With Out Ans HSBC by balvir21

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									HSBC 1. An investor in a closed-end mutual fund can get money back before maturity by selling units (1-Mark) Back to the fund To a special trust at NAV On a stock exchange where the fund is listed To the agent through which he/she subscribed to the units of the fund

2. A closed-end mutual fund has a fixed (1-Mark) NAV Tenure Rate of return Number of distributors

3. A mutual fund is owned by (1-Mark) The Govt of India SEBI All its investors AMFI

4. Who is the primary guardian of unit holders funds? (1-Mark) The AMC The Sponsor The Trustees The Custodians

5. The limit on maximum entry or exit load that a fund can charge is determined by the (1-Mark) AMC SEBI AMFI Distribution agents based on demand for the fund

6. Which of the following is not true for Equity Linked Savings Schemes? (2-Mark) Investors can claim an income tax benefit There is a lock-in period before investment can be withdrawn There are not specific restrictions on investment objectives for the fund managers These funds cannot invest in shares of listed companies

7. The fund sponsors should have a sound financial track record of (1-Mark) 7 years 12 months 5 years 3 years

8. The agreement between the Trustees and the AMC is known as (2-Mark) Trust Deed Investment Management Agreement Agreement to manage Portfolio AMC appointment letter

9. A closed-end scheme of a mutual fund is not governed by (1-Mark)

Exchange Rules of the stock exchange where it is listed Listing Agreement between the fund and the stock exchange Guidelines issued by the Ministry of Commerce 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 (1-Mark) One week 30-days 42-days Six weeks

11. The Board of Trustees of the UTI does not have nominees from (1-Mark) RBI LIC IDBI The Bombay Stock Exchange (BSE)

12. The "Capital" of a scheme does not include (1-Mark) Unit capital Reserves Borrowing Net worth of the AMC

13. The most important source of information for a prospective investor in mutual fund is (1-Mark)

Offer document Annual Report of the AMC Economic Times AMFI Newsletter

14. The offer document issued by mutual funds does not serve the purpose of (1-Mark) Announcing the launch of the scheme Giving detailed information about the scheme Explaining the risk factors of the scheme Giving the fund manager's investment outlook for the next quarter

15. The offer document for a scheme remains valid even if (2-Mark) The AMC is reconstituted Entry or exit loads are changed The scheme's NAV changes New plans are added to existing schemes

16. Standard risk reactors are the ones (2-Mark) Which are uniformly applicable for any mutual fund scheme Different for different schemes Which are made by a "standards" committee None of the above

17. The prospectus or offer document containing the details of a new scheme is first registered with the (2-Mark) AMFI

SEBI Bombay Stock Exchange Ministry of Finance

18. A scheme's policy on dividends and distribution (2-Mark) Is decided by the fund manager as per the market outlook Can be changed to suit the requirements of the AMC Need not be consistent Should be disclosed at the time of initial launch

19. The following need not be covered in a Key Information Memorandum (2-Mark) Risk Factors Opening and earliest closing date of the initial offer Disclaimer clause Functions and responsibilities of the sponsor, trustees, AMC and Custodian responsibilities

20. The following are not termed as "sales practices" (1-Mark) Agents commission Before-and after-sales service to investors Advertising of schemes Stock broking

21. Which of the following sales practices is prescribed by regulation (1-Mark) AMFI Code of Ethics

SEBI Advertising AMFI's Code for Agents 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 (1-Mark) SEBI Regulations Manual AMFI booklet Offer document RBI Guidelines

23. Which of the following is not true (2-Mark) Companies can invest in mutual fund schemes Registered societies can invest in mutual fund schemes NRI can not invest in mutual fund HUF can invest in mutual fund

24. Listed equity shares are to be valued at (1-Mark) The average price of the share in NSE The lowest price of the day in BSE Cost price or current market price whichever is lower 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 (1-Mark) Interest warrant bounces twice The issuer refuses to repay interest

If the interest/installment becomes overdue for a period of 180 days 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 (2-Mark) NAV 95% of NAV 93% of NAV 97% of NAV

27. For a no-load fund , the AMC can change an investment management fee not exceeding (2-Mark) 3.50% 4.00% 2.25% 0.50%

28. A funds NAV is affected by (2-Mark) Purchase and sale of investment securities Valuation of all investment securities held Accrual of income or expense All of the above

29. If an investor switches from one scheme to another scheme within the same mutual fund (1-Mark) No load will be charged Only entry load will be charged in the new scheme

Only exit load will be charged in the old scheme Depends on AMC and varies between different AMC

30. Which of the following is untrue of an automatic reinvestment plan? (2-Mark) The plan allows for automatic reinvestment of all income and capital gains Automatic reinvestment allows for accumulation of additional units of the fund The major benefit of automatic reinvestment is compounding Its benefit is often lost on account of the heavy load charge on the reinvestment

31. A passive fund manager (1-Mark) Researches stocks extensively Does not buy and sell stocks often Does not have to go through the process of stock selection Does not have to track stocks

32. Coupon of a debt security refers to (1-Mark) A piece of paper attached to the certificate The return-on investor would earn The rate of interest paid on par value of the bond None of the above

33. Certificates of Deposits (CDs) are issued by (1-Mark) Regional Rural Banks Corporates Scheduled commercial banks

None of the above

34. Value stocks (1-Mark) Have high current dividend yield Yield high growth in earnings Are currently under valued None of the above

35. Mutual funds are allowed to lend (1-Mark) Loans Securities Physical assets None of the above

36. An owner of preference shares is given which of the following rights (1-Mark) Voting rights Fixed dividend income from post-tax profits Voting rights and unlimited dividend income No guaranteed rights

37. When interest rates for similar maturities' bonds are 11%, bond with a 9% coupon rate will sell (2-Mark) Above par Below par At par

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 (2-Mark) Current yield Technical analysis Yield to maturity Fundamental analyis

39. Yield curve is also known as (2-Mark) Curve of Interest Term Structure of Interest Rates Curve that yields None of the above

40. As per SEBI norms, a fund's investments, in the equity shares of any one company are restricted to (2-Mark) 25% of Net Assets 10% of Net Assets 50% of Net Assets 100% of Net Assets

41. Transaction costs include (1-Mark) All expenses related to purchase and sale of securities All expenses charged to the fund Distribution expenses

None of the above

42. The Expense Ratio is of least importance in which of the following (1-Mark) Debt fund Index fund Equity fund Liquid fund

43. Turnover rates would be most relevant to analyze the performance of (1-Mark) Equity funds Index funds Debt funds Value funds

44. Portfolio turnover rate refers to (2-Mark) Ratio of sales to the net assets of the fund Ratio of purchases to the net assets of the fund Ratio of sales or purchases( which ever is lower) to net assets of the fund Ratio of sales or purchases( which ever is higher) to net assets of the fund

45. The rule of 72 is used to (2-Mark) Calculate entry load of a scheme Calculate the period in which an investment will double at a given rate of return Calculate the rate at which money will grow to double in a given period both b and c

46. If there is an entry load in a scheme, the investors return (2-Mark) Will increase to the extent of load Will not change because there will not be any exit load Will reduce to the extent of load None of the above

47. As per SEBI, mutual funds can borrow for short term to the extent of (2-Mark) Total net assets 50% of net assets 25% of net assets 20% of net assets

48. When selling a mutual fund, a good agent would never (1-Mark) Describe the past performance of the scheme Compare the fund with other mutual funds Assure a rate of return Compare the fund with other financial products

49. Which of the following is not a characteristic of company fixed deposits (1-Mark) A higher rate of interest Higher risk Unfavorable effect of tax Very high liquidity

50. Which of the following represent indirect investments?

(1-Mark) Investment in a mutual fund Investment in shares Investment in bank deposit Investment in post office schemes

51. The most important reason for an investor to prefer a bank deposit to a mutual fund is (1-Mark) The creditworthiness of the bank Because the bank does not invest in securities That the bank offers a guarantee All of the above

52. The constraint on financial planning due to insufficient resources can be remedied to some extent by (1-Mark) Decreasing the standard of living Disciplining children Disciplined monthly budgeting None of the above

53. Structural characterization of an equity fund include (1-Mark) Costs of investing The specific securities in which the fund has invested The number of employees of the AMC All of the above

54. Listing of shares at a stock exchange ensures

(1-Mark) Guaranteed returns Long term capital appreciation Low risk High liquidity

55. Mutual fund investors should be advised to expect (1-Mark) Low post tax returns Dramatic results Better returns than every other available option Only realistic wealth accumulation goals

56. Once a financial advisor works out ideal Asset Allocation, it can be used for all his investors (1-Mark) True False -

57. A retired person generally needs a greater proportion (1-Mark) Debt funds Equity funds Money Market funds 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

(1-Mark) True False -

59. In which type of schemes should an unmarried professional working in HLL invest (2-Mark) Scheme investing 80% in debt securities 50% in equity funds and 50% in income funds At least 75% in equity funds having a higher P/E Ratio than the market All the money in a balanced fund

60. The best equity fund, relative to others, would have (2-Mark) Higher Ex Marks, lower Beta and higher Gross Dividend Yield Higher Ex Marks, higher Beta and higher Gross Dividend Yield Lower Ex Marks, lower Beta and lower Gross Dividend Yield 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? (2-Mark) It would be better to stick to one type of fund, the one that meets his investment objective. He should keep switching parts of his investment from the equity fund to the money market fund as the market rises and switch back to the equity fund when the market falls 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 none of the above

62. If a charitable trust approaches a distributor for investment in a mutual fund, the distributor should (2-Mark) Accept the application without wasting time Reject the application outright Refer to the offer document Accept the application as a direct application

63. Beta of an equity fund measures its (2-Mark) Performance Risk Both the above None of the above

64. The basis of genuine investment advice should be (2-Mark) The current market situation The agent commissions paid by different funds Financial planning to suit the investor's needs Planning to complete the agent's annual targets

65. One of your friends who has invested in a mutual fund is about to get Australian citizenship. What would you advise? (2-Mark) He should transfer the investment to his relative He should get RBI approval for continuing He can continue to hold as PIO are allowed to invest in mutual funds in India He should immediately redeem his investment since foreign citizens are not eligible investors

66. As per Bogle, asset allocation for older investors in accumulation phase should be (2-Mark) 30% equity ; 70% debt 40% equity ; 60% debt 50% equity ; 50% debt 70% equity ; 30% debt

67. A steady holding of investments in an equity fund's portfolio indicates (2-Mark) Long-term orientation Lower transaction costs Both the above None of the above

68. An investor should not invest in a mutual fund if (2-Mark) He expects a customized portfolio He is able to carry out detailed investment research and monitor the stock market Both the above None of the above

69. Which of the following is not true about the buy and hold strategy (2-Mark) It is preferred by a many investors It does not involve rebalancing It is very beneficial as investors may exit from poor performers and invest in better ones All of the above

1. The highest risk is associated with one of the following kind of funds (1-Mark) Balanced Funds Gilt Funds Equity Growth Funds Debt Funds

2. An investor in a closed-end mutual fund can get money back before maturity by selling units (1-Mark) Back to the fund To a special trust at NAV On a stock exchange where the fund is listed To the agent through which he/she subscribed to the units of the fund

3. Which of the following is not false about a mutual fund? (1-Mark) Open ended funds can be sold in secondary market Closed ended fund do not have a fixed tenure Open ended funds do not calculate their NAV on every business day The NAV of a closed ended fund has to be calculated at least once in a week

4. Which of the following investment is not made by debt funds (1-Mark) Government debt instruments

Corporate paper Financial institutions' bonds Equity of private companies

5. Which of the following is not true for a mutual fund (1-Mark) The mutual fund is owned by all the investors Mutual fund gives a diversified portfolio to investors The objectives of investors of a mutual fund are diverse The mutual funds do not invest in real estate

6. The amount required to buy 100 units of a scheme having an entry load of 1.5% and NAV of Rs.20 is (2-Mark) Rs.2000 Rs.2015 Rs.1985 Rs.2030

