive planning to retire at age 60?
a. Sudden wealth stage
b. Reaping stage
c. Accumulation stage
d. Transition stage

19. The OD should indicate the management of the fund. The management doesn't include:
a. Name of trustees
b. Name of the Fund Manager
c. Business experience of the key personnel of the AMC
d. Registration number of the custodian

20. Small funds:
a. Are relatively easier to manage
b. Achieve their objectives in a more focused manner
c. Have limited holding of securities
d. All of the above

21. OD must contain information about unit holder transaction expenses. Which of the following is not an item under this?
a. Repurchase load
b. Initial issue expenses
c. Max sales load
d. Switchover load

22. An open ended scheme can change its fundamental attributes:
a. By allowing unit holders to exit scheme after 6 months without exit load
b. After obtaining prior approval from SEBI
c. By obtaining consent of 75% of unit holders
d. Informing each unit holder individually and allowing exit without exit load

23. The total net assets of a fund scheme increased from 100 cr to 120 cr. Of this, 5 cr was unrealized gain. The number of units is 10 cr. The maximum dividend per unit the scheme can declare is:
a. Rs 2
b. Rs 1.50
c. Rs. 0.50
d. Rs. 1



24. Fund manager with investment philosophy of growth investing, looks for:
a. Companies with above average profits and growth in earnings
b. Companies with large equity base
c. Companies which are likely to go for public issue
d. All of the above

25. "Making mutual funds work for you – the investor's guide" was published by:
a. SEBI
b. AMFI
c. UTI
d. Investor Education and Protection Fund

26. An Investor invested in the UTI Money market Mutual Fund. To see the relevant financial statements, she should read:
a. Financial statement of the schemes managed by UTI trustee
b. Annual report of AMFI
c. Annual report of SEBI
d. Financial statement of the UTI AMC

27. As per investment company institute, AMFI equivalent in the US, corporate bond funds have higher risk than:
a. Money Market funds
b. Index funds
c. Aggressive funds
d. Growth funds

28. MF can invest in unlisted securities within SEBI approved limits, including:
a. Unlisted company's shares
b. Units of venture capital funds
c. Both the above
d. None of the above

29. A grandfather wants to make an investment for a newborn grandson. Which is the most suitable investment?
a. Index funds
b. Income funds
c. Money market funds
d. Gilt funds

30. The ratio which divides risk premium by Standard Deviation is:
a. Sharpe Ratio
b. Treynor Ratio
c. Bogle Ratio
d. Jensen Ratio

31. The following is not required on the cover page of the OD?
a. Date on which approved by trustees
b. Earliest closing date for New Fund Offer
c. Date the NFO closes
d. Date the NFO opens



32. The NAV of a fund is 35. Entry load is 1.75% and Exit Load is 0.50%. How many units should Ms Monica redeem to withdraw Rs. 50,000/-?

33. NAV of a fund is 48. Entry Load is 2.25% and Exit Load is 1%. Calculate the price at which the investor will be able to purchase 2000 units.

34. Which of the following expenses cannot be charged to the scheme
a. Audit fees
b. Costs related to investor communication
c. Winding costs for terminating the scheme
d. Penalties and fines for infraction of laws

35. The valuation norm for non-investment grade, performing assets is done:
a. On YTM basis using the Crisil valuation methodology
b. On YTM basis with 25% discount
c. At 25% discount to face value
d. At face value

36. Valuation norms for non-traded securities should be disclosed
a. At the end of every financial year
b. Every quarter
c. In the offer document at the time of launch of the scheme
d. Should not be disclosed, being confidential information

37. As per SEBI guidelines, a security is to be treated as untraded when
a. Security is never traded on stock exchange
b. Security is not traded for 30 days
c. Security is not traded for 60 days
d. None of the above

38. Ex-marks with 100% could be for the following fund:
a. Growth fund
b. Index fund
c. Value fund
d. Balanced fund

39. A high turnover rate for a fund indicates
a. High transaction costs
b. Greater efficiency
c. High returns to the investor
d. A rising market

