Practice Questions for AMFI Test 1. A close-ended mutual fund has a fixed: a. NAV b. fund size c.

rate of return d. number of distributors 2. The maximum load that a fund can charge is determined by the: a. AM b. !"#$ c. AM%$ d. distribution agents based on demand for the fund &. The amount re'uired to buy 1(( units of a scheme ha)ing an entry load of 1.*+ and NAV of ,s.2( is: a. ,s.2((( b. ,s.2(1* c. ,s.1-.* d. ,s.2(&( /. A gilt fund is a s0ecial ty0e of fund that in)ests: a. in )ery high 'uality e'uity only b. in instruments issued by com0anies 1ith a sound trac2 record c. in short-term securities d. in go)ernment securities only *. 3f the follo1ing fund ty0es4 the highest ris2 is associated 1ith a. #alanced %unds b. 5ilt %unds c. "'uity 5ro1th %unds d. 6ebt %unds 7. The NAV of a mutual fund : a. is al1ays constant b. 2ee0s going u0 at a steady rate c. fluctuates 1ith mar2et 0rice mo)ements d. cannot go do1n at all 8. An o0en-ended mutual fund is one that has : a. an o0tion to in)est in any 2ind of security b. units a)ailable for sale and re0urchase at all times c. an u00er limit on its NAV d. a fixed fund size .. An in)estor in a close-ended mutual fund can get his9her money bac2 by selling his9her units: a. bac2 to the fund b. to a s0ecial trust at NAV c. on a stoc2 exchange 1here the fund is listed d. to the agent through 1hich he9she subscribed to the units of the fund -. The :load: charged to an in)estor in a mutual fund is a. entry fee b. cost of the 0a0er on 1hich the unit certificates are 0rinted c. the fee the agent charges to the in)estor d. the ex0enses incurred by fund managers for mar2eting a mutual fund scheme

1(. A mutual fund is o1ned by a. the 5o)t. of $ndia b. !"#$ c. all its in)estors d. AM%$ 11. ;nits from an o0en-ended mutual fund are bought a. on a stoc2 exchange b. from the fund itself c. from AM%$ d. from a stoc2 bro2er 12. A mutual fund is not a. o1ned <ointly by all in)estors b. a com0any that manages in)estment 0ortfolios of high net1orth indi)iduals c. a 0ool of funds used to 0urchase securities on behalf of in)estors d. a collecti)e in)estment )ehicle 1&. :=oad: cannot be reco)ered a. at the time of the in)estor>s entry into the fund b. as a fixed amount each year c. at the time the in)estor exits the fund d. from the fund>s distribution agent 1/. The most im0ortant ad)antage of a money mar2et mutual fund is a. 'uic2 ca0ital a00reciation b. high regular income c. safety of 0rinci0al d. no loads 1*. !ome close-ended funds are 'uoted at a discount to their NAV because a. of high ex0ense ratios b. in)estors do not ex0ect the current NAV to be sustained in future c. the re0urchase 0rice fixed by the fund in lo1er than the NAV d. of the inherent ris2 in)ol)ed in in)esting in such ty0e of funds 17. The NAV of each scheme should be u0dated on AM%$>s 1ebsite a. e)ery 'uarter b. e)ery month c. e)ery hour d. e)ery day 18. 6ebt funds target a. lo1 ris2 and stable income b. 0rotection of 0rinci0al c. high gro1th 1ith ris2 d. long term ca0ital a00reciation 1.. $n 1hich of the follo1ing do debt funds not in)est a. go)ernment debt instruments b. cor0orate 0a0er c. financial institutions> bonds d. e'uity of 0ri)ate com0anies 1-. ?hich of the follo1ing ris2s do not affect a debt fund

a. b. c. d.

default by issuer on 0ayment of interest or 0rinci0al 0rice fluctuations of the debt securities share price movements interest )olatility

2(. Assured return or guaranteed monthly income 0lans are essentially a. @ybrid funds b. 5ro1th %unds c. 6ebt9$ncome funds d. !ector funds 21. A %ixed Term Alan !eries is a. an o0en-ended fund b. a close-ended fund c. a fixed term ban2 de0osit d. a fixed term cor0orate bond 22. NAVs of e'uity funds are not affected by a. !toc2 mar2et mo)ements b. ")ents affecting the industry9sector in 1hich the fund has in)ested @a00enings in the com0anies in 1hich the fund has in)ested c. real estate 0rices 2&. The greatest 0otential for gro1th in ca0ital is offered by a. debt funds b. gilt funds c. gro1th funds d. balanced funds 2/. A !ystematic ?ithdra1al Alan4 allo1s in)estors to get bac2 the 0rinci0al amounts in)ested in addition to the income on in)estment a. True b. %alse 2*. ?hich of the follo1ing is untrue of an automatic rein)estment 0lanB a. The 0lan allo1s for automatic rein)estment of all income and ca0ital gains b. Automatic rein)estment allo1s for accumulation of additional units of the fund c. The ma<or benefit of automatic rein)estment is com0ounding d. The benefit of automatic rein)estment is often lost on account of the hea)y load charge on the rein)estment 27. onstraints im0osed by most funds on chec2 1riting are: a. Account balance should not fall belo1 the minimum ca0ital re'uired b. hec2s issued must be for at least the minimum amount s0ecified c. Number of chec2s 0er month must not exceed a s0ecified number d. #oth a C b abo)e 28. The 0erformance of a fund is largely measured by the success of a. the mar2eting function b. the o0erations function c. the 0ortfolio mar2et function d. none of the abo)e 2.. 5enerally in)est in a. unlisted b. mar2et-traded

c. d.