7. The fund sponsors should have a sound financial track record of (1-Mark) 7 years 12 months 5 years 3 years

8. The Board of Trustees of a mutual fund (2-Mark) Act as a protector of investors' interests

Directly manage the portfolio of securities Do not have the right to dismiss the AMC Cannot supervise and direct the working of the AMC

9. Unit-holders aggrieved by a mutual fund or an AMC can get redressed from (1-Mark) Consumer Courts SEBI AMFI RBI

10. The largest corpus of investable funds in India is with (1-Mark) Bank-owned mutual funds Private Sector mutual funds UTI Insurance Companies

11. The amount of authority enjoyed by a self-regulatory organization is defined by (1-Mark) The apex regulatory authority Company law board Its own members RBI

12. Investors have the right to receive interest from the AMC if redemption proceeds are not dispatched within a period of (1-Mark) A month 14 days

14 working days 10 working days

13. The offer document issued by mutual funds does not serve the purpose of (1-Mark) Announcing the launch of the scheme Giving detailed information about the scheme Explaining the risk factors of the scheme Giving the fund manager's investment outlook for the next quarter

14. The most important source of information for a prospective investor in mutual fund is (1-Mark) Offer document Annual Report of the AMC Economic Times AMFI Newsletter

15. The risk of a scheme's NAV moving up or down on the basis of capital market movements is (2-Mark) An investment attribute Scheme specific risk Standard risk Credit risk

16. Which of the following is true about the Fundamental attributes of a scheme (2-Mark) Investment objectives of a scheme is not a fundamental attribute

They can be changed after informing investors and taking approval from SEBI and trustees Offer document need not be updated after change in fundamental attribute of a scheme All are false

17. Standard risk reactors are the ones (2-Mark) Which are uniformly applicable for any mutual fund scheme Different for different schemes Which are made by a "standards" committee None of the above

18. A due diligence certificate does not certify that (2-Mark) The draft offer document forwarded to SEBI is in accordance with SEBI regulations All legal requirements connected with launching of the scheme have been complied with Disclosures made in the offer document are true, fair and adequate The AMC guarantees a good performance

19. Which the following is not false (2-Mark) The offer document need not be studied by an investor before investing in a scheme The offer document is not a legal document A change in key personnel of the AMC does not necessitate a revision of the offer document If fresh litigation cases or adjudication proceedings are referred by SEBI against the fund sponsors or a company associated with the sponsors, then the offer document needs to be revised

20. The following are not termed as "sales practices" (1-Mark)

Agents commission Before-and after-sales service to investors Advertising of schemes Stock broking

21. The code of ethics for mutual funds published by AMFI (1-Mark) Is mandatory Is in the form of recommended practices Is unfavorable to investors Does not cover distribution and selling practices

22. Along with the application form ,it is mandatory to attach (1-Mark) Investment rebate Offer document Key information memorandum None of the above

23. Which of the following is not true (2-Mark) Companies can invest in mutual fund schemes Registered societies can invest in mutual fund schemes NRI can not invest in mutual fund HUF can invest in mutual fund

24. As per SEBI (Mutual Fund) Regulations ,1996 an asset shall be classified as NPA if (1-Mark) Interest warrant bounces twice

The issuer refuses to repay interest If the interest/installment becomes overdue for a period of 180 days If the interest/installment becomes overdue for a period of one quarter

25. Mutual funds have to value their investments (1-Mark) At purchase price On a mark-to-market basis At par At book value

26. For a open-end fund, the sale price should not be (2-Mark) Higher than NAV Higher than 107% of NAV Lower than 107% of Repurchase price Equal to NAV

27. As per SEBI regulations for valuation of investments held by mutual funds, a security is considered "non-traded" when it (2-Mark) Has not been traded for 60 days prior to valuation Has not been traded for 30 days prior to valuation Is not listed on any stock exchange Is held by the mutual fund without buying or selling

28. Liabilities in the balance sheet of a mutual fund are (2-Mark) In the form of long-term loans Strictly short term in nature

Combination of long term and short term Not allowed as per regulations

29. If an investor switches from one scheme to another scheme within the same mutual fund (1-Mark) No load will be charged Only entry load will be charged in the new scheme Only exit load will be charged in the old scheme Depends on AMC and varies between different AMC

30. Systematic Transfer Plan allows investors to (2-Mark) Transfer amount from one mutual fund to another mutual fund at regular intervals Transfer amount from one scheme to another with in the same mutual fund Transfer amount from one scheme to his bank account Transfer dividends of one scheme to another

31. Mutual funds are allowed to lend (1-Mark) Loans Securities Physical assets None of the above

32. Which of the following is not an equity instrument? (1-Mark) Preference shares Equity warrants

Ordinary debentures Convertible debentures

33. Commercial Paper is issued by Corporate bodies (1-Mark) To meet short-term working capital requirements To finance the acquisition of long term capital assets To retire long term debt To pay dividend

34. Shares of companies with large capital market capitalization (1-Mark) Have greater growth potential Are more liquid Are not available None of the above

35. The drawback of an ordinary share is (1-Mark) Possibility of capital appreciation Ownership privilege of the company Dividend income No guaranteed income or security

36. If 10-year government securities yields 10% and a 10-Year fixed deposit in a company yields 12%, the yield spread is (1-Mark) 12% 22% 10%

2%

37. For an open ended scheme, investment in unlisted shares (2-Mark) Can not be lower than 10% of net assets Should be equal to investment in listed shares Can not exceed 5% of net assets Can not exceed 10% of net assets

38. The additional yield required to account for the risk of default by the borrower is known as (2-Mark) Yield plus Yield spread Yield extra Yield premium

39. When interest rates rise, prices of existing bonds (2-Mark) Also rise Fall Are not affected Fluctuate either up or down

40. Market capitalization of a company is calculated by multiplying the number of outstanding shares by (2-Mark) Rs.10 Face value of each share Current market value of each share

Dividend yield

41. The expense ratio used for measuring fund performance is an indicator of (1-Mark) Product market condition Growth in the economy Prevalent market practices The fund's efficiency

42. Portfolio turnover rate of a fund measures the (1-Mark) Size of the fund's portfolio Amount of buying and selling done by the fund The average number of units sold by the fund in one day None of the above

43. Change in NAV as a measure of fund performance is more suitable for (1-Mark) Growth funds Income funds Funds with withdrawal plans None of the above

44. Which of the following is not a SEBI regulation on returns (2-Mark) Standard measurements have to be used for computation of returns Returns for a period of less than 1 year have to be annualized Returns for 1, 3 and 5 years, or since inception which ever is later is to be provided CAGR to be used for funds which are more than 1 year old

45. Assets under management of a fund at the end of year are 125 Cr.The Average Net assets of the fund are Rs. 100 crore and the total expenses of the fund in that year are Rs. 2.5 Cr. What is the expense ratio? (2-Mark) 2.00% 2.50% 1.25% 25.00%

46. A high turnover rate for a fund indicates (2-Mark) High transaction costs Greater efficiency High returns to the investor A rising market

47. The Income Ratio as a measure of a fund's performance is defined by the fund's (2-Mark) Total income and total assets Net investment income and net assets Total income and net assets None of the above

48. A mainstream diversified debt fund is most affected by (1-Mark) Re-investment risk Liquidity risk Interest rate risk Default risk

49. Which of the following works with an investor on his overall financial situation (1-Mark) Tax Advisor Financial Planner Insurance Agent Financial Advisor

50. Which of the following investment products do not give guarantee for return or capital (1-Mark) Bank deposits Pubic provident fund (PPF) National Savings Certificates (NSC) Units of a mutual fund

51. In the dividend reinvestment option ,the number of units held by an investor increases because of (1-Mark) Growth in net asset value i.e. capital appreciation Reinvestment of dividend which is like compounding Interest received on the fund's assets None of the above

52. For older investors who want to transfer their wealth (1-Mark) No financial planning is required The right investment strategy depends upon who the beneficiaries are The right investment strategy depends upon the state of the stock market All the funds can be invested in aggressive equity funds

53. Which of the following is untrue for Public Provident Fund Schemes (1-Mark) The interest is tax-free Post-tax returns are attractive Liquidity is rather low None of the above

54. Running a money market mutual fund requires more of (1-Mark) Credit analysis skills Equity analysis skills Patience Trading skills

55. Structural characterization of an equity fund include (1-Mark) Costs of investing The specific securities in which the fund has invested The number of employees of the AMC All of the above

56. The biggest disadvantage of investment in real estate is (1-Mark) Less potential for capital appreciation High purchase price Depreciation in value as time passes Value gets eroded due to inflation

57. The rate of interest paid by a company on debentures issued by it depends on (1-Mark) The stock market situation SEBI guidelines The company's credit rating The amount of money being raised

58. From whom can a unit-holder seek redressal if his complaint is not entertained by the mutual fund (1-Mark) AMC Board of Trustees SEBI RBI

59. As per Bogle, asset allocation for younger investors in accumulation phase should be (2-Mark) 20% equity ; 80% debt 70% equity ; 30% debt 50% equity ; 50% debt 80% equity ; 20% debt

60. Which of the following is false about fixed asset allocation (2-Mark) It means maintaining the same ratio between various components of the portfolio It involves rebalancing the portfolio in a disciplined manner It means that the portfolio would never be rebalanced It involves periodic review and returning to the original allocation

61. In which type of schemes should an unmarried professional working in HLL invest

(2-Mark) Scheme investing 80% in debt securities 50% in equity funds and 50% in income funds At least 75% in equity funds having a higher P/E Ratio than the market All the money in a balanced fund

62. An Ex-Mark of 100% is possible for (2-Mark) A growth fund An aggressive growth fund An index fund A balanced fund

63. Which of the following is not true about the buy and hold strategy (2-Mark) It is preferred by a many investors It does not involve rebalancing It is very beneficial as investors may exit from poor performers and invest in better ones All of the above

64. Which of the following is true about an equity fund selection (2-Mark) Fund with higher percentage in cash should be selected Funds with low market capitalization have more liquidity Track record of fund managers is not important Funds with higher x-marks are more diversified and have lower risk

65. Direct investment in stock market can be a better option than investing through mutual funds if the investor (2-Mark)

Wants better returns than those offered by mutual funds Has large capital, knowledge and resources for research Has identified a bullish phase in the stock market Wants to invest for the long term

66. If a charitable trust approaches a distributor for investment in a mutual fund, the distributor should (2-Mark) Accept the application without wasting time Reject the application outright Refer to the offer document Accept the application as a direct application

67. Of the following, which type of fund would have a higher P/E multiple in comparison to the average market multiple (2-Mark) A Value Fund A Growth Fund An Index Fund Could be any of the above three, one cannot generalize

68. What would you recommend to an investor who does not want to take any credit risk (2-Mark) Deposit with a chit fund company Deposit with a local co-operative bank A Gilt fund A Diversified debt fund

69. The most important factor look for when investing in a corporate fixed deposit is the (2-Mark)

Yield Rate of interest Credit rating of the deposit None of the above

HSBC 1. The NAV of each scheme should be updated on AMFI's website (1-Mark) Every quarter Every month Every hour Every day

2. Units from an open-end mutual fund are bought from (1-Mark) A stock exchange The fund itself AMFI The Banks

3. A mutual fund can benefit from economies of scale because of (1-Mark) Indirect Investment Large volumes of trade

Portfolio diversification Fund manager

4. A mutual fund is not (1-Mark) Owned jointly by all investors A company that manages investment portfolios of high net worth individuals A pool of funds used to purchase securities on behalf of investors A collective investment vehicle

5. Which of the following is not false about a mutual fund? (1-Mark) Open ended funds can be sold in secondary market Closed ended fund do not have a fixed tenure Open ended funds do not calculate their NAV on every business day The NAV of a closed ended fund has to be calculated at least once in a week

6. Which of the following is not true for Equity Linked Savings Schemes? (2-Mark) Investors can claim an income tax benefit There is a lock-in period before investment can be withdrawn There are not specific restrictions on investment objectives for the fund managers These funds cannot invest in shares of listed companies

