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Chapter 1
Q.1 In India, the first mutual fund after UTI was launched by
1. Can bank mutual fund 3. SBI mutual fund
2. Morgan Stanley 4. LIC mutual fund
Q.2 A Mutual Fund is a
1. Collective investment vehicle for the 2. Company that accepts fixed deposits
purchase of securities on behalf of 3. Fund that issues bond and debentures
investors. 4. None of the above
Q.3 In India a mutual fund is a trust whereas in the USA it is
1. An investment company 3. A Society
2. A Trust 4. A Bank
Q.4 Which of the following statement is TRUE?
1. Growth and risk are associated with 3. Both 1 & 2
equity funds 4. None of the above
2. Stability is associated with debt funds
Q.5 Investment in an Equity Linked Savings Scheme (ELSS)
1. Entitles the investor to claim income 3. Automatically leads to investment in
tax rebate equity shares
2. Requires the investment to be locked 4. All of these
in for a period of 3 years
Q.6 Mutual funds should be recommended as
1. Investments to achieve long-term 3. Investments to take advantages from
goals stock market swings
2. A “get rich quick” investment option 4. All of these
Q.7 In India, the public sector mutual funds came
1. Before private sector funds & UTI 3. After SEBI Regulation 1996
2. After UTI but before SEBI regulation 4. After SEBI Regulation 1996 but before
1996 private sector funds
Q.8 Which one of the below is correct?
1. UTIMF was established by a special 3. UTIMF is not the first MF in India
act of parliament 4. UTIMF was set up by Reserve Bank of
2. UTIMF voluntarily accepted guidelines India
of SEBI
Q9 Who published “Making Mutual Funds Work for you- The Investors Guide”
1. AMFI 3. RBI
2. SEBI 4. AMCs
Q.10 A close ended mutual fund has a fixed
1. NAV 3. Rate of Return
2. Fund Size 4. Number of Distributors
Q.11 Ownership of unit holders in mutual funds is
1. Mutual 3. Mutual and Beneficial
2. Beneficial 4. None of the above
Q.12 Which of the following is most significant event during February 2003?
1. UTI Act repealed 3. UTI no longer has special legal status as a
2. UTI MF found trust established by Act of parliament.
4. All of the above
Q.13 The Board of Trustee of the UTI does not have nominees from
1. RBI 3. IDBI
2. LIC 4. The Bombay Stock Exchange (BSE)
Q.14 In the union budget 1999, which significant change was made?
1. Dividends were made tax free in the 3. Dividend distribution tax on all
hands of unit holders. schemes were removed.
2. Capital Gain taxes were abolished. 4. All of these
Q.15 A close ended scheme is quoted on the stock exchange at a discount to its NAV when
1. The markets are bearish 3. The assets of the fund are
2. Investors perceive that the fund will be undervalued
unable to maintain the NAV 4. None of the above
Q.16 AUM of Mutual Fund industry in year 2004-2005 was: (In crores)
1. 140000 3. 152000
2. 150000 4. 120000
Q.17 Which one is more diversified?
1. Fund A which invests in Shares in India 3. Both are equally diversified
2. Fund B which invests in shares in 4. Insufficient information
India and USA both
Q.32 An investor in a close-ended fund can get his money back by selling his units:
1. Back to the fund 3. On a stock exchange where the fund is listed
2. Back to AMFI 4. To the agent who sold the units to the investor
Q.33 Small funds are...
1. Relatively easier to manage 3. Have limited holding
2. Achieve their objectives in more 4. All of these
focused manner
Q.34 Stock markets investments in the market directly offer some advantages except...
1. Potential for high returns 3. Low risk
2. Liquidity through trading on the stock 4. The opportunity to capitalize on stock
exchanges market fluctuations
Q.35 Which of the following was the first Mutual Fund in India after UTI
1. Can Bank Mutual Fund 3. LIC Mutual Fund
2. SBI Mutual Fund 5. Indian Bank Mutual Fund
Q.36 Which of the following Mutual Fund was set up after 1963 but before 1987?
1. SBI Mutual Fund 3. LIC Mutual Fund
2. Can Bank Mutual Fund 4. None of the above
Q.37 Which of the following is true about Closed ended Mutual Funds?