40. An investor can assess the performance of his mutual fund by comparing it with the performance of
a. Other mutual fund of the same type
b. The stock market
c. Other financial products
d. All of the above





41. If the NAV of an open-ended fund was Rs. 16 at the beginning of the year and Rs.22 after 13 months, the annualized change in NAV is
a. 6.0%
b. 34.6%
c. 40.6%
d. 37.5%

42. The choice of an appropriate benchmark for evaluating a fund's performance depends on
a. The fund manager
b. The investment objective of the fund
c. SEBI
d. AMFI

43. When comparing a fund's performance with that of its peer group, the following cannot be compared
a. Two debt funds with 5 year maturities
b. A broad-based equity fund with an IT Sector Fund
c. A bond fund with bond index
d. A government securities fund with a government security

44. Which of the following is false?
a. ROI is a measure similar to Total Return with Reinvestment of distribution
b. Total Return with Reinvestment of distributions assumes reinvestment at NAV on the distribution date
c. As a measure of performance, Total Return with Reinvestment of distribution seeks to overcome the shortcomings of simple Total Return
d. Because of its simplicity, simply Total Return is preferred in practice to Total Return with Reinvestment of distribution

45. Financial planning allows a person
a. To become a billionaire
b. To achieve financial goals through proper management of finances
c. To invest in foreign countries
d. None of the above

46. Financial Planning comprises
a. Defining a client's profile and goals
b. Recommending appropriate asset allocation
c. Monitoring financial planning recommendations
d. All of the above

47. Financial planning does not include
a. Enabling investors to define financial goals
b. Assessing the investors risk and return requirements
c. Recommending an appropriate asset allocation
d. Selecting securities that will be included in the investor's portfolio

48. A small investor can build a diversified portfolio by
a. Buying one share each of the listed companies
b. Investing in a mutual fund
c. Borrowing enough money to buy shares of well-managed companies
d. None of the above

49. Direct investment in stock market can be a better option than investing through mutual funds if the investor
a. Wants better returns than those offered by mutual funds
b. Has large capital, knowledge and resource for research
c. Has identified a bullish phase in the stock market
d. Wants to invest for the long term

50. The reason for popularity of Indira Vikas Patra was
a. Rural investors
b. Investors in high tax bracket
c. Urban investors
d. Investors who want to protect their identity

51. Most individuals invest in life Insurance policies for
a. Risk protection
b. Tax benefits
c. Easy liquidity
d. High returns

52. Which of the following about PPF is false?
a. Investments have to be made from taxable income of the relevant year.
b. Investments once made cannot be withdrawn until maturity.
c. Both interest and principal are tax free in the year of withdrawal
d. Investments enjoy tax benefits under Section 80c of the IT Act.

53. The difference between debenture and bond is:
a. Bonds are issued by corporations and debentures are issued by PSUs.
b. Bonds are unsecured and debentures are secured.
c. Bonds are backed by loans and debentures are backed by assets
d. None of the above

54. A criticism of rupee-cost averaging is
a. Investment is for the same amount at regular intervals
b. Over a period of time, the average purchase price will work out lower than if one ties to guess the market highs and lows
c. It does not tell you when to buy, sell or switch from one scheme to another
d. Rupee cost averaging has no serious shortcomings

55. A high proportion of investment in income funds is required by
a. Accumulating investors
b. Affluent investors
c. Investors in the inter-generational transfer phase
d. Investors in the distribution phase

56. Mutual fund can benefit from economics of scale because of
a. Portfolio diversification
b. Risk reduction
c. Large volume of trades
d. None of the above




57. Equity Linked Savings Scheme does not have which of the following features?
a. It entitles the unit holder to tax benefits
b. The investment is locked in for 3 years
c. A minimum stated level of investments is made in equity and equity related instruments
d. None of the above

58. The Custodian of a mutual fund:
a. Is appointed for safekeeping of securities
b. Need not be an entity independent of the sponsors
c. Not required to be receive deliveries with SEBI
d. Does not give or receive deliveries of physical securities

59. As per SEBI guidelines, a due diligence certificate is not
a. Signed by a Compliance Officer of the mutual fund
b. A certificate that all legal formalities of a scheme are completed
c. Attached to Annual report
d. A part of offer document