7. In India, Mutual Funds are formed as (1-Mark) A public limited company A trust A private limited company

A society

8. The fund sponsor has to contribute (2-Mark) Nothing to the AMC The total net worth of the AMC At least 40% of the AMC's net worth Exactly 50%

9. Which of the following is an SRO (Self Regulatory Organization) (1-Mark) NSE SEBI AMFI RBI

10. UTI Cannot (1-Mark) Provide corporate finance Engage in real estate and property development business Provide merchant banking services Invest in securities

11. The largest corpus of investable funds in India is with (1-Mark) Bank-owned mutual funds Private Sector mutual funds UTI Insurance Companies

12. Unit holders' right to information does not include (1-Mark) Obtaining from the trustees any information having an adverse effect on their investments Inspecting major documents of a fund Receiving of a copy of the annual financial statements of that fund Approving investment decisions of the fund

13. A compliance officer (1-Mark) Certifies that the information contained in the offer document is true and fair Belongs to SEBI Cannot certify that the AMC's legal and procedural obligations are fulfilled Cannot be appointed by the AMC

14. The offer document issued by mutual funds does not serve the purpose of (1-Mark) Announcing the launch of the scheme Giving detailed information about the scheme Explaining the risk factors of the scheme Giving the fund manager's investment outlook for the next quarter

15. Valuation norms for non-traded securities should be disclosed (2-Mark) At the end of every financial year Every quarter In the offer document at the time of launch of the scheme Should not be disclosed, being confidential information

16. The investment objectives of a mutual fund scheme (2-Mark) Are of no relevance to the investor Should be the same as his own investment objectives Change with market movements Change with a change in the AMC's key personnel

17. 'Key Information Memorandum' is (2-Mark) An abridged version of the offer document The Memorandum and Articles of Association of the AMC A sheet containing historical NAVs of other schemes of the same mutual fund Annual Report of the AMC

18. As a part of borrowing policy, the following need not be disclosed in an offer document (2-Mark) Purpose and circumstances of borrowing Regulatory limits on borrowing Potential risk to AMC and unit-holders Names of lenders

19. For assured return schemes, information about the guarantor's net worth which justifies the guarantor's ability to meet any shortfalls in the returns assured under the scheme, can be found in (2-Mark) The offer document The key information memorandum Both a) and b) None of the above

20. The following are not termed as "sales practices" (1-Mark) Agents commission Before-and after-sales service to investors Advertising of schemes Stock broking

21. An agent can offer and sell a fund's units at (1-Mark) Any price he chooses A price determined by competition among agents A price based on demand for that fund's units The public offering price currently in effect

22. To sell funds effectively, an agent need not (1-Mark) Be fully aware of the important characteristics of the scheme Know his/her client's risk profile Give after sales service Offer large investment rebates

23. Mutual Fund agents/distributors are not allowed to (2-Mark) Sell financial products other than mutual funds Sell schemes of more than one mutual fund Pass back the commissions earned to the investors Work anywhere else

24. Investments made by a mutual fund on behalf of investors are accounted as (1-Mark) Assets Liabilities Capital None of the above

25. Scheme-wise annual report of a mutual fund need not be (1-Mark) Sent to all unit-holders Forwarded to SEBI Published as an advertisement Stock exchanges

26. For a open-end fund, the sale price should not be (2-Mark) Higher than NAV Higher than 107% of NAV Lower than 107% of Repurchase price Equal to NAV

27. A closed-end has average weekly net assets of Rs 200 crore.As per SEBI regulations, the AMC can charge the fund with investment and advisory fees upto (2-Mark) Rs 2.25 crore Rs 2.00 crore Rs 2.50 crore Rs 3.00 crore

28. As per SEBI regulations for valuation of investments held by mutual funds, a security is considered "non-traded" when it (2-Mark) Has not been traded for 60 days prior to valuation Has not been traded for 30 days prior to valuation Is not listed on any stock exchange Is held by the mutual fund without buying or selling

29. It is cumpulsory to quote PAN number (1-Mark) If the investor has PAN If the investment is Rs. 1 Lac or more If the investment is Rs. 50000 or more If the investor is liable to pay tax in that year

30. Constraints imposed by most funds on check writing are (2-Mark) Account balance should not fall below the minimum capital required Checks issued must be for at least the minimum amount specified Number of checks per month must not exceed a specified number Both a and b above

31. Equity derivative instruments are (1-Mark) Shares Bonds Contracts Notes

32. Which of the following is not an equity instrument?

(1-Mark) Preference shares Equity warrants Ordinary debentures Convertible debentures

33. Security dealers of a mutual fund (1-Mark) Guard the cabin of the fund manager Execute buy and sell orders for the fund Decide which shares to buy or sell None of the above

34. Fundamental analysis forms the basis to decide (1-Mark) When to buy a given share Whether to buy a given share or not Whether to use technical analysis or quantitive analysis Whether the company's factory can withstand earthquakes

35. Commercial Paper is issued by Corporate bodies (1-Mark) To meet short-term working capital requirements To finance the acquisition of long term capital assets To retire long term debt To pay dividend

36. An owner of preference shares is given which of the following rights (1-Mark) Voting rights

Fixed dividend income from post-tax profits Voting rights and unlimited dividend income No guaranteed rights

37. The Price/Earnings (P/E) Ratio is calculated using (2-Mark) Market price and dividend Market price and earning per share Market capitalization and dividend Market price and face value

38. Which of the following is true regarding borrowing powers of a mutual fund (2-Mark) A mutual fund can not borrow at all A mutual fund can borrow only up to 20% of net assets A mutual fund can borrow for a maximum period of one year A mutual fund can borrow for investment purposes

39. Continuous tracking of the companies in which a mutual fund has invested is done by (2-Mark) Continuous tracking systems Equity analysts Trustees Security dealers

40. It may not be possible to reinvest interest received at the same rate as principal. This is known as (2-Mark) Reinvestment risk

Inflation risk Interest-rate risk Call risk

41. Portfolio turnover rate of a fund measures the (1-Mark) Size of the fund's portfolio Amount of buying and selling done by the fund The average number of units sold by the fund in one day None of the above

42. The major sources of return to an investor from investment in mutual funds are (1-Mark) Interest and capital appreciation Dividend and rent Dividend and capital appreciation Dividend

43. To choose an appropriate benchmark for a scheme, all of the following are required except (1-Mark) The composition and size of the portfolio The investment objective Historical data of fund performance The nature of investments

44. On 1 Jan '05 NAV was Rs. 20/-. On 1 April '04 fund declared dividend of 12%.On 31 Dec '04 NAV was Rs. 22.80. What is the return as per total return method. (2-Mark) 20%

40% 12% 18%

45. As per SEBI, mutual funds can borrow for short term to the extent of (2-Mark) Total net assets 50% of net assets 25% of net assets 20% of net assets

46. Standard deviation is a measure of (2-Mark) Market risk Total risk Credit risk Re-investment risk

47. A high turnover rate for a fund indicates (2-Mark) High transaction costs Greater efficiency High returns to the investor A rising market

48. Of the following, which would be more suitable for a retiree with a modest risk appetite (1-Mark) Value Fund

Diversified Equity Fund Growth Fund Balanced Fund

49. The differerentiating factor among debt funds of comparable maturity and quality is (1-Mark) Gross yields Costs Fund age Tenure of the fund manager

50. The biggest advantage of investment in gold is (1-Mark) High returns High appreciation in value Low Purchase price Hedge against inflation

51. The rate of interest paid by a company on debentures issued by it depends on (1-Mark) The stock market situation SEBI guidelines The company's credit rating The amount of money being raised

52. Debt schemes are popular because (1-Mark) The Indian Stock Market is always going down The returns are more predictable

Most investors are always in debt All of the above

53. Most individuals invest in life insurance policies for (1-Mark) Risk protection Tax benefits Easy liquidity High returns

54. A wealth preserving affluent investor is likely to invest in (1-Mark) Direct Equity Real Estate Growth funds Debt funds or fixed income securities

55. Among the following, which is more important for an investor (1-Mark) Size of the fund Funds suitability for an investor Past performance of the fund Fund Manager

56. Investing through mutual fund is a better option than investing directly in the stock market because (1-Mark) Identifying stocks is a difficult process Agents get commissions on mutual fund investment Returned are guaranteed by mutual funds

All of the above

57. To satisfy a young investor's need for growth, a greater proportion of investment should be advised in (1-Mark) Gilt funds Income Funds Equity Growth funds Liquid funds

58. Which of the following is not an advantage of bank deposits? (1-Mark) Liquidity High perceived safety Low entry price High yield after tax

59. A Flexible Ratio of Asset Allocation means (2-Mark) Continuously changing the ratio of various assets in the portfolio Not doing any re-balancing and letting the profits run Active switching None of the above

60. Which of the following is not true about the buy and hold strategy (2-Mark) It is preferred by a many investors It does not involve rebalancing It is very beneficial as investors may exit from poor performers and invest in better ones

All of the above

61. The basis of genuine investment advice should be (2-Mark) The current market situation The agent commissions paid by different funds Financial planning to suit the investor's needs Planning to complete the agent's annual targets

62. As per Bogle, asset allocation for older investors in distribution phase should be (2-Mark) 20% equity ; 80% debt 40% equity ; 60% debt 50% equity ; 50% debt 0% equity ; 100% debt

63. Which of the following would you recommend to Mr. Sharma who wants to invest Rs. 3 lac for three months (2-Mark) Bank Fixed Deposit A Debt fund having duration of 3 years A Liquid Fund A Balanced Fund

64. The size of the market capitalization of a fund's equity holdings is inversely proportional to the (2-Mark) Returns that can be expected from the fund Level of risk assumed by the fund State of the stock market

All of the above

65. Yield-to-maturity of a debt fund's portfolio gives an indication of (2-Mark) Current income Total return Liquidity All of the above

66. A steady holding of investments in an equity fund's portfolio indicates (2-Mark) Long-term orientation Lower transaction costs Both the above None of the above

67. Direct investment in stock market can be a better option than investing through mutual funds if the investor (2-Mark) Wants better returns than those offered by mutual funds Has large capital, knowledge and resources for research Has identified a bullish phase in the stock market Wants to invest for the long term

68. Which of the following will result in higher percentage of equity than in debt during bullish phase of the equity markets (2-Mark) Fixed Asset Allocation Flexible Asset Allocation both a and b

neither a nor b

69. Which of the following debt investments is not rated (2-Mark) Corporate Bonds Commercial Paper Company Deposit Debt mutual fund

Test2 1. A no-load fund is one in which (1-Mark) The entry load is not charged The exit load is not charged * The entry load as well as exit load is not charged The initial issue expenses are not charged to the investor

2. A mutual fund can benefit from economies of scale because of (1-Mark) Indirect Investment Large volumes of trade Portfolio diversification Fund manager

3. Which of the following is not true for Index Funds (1-Mark)

These funds invests in the shares that constitute a specific index The investment in shares is in the same proportion as in the index These funds aim to minimize the tracking error These funds are not diversified

4. The NAV of each scheme should be updated on AMFI's website (1-Mark) Every quarter Every month Every hour Every day

5. Which of the following investment option does not give the benefit of compounding (1-Mark) Growth option Dividend payout option Dividend Reinvestment option None of the above

6. CDSC is a kind of (2-Mark) Entry load Entry load, which varies with holding period of an investor Exit load, which varies with the holding period of an investor None of the above

7. The structure which is required to be followed by mutual funds in India is laid down by (1-Mark) Financial Ministry

Securities and Exchange Board of India (SEBI) Fund Sponsor Association of Mutual Funds of India (AMFI)

8. The AMC of a mutual fund cannot (2-Mark) Undertake advisory services or financial consulting Invest the funds in government paper Indulge in an activity not related to financial services Invest the funds in listed securities

9. The largest corpus of investable funds in India is with (1-Mark) Bank-owned mutual funds Private Sector mutual funds UTI Insurance Companies

10. The entity that SEBI does not regulate is (1-Mark) Share registrars Mutual funds Stock exchanges Non-banking finance companies

11. The responsibilities of a unit-holder do not include (1-Mark) Monitoring his investments carefully Being aware of information that affects his investment in a major way