thinly traded 0ri)ately 0laced

2-. ?hich of the follo1ing is not an e'uity instrument a. 0reference shares b. e'uity 1arrants c. ordinary debentures d. con)ertible debentures &(. The dra1bac2 of an ordinary share is A. 0ossibility of ca0ital a00reciation #. o1nershi0 0ri)ilege of the com0any . guaranteed di)idend income 6. no guaranteed income or security &1. An o1ner of 0reference shares is gi)en 1hich of the follo1ing rights a. )oting rights b. fixed di)idend income from 0ost-tax 0rofits c. )oting rights and unlimited di)idend income d. no guaranteed rights &2. Mar2et ca0italization of a com0any is calculated by multi0lying the number of outstanding shares by a. ,.1( b. %ace )alue of each share c. urrent mar2et )alue of each share d. di)idend yield &&. The Arice9"arnings DA9"E ,atio is an im0ortant measure of a com0any>s antici0ated 0erformance. $t is calculated using: a. Mar2et 0rice and di)idend b. Mar2et 0rice and earning 0er share c. Mar2et ca0italisation and di)idend d. Mar2et 0rice and face )alue &/. A com0any 1hose earnings are strongly related to the state of economy is 2no1n as a. "conomy stoc2s b. yclical !toc2s c. Value !toc2s d. 5ro1th stoc2s &*. A 5ro1th stoc2 refers to shares of a com0any 1hose earnings are 0ro<ected to gro1 at the normal mar2et rates a. True b. %alse &7. ?hich of the follo1ing is generally true for a gro1th stoc2 a. steady ca0ita a00reciation and steady di)idends yields b. high ca0ital a00reciation and high di)idend yields c. high ca0ital a00reciation but lo1 di)idend yields d. steady ca0ital a00reciation but high di)idend yields &8. !hares of com0anies 1ith large ca0ital mar2et ca0italisation a. ha)e greater gro1th 0otential b. are more li'uid c. are not a)ailable d. none of the abo)e

&.. 6i)idend yield for a stoc2 is a. di)idend 0er share b. di)idend 0er face )alue c. di)idend 0er share to current mar2et 0rice d. none of the abo)e &-. Value stoc2s a. ha)e high current di)idend yield b. yield high gro1th in earnings c. are currently under )alued d. none of the abo)e /(. A better 0erformance than the return on index is gi)en by a. 0assi)e fund manager b. an acti)e fund manager c. all fund managers d. non fund manager /1. A change in 2ey 0ersonnel es0ecially the fund manager of an AM does not necessitate a re)ision of the offer document a. True b. %alse /2. $f fresh litigation cases or ad<udication 0roceedings are referred by !"#$ against the fund s0onsors or a com0any associated 1ith the s0onsors4 then the offer document needs to be re)ised a. True b. %alse /&. The offer document need not be re)ised if the management or the controlling interest in the AM change a. True b. %alse //. An AM cannot ex0lain ad)erse )ariations bet1een ex0ense estimates for the scheme on offer and actual ex0enses for 0ast schemes in a. financial ne1s0a0ers b. business channels on TV c. the offer document d. AM%$ ne1sletter /*. $nformation on estimated ex0enses to be incurred by a scheme is not found in the offer document4 but in brochures of the fund a. True b. %alse /7. ?hen com0aring a fund>s 0erformance 1ith that of its 0eer grou04 the follo1ing cannot be com0ared a. T1o debt funds 1ith * year maturities b. A broad-based e'uity fund 1ith an $T !ector %und c. A bond fund 1ith a bond d. A go)ernment securities fund 1ith a go)ernment security /8. An AM must ex0lain ad)erse )ariation bet1een ex0ense estimates for the scheme on offer and actual a. ex0enses for 0ast schemes in b. financial ne1s0a0ers c. business channels on TV d. offer document

e. AM%$ Ne1sletter /.. $nformation on estimated ex0enses to be incurred by a scheme is not found in the offer document4 but in brochures of the fund a. True b. %alse /-. The offer document and 2ey information memorandum contain financial information for a. all schemes of all mutual funds in the ca0ital mar2et b. all schemes launched by the 0articular fund during the last & fiscal years c. none of the schemes d. com0anies in 1hich in)estment is 0ro0osed *(. The functions and res0onsibilities of the s0onsor4 AM 4 trustees and custodian of the mutual fund are listed in a. offer document only b. 2ey information memorandum c. both offer document and 2ey information memorandum d. none of the abo)e *1. $nformation about trusteeshi0 fees is included in the offer document but not in the 2ey information memorandum e. True f. %alse *2. The follo1ing information about the constitution of the mutual fund is found in both the offer document and 2ey information memorandum e. acti)ities of the s0onsor f. summary of trust deed 0ro)isions g. name and addresses of the board of trustees h. all of the abo)e *&. The in)estment ob<ecti)es of the fund an in)estor selects for in)estment e. are of no rele)ance f. should be the same as his o1n in)estment ob<ecti)es g. change 1ith mar2et mo)ements h. change 1ith change in the AM >s 2ey 0ersonnel */. The in)estment 0olicies listed out in the offer document of a fund do not include e. the ty0e of securities in 1hich the scheme 1ill in)est 0rinci0ally f. asset allocation 0attern g. 0olicy of di)ersification h. the s0ecific securities in 1hich the fund 1ill in)est **. $f a scheme>s name im0lies that it 1ill in)est 0rimarily in a 0articular ty0e of security or in certain industry9sector4 then it should in)est atleast the follo1ing 0ercentage of its total assets in the indicated ty0e of security9industry9sector e. 1((+ f. .(+ g. 7*+ h. /(+ *7. %or assured return schemes4 information about the guarantor>s net 1orth 1hich <ustifies the guarantor>s ability to meet any shortfalls in the returns assured under the scheme can be found in e. the offer document f. the 2ey information memorandum g. both DaE and DbE h. none of the abo)e *8. The names and bac2ground of 2ey 0ersonnel of the AM e. need not be disclosed to in)estors f. are of no rele)ance as they may change