60. SEBI does not require the following to be included in the offer document issued by a mutual fund
a. Details of the Sponsor and the AMC
b. Description of the Scheme & investment objective/strategy
c. Investors' Rights and Services
d. Performance of other mutual funds

61. Mutual funds do not justify the need for paying commission to agents when the investors skip out of the scheme before a specified period. In India this practice is adopted by
a. Agents voluntarily paying back the commission to the Mutual fund
b. Trail commission is not paid to the agents
c. None of the above
d. The whole of commission is paid to the agents

62. Distributors or agents
a. Can distribute several mutual funds simultaneously
b. Cannot appoint sub-agents or sub-brokers
c. Should be only individuals not companies or banks
d. Should not be an employee or associate of the AMC

63. The AMFI code of ethics does not cover the following prescriptions
a. Adequate disclosures should be made to the investors
b. Funds should be managed in accordance with stated investment objectives
c. Conflict of interest should be avoided in dealings with directors or employees
d. Each investment decision should be approved by investors

64. Contingent Deferred Sales Charge (CDSC)
a. Is higher for investors who stay invested in the scheme longer
b. Is lower for investors who stay invested in the scheme longer
c. Is the same for all investors irrespective of how long they stay invested
d. Is not allowed to be charged to mutual fund investors in India.





65. A Debt fund distributes 10% dividend. How much tax does the investor have to pay on this dividend?
a. 10%
b. 12%
c. 20%
d. None

66. A value manger does not look for
a. Stocks that are currently undervalued in 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

67. As per SEBI, mutual funds can borrow for short term to the extend of
a. Total net assets
b. 50% of net assets
c. 25% of net assets
d. 20% of net assets

68. A mutual fund is not allowed to invest in the sponsor company,
a. > 25% of its net assets
b. > 10% of its net assets
c. Not at all
d. > 5% of net assets

69. Liabilities in the balance of a mutual fund 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

70. A fund's investments at market value total Rs. 700 crores, Total liabilities stand at Rs. 50 lacs and the number of units outstanding is 28 Crores. What is the NAV?
a. Rs. 30.19
b. Rs. 24.98
c. Rs. 32.15
d. Rs. 40.49

71. For valuation of traded securities, which of the following is not true?
a. The security is valued at the last quoted price
b. The security is valued on the basis of earnings capitalization
c. Making to market is applied
d. If the security has not been traded on valuation date, the trading price on any previous date may be used, provided that date is not more than 30 days prior to valuation date.

72. For evaluating sectoral funds, the preferred benchmark would be the
a. BSE Sensex
b. S&P CNX Nifty
c. BSE 200
d. S&P CNX Sectoral Indices



73. The Expense Ratio as a measure of a fund's performance is defined as
a. Total expenses and average net assets
b. Total expenses and total asset
c. Average expenses and average net assets
d. None of the above

74. Within an asset class, which individual security to invest in should be decided by
a. The financial planner
b. The investor himself
c. A professional fund manager
d. An objective advisor

75. Flexible asset allocation means
a. Continuously changing the ratio of various assets in the portfolio
b. Not doing any re-balancing and letting the profits run
c. Active switching
d. None of the above

[ganeshbala]

1. Which of the following is generally true for a growth stock?
a. Steady capital appreciation and steady dividends yields
b. High capital appreciation and high dividend yields
c. High capital appreciation but low dividend yields
d. Steady capital appreciation but high dividend yields

2. A fund's declared NAV does not include loads
a. True
b. False

3. All expenses and income accrued upto the valuation date shall be considered for valuation. Some minor expenses need not be so accrued, provided their affect on the NAV is not more than:
a. 2%
b. 1.5%
c. 0.5%
d. 1%

4. When a scheme with assured returns is being launched, which of the following need not be published in the offer document?
a. Means of fulfilling the guarantee
b. Information for all schemes launched by the fund in the past
c. Comparison with other mutual funds
d. Investment objective

5. NAV of a fund is 14, Entry Load is 2.25%. Calculate the price at which the investor will be able to 500 purchase units.