Carefully studying the offer document Taking decisions about where the fund managers should invest

12. The rights of investors in a mutual fund scheme are laid down in (1-Mark) The Offer Document of that scheme Quarterly Reports Annual Reports Marketing brochures

13. The offer document issued by mutual funds does not serve the purpose of (1-Mark) Announcing the launch of the scheme Giving detailed information about the scheme Explaining the risk factors of the scheme Giving the fund manager's investment outlook for the next quarter

14. SEBI does not require the following to be included in the offer document issued by a mutual fund (1-Mark) Details of the Sponsor and the AMC Description of the Scheme and investment objective/strategy Investors' Rights and Services Performance of other mutual funds

15. Which the following is not false (2-Mark) The offer document need not be studied by an investor before investing in a scheme The offer document is not a legal document

A change in key personnel of the AMC does not necessitate a revision of the offer document If fresh litigation cases or adjudication proceedings are referred by SEBI against the fund sponsors or a company associated with the sponsors, then the offer document needs to be revised

16. The following information about the constitution of the mutual fund is found in the offer document (2-Mark) Activities of the sponsor Summary of trust deed provisions Name and addresses of the board of trustees All of the above

17. The offer document of an open ended fund has to be fully revised and updated (2-Mark) Every six months Once in two years Every quarter Every month

18. Which of the following is not true for offer documents of open-end schemes (2-Mark) It is first issued at the time the scheme is launched It is registered with SEBI It has to be revised every month It contains all important disclosures that a mutual fund is reguired to make

19. Standard risk reactors are the ones (2-Mark) Which are uniformly applicable for any mutual fund scheme

Different for different schemes Which are made by a "standards" committee None of the above

20. In India the minimum or maximum commissions payable to distributors is decided by (1-Mark) Distributors AMC SEBI Trustees of the mutual funds

21. The code of ethics for mutual funds published by AMFI (1-Mark) Is mandatory Is in the form of recommended practices Is unfavorable to investors Does not cover distribution and selling practices

22. Which of the following sales practices is prescribed by regulation (1-Mark) AMFI Code of Ethics SEBI Advertising AMFI's Code for Agents None of the above

23. Mutual Fund agents/distributors are not allowed to (2-Mark) Sell financial products other than mutual funds Sell schemes of more than one mutual fund

Pass back the commissions earned to the investors Work anywhere else

24. Which of the following is not a treatment of NPA? (1-Mark) Accrual of income of NPA has to be stopped Income accrued but not received on the asset classified as NPA has to be provided NAV has to be reduced by 1% Provision has to be made for the principal due in a graded manner

25. Mutual funds have to value their investments (1-Mark) At purchase price On a mark-to-market basis At par At book value

26. When computing NAV of fund, SEBI requires accrual of major expenses to be accounted (2-Mark) Quarterly Annually On a day to day basis When actually paid

27. For a closed end scheme, initial issue expenses (2-Mark) Can be amortized over a period of 10 years Can be amortized over a period not exceeding 5 years

Can not be recovered from investors Can be amortized over the life of the scheme

28. For a no-load fund , the AMC can change an investment management fee not exceeding (2-Mark) 3.50% 4.00% 2.25% 0.50%

29. It is cumpulsory to quote PAN number (1-Mark) If the investor has PAN If the investment is Rs. 1 Lac or more If the investment is Rs. 50000 or more If the investor is liable to pay tax in that year

30. Constraints imposed by most funds on check writing are (2-Mark) Account balance should not fall below the minimum capital required Checks issued must be for at least the minimum amount specified Number of checks per month must not exceed a specified number Both a and b above

31. If 10-year government securities yields 10% and a 10-Year fixed deposit in a company yields 12%, the yield spread is (1-Mark) 12% 22%

10% 2%

32. An accurate measure of the sensitivity of a debt portfolio to changes in interest rate is the (1-Mark) Yield curve Credit rating of each security Duration of the portfolio Current yield

33. A passive fund manager (1-Mark) Researches stocks extensively Does not buy and sell stocks often Does not have to go through the process of stock selection Does not have to track stocks

34. Fundamental analysis involves (1-Mark) Checking the foundations of the company's factory building Research into the operations and finances of the company Studying the company's share prices None of the above

35. A call provision in a debt issue allows the issuer to (1-Mark) Call out the names of the investors Redeem the debt on maturity Extend the tenure of the debt

Redeem the debt before maturity

36. The largest proportion of trades done in the wholesale debt market is accounted by (1-Mark) Mutual funds Foreign banks Indian banks Financial institutions

37. For an open ended scheme, investment in unlisted shares (2-Mark) Can not be lower than 10% of net assets Should be equal to investment in listed shares Can not exceed 5% of net assets Can not exceed 10% of net assets

38. Debt securities bought at a discount to their face value are generally (2-Mark) Interest bearing Zero coupon bonds Paying interest at a floating rate None of the above

39. Current yield relates interest on a security to (2-Mark) Its current market price Its face value Its fair value The current price of T-Bills

40. The yield on Treasury Bill (T-Bill) is determined by (2-Mark) The Government of India Auction The State Governments Floating rate method

41. When comparing fund performance with peer group funds (1-Mark) The age of funds should be same The AMCs should have same net worth Size and composition of the portfolios should be comparable All of the above

42. The choice of an appropriate benchmark for evaluating a fund's performance depends on (1-Mark) The fund manager The investment objective and the asset allocation pattern of the fund SEBI AMFI

43. The expense ratio used for measuring fund performance is an indicator of (1-Mark) Product market condition Growth in the economy Prevalent market practices The fund's efficiency

44. To evaluate a closed-end debt-fund, a suitable benchmark would be (2-Mark) BSE Sensex I-Sec's I-BEX Interest on bank fixed deposits of similar maturity S and P CNX Deft

45. The Income Ratio as a measure of a fund's performance is defined by the fund's (2-Mark) Total income and total assets Net investment income and net assets Total income and net assets None of the above

46. A high turnover rate for a fund indicates (2-Mark) High transaction costs Greater efficiency High returns to the investor A rising market

47. The rule of 72 is used to (2-Mark) Calculate entry load of a scheme Calculate the period in which an investment will double at a given rate of return Calculate the rate at which money will grow to double in a given period both b and c

48. From whom can a unit-holder seek redressal if his complaint is not entertained by the mutual fund (1-Mark) AMC Board of Trustees SEBI RBI

49. Short Term bond funds are (1-Mark) Low risk funds Moderate risk funds High risk None of the above

50. An equity fund can be said to be concentrated when (1-Mark) When it invests in only in two or three stocks When it invests in may companies of the same sector When top ten holdings account for more than 50% of net assets invested When top ten holdings account for more than 25% of net assets invested

51. The biggest disadvantage of investment in real estate is (1-Mark) Less potential for capital appreciation High purchase price Depreciation in value as time passes Value gets eroded due to inflation

52. To satisfy a young investor's need for growth, a greater proportion of investment should be advised in (1-Mark) Gilt funds Income Funds Equity Growth funds Liquid funds

53. Within an asset class, which individual security to invest in should be decided by (1-Mark) The financial planner The investor himself A professional fund manager An objective advisor

54. The differerentiating factor among debt funds of comparable maturity and quality is (1-Mark) Gross yields Costs Fund age Tenure of the fund manager

55. One of the most effective ways to invest through mutual funds is to (1-Mark) Develop a model portfolio Buy a few units of every mutual fund scheme available Invest all the money in one fund scheme Invest all the money in different schemes of the same fund family

56. Running a money market mutual fund requires more of

(1-Mark) Credit analysis skills Equity analysis skills Patience Trading skills

57. Debt schemes are popular because (1-Mark) The Indian Stock Market is always going down The returns are more predictable Most investors are always in debt All of the above

58. The most important reason for an investor to prefer a bank deposit to a mutual fund is (1-Mark) The creditworthiness of the bank Because the bank does not invest in securities That the bank offers a guarantee All of the above

59. One of your friends who has invested in a mutual fund is about to get Australian citizenship. What would you advise? (2-Mark) He should transfer the investment to his relative He should get RBI approval for continuing He can continue to hold as PIO are allowed to invest in mutual funds in India He should immediately redeem his investment since foreign citizens are not eligible investors

60. If yield is expected to fall, a debt fund manager will do all of the following except (2-Mark) Sell short maturity securities and buy long maturity securities See that the fund's average duration becomes longer than the market's average duration Sell long duration securities and buy short duration securities Sell high coupon securities and buy low coupon securities

61. Which of the following is true about Jacob's Model Portfolio for investors in distribution phase (2-Mark) Investment in diversified equity should be around 15% - 30% Investment in income and gilt funds should be around 15% - 30% Investment in liquid funds should be around 15% - 30 % None of the above

62. Beta of an equity fund measures its (2-Mark) Performance Risk Both the above None of the above

63. What will you answer if an investor asks whether a debt mutual fund can give negative returns? (2-Mark) Yes, but only if AMC makes some fraud in calculating NAV Yes, because the value of debt securities may move down Never You will decide not to advice any thing at all

64. A criticism of rupee-cost averaging is (2-Mark) Investment is for the same amount at regular intervals Over a period of time, the average purchase price will work out higher than if one tries to guess the market highs and lows It does not an investor when to buy, sell or switch from one scheme to another Rupee cost averaging has no serious shortcomings

65. Which of the following is an important criteria to select a money market fund (2-Mark) Portfolio turnover Duration of the fund The expense ratio All of the above

66. Direct investment in stock market can be a better option than investing through mutual funds if the investor (2-Mark) Wants better returns than those offered by mutual funds Has large capital, knowledge and resources for research Has identified a bullish phase in the stock market Wants to invest for the long term

67. Which of the following is true about Jacob's Model Portfolio for investors in accumulation phase (2-Mark) Investment in diversified equity should be around15% - 30% Investment in income and gilt funds should be around 65% - 80% Investment in liquid funds should be around 5% None of the above

68. Which of the following is a disadvantage of Standard Deviation as a measure of risk (2-Mark) Standard Deviation measures total risk, not just market risk It is based on past returns, which does not necessarily indicate further performance It is an independent number All types of funds can be measured with standard deviation

69. Which of the following is not a relevant criteria to select an equity fund (2-Mark) Percentage of cash in portfolio Concentration of portfolio Market capitalization of the fund The interest rate environment

-----------------------------------------------------------------------------------------------------------------------------------------------------------Test 1 1. Which of the following is not true for Index Funds (1-Mark) These funds invests in the shares that constitute a specific index The investment in shares is in the same proportion as in the index These funds aim to minimize the tracking error These funds are not diversified 2. The NAV of each scheme should be updated on AMFI's website (1-Mark) Every quarter Every month Every hour Every day 3. Which of the following investment option does not give the benefit of compounding (1-Mark) Growth option

Dividend payout option Dividend Reinvestment option None of the above 4. A mutual fund is owned by (1-Mark) The Govt of India SEBI All its investors AMFI 5. Which of the following is not applicable if the schemes of one mutual fund are taken over by another mutual fund (1-Mark) The schemes' offer documents have to be changed and updated There is a change in the AMC of the schemes that are taken over There is a change in the sponsor of the schemes that are taken over The schemes have to wound up compulsorily 6. The amount required to buy 100 units of a scheme having an entry load of 1.5% and NAV of Rs.20 is (2-Mark) Rs.2000 Rs.2015 Rs.1985 Rs.2030 7. The fund sponsors should have a sound financial track record of (1-Mark) 7 years 12 months 5 years 3 years 8. The fund sponsor has to contribute (2-Mark) Nothing to the AMC The total net worth of the AMC At least 40% of the AMC's net worth Exactly 50% 9. The regulation which governs the working of mutual funds in India is (1-Mark) SEBI Act , 1992 Companies Act, 1956 Income Tax Act, 1961 SEBI (Mutual Funds) Regulations, 1996 10. UTI Cannot (1-Mark) Provide corporate finance Engage in real estate and property development business Provide merchant banking services Invest in securities 11. UTI was set up by (1-Mark) SEBI AMFI A special act RBI 12. Unit holders of a mutual fund scheme do not have a right to (1-Mark)