g. h.

are disclosed in the offer document are declared in ne1s0a0er ad)ertisements

*.. The minimum amount to be raised4 and the maximum target amount e. are not 2no1n before the offer is concluded f. can be decided based on in)estor res0onse to the offer g. are defined as 0er !"#$ ,egulations before the offer is made h. need not be disclosed in the offer document *-. The circumstances for refund of in)estment in the initial offer and 0eriod 1ithin 1hich refund must be carried out are not s0ecified in the offer document4 but only on the a00lication e. True f. %alse 7(. 3ffer related information re'uired to be listed in the offer document and 2ey information memorandum includes e. dates of o0ening4 closing4 earliest closing4 allotment and des0atch of certificates f. 0rocedure for transfer and transmission of units g. both the abo)e h. neither of the abo)e 71. $n the offer document4 funds are re'uired to ma2e disclosures summarising associate transactions and their im0act on the 0erformance of the scheme for the last e. one fiscal year f. 2 fiscal years g. & fiscal years h. * fiscal years 72. The circumstances under 1hich a scheme shall be 1ound u0 are to be described in the offer document at the time of the initial launch of the scheme itself e. True f. %alse 7&. The follo1ing do not form a 0art of the in)estment 0rocedure described in an offer document e. )arious 0lans under the scheme De.g. di)idend rein)estment 0lantE f. minimum initial Dand subse'uentE in)estment g. details of 1ho can in)est h. details of other com0eting mutual funds 7/. A scheme>s 0olicy on di)idends and distribution e. is decided by the fund manager as 0er is mar2et outloo2 f. can be changed to suit the re'uirements of the AM g. need not be consistent h. should be disclosed at the time of initial launch 7*. !"#$ restricts mutual fund in)estments in com0anies forming 0art of the same grou0 as the AM . This is: e. not true f. in the interest of in)estor 0rotection g. a00lied only to some mutual funds4 not all h. not fa)ourable to in)estors at all 77. A disclosure should be made in the offer document if an AM has in)ested more than the follo1ing 0ercentage of its net assets in grou0 com0anies e. *(+ f. /(+ g. 2*+ h. 1(+

78. Mutual funds are allo1ed to borro1 e. freely to meet their re'uirements f. for in)estment 0ur0oses g. only to meet redem0tion demands h. not allo1ed at all 7.. As a 0art of borro1ing 0olicy4 the follo1ing need not be disclosed in an offer document e. 0ur0ose and circumstances of borro1ing f. regulatory limits on borro1ing g. 0otential ris2 to AM and unit-holders h. names of lenders 7-. Valuation norms for non-traded securities should be disclosed e. at the end of e)ery financial year f. e)ery 'uarter g. in the offer document at the time of launch of the scheme h. should not be disclosed4 being confidential information 8(. Arocedure for redem0tion or re0urchase need not e. be described in the offer document f. include ho1 redem0tion or re0urchase 0rice of units 1ould be determined g. include names of centres 1here redem0tion can be effected h. indicate the redem0tion or re0urchase 0rice as at the end of the current fiscal year 81. The fund need not describe its accounting 0olicies in the offer document as these are of no use to an in)estor e. True f. %alse 82. The accounting 0olicies of a fund should be in accordance 1ith d. 5AAA e. !"#$ regulations f. $ A$ 5uidelines g. American 5AAA 8&. Tax treatment of in)estments does not e. form a section in the offer document f. describe the tax elements a00licable to in)estors 1ho in)est in the fund g. form a section in the 2ey information memorandum h. offer tax ad)ice to in)estors 8/. 6ocuments a)ailable to in)estors for ins0ection do not include c. Memorandum and Articles of Association of AM d. consent of auditors and legal ad)isors e. in)estment management re0orts f. re0orts based on 1hich actual in)estments are made 8*. $n)estors> rights under a scheme are e. uniform for all schemes of all funds f. not defined g. listed in the offer document h. a)ailable 1ith stoc2 exchanges 87. The offer document for a scheme should describe ho1 the NAV of the scheme is to be com0uted e. True f. %alse