1. It has fixed number of units only 3. It has fixed no. of units & fixed Unit capital
2. It has fixed Unit Capital only 4. None of the above
Q.38 By What name is the Phase of year 2004 onwards of mutual fund industry known?
1. Growth and SEBI Regulation 3. Emergence of Large & uniform industry
2. Emergence of Private funds 4. Consolidation & growth
Q.39 In case of an open ended Mutual Fund , which is true
1. All the times units can be allotted 3. Unconditionally exits at all times
2. Allotment at the time of NFO only 4. All of the above
Chapter 5
Q.1 A load means
1. An amount recovered from the registrar 3. An amount paid to the broker by the fund
2. An amount which is recovered from the 4. An amount paid by the fund to the
investor regulator (SEBI)
Q.2 AMFI code of Ethics broadly covers
1. Management of funds ought to be in the interest of the unit holder
2. Adequate disclosures by the fund ought to be made to the unit holders
3. Funds are urged to adopt to the professional selling practices
4. All of these
5. Only (1) & (2)
Q.3 If an investor failed to claim the redemption proceeds after 3 years of due date he has the right
to receive an amount equal to
1. Prevailing NAV 4. Zero.
2. Face value of the unit 5. Due date NAV plus interest @ 15% p.a.
3. NAV at end of 3 years after the due date
Q.4 One of the following is NOT an ethical practice for a good mutual fund agent which one
1. Promising a particular rate of return in a scheme
2. To discuss the financial and investment needs of the investor
3. To explain the returns obtained by similar schemes of other AMCs
4. To discuss with the investor the risks associated with the proposed investment
Q.5 Commission payable to agents by mutual fund is..
1. Based on the funds’ policy and discretion
2. Based on SEBI guidelines on agent commissions
3. Based on commissions paid by UTI to its agents
4. Based on Regulations of the RBI
Q.6 Which of the following sales practices is prescribed by regulation?
1. AMFI Code of Ethics 3. Mafia’s code of agents
2. SEBI Advertising Code 4. None of the above
Q.7 Some funds pay of the commission up-front and the balance in phases. This practice is called
1. Exit load 4. Trail commission
2. Discounting 5. Phased commissioning
3. Deferred contingent sales charge
Q.8 One of the following statements cannot be considered as the fundamental attribute of a
scheme. Which one?
1. The scheme is an Income-oriented scheme
2. The scheme is open-end in nature
3. Details on listing, repurchase and redemption of units
4. The address and contact details of the registrars and custodians
Q.9 For a person to become an agent of a mutual fund, he must...
1. Have passed class 12 exams
2. Obtain approval from the main broker of the fund
3. Be a university graduate
4. Meet the requirements laid down by the concerned AMC
Q.10 The jurisdiction for resolving legal disputes concerning mutual funds is
1. Given in the offer document/ key information memorandum
2. Stated in the major stock exchanges
3. Decided by company law board
4. Decided by the BSE/NSE
Q.11 As on March 2002, in India a person can be appointed as an agent of a mutual fund if he
1. Passes the AMFI test
2. Signs an agreement with a fund on non- judicial stamp paper
3. Both (1) and (2)
4. has the knowledge about mutual funds
Q.12 Who cannot invest in a mutual fund in India?
1. Provident funds 4. Non-resident Indians
2. Non – banking finance companies 5. Overseas corporate bodies
3. Foreign citizens
Q.13 The AMFI code of ethics does not cover the following prescriptions
1. Adequate disclosures should be made to the investors
2. Funds should be managed in accordance with stated investment objectives
3. Conflict of interest should be avoided in dealings with directors or employees
4. Each investment decision should be approved by investors
Q.14 Contingent Deferred Sales Charge (CDSC)
1. Is higher for investors who stay invested in the scheme longer
2. Is lower for investors who stay invested in the scheme longer
3. Is the same for all investors irrespective of how long they stay invested
4. Is not allowed to be charged to mutual fund investors in India
Q.15 SEBI guidelines for agents includes
1. Agents can sell products of a single mutual fund
2. Agents can sell products of mutual funds with whom he has entered into agreements
3. Agents could be only individuals
4. None of the above
Q.16 An investor buys units in a fund that has given excellent returns in the past, but his
expectations are not met, as the fund does not perform well this year. The investor can
1. Sue the AMC 3. Sue the agent
2. Sue the Trustees 4. None of the above
Q.17 Are Overseas Corporate Bodies allowed to invest in Mutual Funds?