Proportionate ownership of the scheme's assets Declare Dividend for that scheme Declare Dividend for other schemes of the mutual fund All of the above 13. The functions and duties of the sponsor, AMC, trustees and custodian of the mutual fund are listed in (1-Mark) Offer document only Key information memorandum only Both offer document and key information memorandum None of the above 14. The names and background of key personnel of the AMC (1-Mark) Need not be disclosed to investors Are of no relevance as they may change Are disclosed in the offer document Are declared in newspaper advertisements 15. Standard risk reactors are the ones (2-Mark) Which are uniformly applicable for any mutual fund scheme Different for different schemes Which are made by a "standards" committee None of the above 16. Which of the following is not true for offer documents of open-end schemes (2Mark) It is first issued at the time the scheme is launched It is registered with SEBI It has to be revised every month It contains all important disclosures that a mutual fund is reguired to make

17. The risk of a scheme's NAV moving up or down on the basis of capital market movements is (2-Mark) An investment attribute Scheme specific risk Standard risk Credit risk

18. A scheme's policy on dividends and distribution (2-Mark) Is decided by the fund manager as per the market outlook Can be changed to suit the requirements of the AMC

Need not be consistent Should be disclosed at the time of initial launch

19. For assured return schemes, information about the guarantor's net worth which justifies the guarantor's ability to meet any shortfalls in the returns assured under the scheme, can be found in (2-Mark) The offer document The key information memorandum Both a) and b) None of the above

20. Which of the following sales practices is prescribed by regulation (1-Mark) AMFI Code of Ethics SEBI Advertising AMFI's Code for Agents None of the above

21. Which of the following distribution channels is preferred by private mutual funds (1-Mark) Individual Agents Small Distribution companies Established distribution companies The internet

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 (1-Mark) SEBI Regulations Manual AMFI booklet

Offer document RBI Guidelines

23. SEBI's advertising code mandate that performs calculations in a fund's advertisement should be based on (2-Mark) The NAV The NSE Fifty Index The BSE Sensex None of the above

24. The maximum amount of initial issue expenses that can be recovered from the investors is limited to (1-Mark) Rs. 10 Crores 2.25% of NAV 6% of the amount mobilized during NFO Unlimited

25. Listed equity shares are to be valued at (1-Mark) The average price of the share in NSE The lowest price of the day in BSE Cost price or current market price whichever is lower The last traded price in the stock exchange where the security is principally traded

26. When computing NAV of fund, SEBI requires accrual of major expenses to be accounted (2-Mark) Quarterly

Annually On a day to day basis When actually paid

27. Which of the following expenses cannot be charged to the scheme? (2-Mark) Audit fees Costs related to investor communication Winding costs for terminating the scheme Penalties and fines for infraction of laws

28. If the average annual assets of a equity mutual fund scheme are Rs.1,000 Crore, then what will be the maximum amount of annual recurring expenses chargeable as per SEBI guidelines (2-Mark) Rs. 6 Cr Rs. 20.50 Cr Rs. 23.25 Cr As per actuals

29. In case of joint holding, on redemption, the proceeds are paid to the (1-Mark) Nominee Last holder First holder As per the request of all the holders

30. Constraints imposed by most funds on check writing are (2-Mark) Account balance should not fall below the minimum capital required

Checks issued must be for at least the minimum amount specified Number of checks per month must not exceed a specified number Both a and b above

31. If 10-year government securities yields 10% and a 10-Year fixed deposit in a company yields 12%, the yield spread is (1-Mark) 12% 22% 10% 2%

32. Technical analysis guides the decision on (1-Mark) Whether to buy or sell The right time to buy or sell Whether company's technical personnel are adequately qualified None of the above

33. Which of the following measures are not taken by SEBI for protecting investors of mutual funds? (1-Mark) Mandating minimum levels of diversification for mutual funds Ensuring that the funds are not used to favor a few companies Tracking the securities that each fund has invested in Ensuring that the funds are invested in approved securities only

34. Which of the following is not considered for technical analysis? (1-Mark) Historical data on the company's share price

The company shares' trading volume Current market sentiment The company's regulatory environment

35. In a mutual fund, the overall decisions on allocating money to particular industries/sectors are taken by (1-Mark) Equity analysts Fund managers Security dealers Trustees

36. A call provision in a debt issue allows the issuer to (1-Mark) Call out the names of the investors Redeem the debt on maturity Extend the tenure of the debt Redeem the debt before maturity

37. Dividend yield for a stock is (2-Mark) Dividend per share Dividend per face value Dividend per share to current market price None of the above

38. Current yield relates interest on a security to (2-Mark) Its current market price Its face value

Its fair value The current price of T-Bills

39. A mutual fund may transfer investments from one scheme to another (2-Mark) Not at all At current market rates At cost price At a fixed premium over market rate

40. Which of the following is true regarding borrowing powers of a mutual fund (2-Mark) A mutual fund can not borrow at all A mutual fund can borrow only up to 20% of net assets A mutual fund can borrow for a maximum period of one year A mutual fund can borrow for investment purposes

41. The most suitable measure of fund performance for all fund types is (1-Mark) NAV Change Total Return Total Return with dividend reinvestment method None of the above

42. Portfolio turnover rate of a fund measures the (1-Mark) Size of the fund's portfolio Amount of buying and selling done by the fund The average number of units sold by the fund in one day

None of the above

43. The Expense Ratio is of least importance in which of the following (1-Mark) Debt fund Index fund Equity fund Liquid fund

44. Assets under management of a fund at the end of year are 125 Cr.The Average Net assets of the fund are Rs. 100 crore and the total expenses of the fund in that year are Rs. 2.5 Cr. What is the expense ratio? (2-Mark) 2.00% 2.50% 1.25% 25.00%

45. An actively managed equity fund expects to (2-Mark) Be able to beat the benchmark returns Earn the same returns as the benchmark Have no benchmarks Underperform when compared with the benchmark

46. If there is an entry load in a scheme, the investors return (2-Mark) Will increase to the extent of load Will not change because there will not be any exit load Will reduce to the extent of load

None of the above

47. Portfolio turnover rate refers to (2-Mark) Ratio of sales to the net assets of the fund Ratio of purchases to the net assets of the fund Ratio of sales or purchases( which ever is lower) to net assets of the fund Ratio of sales or purchases( which ever is higher) to net assets of the fund

48. Which of the following is not a part of life cycle stage of an investor (1-Mark) Childhood stage College stage Pre-retirement stage Post-retirement stage

49. The most important reason for an investor to prefer a bank deposit to a mutual fund is (1-Mark) The creditworthiness of the bank Because the bank does not invest in securities That the bank offers a guarantee All of the above

50. A wealth preserving affluent investor is likely to invest in (1-Mark) Direct Equity Real Estate Growth funds

Debt funds or fixed income securities

51. Structural characterization of an equity fund include (1-Mark) Costs of investing The specific securities in which the fund has invested The number of employees of the AMC All of the above

52. Of the following, which would be more suitable for a retiree with a modest risk appetite (1-Mark) Value Fund Diversified Equity Fund Growth Fund Balanced Fund

53. Listing of shares at a stock exchange ensures (1-Mark) Guaranteed returns Long term capital appreciation Low risk High liquidity

54. In India, individual investors do not have direct access to (1-Mark) Capital market instruments Real estate Bullion Money market instruments

55. The role of an advisor is to (1-Mark) Point out the features and benefits of various investments options Help the investor develop the right approach to investing Recommend some investment option available Offer adhoc advise whenever the investor has surplus money available

56. Which of the following is not a characteristic of company fixed deposits (1-Mark) A higher rate of interest Higher risk Unfavorable effect of tax Very high liquidity

57. Deciding on strategies such as cost averaging, value averaging, active switching, all depend on the (1-Mark) Stock market situation on date Amount of money to be invested Investor's risk tolerance Phase through which the economy is passing

58. Asset Allocation is (1-Mark) Keeping certificates of the physical securities in proper places Allocation the available money to all the securities available Allocating the right proportion of funds to equity, debt and money market securities None of the above

59. Which of the following is an important criteria to select a money market fund (2-Mark) Portfolio turnover Duration of the fund The expense ratio All of the above

60. Circumstances that might cause an investor to change the composition of his portfolio (2-Mark) Cyclical changes in economy Unforeseen economic changes affecting the portfolio's preferred sectors Both the above None of the above

61. Which of the following characterize the fund that a risk averse investor should choose (2-Mark) Gross dividend yield 15% Beta 1.5, Ex-Marks 90 Gross dividend yield 10%, Beta 1, Ex-Marks 70 Gross dividend yield 11%, Beta 0.9, Ex-Marks 80 Gross dividend yield 12%, Beta 1.2, Ex-Marks 80

62. Which of the following debt investments is not rated (2-Mark) Corporate Bonds Commercial Paper Company Deposit Debt mutual fund

63. The transition phase of an investor's wealth cycle is when the (2-Mark) Financial goals have been already met The investor has retired Financial goals are approaching Investor suddenly gets a windfall

64. Which of the following is true about an equity fund selection (2-Mark) Fund with higher percentage in cash should be selected Funds with low market capitalization have more liquidity Track record of fund managers is not important Funds with higher x-marks are more diversified and have lower risk

65. Which of the following is false about fixed asset allocation (2-Mark) It means maintaining the same ratio between various components of the portfolio It involves rebalancing the portfolio in a disciplined manner It means that the portfolio would never be rebalanced It involves periodic review and returning to the original allocation

66. Investors who follow the fixed Asset Allocation approach (2-Mark) Maintain balance in their portfolio by liquidating some investments from the asset class which has given higher return and reinvesting in the other asset class which has lower return Are not disciplined Increase their equity position when equity prices tend to climb None of the above

67. Which of the following is a disadvantage of Standard Deviation as a measure of risk (2-Mark) Standard Deviation measures total risk, not just market risk It is based on past returns, which does not necessarily indicate further performance It is an independent number All types of funds can be measured with standard deviation

68. Which of the following would you suggest if your client suddenly wins Rs 1 Cr in a Game show (2-Mark) Invest whole amount in equity directly Invest half in equity mutual funds and the other half in debt mutual funds Invest in money market mutual fund till the time he decides on the use of the money Spend, gift and invest as per his wish

69. An Ex-Mark of 100% is possible for (2-Mark) A growth fund An aggressive growth fund An index fund A balanced fund -----------------------------------------------------------------------------------------------------------------------------------------------------------------------HSBC Test 2 1. An open-end mutual fund is one that has (1-Mark) An option to invest in any kind of security Units available for sale and repurchase at all times An upper limit on its NAV

A fixed fund size

2. Which of the following is not true for a mutual fund (1-Mark) The mutual fund is owned by all the investors Mutual fund gives a diversified portfolio to investors The objectives of investors of a mutual fund are diverse The mutual funds do not invest in real estate

3. CDSC stands for (1-Mark) Contingent Deferred Sales Charge Commission and Discounts Structure Committee Commonly Disclosed Sales Commission Compounded and Discounted Sales Commitment

4. Which of the following risks do not affect a pure debt fund (1-Mark) Default by issuer on payment of interest or principal Price fluctuations of the debt securities Share price movements Interest volatility

5. A closed-end mutual fund has a fixed (1-Mark) NAV Tenure Rate of return Number of distributors

6. Which of the following is not true for Equity Linked Savings Schemes? (2-Mark) Investors can claim an income tax benefit There is a lock-in period before investment can be withdrawn There are not specific restrictions on investment objectives for the fund managers These funds cannot invest in shares of listed companies

7. The fund sponsors should have a sound financial track record of (1-Mark) 7 years 12 months 5 years 3 years

8. The AMC of a mutual fund cannot (2-Mark) Undertake advisory services or financial consulting Invest the funds in government paper Indulge in an activity not related to financial services Invest the funds in listed securities

9. The Board of Trustees of the UTI does not have nominees from (1-Mark) RBI LIC IDBI The Bombay Stock Exchange (BSE)

10. After dividend declaration, unit-holders are entitled to receive dividend within a period of (1-Mark) One week 30-days 42-days Six weeks