88. An offer document contains an AM >s in)estor grie)ance>s history for the 0ast e. one fiscal year f. 2 fiscal years g. & fiscal years h. six months 8.. Any 0ending cases or 0enalties le)ied on the s0onsors or AM should be disclosed in the offer document e. True f. %alse 8-. ?ho among the follo1ing are not eligible to in)est in M% e. $ndian om0anies f. #an2s g. Non #an2ing %inance om0anies h. %oreign itizens .(. N,$s are eligible to in)est in Mutual %unds a. True b. %alse .1. The most im0ortant lin2 bet1een Mutual %und and $n)estors is e. 5o)ernment f. !"#$ g. %und distributors h. AM%$ .2. Are 3)erseas or0orate #odies allo1ed to in)est in Mutual %unds e. No f. Fes g. if Ministry of %inance a00ro)es h. if AM%$ a00ro)es .&. ?ho among the follo1ing are not $nstitutional $n)estors e. #an2s f. ,esident $ndi)iduals g. Aro)ident %unds h. Non #an2ing %inance om0anies ./. $t is com0ulsory to use fund agents9intermediaries for in)esting M%s e. True f. %alse .*. 5enerally4 1hich category of in)estors need ad)ice for $n)esting in Mutual %unds c. Non #an2ing %inance om0anies d. $nsurance om0anies e. %oreign $nstitutional $n)estors f. $ndi)iduals .7. Most eligible in)estors of Mutual %unds can broadly be grou0ed into either indi)idual or institutional in)estors e. True f. %alse .8. ommission rates or loads a00licable to big in)estors and small in)estors are e. same f. different

g. h.

not charges to either none of the abo)e

... ?hat document Mutual %und distributors need to refer for finding out eligible category of in)estors in a 0articular Mutual %und !chemeB e. !"#$ ,egulations Manual f. AM%$ boo2let g. 3ffer document h. ,#$ 5uidelines .-. As 0er AM%$ figures4 ho1 many agents a00roximately4 are there in $ndia selling Mutual %unds e. *(((( f. 1((((( g. 8*((( h. 1*(((( -(. ?hich Mutual %und has ma<ority of the agents selling its Mutual %und units in $ndia e. =$ Mutual %und f. ;T$ Mutual %und g. !#$ Mutual %und h. None of the abo)e -1. Mutual %und agents9distributors are not allo1ed to sell %inancial Aroducts other than Mutual %unds c. True d. %alse -2. Are Mutual %und agents9distributors in $ndia re'uired to 0ass any examination to 'ualify to sell Mutual %und ;nits c. Fes4 a test conducted by AM%$ d. Fes4 a test conducted by !"#$ e. No f. a Aost 5raduate uni)ersity course -&. @o1 many ma<or distributor om0anies are there in $ndia selling Mutual %und units c. a00roximately d. a00roximately 11 e. a00roximately 1( f. a00roximately 2* -/. The offer document is not a legal document e. True f. %alse -*. A co0y of all changes in the offer document has to be filed 1ith !"#$ c. True d. %alse -7. The legal res0onsibility for the accuracy of the statements made in the offer document lies 1ith e. !"#$ f. the AM g. AM%$ h. the om0any =a1 #oard -8. Though the offer document of a scheme is 0re0ared as 0er !"#$ ,egulations and is filed 1ith !"#$4 !"#$ does not certify the accuracy or ade'uacy of the document f. True

g.

%alse

-.. The follo1ing need not be co)ered in a Gey $nformation Memorandum c. ,is2 %actors d. 30ening4 losing and earliest losing 6ate of the offer e. 6isclaimer lause f. %unctions and res0onsibilities of the s0onsor4 trustees4 AM and ustodian res0onsibilities --. The front 0age of an offer document need not co)er e. o0ening4 closing and earliest closing date of the offer f. disclaimer clause g. legal and regulator com0liance h. 0rice of units 1((. A :glossary: of 6efined Terms must be included in the offer document e. True f. %alse 1(1. !tandard ris2 factors are not g. mar2et dri)en h. common to all schemes i. of rele)ance to no)ice in)estors <. ne1 to a regular in)estor 1(2. The ris2 of a scheme>s NAV mo)ing u0 or do1n on the basis of ca0ital mar2et mo)ements is a standard ris2 factor i. True <. %alse 1(&. Aast 0erformance of a s0onsor9AM mutual fund is not indicati)e of the future 0erformance of the scheme. This is i. not true <. a standard ris2 factor for all schemes 2. a scheme-s0ecific ris2 factor l. a00licable only to gilt funds 1(/. ,is2 arising from a scheme>s in)estment ob<ecti)e9strategy and 0ro0osed asset allocation is i. not 0resent <. common to all schemes 2. s0ecific to that scheme l. not a00licable to debt funds 1(*. $n an assured returns scheme4 if assurance is only for a limited 0eriod4 it must be stated in the offer document that there is no guarantee for sustaining the assured return for the remaining duration of the scheme i. True <. %alse 1(7. $f the AM is managing a fund for the first time4 this information can be found in i. ne1s0a0ers <. !"#$ 2. AM%$ Ne1sletter l. 3ffer document 1(8. A com0liance officer i. stands guarantee to the information contained in the offer document

<. 2. l.

belongs to !"#$ cannot certify that the AM >s legal and 0rocedural obligations are fulfilled cannot be a00ointed by the AM