1. No 3. If Ministry of Finance approves
2. Yes 4. If AMFI approves
Q.18 Documents available to investors for inspection do not include
1. Memorandum and Articles of Association of AMC
2. Consent of auditors and legal advisors
3. Investment management reports
4. Reports based on which actual investments are made
Q.19 Open ended schemes are sold by
1. NSE 3. National Distributors
2. Agencies of banks 4. Both 2 and 3
Q.20 Which of the following decisions can not be taken by a Mutual fund unitholder?
1. Change of Load structure 3. Purchase and sell of securities
2. Point of entry and exit 4. 1 and 3rd Option
Chapter 6
Q.1 The NAV of XYZ equity scheme is Rs. 10.50 on 3 rd September 2002, if the fund charges 0.25%
as the exit load, what would be the repurchase price for the investor?
1. 7.8750 3. 10.000
2. 13.1250 4. 10.4737
Q.2 An equity fund with weekly average net assets of Rs. 1400 crore may change maximum
ongoing expenses (excluding issue/redemption expenses) to the extent of
1. Rs. 35.00 crore 3. Rs. 27.50 crore
2. Rs. 26.75 crore 4. 19.75 crore
Q.3 If NAV of a scheme is 11 and entry load is 2%, what would be the number of units purchased
by Rs. 100
1. Less than 10 3. More than 10
2. Equal to 10 4. None of the above
Q.4 A close-end equity fund has average weekly net assets of Rs. 200 crores. As per the SEBI
Regulation, the AMC can charge the fund with investment and advisory fees upto:
1. Rs. 2.25 crores 3. Rs. 2.5 crores
2. Rs. 2 crores 4. Rs. 3 crores
Q.5 An open-ended fund was purchased when its NAV was Rs.22. One year later, its NAV was
Rs.24. The annualized percent Nav change is.
1. 5.88% 3. 6.42%
2. 9.09% 4. Insufficient data
Q.6 If NAV of 40 becomes 44. What is % annualized return?
1. 10% 3. 8%
2. 12 % 4. 14%
Q.7 Which of the below is a short-term capital asset?
1. Unit of MF held for a period of not more than one year preceding the date of transfer
2. Unit of MF held for a period of less than one year preceding the date of transfer
3. Unit of MF held for a period of less than three years preceding the date of transfer
4. Unit of MF held for a period of not more than three years preceding the date of transfer
Q.8 10 crore units were allotted in a scheme. 2.25% is the entry load charged and Rs.8 crore is the
initial issue expenses incurred. What maximum can be charged as expenses towards entry
load?
1. Rs. 8 crore 3. Rs. 2.25 crore
2. Rs. 6 crore 4. None of the above.
Q.9 In a no load debt fund of corpus 200 Crores, what could be the maximum investment
management charges?
1. 2 crore 4. 4.25 crore
2. 2.25 crore 5. 5.25 crore
3. 3.25 crore
Q.10 Unit capital falls under which head in balance sheet?
1. Asset 3. Profit and Loss account
2. Liabilities 4. None of the above
Q.11 If NAV of a scheme is Rs.12 and units allotted are 100, what will be the total asset of the
scheme.
1. Less that Rs.1200 3. Exactly Rs. 1200
2. More than Rs. 1200 4. None of the above.
Q.12 A non-traded equity is valued using ……….
1. Net worth per share
2. Valuation using capitalization earnings methods
3. Average of (1) and (2)
4. Average of (1) and (2) further discounted for illiquidity
5. None of these.
Q.13 Which of the following SEBI restrictions applies to a scheme’s investment in unlisted shares ?
1. A closed-end scheme may invest a maximum of 10% of its NAV in unlisted shares
2. An Open-end scheme may invest a maximum of 5% of its NAV in unlisted shares
3. (1) & (2) above
4. None of these
Q.14 As per SEBI, Non-Performing assets (NPA) of a mutual fund can be defined as...