11. The largest corpus of investable funds in India is with (1-Mark) Bank-owned mutual funds Private Sector mutual funds UTI Insurance Companies

12. A Self Regulatory Organization can (1-Mark) Regulate all entities in the market Regulate only its own members in a limited way Regulate its own members with total jurisdiction Regulate no one

13. The functions and duties of the sponsor, AMC, trustees and custodian of the mutual fund are listed in (1-Mark) Offer document only Key information memorandum only Both offer document and key information memorandum None of the above

14. An addendum giving details of material change in the offer document should be circulated to (1-Mark) Distributors/brokers Unit holders SEBI All of the above

15. A due diligence certificate does not certify that (2-Mark) The draft offer document forwarded to SEBI is in accordance with SEBI regulations All legal requirements connected with launching of the scheme have been complied with Disclosures made in the offer document are true, fair and adequate The AMC guarantees a good performance

16. The following need not be covered in a Key Information Memorandum (2-Mark) Risk Factors Opening and earliest closing date of the initial offer Disclaimer clause Functions and responsibilities of the sponsor, trustees, AMC and Custodian responsibilities

17. The offer document of a closed-end fund is issued (2-Mark) Every year Only once at the time of issue Every quarter Every six months

18. Standard risk reactors are the ones (2-Mark) Which are uniformly applicable for any mutual fund scheme Different for different schemes Which are made by a "standards" committee None of the above

19. The following does not form a part of the investment procedure described in an offer document (2-Mark) Various plans under the scheme (e.g. dividend reinvestment plan) Minimum initial (and subsequent) investment Details of who can invest Details of other competing mutual funds

20. Excess distribution expenses are to be borne by the (1-Mark) AMC Unit holders SEBI AMFI

21. Agents are compensated by mutual funds (1-Mark) Through salaries Through commissions Through an annual fee Not in cash but in kind

22. Generally, which category of investors are less aware about mutual funds and needs more advice (1-Mark) Non Banking Finance Companies Insurance Companies Foreign Institutional Investors Individuals

23. Which of the following is true regarding mutual fund agents/intermediaries (2-Mark) It is compulsory to invest in mutual funds through agent/intermediary Agents have to be registered with AMFI Only males are allowed to be agents Agents can pass back the commissions to investors

24. Which of the following is not true about dividends of a mutual fund? (1-Mark) Dividends are tax-free in the hands of investors Debt mutual funds have to pay dividend distribution tax Dividends can be paid out of unrealized profits of the mutual funds Equity mutual funds do not have to pay dividend distribution tax

25. Mutual funds have to value their investments (1-Mark) At purchase price On a mark-to-market basis At par At book value

26. Profit and loss on sale of securities of a mutual fund has to be calculated on the basis of (2-Mark) LIFO Method Average Cost Method FIFO method Any of the above

27. For a open-end fund, the sale price should not be (2-Mark) Higher than NAV Higher than 107% of NAV Lower than 107% of Repurchase price Equal to NAV

28. As per SEBI regulations for valuation of investments held by mutual funds, a security is considered "non-traded" when it (2-Mark) Has not been traded for 60 days prior to valuation Has not been traded for 30 days prior to valuation Is not listed on any stock exchange Is held by the mutual fund without buying or selling

29. Each investor is mandatorily required to give details of which of the following in his application form (1-Mark) Nominee E-mail Address Bank Account PAN

30. Which of the following is true about Systematic Investment Plan (2-Mark) SIP does not give the benefit of rupee cost averaging STP in one scheme can be effectively used to get the benefit of SIP in another scheme SIP tells an investor when to invest and when to exit from a scheme All are false

31. In a mutual fund, the overall decisions on allocating money to particular industries/sectors are taken by (1-Mark) Equity analysts Fund managers Security dealers Trustees

32. Security dealers of a mutual fund (1-Mark) Guard the cabin of the fund manager Execute buy and sell orders for the fund Decide which shares to buy or sell None of the above

33. The Indian debt market is largely (1-Mark) Wholesale in nature Retail in nature Dominated by NRIs All of the above

34. An important indicator of expected trends in interest rates is (1-Mark) The Economic Times The Sensex The Yield Curve The Chief Minister's Speech

35. Which of the following is not considered for technical analysis? (1-Mark) Historical data on the company's share price The company shares' trading volume Current market sentiment The company's regulatory environment

36. Mutual funds are allowed to lend (1-Mark) Loans Securities Physical assets None of the above

37. Dividend yield for a stock is (2-Mark) Dividend per share Dividend per face value Dividend per share to current market price None of the above

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

(2-Mark) 25% of Net Assets 10% of Net Assets 50% of Net Assets 100% of Net Assets

39. Current yield relates interest on a security to (2-Mark) Its current market price Its face value Its fair value The current price of T-Bills

40. To compare bonds with different coupon rates, maturities and prices, investors would use (2-Mark) Current yield Technical analysis Yield to maturity Fundamental analyis

41. To choose an appropriate benchmark for a scheme, all of the following are required except (1-Mark) The composition and size of the portfolio The investment objective Historical data of fund performance The nature of investments

42. The choice of an appropriate benchmark for evaluating a fund's performance depends on (1-Mark) The fund manager The investment objective and the asset allocation pattern of the fund SEBI AMFI

43. The expense ratio used for measuring fund performance is an indicator of (1-Mark) Product market condition Growth in the economy Prevalent market practices The fund's efficiency

44. Beta co-efficient is a measure of (2-Mark) Market risk Total risk Credit risk Re-investment risk

45. On 1 Jan '04 NAV was Rs. 12/-. On 1 April '04 fund declared dividend of 14% which was reinvested at the ex-dividend NAV of Rs.14/-. On 31 Dec '04 NAV was Rs. 20. What is the return as per total return with dividend reinvestment method (2-Mark) 75% 25.33% 83.33% 93.33%

46. If there is an entry load in a scheme, the investors return (2-Mark) Will increase to the extent of load Will not change because there will not be any exit load Will reduce to the extent of load None of the above

47. Portfolio turnover rate refers to (2-Mark) Ratio of sales to the net assets of the fund Ratio of purchases to the net assets of the fund Ratio of sales or purchases( which ever is lower) to net assets of the fund Ratio of sales or purchases( which ever is higher) to net assets of the fund

48. A sectoral fund is a (1-Mark) Low risk fund Moderate risk fund High risk fund Low-to-moderate risk fund

49. The rate of interest paid by a company on debentures issued by it depends on (1-Mark) The stock market situation SEBI guidelines The company's credit rating The amount of money being raised

50. A wealth preserving affluent investor is likely to invest in

(1-Mark) Direct Equity Real Estate Growth funds Debt funds or fixed income securities

51. Mutual fund investors should be advised to expect (1-Mark) Low post tax returns Dramatic results Better returns than every other available option Only realistic wealth accumulation goals

52. Annual contribution to Public Provident Fund should be (1-Mark) Rs.10000 Between 100 and Rs.60000 Between Rs.600 and Rs.1000 None of the above

53. Which of the following is most risky? (1-Mark) Investing in a money market mutual fund Investing in an index fund Short term investment in an equity fund Long term investment in an equity fund

54. Listing of shares at a stock exchange ensures (1-Mark) Guaranteed returns

Long term capital appreciation Low risk High liquidity

55. International funds invest in various countries therefore they are low risk funds (1-Mark) True False -

56. Running a money market mutual fund requires more of (1-Mark) Credit analysis skills Equity analysis skills Patience Trading skills

57. Which of the following is not an advantage of bank deposits? (1-Mark) Liquidity High perceived safety Low entry price High yield after tax

58. To satisfy a young investor's need for growth, a greater proportion of investment should be advised in (1-Mark) Gilt funds

Income Funds Equity Growth funds Liquid funds

59. A criticism of rupee-cost averaging is (2-Mark) Investment is for the same amount at regular intervals Over a period of time, the average purchase price will work out higher than if one tries to guess the market highs and lows It does not an investor when to buy, sell or switch from one scheme to another Rupee cost averaging has no serious shortcomings

60. If a charitable trust approaches a distributor for investment in a mutual fund, the distributor should (2-Mark) Accept the application without wasting time Reject the application outright Refer to the offer document Accept the application as a direct application

61. In which type of schemes should an unmarried professional working in HLL invest (2-Mark) Scheme investing 80% in debt securities 50% in equity funds and 50% in income funds At least 75% in equity funds having a higher P/E Ratio than the market All the money in a balanced fund

62. Which of the following lets an investor book profits in a rising market and increase holdings in a falling market (2-Mark) Fixed Ratio of Asset Allocation

Flexible Ratio of Asset Allocation Investment without any asset allocation plan Buy and Hold Strategy

63. Which of the following is true about Jacob's Model Portfolio for investors in distribution phase (2-Mark) Investment in diversified equity should be around 15% - 30% Investment in income and gilt funds should be around 15% - 30% Investment in liquid funds should be around 15% - 30 % None of the above

64. What of the following will have the least standard deviation (volatility)? (2-Mark) Liquid fund Short term debt fund Equity fund ELSS scheme

65. What will you answer if an investor asks whether a debt mutual fund can give negative returns? (2-Mark) Yes, but only if AMC makes some fraud in calculating NAV Yes, because the value of debt securities may move down Never You will decide not to advice any thing at all

66. Dividends distributed by mutual funds are (2-Mark) Taxed at source

Taxed in the hands of the investors Subject to capital gains tax Tax-free in the hands of the investor

67. Which of the following would you suggest if your client suddenly wins Rs 1 Cr in a Game show (2-Mark) Invest whole amount in equity directly Invest half in equity mutual funds and the other half in debt mutual funds Invest in money market mutual fund till the time he decides on the use of the money Spend, gift and invest as per his wish

68. Of the following, which type of fund would have a higher P/E multiple in comparison to the average market multiple (2-Mark) A Value Fund A Growth Fund An Index Fund Could be any of the above three, one cannot generalize

69. Financial planning helps a person (2-Mark) To become a billionaire To achieve financial goals through proper management of finances To invest in foreign countries None of the above -----------------------------------------------------------------------------------------------------------------------------------------------------------------------HDFC Test 3

Q No : 1 Asset Management Company manages the fund in accordance with which of the following documents? Marks 2 Trust deed SEBI Regulations RBI policy 1 &2 All of the above None of the above Q No : 2 Peer Group Comparison for two Debt funds should be Marks 1 For Debt Funds having similar Credit Quality & Maturity Profile Only on their Credit Quality Only on their Maturity Profile None of the Above Q No : 3 The Correct Approach for Benchmarking of any fund is done by looking at Marks 1 Asset Class it invests in The Fund's Stated Investment Objective Only 1 Only 2 Both 1 & 2 Neither Q No : 4 Factors to be considered while investing in a Balanced Fund are Marks 1 Costs Portfolio Balance Returns all of the above None of these only 1 & 2 Q No : 5 The principal amount that investors will be paid upon maturity of a bond is called Marks 1 price value market value par value discounted value present value Q No : 6 All advertisements released by the Mutual Fund are required to be filed with SEBI within Marks 2 10 days from the date of issue 15 days from the date of issue 07 days from the date of issue None of the above

Q No : 7 The appointment of AMC for the Mutual Fund can be terminated by Marks 2 Majority of Directors of the Trustee 50 % of the Unitholders 45% of the Unitholders 60% of the Unitholders 70% of the Unitholders Cannot be terminated Q No : 8 A Bond has par value of Rs. 1000 and coupon of 10%. It is currently trading at a yield of 8%. Its market price would be Marks 2 Rs. 850 Rs. 1000 Rs. 1250 Rs. 1300 Q No : 9 What is the maximum duration for which a Mutual Fund can borrow money ? Marks 1 One Year Two Years One Month Six Month None of the Above Q No : 10 Validate the statement - A prospective investor enjoys all the rights of an existing investor of a mutual fund Marks 1 Completely true Rarely true Completely false Partly false Selectively true None of the above Q No : 11 1990 1985 1995 1999 1980 2000 In which year was AMFI incorporated Marks 1

Q No : 12 Discounted instruments usually bear Marks 1 Fixed rate interest payments floating rate interest payments no interest payments None of the above