1(.. The due diligence certificate that must be submitted to !"#$ along 1ith the draft offer document cannot be signed by i. the managing director of the AM <. an executi)e director of the AM 2. the com0liance officer l. $n)estor relations officer 1(-. A due diligence certificate does not certify that g. the draft offer document for1arded to !"#$ is in accordance 1ith !"#$ regulations h. all legal re'uirements connected 1ith launching of the scheme ha)e been com0lied 1ith i. disclosures made in the offer document are true4 fair and ade'uate <. the AM guarantees a good 0erformance 11(. $n de)elo0ed countries4 an im0ortant Mutual %und mar2eting channel is through i. $nsurance om0anies <. #an2s 2. Non-#an2ing %inance om0anies l. ,etail 6istributors 111. "merging or ne1 channel for distributors9mar2eting of Mutual %und in $ndia is i. $nsurance om0anies <. #an2s 2. Hualified Mutual %und agents l. 6irect !ales agents of res0ecti)e mutual funds 112. Mutual %unds often use their o1n em0loyees to mobilise funds from g. retail in)estors h. @igh Net1orth indi)iduals9institutional in)estors i. all in)estors <. foreign in)estors 11&. ,etail distribution channels are a critical element in the distribution of mutual funds in $ndia i. True <. %alse 11/. :!ales Aractices: co)er the follo1ing areas i. desirable mar2eting 0ractices <. agents> res0onsibilities to the in)estor 2. ethical code of conduct l. all of the abo)e 11*. The follo1ing are not termed as :sales 0ractices: i. agents commission <. before-and after-sales ser)ice to in)estors 2. ad)ertising of schemes l. stoc2 bro2ing 117. !ales 0ractices are ne)er mandated by regulators4 but arise from con)ention only i. True <. %alse 118. Agents are com0ensated by mutual funds

i. <. 2. l.

through salaries through commissions through an annual fee not in cash but in 2ind

11.. $n $ndia the minimum or maximum commissions 0ayable to distributors are not 0rescribed by la14 but are decided using the fund>s o1n discretion i. True <. %alse 11-. =o1est commissions are 0aid on i. "'uity funds <. tax benefit schemes of mutual funds 2. debt funds l. long-term in)estments in mutual funds 12(. "xcess distribution ex0enses are to be borne by the i. AM <. unit holders 2. !"#$ l. AM%$ 121. To co)er fund distribution ex0enses4 o0en ended funds g. charge a fee from agents h. charge entry and exit loads from in)estors i. create a reser)e <. sell in)estments 122. Trail commission means 0aying h. no commission at all i. the entire commission u0-front <. 0art of the commission u0-front and the balance in 0hases 2. the entire commission after fi)e years 12&. !ub-bro2ers ser)e as agents of the 0rinci0al bro2er and a mutual fund is not ans1erable for their acti)ities i. True <. %alse 12/. $n $ndia4 Mutual fund agents> rate and ser)ices are at 0resent defined by g. !"#$ rules h. stoc2 exchange bye-la1s i. AM%$ rules <. con)ention 12*. Along 1ith the a00lication4 it is mandatory to distribute i. in)estment rebate <. offer document 2. 2ey information memorandum l. none of the abo)e 127. To sell funds effecti)ely4 an agent need not g. be fully a1are of the im0ortant characteristics of the scheme h. 2no1 his9her client>s ris2 0rofile i. gi)e after sales ser)ice <. offer large in)estment rebates

128. %or in)estors to correctly com0are 0erformance of different funds !"#$>s ad)ertising codes include i. uniform com0utation of yields <. uniform 0resentations of di)idends 2. identical time 0eriods l. all of the abo)e 12.. !"#$>s ad)ertising code mandate that all 0erformance calculations in a fund>s ad)ertisement should be based g. NAV h. the N!" %ifty $ndex i. the #!" !ensex <. none of the abo)e 12-. An agent>s a00ointment by a fund i. re'uires !"#$>s a00ro)al <. is a lengthy and cumbersome 0rocess 2. is mandatorily 0receded by an AM%$ test l. does not re'uire any a00ro)al 1&(. An in)estor does not ha)e recourse to his agent in case of errors4 0roblems or the 'uality of the in)estment c. True d. %alse 1&1. An agent can offer and sell a funds>s units at i. any 0rice he chooses <. a 0rice determined by com0etition among agents 2. a 0rice based on demand for that fund>s units l. the 0ublic offering 0rice currently in effect 1&2. All buy orders through an agent do not become )alid till the fund acce0ts and confirms the orders i. True <. %alse 1&&. ?hen an agent 0urchases4 offers or sells units4 ensuring com0liance 1ith a00licable regulations is the res0onsibility of i. the fund <. the agent 2. AM%$ l. !"#$ 1&/. The terms of appointment of a bro2er by a fund are g. laid do1n by !"#$ h. laid do1n by AM%$ i. not uniform to all funds <. none of the abo)e 1&*. The code of ethics for mutual funds 0ublished by AM%$ g. is mandatory h. is in the form of recommended 0ractices i. is unfa)ourable to in)estors <. does not co)er distribution and selling 0ractices 1&7. The AM%$ code of ethics does not co)er the follo1ing 0rescri0tions g. Ade'uate disclosures should be made to the in)estors h. %unds should be managed in accordance 1ith stated in)estment ob<ecti)es i. conflict of interest should be a)oided in dealings 1ith directors or em0loyees

<.