6. The NAV of each scheme should be updated on AMFI's website
a. Every quarter
b. Every month
c. Every hour
d. Every day

7. NAV of a scheme is 20. Exit Load is 1.5%. What will be the price at which the investor will be able to sell units?

8. Which of the following would you suggest if your client suddenly wins Rs. 1 cr in a game show
a. Invest the whole amount in equity directly
b. Invest half in equity mutual funds and the other half in debt mutual funds
c. Invest in a money market mutual fund till the time he decides on the use of the money
d. Spend, gift and invest as per his wish

9. Which of the following are not true for ELSS?
a. Investor can claim an income tax benefit
b. There is a lock-in period before investment can be withdrawn
c. There are no specific restrictions on investment objectives for the fund managers
d. These funds cannot invest in shares of listed companies

10. The prospectus of the OD containing the details of a new scheme is first registered with
a. AMFI
a. SEBI
b. BSE
c. Ministry of Finance


11. A no-load fund is one in which?
a. Entry load is not charged
b. Exit load in not charged
c. Entry load as well as exit load is not charged
d. The initial issue expenses are not charged to the investor

12. If the NAV of an open-ended fund increased from Rs. 16 to Rs. 20 in 6 months, the absolute return is
a. 6.00%
b. 34.60%
c. 25.00%
d. 37.50%

13. A Mutual fund can benefit from economies of scale because of:
a. Indirect investment
b. Large volumes of trade
c. Portfolio diversification
d. Fund manager

14. The structure, which is required to be followed by mutual funds in India, is laid down by:
a. Finance ministry
b. SEBI
c. Fund Sponsor
d. AMFI

15. The Board of trustees of a mutual fund
a. Act as a protector of investor's interest
b. Directly manage the portfolio of securities
c. Do not have the right to dismiss the AMC
d. Cannot supervise and direct the working of the AMC

16. The fund sponsor has to contribute:
a. Nothing to the AMC
b. The total Net Worth of the AMC
c. At least 40% of the AMC's net worth
d. Exactly 50% of the net worth of AMC

17. Special Privileges of erstwhile UTI include
a. Assured return schemes
b. Guarantees
c. Ability to take/make loans
d. All of the above

18. The most important factor to look for when investing in a corporate fixed deposit is the
a. Yield
b. Rate of interest
c. Credit rating of the deposit
d. None of the above

19. Risk arising from a scheme's investment objective/strategy and proposed asset allocation is
a. Not a risk at all
b. Common to all schemes
c. Specific to that scheme
d. Not applicable to debt funds




20. The role of AMFI in the MF industry is not to:
a. Promote the interest of the unit holders
b. Set a code of ethics
c. Regulate mutual funds
d. Increase public awareness of MFs in the country

21. Loads are recovered
a. From agents and distributors
b. As a fixed amount each year
c. At the time of investor's entry or exit
d. None of the above

22. Which of the following is true about the fundamental attributes of a scheme
a. Investment objectives of a scheme are not a fundamental attribute
b. These can be changed after informing investors and taking approval from SEBI and Trustees
c. OD need not be updated after change in fundamental attributes of a scheme
d. All are false

23. Investments made by mutual fund on behalf of investors are accounted as
a. Assets
b. Liabilities
c. Capital
d. None of the above

24. The NAV of an Open-ended scheme is 15. What can be the maximum entry load charged to the investor?
a. 2.25% of 10
b. 2.25% of 15
c. 7% of 15
d. 7% of 10

25. A high portfolio turnover for a fund indicates
a. That the fund is active
b. Higher transaction cost
c. Both of the above
d. None of the above

26. Which of the following is not an equity instrument?
a. Preference shares
b. Equity warrants
c. Ordinary debentures
d. Convertible debentures

27. Retired investors should
a. Not draw down on their capital
b. Not invest in securities which bear risk of capital erosion
c. Continue holding some proportion of their holdings in equity growth funds
d. Never invest in equity

28. The code of conduct may be put in place by:
a. AMFI
b. Board of Trustees
c. Directors of AMC
d. All of the above

29. The expense ratio is not affected by:
a. Fund size
b. Average account size
c. Portfolio composition
d. Stock market conditions

