NISM SERIES V A – MUTUAL FUND

DISTRIBUTORS CERTIFICATION EXAM –

PRACTICE TEST 6

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TEST DETAILS – The NISM MUTUAL FUND DISTRIBUTORS CERTIFICATION EXAM is a 100 mark exam
with 50% as passing marks. In all 100 questions will be asked with NO negative marking. The time
duration is 2 hours.
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NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

PRACTICE TEST
6

Question 1 According to the Certified Financial Planner “ Board of Standards

(USA), the last stage in financial planning is _____________. (a)
Develop and Present Financial Planning Recommendations and / or Options ​(b)
Monitor the Financial Planning Recommendations ​(c) ​Implement the Financial
Planning Recommendations ​(d) ​Establish and Define the Client-Planner
Relationship

Question 2 Which of the below statement is FALSE with respect to objectives

of
AMFI ? (a) ​To represent to the Government, Reserve Bank of India and
other bodies on
all matters relating to the Mutual Fund Industry. ​(b) ​To regulate the
Mutual Fund Industry ​(c) ​To disseminate information on Mutual Fund Industry
and to undertake
studies and research directly and/or in association with other
bodies. ​(d) ​To develop a cadre of well-trained Agent distributors
 Correct Answer 1 ​Monitor the Financial Planning
Recommendations

Answer • Establish and Define the Client-Planner

Explanation Relationship
comprehensive financial plan, as proposed
al Planner – Board of Standards (USA) are
• Gather Client Data, Define Client Goals
• Analyse and Evaluate Client’s Financial
Status
• Develop and Present Financial Planning Recommendations and / or
Options
• Implement the Financial Planning
Recommendations
• Monitor the Financial Planning
Recommendations

Correct Answer 2 ​To regulate the Mutual Fund Industry

nds in
Answer
Explanation
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 3 A Mutual Fund has several schemes running. To avoid more

backoffice
 work etc. it can put funds of all the schemes in a single bank
account - True or False ?

(a) ​TRUE ​(b) ​FALSE

Question 4 The benchmark for a Gilt fund investing in Government Securities with
maturities ranging from 1 to 3 years is
___________. (a) ​Si-Bex ​(b) ​Mi-Bex ​(c) ​Li-Bex ​(d) ​None of the
above

Correct Answer 3 ​FALSE

be maintained in a different Bank
Answer
Explanation

Correct Answer 4 ​Si-Bex

Answer
Explanation
nance Company Limited (Isec) has been
rities Sovereign Bond Index (i-BEX) since 1994
et. In order to meet specific needs of market
been maintaining short-maturity index (Si-BEX)
one to three years, medium maturity
ties maturing in three to seven years,
comprising securities maturing later
96. These three new indices alongwith
erage of Si-BEX, Mi-BEX and Li-BEX
ark gilt indices for mutual fund
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6
 Question 5 Floating rate debt market securities generally hold their value
despite
changes in the yields in the debt market - True or False
? (a) ​TRUE ​(b) ​FALSE

Question 6 Dividend warrants have to be dispatched to investors within __ days

of
declaration of the dividend.
(a) ​10 ​(b) ​15 ​(c) ​30 ​(d) ​45

Correct Answer 5 ​TRUE

Correct Answer 6 ​30

 NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 7 The Market Value of a scheme is Rs 240 crores. Dividend accrued but
not received is Rs 30 crore. The Expenses payable are Rs 10 crore. The total
number of outstanding units is 120 lakhs. What is the NAV of the scheme ? (a)
175.8 ​(b) ​216.66 ​(c) ​224.7 ​(d) ​311.74

Question 8 Which of the following is not a benefit of investing in a Mutual Fund ?

(a) ​Diversification of Risk ​(b) ​Professional Management of Funds ​(c)
Time and cost savings ​(d) ​Custody of his share of the portfolio in his
demat account

Correct Answer 7 ​216.66

Answer =
Explanation
Rs 240 crore
of Rs 30 crore
 Correct Answer 8 ​Custody of his share of the portfolio in his demat
account
shares in their demat
Answer
Explanation
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 9 AMFI is a Self Regulatory Organization (SRO) - True or False ?

(a) ​FALSE ​(b) ​TRUE

Question 10 Mr. Mohit invested Rs 5000 in a Mutual Fund on 1 Jan 2011 and when
he redeemed on 31 Dec 2012 he got Rs 12000. Calculate the
CAGR. (a) ​54.90% ​(b) ​69.75% ​(c) ​70.80% ​(d) ​125%

Correct Answer 9 ​FALSE

ated by SEBI. AMCs in India are
Answer dy that has been created to promote
Explanation ndustry. AMFI is not an SRO.
have not constituted any SRO for themselves.
 Correct Answer 10 ​54.90%
} ^ ( 1 / No. of years) - 1.
Answer = { 12000 / 5000 } ^ 1 / 2 - 1 = {2.4} ^ 0.5 - 1
Explanation of your computer type 14000 then press x^y
g Compounded Annual Growth Rate : CAGR = {
= 1.549 - 1 = .549 x 100
= 54.90%
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 11 FMP dividends are Tax Free - True or False ?