each in)estment decision should be a00ro)ed by in)estors

1&8. 6istribution and sales 0ractices are only 0artly regulated by !"#$ at 0resent i. True <. %alse 1&.. ?hich of the follo1ing distribution channels is 0referred by 0ri)ate mutual funds i. $ndi)idual Agents <. !mall 6istribution com0anies 2. established distribution com0anies l. the $nternet 1&-. ?hich of the follo1ing sales 0ractices is 0rescribed by regulation i. AM%$ ode of "thics <. !"#$ Ad)ertising 2. AM%$>s ode for Agents l. None of the abo)e 1/(. $n a mutual fund in)estors> subscri0tions are accounted for as i. liabilities <. de0osits 2. unit ca0ital l. none of the abo)e 1/1. $n)estments made by a mutual fund on behalf of in)estors are accounted as e. assets f. liabilities g. ca0ital h. none of the abo)e 1/2. =iabilities in the balance sheet of a mutual fund are g. in the form of long-term loans h. strictly short term in nature i. combination of long term and short term <. not allo1ed as 0er regulations 1/&. Net Asset Value DNAVE of a mutual fund scheme is defined as the schemes g. assets minus liabilities h. assets 0er unit i. assets minus liabilities 0er unit <. none of the abo)e 1//. The day on 1hich NAV is calculated by a fund is 2no1n as g. com0utation date h. )aluation date i. record date <. boo2 closure date 1/*. A funds NAV is affected by e. Aurchase and sale of in)estment securities f. )aluation of all in)estment securities held g. units sold or redeemed h. all of the abo)e 1/7. ?hen com0uting NAV of fund !"#$ re'uires accrual of ma<or ex0enses to be accounted i. 'uarterly

<. 2. l.

annually on a day to day basis 1hen actually 0aid

1/8. $f a fund calculates NAV daily4 it 1ill include all the transaction concluded u0 to h. last 1ee2 i. last t1o days <. 0re)ious day 2. today 1/.. %or a o0en-ended fund4the re0urchase 0rice should not be lo1er than g. NAV h. -*+ of NAV i. -&+ of NAV <. -8+ of NAV 1/-. %or a close-ended fund4 the re0urchase 0rice should not be lo1er than i. NAV <. -*+ of NAV 2. -&+ of NAV l. -8+ of NAV 1*(. %or a scheme that has a load4 the AM can change an in)estment management fee not exceeding g. 1.*(+ h. 2.((+ i. 1.2*+ <. (.*(+ 1*1. $nitial ex0enses of launching schemes should not exceed 2. 1*+ of amount recei)ed l. 1(+ of amount raised m. 7+ of amount raised n. *+ of the amount raised 1*2. ?hich of the follo1ing ex0enses cannot be charged to the scheme 2. Audit fees l. costs related to in)estor communication m. 1inding costs for terminating the scheme n. 0enalties and fines for infraction of la1s 1*&. ?hich of the follo1ing are not true for "'uity =in2ed !a)ings !chemesB m. $n)estors can claim an income tax rebate n. There is a loc2-in 0eriod before in)estment can be 1ithdra1n o. There are not s0ecific restrictions on in)estment ob<ecti)es for the fund managers 0. These funds cannot in)est in e'uity 1*/. ?hich of the follo1ing is not true for $ndex %unds m. These funds in)ests in the shares that constitute a s0ecific index n. The in)estment in shares is in the same 0ro0ortion as in the index o. These funds ta2e only the o)erall mar2et ris2 0. These funds are not di)ersified 1**. The structure 1hich is re'uired to be follo1ed by mutual funds in $ndia is laid do1n by 2. %inancial Ministry l. !ecurities C "xchange #oard of $ndia D!"#$E m. %und !0onsor n. Association of Mutual %unds of $ndia DAM%$E

1*7. The #oard of Trustees of a mutual fund: m. act as a 0rotector of in)estors> interests n. directly manage the 0ortfolio of securities o. do not ha)e the right to dismiss the AM 0. cannot su0er)ise and direct the 1or2ing of the AM 1*8. The AM of a mutual fund cannot m. underta2e ad)isory ser)ices or financial consulting n. cannot in)est the funds in go)ernment 0a0er o. act as a trustee of more than one mutual fund 0. cannot in)est the funds in securities 1*.. The trust that manages a mutual fund is a00ointed by m. The %inance Ministry n. ,.#.$ o. !"#$ 0. The s0onsor of that mutual fund 1*-. The custodian of a mutual fund: 2. is a00ointed for safe2ee0ing of securities l. need not be an entity inde0endent of the s0onsors m. not re'uired to be registered 1ith !"#$ n. does not gi)e or recei)e deli)eries of 0hysical securities 17(. Transfer Agents of a mutual fund are not res0onsible for m. issuing and redeeming units of the mutual fund n. u0dating in)estor records o. 0re0aring transfer documents 0. in)esting the funds in securities mar2ets 171. 6istributors or agents m. can distribute se)eral mutual funds simultaneously n. cannot a00oint sub-agents or sub-bro2ers o. should be only indi)iduals not com0anies or ban2s 0. should not be an em0loyee or associate of the AM 172. A transfer in the management of a close-ended scheme does not re'uire the consent of 2. unit holders 1ith 8*+ )oting rights l. !"#$ m. Trustees n. AM 17&. The fund s0onsor has to contribute 2. nothing to the AM l. the total net1orth of the AM m. atleast /(+ of the AM >s net1orth n. exactly *(+ 17/. The s0onsor of a mutual fund may be com0ared to m. a director in a om0any n. the hief "xecuti)e of a om0any o. Aromoter of a om0any 0. an e'uity shareholder in a om0any 17*. $ssuing and redeeming units of a mutual fund is the role

m. n. o. 0.