1. An equity which is trading below its par value
2. An equity share which is yet to be listed on the stock exchange
3. A debt security on which either interest or the principle or both amounts are due but not received for
one quarter after the due date
4. None of these
Q.15 An investor purchased units in an approved mutual fund on Juanuary’01 1998, for Rs.4,
00,000.00. He sold the units on December 15, 1999 for Rs.6, 00,000.00. Calculate the capital
gains taxes paid by him without the benefit of indexation (ignore taxation).
1. Rs.20, 000.00 3. Zero
2. Rs.40, 000.00 4. Depends on the investor’s tax bracket
Q.16 An open-end fund with 10000 units outstanding had the following items in its balance sheet:
Investments at market value Rs. 100000/- Other assets Rs. 20000/-
Current Liabilies Rs. 25000/- Calculate the fund’s NAV per unit.
1. Rs. 9.50 3. Rs. 10
2. Rs. 12 4. Rs. 14.50
Q.17 Liabilities in the balance sheet of a mutual fund are
1. In the form of long-term loans 3. Combination of long term and short term
2. Strictly short term in nature 4. Not allowed as per regulations
Q.18 A funds NAV is affected by
1. Purchase & sale of investment securities 3. Units sold or redeemed
2. Valuation of all investment securities held 4. All of the above
Q.19 Which of the following expenses cannot be charged to the scheme
1. Audit fees 3. Winding costs for terminating the scheme
2. Costs related to investor communication 4. Penalties and fines for infraction of laws
Q.20 As per SEBI guidelines, a security is to be treated as untraded when
1. Security is never traded on stock exchange 3. Security is not traded for 60 days
2. Security is not traded for 30 days 4. None of the above
Q,21 NAV is
1. Book value/ no of outstanding units 3. Net asset/ outstanding units
2. Net value / initial allotted units 4. None
Q.22 An investor invested 200 units at Rs. 12 . What will be the value of the asset after 1 year if the
outstanding units at the end is 20000 units?
1. 2400 3. Insufficient Information
2. 1% of value of 20000 units 4. Book value of the asset / 20,000 units
Q.23 10 crore units were allotted. Initial Issue expenses of Rs. 8 cr. Entry load 2.25%, no other
expenses were incurred, there is no change in value of underlying assets, what will be NAV at
time of reopening if the expenses is to be write off within 5 years
1. 10 3. 9.40
2. 9.775 4. 10.225
Q.24 Entry load is used for meeting
1. Distribution Expenses 3. None of the Above
2. Marketing & Promotion 4. both
Q25. STT ( Securities Transaction Tax) is borne by which of the following
1. AMC
2. Trust
3. Investor
4. None of the above
Chapter 7
Q.1 Which of the following is TRUE of an automatic reinvestment (or a growth) plan?
1. The growth plan allows for the automatic reinvestment of all income and capital gains
2. Automatic reinvestment allows for accumulation of additional units of the fund.
3. The major benefit of automatic reinvestment is compounding
4. An investor who subscribes to the growth option under a scheme can later change to a dividend
option
5. All of these
Q.2 A Systematic Investment Plan.
1. Requires the investor to invest a fixed sum periodically
2. Enforces saving in a disciplined and phased manner
3. Provides the benefit of Rupee Cost Averaging
4. All of these
Q.3 A systematic withdrawal plan is ideal for:
1. Investors with growth as the main investment objective
2. Investors who wish to benefit from market fluctuations
3. Investors who prefer a regular income stream
4. Investors who are not sure about themselves
Q.4 Mutual fund in India do not offer
1. Nomination and transfer facilities 4. Providing periodic statements to unit
2. Redemption of units holders regarding their transactions
3. Loans against units
Q.5 NAV of a scheme helps in deciding an investor whether he should go for..........
1. Automatic Reinvestment Plans
2. Systematic Withdrawal Plans 4. All of these
3. Systematic Transfer Plans 5. None of these
Q.5 Which of the following strategies is an example of the combined approach of Rupee Cost and
Value Averaging?