30. Which of the following transaction cost are not quantified in the offer document?
a. Brokerage commission
b. Dealer spread
c. Custodian fee
d. Registrar fee

31. A small investor can build a diversified portfolio by
a. Buying one share each of all listed companies
b. Investing in a mutual fund
c. Borrowing enough money to buy shares of well-managed companies
d. None of the above

32. The liquidity needs of an investor are met through
a. Equity funds
b. Index funds
c. Money market funds
d. Sector funds

33. Which of the following is not false about a mutual fund
a. Open ended funds can be sold in secondary markets
b. Close ended funds do not have a fixed tenure
c. Open ended funds do not calculate their NAV on every business day
d. The NAV of a close ended fund has to be calculated at least once in a week

34. An investor should be advised to avoid investing in a debt fund with a
a. Lower rated portfolio and higher expense ratio
b. Higher rated portfolio and lower expense ratio
c. Lower rated portfolio and lower expense ratio
d. Higher rated portfolio and higher expense ratio

35. A self-regulatory organization can
a. Regulate all entities in the market
b. Regulate only its own members in a limited way
c. Regulate its own members with total jurisdiction
d. Regulate no one

36. Systematic Withdrawal Plan allows investors to get back the principal amounts invested in addition to the income on investment
a. True
b. False

37. UTI was set up by
a. SEBI
b. AMFI
c. A special Act
d. RBI

38. Constraints imposed by most funds on check writing are
a. Account balance should not fall below the minimum capital required
b. Checks issued must be for at least the minimum amount specified
c. Number of checks per month must not exceed a specified number
d. Both a & b above


39. An owner of preference shares is given which of the following rights
a. Voting rights
b. Fixed dividend income from post-tax profits
c. Voting rights and unlimited dividend income
d. No guaranteed rights

40. Market capitalisation of a company is calculated by multiplying the number of outstanding shares by
a. Rs.10
b. Face value of each share
c. Current market value of each share
d. Dividend yield

41. Shares of companies with large capital market capitalisation
a. Have greater growth potential
b. Are more liquid
c. Are not available
d. None of the above

42. In case of a fund scheme merger or take-over
a. High court approval may not be necessary
b. SEBI approval is a must
c. All unit holders must be informed
d. All of the above

43. What is the statistics used in validitating Beta?
a. Standard deviation
b. Beta
c. Ex-marks
d. Sharpe ratio

44. As a financial planner, which of the following would you suggest for a person who can take a moderate risk
a. Aggressive growth fund
b. Aggressive equity fund
c. Diversified equity fund
d. Sectoral fund

45. A growth fund manager would apply the following strategies:
a. Invest in those companies that would give more returns than the average returns in the industry.
b. Invest in companies having a large equity base.
c. Invest in companies coming out with new "Initial public offers'
d. All of the above

46. An active style of portfolio management includes the following:
a. Application of 'Systematic transfer plan' in various schemes of a fund.
b. Undertake macroeconomic analysis to determine profitable investment trends.
c. Invest in companies with high market capitalization
d. All of the above.

47. What would be the maximum initial issue expenses charged from the investors, if the amount mobilized from a mutual fund NFO is Rs. 50 crore.
a. Rs. 5 crore
b. Rs. 2 crore
c. Rs. 3 crore
d. Rs. 1 crore

48. When interest rates for similar maturities bonds are 11.5%, bond with a 8% coupon rate will become:
a. More attractive
b. Less attractive
c. At par
d. The price is unrelated to the interest rates for similar securities.

49. What would be a suitable benchmark to evaluate a closed-end debt fund?
a. BSE Sensex
b. I-sec's Si-bex
c. Crisil Composite Bond Fund Index
d. S & P CNX Nifty

50. Financial planning involves the achievement of following objectives:
a. Buying a home
b. Purchase of a new car
c. Planning for retirement
d. All of the above

51. What is Bogle's suggestion regarding the 'rule of thumb' for asset allocation?
a. 50% equity and 50% debt
b. 60% equity and 40% debt
c. An investor's allocation to debt should be equal to his age.
d. Investor should not do any re-balancing of his/her portfolio.