the custodian the transfer agent the trustees the ban2ers

177. The fund s0onsors should ha)e a sound financial trac2 record of 2. 8 years l. 12 months m. * years n. & years 178. The net1orth of an asset management com0any should be greater than m. ,s.1(( rores n. can be decided by the !0onsor o. should be atleast ,s. 1( rores at all times 0. should be greater than ,s.1( rores 17.. The AM and directors are ans1erable to 2. !toc2 "xchanges l. The #oard of Trustees m. Agents and distributors n. !toc2 #ro2ers 17-. The role of an AM is to act as 1. 0romoters 2. in)estment managers &. distribution agents /. regulators 18(. A change in the follo1ing 2ey 0eo0le does not materially im0act the 0erformance of the fund m. %und s0onsors n. Trustees of the fund o. %und Manager 0. Members of the AM%$ ommittee 181. To transfer the management of a scheme from one AM to another4 the consent of the follo1ing is re'uired 2. !"#$ l. ;nit holders m. both !"#$ and unit holders n. none of the abo)e 182. As 0er !"#$>s 0rinci0les4 the AM and the #oard of Trustees of a fund should belong to the same s0onsors l. True m. %alse 18&. After ;T$4 the first mutual funds 1ere started by 2. 0ri)ate sector ban2s l. 0ublic sector ban2s m. financial institutions n. non-ban2ing finance com0anies 18/. The highest authority among the follo1ing is the 2. !"#$ l. om0any =a1 #oard m. ,#$ n. Ministry of %inance

18*. The entity that !"#$ does not regulate is m. share registrars n. mutual funds o. stoc2 exchanges 0. non-ban2ing finance com0anies 187. The accounts and all other records of an AM are filed 1ith 2. AM%$ l. ,egistrar of om0anies m. Agents> Association n. ;T$ 188. A close-ended scheme of a mutual fund is not go)erned by m. "xchange ,ules of the stoc2 exchange 1here it is listed n. =isting Agreement bet1een the fund and the stoc2 exchange o. guidelines issued by the Ministry of ommerce 0. om0anies Act 0ro)isions relating to transactions in securities 18.. The entry of mutual funds in $ndia 1as initiated by mutual funds set u0 by 2. Aublic !ector #an2s l. Ari)ate !ector mutual funds m. ;nit Trust of $ndia n. mutual funds set u0 by insurance com0anies 18-. %or a close-ended scheme to change its fundamental attributes4 it must obtain the consent of m. *(+ of unit holders n. *(+ of trustees o. 8*+ of unit holders 0. none of the abo)e 1.(. The largest cor0us of in)estable funds in $ndia is 1ith e. #an2-o1ned mutual funds f. Ari)ate !ector mutual funds g. ;T$ h. $nsurance om0anies 1.1. The #oard of Trustees of the ;T$ does not ha)e nominees from m. ,#$ n. =$ o. $6#$ 0. The #ombay !toc2 "xchange D#!"E 1.2. ;T$ annot 0ro)ide 2. cor0orate finance l. engage in real estate and 0ro0erty de)elo0ment business m. 0ro)ide merchant ban2ing ser)ices n. in)est in securities 1.&. The : a0ital: of a scheme does not include m. unit ca0ital n. reser)es o. borro1ing 0. net1orth of the AM 1./. ?hich of the follo1ing are !elf ,egulatory 3rganisations

2. l. m. n.

#ombay !toc2 "xchange !"#$ AM%$ ,#$

1.*. A !elf ,egulatory 3rganisation can regulate 2. all entities in the mar2et l. only its o1n members in a limited 1ay m. its o1n members 1ith total <urisdiction n. no entity at all 1.7. The amount of authority en<oyed by a 1. self-regulatory organisation is defined by 2. the a0ex regulatory authority &. com0any la1 board /. its o1n members *. ,#$ 1.8. The role of AM%$ in the mutual funds industry is not to 2. 0romote the interests of the unit holders l. set a ode of "thics m. regulate mutual funds n. increase 0ublic a1areness of mutual funds in the country 1... The rights of in)estors in a mutual fund scheme are laid do1n in m. the 3ffer 6ocument of that scheme n. Huarterly ,e0orts o. Annual ,e0orts 0. mar2eting brochures 1.-. ;nit holders of a mutual fund scheme do not ha)e a right to m. 0ro0ortionate o1nershi0 of the scheme>s assets n. di)idend declared for that scheme o. di)idend declared for other schemes of the mutual funds 0. income declared under that scheme 1-(. After di)idend declaration4 unit-holders are entitled to recei)e di)idend 1ithin m. one 1ee2 n. one month o. /2 days 0. six 1ee2s 1-1. ;nit holders> right to information does not include i. obtaining from the trustees any information ha)ing an ad)erse effect on their in)estments <. ins0ecting ma<or documents of a fund 2. recei)ing of a co0y of the annual financial statements of that fund l. a00ro)ing in)estment decisions of the fund 1-2. !hortfalls in the case of assured returns schemes are met 2. by s0onsors of such schemes l. only if the offer document s0ecifically 0ro)ided such a guarantee by a named s0onsor m. the 5o)ernment of $ndia n. AM%$ 1-&. ;nit-holders aggrie)ed by a %und or AM can get redressed from 2. onsumer ourts