Q No : 13 In the event of failure to despatch the redemption proceeds within the specified period, interest will have to be paid at the rate of Marks 1 10% 15% 20% None of the above Q No : 14 The term used to denote the inability of an index fund to replicate the performance of the index Marks 1 Tracking error Performance Error Return Error Standard Error Q No : 15 a only b only Either Neither An agent must act on behalf of the (a) Mutual fund (b) Investor Marks 1

Q No : 16 Factors to be considered while investing in a Money Market fund are Marks 1 Costs Portfolio Quality None of the above both 1 & 2 Q No : 17 Which is the policy especially designed for women by LIC? Marks 1 Jeevan Shree Jeevan Akshay Jeevan Sneha Bima Nivesh Q No : 18 Income earned from an investment in Mutual Fund is covered under Marks 1 Gift Tax Income Tax Wealth Tax Sales Tax All of the above None of the above Q No : 19 Which of the following mutual funds is eligible to borrow in India & abroad, from any person? Marks 2 UTI only

Public Sector Bank sponsored funds only Private sector Mutual Funds UTI, Bank sponsored Mutual Funds, Private sector Mutual Funds UTI & Public Sector Bank sponsored funds None of the above Q No : 20 An investor invests Rs. 30,000/- under an Equity Linked Savings Scheme (ELSS). The maximum tax rebate which can be availed by the investor is Marks 1 6000 No rebate can be availed as the scheme is not covered under section 88 of Income Tax Act 2000 3000 1000 None of the above Q No : 21 Does Mutual Fund investments attract deduction of tax at source for domestic unit holders Marks 1 Yes No All of the above None of the above Q No : 22 Distribution tax on the income distributed by debt fund is paid as per the section Marks 2 88 196 94 194 115 R None of the above Q No : 23 UTI, set up by a special statute is empowered to conduct the following businesses Marks 2 Invest in various securities, Launch savings cum insurance schemes Grant loans against security, enter into bills discounting Acquire immovable property, Provide leasing/hire purchase finance & merchant banking services Option 1 only Option 1 & 2 Option 1, 2 & 3 Q No : 24 Trading volumes in the WDM Segment of the National Stock Exchange are dominated by Marks 2 Corporate Bonds Treasury Bills

PSU Bonds Government Securities Commercial Paper Others Q No : 25 Issuing and redeeming of units of a Mutual Fund is a function of Marks 1 Bankers Custodian The transfer agent Trustees Q No : 26 Risk factors may not be mentioned in Marks 2 Product launch advertisement Tombstone advertisement Performance advertisement All of the above advertisements Q No : 27 Which of the following portfolio maturities would be most exposed to interest rate risk? Marks 1 2yrs 6 mths 3 years 5 months 4.5 years 6 years Q No : 28 20 30 40 50 How many stocks does the BSE Sensitive (Sensex) Index include? Marks 1

Q No : 29 Which of these instruments do not carry a credit rating domestically? Marks 2 Commercial Paper Certificates of Deposit Corporate Debentures PSU Bonds Treasury Bills Bank/ FI Bonds Q No : 30 What does the Sharpe Ratio use as a measure of volatility? Marks 1 Standard Deviation Standard Variance Beta Coefficient Duration

Q No : 31 Which is the policy of LIC which is covered u/s 80 CCC of Income Tax Act, 1961 ? Marks 1 Jeevan Shree Jeevan Akshay Jeevan Suraksha Bima Nivesh Q No : 32 Mutual Fund investing in financial assets only, do not invest in the following Marks 1 Equity Corporate Bond Gold Govt.Securities Q No : 33 Which is a better investment option whilst selecting an equity fund? Marks 2 Ex Marks- 75%, Beta- 0.9, Gross Dividend Yield- 8% Either 1 or 3 Ex Marks- 80%, Beta- 0.9, Gross Dividend Yield- 8% Ex Marks- 90%, Beta- 0.8, Gross Dividend Yield- 9% Q No : 34 In the recent years there is a shift in preference from retail to institutional brokers Marks 1 True False Partially true True for a few AMCs Q No : 35 Value stocks would ideally be shares with Marks 2 High P/E ratios Low P/E ratios P/E ratio would not be considered Companies with high dividend payout Q No : 36 Which one of these can be termed a near perfect hedge against inflation if your holding period is ten years or more? Marks 1 Debt Fund Company FD Index Fund Balanced Fund Q No : 37 Guidelines for Mutual Fund advertising are laid down by Marks 1 RBI SEBI AMFI None of the above

Q No : 38 An Index Fund cannot invest in the following Marks 1 Nifty BSE 100 BSE 30 Commodities Exchange Q No : 39 The income earned such as Dividend & Interest by the schemes of a Mutual Fund are to be accounted on : Marks 2 Accrual basis Receipt basis Combination of both None of the above Q No : 40 All Mutual Fund advertisements must indicate Marks 1 The name of the Sponsor The name of the Trustee The name of the AMC All of the above None of the above Q No : 41 Which legal document specfies the activities that the Mutual Fund cannot undertake? Marks 2 Prospectus Offer Document Trust Deed All of the Above None of the above Q No : 42 The following cannot invest in Mutual Funds in India Marks 1 Non-Resident Individuals Overseas Corporate Bodies Foreign Nationals Foreign Institutional investors Q No : 43 Investors which invest in stocks that are undervalued are: Marks 1 Value investors Growth investors Cyclical investors Index investors Q No : 44 Dividend Yield of a Company is the ratio of : Marks 2 Dividend per share upon Face Value per share Dividend per share upon Book Value per share Dividend per share upon Market Price per share Dividend per share upon replacement cost per share

Q No : 45 Which of the following is not an equity instrument? Marks 1 Ordinary shares Equity Warrants Preference shares Convertible debentures None of the above Q No : 46 Who among the following can nominate? Marks 2 Unitholder acting as a Trust Unitholder holding units as holder of an office Both the above None of the above Q No : 47 Distribution Tax of 10.2% is applicable as per the Finance bill 2001 w.e.f Marks 2 1-Apr-99 1-Apr-01 1-Apr-00 1-Jun-01 All of the above None of the above Q No : 48 An open-ended Equity Scheme has average weekly net assets of Rs. 550 crore. According to SEBI Regulations it can charge total expenses of ------- Marks 2 Rs. 11.750 crore Rs. 10.875 crore Rs. 12.000 crore Rs. 12.250 crore None of the above Q No : 49 For a coupon bearing instrument, duration as compared to maturity is always Marks 2 higher lower same not enough information Q No : 50 The rate of interest paid on the par value of bonds to the investor is known as Marks 2 warrant coupon price value market value Q No : 51 Which of the following statements are correct: Marks 2 MFs are allowed to borrow as per SEBI regulations

MFs are allowed to borrow to meet temporary liquidity requirements In case of borrowing by MF, the duration should be more than six months In case of borrowing by MF, the MF shall not borrow more than 20% of the net asset value of the scheme. All of the above Only 1,2 & 4 are correct Q No : 52 Jacob's Program for Developing a model Portfolio includes Marks 2 Working with investors to develop Long Term Goals Determining the asset allocation of the investment portfolio Avoiding ad-hoc Investment advice or decisions All the Above Only 1&3 Only 1&2 Q No : 53 The Term Structure of Interest Rates (TSIR) is indicated by Marks 2 yield curve duration maturity coupon credit ratings Q No : 54 For open-ended schemes, the policy with respect to illiquid assets must be disclosed if Marks 2 the illiquid assets are likely to be more than 15% of the net assets the illiquid assets are likely to be more than 5% of the net assets the illiquid assets are likely to be more than 10% of the net assets the illiquid assets are likely to be more than 20% of the net assets Q No : 55 The AMC must have a networth of atleast : Marks 2 1 crore 5 crores 10 crores 100 crores Q No : 56 Who deals into the decision regarding the costs that arise in case of Mutual Fund Borrowings ? Marks 2 AMC in consultation with Trustee AMC in consultation with Sponsors AMC in consultation with SEBI AMC in consultation with Cusodian All of the above None of the above Q No : 57 Marks 2 Index Fund in India which are prespecified by the Fund Manager has to be

Always the BSE Sensex Always the Nifty Can be any Prespecified Base Index Neithe of the above All of the above Q No : 58 Equity Warrants differ from Stock Options in that : Marks 2 They are compulsorily converted into equity while options are not They are issued by the company while stock options are not They do not have a predetermined conversion price like options. None of the above Q No : 59 To meet redemption payments the Mutual Fund can : Marks 2 Borrow 10% of the net assets of the Scheme for 1 year Borrow 15% of the net assets of the Scheme for 1.5 years Borrow 20% of the net assets of the Scheme for 0.5 years Borrow 5% of the net assets of the Scheme for 2 years Q No : 60 Validate the statement - The investor is not obligated to read the offer document before investing in units of a scheme Marks 2 Completely true Rarely true Completely false Partly false Selectively true None of the above Q No : 61 Who can act as a distributor /Broker on behalf of Asset Management Company? Marks 2 Sponsor Company Associate Company of Mutual Fund Employee of the Mutual Fund None of the above Both 1 &2 All of the above Q No : 62 How many PPF Accounts can a single person open as per the prevailing laws ? Marks 2 2 3 4 1 Q No : 63 Bogle's Simple Managed Portfolio suggests Marks 2 50% in diversified equity 'value' funds 10% in specialty funds

85% in a balanced 60/40 fund 100% in a Balanced 60/40 fund 15% in medium term Bond Fund Both (3) & (5) Q No : 64 Mutual Funds in India as a matter of corporate entity are Marks 2 Public Trusts Company under Companies Act Societies Option 1 only Option 1 & 2 Option 1, 2 & 3 Q No : 65 An Open-ended fund is purchased at an NAV of Rs 10 per unit. 24 months later it is sold at an NAV of Rs. 14 per Unit. The Fund.s Compounded Annualised Return for the period is Marks 2 18.32% 20.00% 20.82% 21.46% -----------------------------------------------------------------------------------------------------------------------------------------------------------------------Test 4 Mock AMFI Exam 1) A very high proportion of investment in all types of equity funds is advisable for investors In distribution phase In accumulation phase In transition phase Who are wealth preserving affluent individuals-1 2) A fund's investments at market value total Rs.700.00 Crores, total liabilities stand at Rs.50.00 Lacs and the number of units outstanding is 28 Crores. What is the NAV Rs.30.19 Rs.24.98 Rs.32.15 Rs.40.49 - 2 3) Liabilities in the balance sheet of a mutual fund are In the form of long-term loans Strictly short term in nature Combination of long term and short term Not allowed as per regulations 1 4) In India, Mutual fund agent's rate and services are at present defined by

SEBI rules Stock exchange bye-laws AMFI rules Convention 1 5) If fresh litigation cases or adjudication proceedings are referred by SEBI against the fund sponsors or a company associated with the sponsors, then the offer document needs to be revised true false 1 6) Who among the following are not Institutional Investors Banks Resident Individuals Provident Funds Non Banking Finance Companies 1 7) SEBI's advertising code mandate that all performance calculations in a fund's advertisement should be based NAV The NSE Fifty Index The BSE Sensex None of the above 1 8) .Net asset Value (NAV) of a mutual fund scheme is defined as the schemes Assets minus liabilities Assets per unit Assets minus liabilities per unit None of the above 1 9) The rights of investors in a mutual fund scheme are laid down in The Offer Document of that scheme Quarterly Reports Annual Reports Marketing brochures 1 10) Dividend yield for a stock is Dividend per share Dividend per face value Dividend per share to current market price None of the above 1 11) Assured return or guaranteed monthly income plans are essentially Hybrid funds Growth Funds Debt/Income funds