(a) ​TRUE ​(b) ​FALSE

Question 12 In the National Pension System -NPS, the investor is allotted

a
_________. (a) ​Special
NPS number ​(b) ​PRAN ​(c)
QNPSN ​(d) ​MANN
Correct Answer 11 ​TRUE

Correct Answer 12 ​PRAN

ount
Answer
Explanation
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 13 Investors of debt oriented mutual funds do not have to pay STT -
True
or False ? (a)
TRUE ​(b) ​FALSE
 Question 14 ' Not more than 25% of the Net Assets will be invested in the
Derivatives
Market' - This statement best describes
___________. (a) ​Investment Interest ​(b) ​Investment Objective ​(c)
Investment Policy ​(d) ​Investment Strategy

Correct Answer 13 ​TRUE

Correct Answer 14 ​Investment Policy

the kind of portfolio that will be
Answer are decided on a day-to-day basis by
Explanation MC.
efines the broad investment charter. Investment
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6
 Question 15 A Mutual Fund scheme has equity shares of ICICI Bank in its portfolio.
For calculation of NAV, which of the following prices will be considered ? (a) ​The
closing price of ICICI Bank on Regional Stock Exchanges on the day of
calculation of NAV ​(b) ​The closing price of ICICI Bank on BSE / NSE on
the day of calculation of
NAV ​(c) ​The Average trading price on Regional Stock Exchanges on
the day of
calculation of NAV ​(d) ​The Average trading price on BSE/NSE on the
day of calculation of NAV

Question 16 Minimum duration of an interval period in an interval scheme/plan is

_______. (a)
15 Days ​(b) ​30 Days ​(c)
45 Days ​(d) ​60 Days

Correct Answer 15 ​The closing price of ICICI Bank on BSE / NSE on the day of calculation
of
NAV
Correct Answer 16 ​15 Days
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 17 The unit capital in an open ended fund keeps changing on a

regular
basis - True or False ?
(a) ​TRUE ​(b) ​FALSE

Question 18 People who are better able to take the downside that comes with risk
are
those who have a ____________. (a)
Daring and adventurous psyche ​(b) ​Multi-skilled and
qualified professionals ​(c) ​Regular source of income
(d) ​All of the above
Correct Answer 17 ​TRUE
rawals happen on a daily basis in an
Answer unit capital keeps changing.
Explanation

Correct Answer 18 ​All of the above

NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 19 The unit holder who has given his money to the Mutual Fund can
decide
what securities or investments the scheme would buy - True or
False ? (a) ​TRUE ​(b) ​FALSE
 Question 20 The advantages of mutual funds are :
(a) ​Liquidity ​(b) ​Economics of
scale ​(c) ​Both 1 and 2 ​(d) ​None
of the above

Correct Answer 19 ​FALSE

which investments the fund should
Answer ned Authority decided on the
Explanation

Correct Answer 20 ​Both 1 and 2

NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6
 Question 21 What is the sale price of the additional units bought by an investor of
an
open ended scheme?
(a) ​More than NAV ​(b) ​Less than
NAV ​(c) ​Equal to NAV ​(d) ​2.5 %
more than NAV

Question 22 Arbitrage funds are meant to give better equity risk exposure - True
or
False ? (a)
TRUE ​(b) ​FALSE

Correct Answer 21 ​Equal to NAV

 Correct Answer 22 ​FALSE
p than liquid funds – and take the
Answer offer.
Explanation
t meant for equity risk exposure, but to lock
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 23 Which of the following aspects of portfolio would an investor in a

debt
scheme give most importance?
(a) ​Number of securities in portfolio ​(b)
Weighted Average Maturity ​(c) ​Stock
selection ​(d) ​Sector selection

Question 24 The NSEs platform for Mutual Fund trading is called NEAT MFSS -
True or False ? (a)
TRUE ​(b) ​FALSE
 Correct Answer 23 ​Weighted Average Maturity
the interest rate sensitivity of a
Answer on all the other three options are
Explanation
a debt security, higher would be its interest rate
weighted average maturity of debt securities in a

Correct Answer 24 ​TRUE

Explanation
Answer tem.
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 25 ______________ is the regulator for the National Pension