52. What should be the recommended portfolio for an investor who is risk averse in his transition phase?
a. Higher allocation to equity funds
b. Higher allocation to debt instruments
c. Investments only in equity
d. He should not invest anywhere

53. Which of the following is true?
a. SEBI does not allow the investor to pledge his mutual fund units in favor of a financial institution
b. An investor cannot redeem his mutual fund holding in part.
c. The frequency of investment offered for SIP varies from one fund to another.
d. All of the above

54. What is the proof that the investor has invested in mutual fund units?
a. The investors receive units commensurate with the investment made.
b. Investors get an account statement, showing their holdings and their price.
c. The receipt of money acts as the proof
d. None of the above

55. What is the maximum time given to the Asset management company to give their reply after the observations made by SEBI to a new fund scheme filed with it?
a. 2 months
b. 3 months
c. 4 months
d. 6 months

56. How would you convince a first-time investor who is risk-averse to invest in mutual funds in comparison to a bank deposit?
a. Mutual funds is the right choice to grow your wealth at a fast pace
b. Mutual fund has the likelihood of giving more growth than the bank deposit as the investment is in a diversified portfolio of securities.
c. Investment in Mutual fund doubles your money in 3 years.
d. All of the above



57. Bogle's suggestion for debt is based on:
a. Age
b. Wealth
c. Family size
d. None

58. Govt. securities are valued for computing NAV by:
a. AMFI
b. RBI
c. SEBI
d. MOF

59. Who cannot distribute mutual funds in India?
a. Regional office
b. SEBI
c. Post Office
d. Foreign Bank
e. PSU Bank

60. Who cannot distribute mutual funds in India?
a. Directors of AMC
b. Trustee
c. Employee of AMC
d. Sponsor

61. Who cannot distribute mutual funds in India?
a. RBI
b. PSU Bank
c. Foreign Bank
d. All of the above

62. An important part of transaction cost is:
a. Stamp duty
b. Custodian fee
c. Registrar fee
d. Commission

63. Best option for power of compounding is:
a. 12% yearly
b. 6% half-yearly
c. 3% quarterly
d. 1% monthly

64. For tax implication computation, a client should
a. Read the OD
b. Consult tax consultant
c. AMC will take care
d. Clarify with IT Dept

65. Who registers the mutual fund with the SEBI?
a. AMC
b. Trustee
c. Sponsor
d. Investment manager



66. A client's financial plan should not be reviewed when
a. The client has just retired
b. The client has just been divorced at age 40
c. The client feels he has attained his financial goals
d. The client's mutual fund portfolio shows appreciation

67. NAV means:
a. (Market Value of Assets – Liabilities) / number of units outstanding
b. (Book Value of Assets – Liabilities) / number of units outstanding
c. Unit capital / number of units outstanding
d. Net assets / initial number of units

68. If an investor needs income, he should select funds with:
a. Low expense ratio
b. High expense ratio
c. Low current yield
d. High current yield

69. When interest rate rises, bond price
a. Is not affected
b. Fluctuates up or down
c. Also rises
d. Falls

70. The AMFI is governed by:
a. RBI
b. Ministry of Finance
c. A board of directors elected from among members of AMFI
d. SEBI

71. A fund that charges a load is better than a no-load fund
a. True
b. False

72. Documents available to investors for inspection do not include
a. Memorandum and Articles of Association of AMC
b. Consent of auditors and legal advisors
c. Investment management reports
d. Reports based on which actual investments are made

73. A passive fund has the following feature
a. A passive fund tracks the index
b. A passive fund matches the performance if the index
c. A passive fund selects the stocks that are present in the index
d. All of the above

74. Where do Gilt Funds Invest?
a. Shares
b. Debentures
c. Dated Securities
d. None of the above

75. Which of the following Mutual Fund was setup after 1963 but before 1987?
a. SBI Mutual Fund
b. Can Bank Mutual Fund
c. LIC Mutual Fund
d. None of the above

[ambesh]

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