Sector funds 1 12) The functions and responsibilities of the sponsor, AMC, trustees and custodian of the mutual fund are listed in Offer document only Key information memorandum Both offer document and key information memorandum None of the above - 1 13) The performance of a fund is largely measured by the success of The marketing function The operations function The portfolio market function None of the above - 1 14) Which of the following is a fundamental attribute of a mutual fund scheme The names and addresses of the registrars and custodians The nature of the scheme being income bearing The specified stocks in the scheme's portfolio The name and address of the compliance officer chapter - 1 15) Mutual funds value their investments At purchase price On a mark-to-market basis At par At book value - 1 16) The circumstances under which a scheme shall be wound up are to be described in the offer document at the time of the initial launch of the scheme itself true false - 1 17) For a close-ended fund, the repurchase price should not be lower than 95% of NAV 93% of NAV 97% of NAV -1 18) Information about trusteeship fees is included in the offer document but not in the key information memorandum true false - 1 19) Shares of companies with large capital market capitalisation Have greater growth potential Are more liquid Are not available

None of the above - 1 20) Procedure for redemption or repurchase need not Be described in the offer document Include how redemption or repurchase price of units would be determined Include names of centers where redemption can be effected Indicate the redemption or repurchase price as at the end of the current fiscal year - 1 21) Technical analysis guides the decision on Whether to buy or sell The right time to buy or sell Whether company's technical personnel are adequately qualified None of the above - 1 22) Excess distribution expenses are to be borne by the AMC Unit holders SEBI AMFI -1 23) An equity fund's age and size are irrelevant when selecting a fund for investment True False- 1 24) Bonds held in the portfolio of a mutual fund are valued at yield to maturity True False - 1 25) Any pending cases or penalties levied on the sponsors of AMC should be disclosed in the offer document true false - 1 26) Mutual fund units cannot be distributed by Trustees of the fund The AMC Non-banking finance companies Banks De-Select 1 27) Sales practices are never mandated by regulators, but arise from convention only True False - 1 28) The code of ethics for mutual funds published by AMFI Is mandatory Is in the form of recommended practices Is unfavourable to investors Does not cover distribution and selling practices - 1

29) Retired investor should Not draw down on their capital Not invest in securities, which bear risk of capital erosion Continue holding a major portion of their holding in equity growth funds Never invest in equity -1 30) A trail commission is justified when An investor cancels his investment The investor redeems his investment in a very short time An agent invests his own money, not that of a client And agent sells many mutual funds - 1 31) Initial issue expenses are charged to a scheme in the first year itself True False -1 32) Risk arising from a scheme's investment objective/strategy and proposed asset allocation is Not present Common to all schemes Specific to that scheme Not applicable to debt funds - 1 33) A steady holding of investments in an equity fund's portfolio indicates Long-term orientation Lower transaction costs Both the above None of the above - 1 34) A close-ended has average weekly net assets of Rs.200 crore. As per SEBI regulations, the AMC can charge the fund with investment and advisory fee upto: Rs.2.25 Crores Rs.2.00 Crores Rs.2.50 Crores Rs.3.00 Crores - 1 35) An investor buys one unit of a fund at a NAV of Rs.20.00 He receives a Dividend of Rs.3.00 when the NAV is Rs.21.00 The unit is redeemed at an NAV of Rs.22.00 Total return is 25.71% Rs.27.51 21.27% Rs.21.75 -2 36) A value manager does not look for Stocks that are currently undervalued in the market

Stocks whose worth will be recognised by the market in the long term High current yield Long term capital appreciation - 1 37) Which of the following statements about UTI in untrue It was set up in 1963 It was formed by RBI It was established by an act of parliament It was not given a monopoly status - 1 38) Which of the following is not true for offer documents of open-ended schemes It is first issued at the time the scheme is launched It is registered with SEBI It has to be revised periodically It need not be revised at all -1 39) Which of the following is the first step in financial planning Asset allocation Selection of fund Studying the features of a scheme None of the above - 1 40) Investments made by a mutual fund on behalf of investors are accounted as Assets Liabilities Capital None of the above -1 41) Mutual funds are allowed to borrow Freely to meet their requirements For investment purposes Only to meet redemption demands Not allowed at all -1 42) Investors who follow the fixed allocation approach Maintain balance in their portfolio by liquidating a part of the position in the class, which has gi Are not disciplined Increase their equity position when equity prices tend to climb None of the above -1 43) Asset allocation is Keeping certificates of the physical securities in proper places Allocating the available money to all the securities available Allocating the right proportion of funds to equity, debt and money market securities None of the above - 1

44) .A high portfolio turnover for a fund indicates That the fund is active Higher transaction cost Both of the above None of the above - 1 45) The accounting policies of a fund should be in accordance with GAAP SEBI regulations ICAI Guidelines American GAAP - 1 46) The best equity fund, relative to others, would have Higher ex marks, lower beta and higher gross dividend yield Higher ex marks, higher beta and higher gross dividend yield Lower ex marks, lower beta and lower gross dividend yield Lower ex marks, higher beta and higher gross dividend yield - 1 47) MFs generally invest in securities which are: Unlisted Market-traded Thinly traded Privately placed - 1 48) Market capitalisation of a company is calculated by multiplying the number of outstanding shares by R.10 Face value of each share Current market value of each share Dividend yield -1 49) For assured return schemes, information about the guarantor's net worth which justifies the guarantor's ability to meet any shortfalls in the returns assured under the scheme can be found in The offer document The key information memorandum Both (a)and(b) None of the above - 1 50) A mutual fund's investments are guided by the AMC Board of trustees Investment objectives - 1 51) The Offer document for a scheme remains valid even if The AMC is reconstituted

Entry or exit load are changed The scheme's NAV changes New plans are added to existing schemes - 1 52) An equity fund can be said to be concentrated when When it invests in two or three stocks When it invests in many companies of the same sector When top ten holdings account for more than 50% of net assets invested When top ten holdings account for more that 25% net assets invested -1 53) A debt fund's age and size are not important when selecting a fund for investment True False -1 54) Investor does not have the right to receive any interest from an AMC if his redemption proceeds are not despatched within 10 working days True False- 1 55) NRI’s are eligible to invest in Mutual Funds true false- 1 56) From whom can a unit-holder seek redressal if his complaint is not entertained by the mutual fund AMC Board of trustees SEBI RBI - 1 57) In case of a fund merger or take-over High court approval may not be necessary SEBI approval is a must All unit holders must be informed All of the above -1 58) A high portfolio turnover for a fund indicates That the fund is active Higher transaction cost Both of the above None of the above - 1 59) Investor's rights under a scheme are Uniform for all schemes of all funds Not defined Listed in the offer document

Available with stock exchanges - 1 60) . Units of a money market mutual fund can be issued to Individuals Banks Trusts All of the above - 1 61) Between the past performance of the fund and its suitability for an investor, past performance is more important True False - 1 62) The offer document issued by mutual funds does not serve the purpose of Announcing the scheme Giving detailed information about the scheme Inviting the the investors Giving the fund manager's investment outlook for the next quarter - 1 63) If a specialty offshore fund has consistently given very good performance, it can be considered for investment by a retiree True False - 1 64) The 1999 union government budget helped the mutual fund industry by Regulating the industry practices Exempting all mutual fund dividends in the hands of investors from income tax Approving the code of ethics formulated by AMFI Doing away with all regulations for mutual funds - 1 65) Most eligible investors of Mutual Funds can broadly be grouped into either individual or institutional investors True False - 1 66) Contingent deferred sales charge (CDSC) Is higher for investors who stay invested in the scheme longer Is lower for investors who stay invested in the scheme longer Is the same for all investors irrespective of how long they stay invested Is not allowed to be charged to mutual fund investors in India - 1 67) The offer document Contains the terms of issue Gives no information relevant for making an investment decision Is not the operating document describing the scheme Cannot be called a reference document - 1

68) A close-ended has average weekly net assets of Rs.200 crore. As per SEBI regulations, the AMC can charge the fund with investment and advisory fee upto Rs.2.25 Crores Rs.2.00 Crores Rs.2.50 Crores Rs.3.00 Crores - 2 69) Investor does not have the right to receive any interest from an AMC if his redemption proceeds are not despatched within 10 working days true false - 1 70) Debt securities bought at a discount to their face value are generally Interest bearing Zero coupon bonds Paying interest at a floating rate None of the above - 1 71) A fund's declared NAV does not include loads True False - 1 72) Are Overseas Corporate Bodies allowed to invest in Mutual Funds no yes If Ministry of Finance approves If AMFI approves - 1 73) A fund that charges a load is better than a no-load fund true false - 1 74) Income distributed to unit-holders by a debt fund is liable to dividend distribution tax true false - 1 75) The load amount charged to a scheme over a period of time is called Entry load Exit load Deferred load No-load - 1 76) UTI was the only mutual fund for the period 1984 to 1988

1963 to 1988 1964 to 1992 None of the above - 1 77) The steps involved in the selection of an equity fund for investment are Sector selection, asset classification, and selection of fund managers and schemes Sector selection, selection of fund managers and schemes, asset classification Asset classification, sector selection, selection of fund managers and schemes Selection of fund managers and schemes, sector selection, asset classification - 1 78) A money market mutual fund is most likely to invest in Corporate bonds Equity shares Government securities with maturity less than 1 year All of the above - 1 79) The most important source of information for a prospective investor is Offer document Annual Report of the AMC Economic Times AMFI Newsletter - 1 80) For older investors who want to transfer their wealth No financial planning is required The right investment strategy depends upon who the beneficiaries are The right investment strategy depends upon the state of the stock market All the funds can be invested in aggressive equity funds - 1 81) If a charitable trust approaches a distributor with an application for investment in a mutual fund the distributor should Accept the application without wasting time Accept the application as a direct application Reject the application outright - 1 82) Documents available to investors for inspection do not include Memorandum and Articles of Association of AMC Consent of auditors and legal advisors Investment management reports Reports based on which actual investments are made - 1 83) If a unit-holder does not agree to the merger of his fund with another, he has no exit option true false- 1 84) When selling a mutual fund, a good agent would never

Describe the past performance of the scheme Compare the fund with other mutual funds Assure a rate of return Compare the fund with other financial products - 1 85) A debt fund distributes 10% dividend. How much tax does the investor have to pay on this dividend? 10% 12% 20% None - 2 86) A prospective investor Has the same status as a unit-holder of a fund Can sue the AMC / trustee Has no legal recourse All of the above - 1 87) SEBI regulations for mutual funds were formulated in 1992 1993 1995 1996 - 1 88) Equity derivative instruments are Shares Bonds Contracts NOTES - 1 89) A mutual fund's investments are guided by the AMC Board of trustees Investment objectives Unit holders - 1 90) Tax treatment of investments does not Form a section in the offer document Describe the tax elements applicable to investors who invest in the fund Form a section in the key information memorandum Offer tax advice to investors - 1 91) A fund manager managing an index fund Has to keep fund expenses low Does not have to research stocks Does not have to balance his portfolio

None of the above - 1 92) In India, a large part of debt securities pay interest on A floating rate basis A fixed rate plus a variable portion A fixed rate Zero coupon basis - 1 93) In which type of schemes should an unmarried professional will invest Scheme investing 80% in debt securities 50% in equity funds and 50% in income funds 90% n equity funds having a higher p/e ratio than the market All the money in a balanced fund - 1 94) As a part of borrowing policy, the following need not be disclosed in an offer document Purpose and circumstances of borrowing Regulatory limits on borrowing Potential risk to AMC and unit-holders Names of lenders - 1 95) Unit holder's right to information does not include Obtaining from the trustees any information having an adverse effect on their investments Inspecting major documents of a fund Receiving of a copy of the annual financial statements of that fund Approving investment decisions of the fund - 1 96) UTI was the only mutual fund for the period 1984 to 1988 1963 to 1988 1964 to 1992 None of the above - 1 97) All debt fund investors are exposed to risk of principal loss True False - 1 98) If an investor failed to claim his redemption proceeds within 3 years, he can claim the proceeds at Par Prevailing NAV The on the date he has applied for redemption 15% below the prevailing NAV - 1 99) The following do not form a part of the investment procedure described in an offer document

Various plans under the scheme (e.g.dividend reinvestment plan) Minimum initial (and subsequent) investment Details of who can invest Details of other competing mutual funds - 1 100) The NAV of each scheme should be updated on AMFI's website Every quarter Every month Every Day Every hour - 1


								
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