System.
(a) ​AMFI ​(b) ​COMMERCE MINISTRY ​(c)
SEBI ​(d) ​PFRDA

Question 26 The Mutual Fund distributor can charge a fee from the investor - True
or False ? (a)
TRUE ​(b) ​FALSE
 Correct Answer 25 ​PFRDA
evelopment Authority (PFRDA) is
Answer sion System.
Explanation

Correct Answer 26 ​TRUE

based on his assessment of various
Answer ered by the distributor.
Explanation
ont commission to distributors will be paid by the
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 27 The STT charged on Purchase of Equity Share in a Stock Exchange

is
____. (a)
0.01% ​(b) ​0.10% ​(c)
 1% ​(d) ​2.50%

Question 28 Mutual funds are constituted as Trusts - True or False ?

(a) ​FALSE ​(b) ​TRUE

Correct Answer 27 ​0.10%

STT on sale of futures & options in
Answer
Explanation
saction Tax on purchase or sale of equity

Correct Answer 28 ​TRUE

NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6
 Question 29 Fundamental analysis can be effectively used for Intra Day Trading -
True or False ? (a)
TRUE ​(b) ​FALSE

Question 30 Its compulsory to list units of _____________ on the stock

exchange.
(a) ​ELSS Fund ​(b) ​Close Ended
Fund ​(c) ​Gilt Fund ​(d) ​Arbitrage
Fund

Correct Answer 29 ​FALSE

ysis approach. Technical analysis is
Answer eculative decisions, including
Explanation
hat longer term investment decisions are best
Correct Answer 30 ​Close Ended Fund
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 31 KIM has to be updated every ______.

(a) ​three months ​(b) ​six
months ​(c) ​one year ​(d) ​five
year

Question 32 Generally long term investment decisions taken through

fundamental
analysis and for shorter term speculative decisions, including
intra-day trading one uses Technical Analysis - True or False ?

(a) ​TRUE ​(b) ​FALSE

Correct Answer 31 ​one year

 ea
Answer
Explanation

Correct Answer 32 ​TRUE

ysis approach. Technical analysis is
Answer eculative decisions, including
Explanation
hat longer term investment decisions are best
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 33 Fund accounting activity of a scheme has be 100% outsourced - True

or
False ? (a)
TRUE ​(b) ​FALSE

Question 34 Offer documents of mutual fund schemes are approved by SEBI -

True
or False ? (a)
TRUE ​(b) ​FALSE
Correct Answer 33 ​FALSE

Correct Answer 34 ​FALSE

e “vetted” by SEBI, though SEBI does
Answer
Explanation
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 35 _____________ assumes that all dividend payouts are re-invested in

the
scheme at the ex-dividend NAV.
(a) ​Compounded Returns ​(b) ​Compounded
Annual Growth Rate ​(c) ​Annualised Returns ​(d)
 Simple Returns

Question 36 Nomination and Pledge options are not available for mutual fund
investors - True or False ?
(a) ​TRUE ​(b) ​FALSE

Correct Answer 35 Compounded Annual Growth Rate

s based on an assumption that the
Answer the same scheme at the ex-dividend
Explanation
s paid – and compounding is to be considered -
ded Annual Growth Rate - technique prescribed

Correct Answer 36 ​FALSE

re available for mutual fund
Answer
Explanation
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6
 Question 37 Day to day management of the MF schemes is handled by the
Trustees -
True or False ? (a)
FALSE ​(b) ​TRUE

Question 38 Redemption / re-purchase cheques would need to be dispatched

to
investors within ______ working days from the date of receipt of
request. (a) ​2 ​(b) ​3 ​(c) ​5 ​(d) ​10

Correct Answer 37 ​FALSE

hemes is handled by an
Answer he sponsor or the Trustees.
Explanation
Correct Answer 38 ​10
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

Question 39 ELSS schemes should contain the least amount of Ill Liquid
Investments
- True or False ? (a)
TRUE ​(b) ​FALSE

Question 40 Anyone who is aggrieved by a ruling of SEBI, can file an appeal with
the
Ministry of Finance - True or False ?
(a) ​TRUE ​(b) ​FALSE

Correct Answer 39 ​FALSE

a greater need for liquidity because
Answer e-purchase at any time - should have
Explanation
quid investments in their portfolio. ELSS Schemes re is great potential in them in the long
three years - so the fund manager can buy more

Correct Answer 40 ​FALSE

ng of SEBI, can file an appeal with
Answer (SAT).
Explanation
NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6

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NISM SERIES V A – MUTUAL FUND
DISTRIBUTORS CERTIFICATION EXAM –
PRACTICE TEST 6