1. When the investor sets a target value for his investments in an Equity fund
2. When the investor invests a fixed sum each month in a Liquid Fund
3. When the investor invests regularly in a Liquid Fund
4. When the investor invests regularly in a Liquid Fund , sets a target for an Equity Fund, then invests
more in Equity Fund if its value declines and books profits when its value exceeds the target value
Q.6 The strategy advisable for an investor to maximize investment return in the long run is:
1. Buy and hold on to investments for a long time
2. Liquidate poorly performing investments from time to time
3. Liquidate good performing investments from time to time
4. Switch from poor performers to good performers
Q.8 While deciding on an asset allocation strategy, the investor must consider ………
1. The stage of his life 3. The purpose of making investment
2. His risk appetite 4. All of these
Q.9 Which of the following is the best investment option for the purpose of getting the maximum
benefits of compounding?
1. 12% interest paid yearly 3. 3% interest paid every quarter
2. 6% interest paid every 6 months 4. 1% interest paid monthly
Q.10 Asset allocation of a portfolio should be re-evaluated every time there is change in the...
(1) Family size and requirement (3) Dramatic change in the market condition
(2) Job of the investor (4) All of these
Chapter 12
Q.1 Which Product category should be the core foundation of a financial plan?
1. Equities 3. Mutual Fund
2. Gold 4. None of these
Q.4 Which of the following does not generally guarantee return or capital?
1. Bank Deposit 3. Units of Mutual fund
2. PPF 4. NSC
Q.5 While choosing between a bank deposit and a debt income fund, the investor must consider
1. Credit rating of bank 3. His investment objective and risk appetite
2. Quality of the mutual fund assets 4. All of these
Chapter 13
Q.6 An investor asks you in what order he should list the following schemes, going from the
scheme with the least risk to the one with the highest risk – 1. Balanced Fund, 2. A Stock Index
Fund, 3. A Liquid Fund, 4. A IT Sector Fund.
1. 1,2,3,4 3. 3,1,2,4
2. 1,3,4,2 4. 2,3,1,4
Chapter 14
Q.1 As per Jacob’s recommendation low risk fund portfolio is likely to have.
1. 50% invested in Government Securities Funds and 50% invested in Money Market funds
2. An equal split between Government Securities Funds, Growth Funds and Index Funds
3. Equal investments in Aggressive Growth Funds, Value Funds, Sector Funds and Debt Fund
4. A mix of Balanced and Growth
Q.2 For which of the following would you consider “ average maturity” as an important factor in
selecting the right one for the investor ?
1. A debt fund 3. A money market or liquid fund
2. A balanced fund 4. Both a and b above
Q.3 A very high proportion of investment in all types of equity funds is advisable for investors
1. In distribution phase 3. In transition phase
2. In accumulation phase 4. Who are wealth preserving affluent
individuals
Q.4 For older investors who want to transfer their wealth
1. No financial planning is required
2. The right investment strategy depends upon who the beneficiaries are
3. The right investment strategy depends upon the state of the stock market
4. All the funds can be invested in aggressive equity funds
Q.5 Which of the following is recommended by Jacob for a Low Risk portfolio ?
1. 50 % Growth and Income fund + 50% Money Market fund
2. 50% Growth funds + 50% index fund
3. 50% Government Securities fund + 50% Money Market fund
4. 50% Sector Funds + 50 % Money Market fund
Chapter 15
Q.4 The detailed version of SEBI circular regarding code of conduct for distributors given by AMFI
is known as:
1. Ethics code 2. AGNI
2. Front running 4. None of the Above
Thank You
And
POINTS to remember
1. Indira Vikas PAtra is preferred because you don’t have to disclose your identity to purchase
that. Now it is becoming popular in urban markets.
2. Debt Funds are exposed to Interest rate risk, Reinvestment Risk, Call risk, Default Risk,
Inflation risk and Liquidity risk.
3. Expense ratio is ratio of Total expenses to Net assets. It is indicators of funds efficiency and
cost effectiveness. Most important in case of debt funds.
4. Fixed Asset Allocation and Flexible Asset Allocation.
5. AGNI – Amfi Guidelines and norms for intermediaries.
6. FIIs can invest in Mutual funds in India after taking approval from FIPB and RBI.