l. !"#$ m. AM%$ n. ,#$ 1-/. $f the 6irectors of an AM commit fraud4 ;nit-holders in)estments> cannot be 0rotected by the 6e0artment of om0any Affairs and the om0any =a1 #oard 2. True l. %alse 1-*. The res0onsibilities of a unit-holder do not include: i. Monitor his in)estments carefully <. being a1are of information that affects his in)estment in a ma<or 1ay 2. carefully studying the offer document l. ta2ing decisions about 1here the fund managers should in)est 1-7. ;T$s scheme ;!-7/ falls under the 0ur)ie1 of !"#$ m. True n. %alse 1-8. ;T$ 1as set u0 by l. !"#$ m. AM%$ n. A s0ecial act o. ,#$ 1-.. #an2 o1ned Mutual %unds are su0er)ised by 2. !"#$ l. ,#$ m. <ointly by !"#$ C ,#$ n. AM%$ 1--. $n)estor does not ha)e the right to recei)e any interest from an AM if his redem0tion 0roceeds are not des0atched 1ithin 1( 1or2ing days m. True n. %alse 2((. $f an in)estor failed to claim his redem0tion 0roceeds 1ithin & years4 he can claim the 0roceeds at 2. Aar l. Are)ailing NAV m. the on the date he has a00lied for redem0tion n. 1*+ belo1 the 0re)ailing NAV 2(1. After closure of the initial offer an o0en ended scheme4 on going sales and re0urchases must start 1ithin o. 3ne 1ee2 0. &( days '. /* days r. 1.( days 2(2. %or scheme to be able to change its fundamental attributes4 it must obtain the consent of o. *(+ of the unit holders 0. *(+ of the trustees '. 8*+ of the unit holders r. none of the abo)e 2(&. The 0ros0ectus or 3ffer 6ocument containing the details of ne1 scheme is first registered 1ith the '. AM%$ r. !"#$

s. t.

#ombay !toc2 "xchange Ministry of %inance

2(/. The offer document issued by mutual funds does not ser)e the 0ur0ose of '. announcing the scheme r. gi)ing detailed information about the scheme s. in)iting the the in)estors t. gi)ing the fund manager>s in)estment outloo2 for the next 'uarter 2(*. The 0ros0ectus of a close-ended fund is issued o. e)ery year 0. issue only once at the time of '. e)ery 'uarter r. e)ery six months 2(7. %undamental attributes of scheme '. do not include the ob<ecti)e of the scheme r. can be changed 1ithout the in)estor>s a00ro)al or 2no1ledge s. include the terms of the scheme t. are not necessary for deciding 1hether to in)est in the scheme or not 2(8. The offer document '. contains the terms of issue r. gi)es no information rele)ant for ma2ing an in)estment decision s. is not the o0erating document describing the scheme t. cannot be called a reference document 2(.. !"#$ does not re'uire the follo1ing to be included in the offer document issued by a mutual fund '. details of the !0onsor and the AM r. 6escri0tion of the !cheme C in)estment ob<ecti)e9strategy s. $n)estors> ,ights and !er)ices t. Aerformance of other mutual funds 2(-. >Gey $nformation Memorandum> is o. an abridged )ersion of the offer document 0. the Memorandum C Articles of Association of the AM '. a sheet containing historical NAVs of other fund schemes r. Annual ,e0ort of the AM 21(. The offer document for a scheme remains )alid e)en if '. the AM is reconstituted r. entry or exit load are changed s. the scheme>s NAV changes t. ne1 0lans are added to existing schemes 211. The offer document has to be fully re)ised and u0dated '. e)ery six months r. once in t1o years s. e)ery 'uarter t. e)ery month 212. An addendum gi)ing details of material change in the offer document should be circulated o. distributors9bro2ers 0. unit holders '. !"#$ r. all of the abo)e

21&. ?hich of the follo1ing is not true for offer documents of o0en-ended schemes o. it is first issued at the time the scheme is launched 0. it is registered 1ith !"#$ '. it has to be re)ised 0eriodically r. it need not be re)ised at all 21/. All im0ortant disclosures that the mutual fund is re'uired to ma2e4 by regulation4 are contained in the offer document '. True r. %alse 21*. The offer document issued 1hen an o0en-ended scheme is launched is )alid for all times4 until amended '. True r. %alse 217 The most im0ortant source of information for a 0ros0ecti)e in)estor is o. offer document 0. Annual ,e0ort of the AM '. "conomic Times r. AM%$ Ne1sletter 218 The offer document need not be studied by an in)estor before in)esting in a scheme '. True r. %alse 21. The offer document is not a legal document o. True 0. %alse 21- $nitial issue ex0enses are charged to a scheme in the first year itself m. True n. %alse 22( !cheme-1ise annual re0ort of a mutual fund need not be '. sent to all unit-holders r. for1arded to !"#$ s. 0ublished as an ad)ertisement t. stoc2 exchanges 221 Mutual funds )alue their in)estments o. at 0urchase 0rice 0. on a mar2-to-mar2et basis '. at 0ar r. at boo2 )alue 222 $n)estors are totally exem0t from 0aying any tax on the di)idend income they recei)e from mutual funds n. True o. %alse 22& $ncome distributed to unit-holders by a debt fund is liable to di)idend distribution tax o. True 0. %alse 22/ A close-ended has a)erage 1ee2ly net assets of ,s 2(( crore.As 0er !"#$ regulations4 the AM can charge the fund 1ith in)estment and ad)isory fees u0to:

o. 0. '. r.

,s 2.2* crore ,s 2.(( crore ,s 2.*( crore ,s &.(( crore

22* A 0assi)e fund manager '. researches stoc2s extensi)ely r. does not buy and sell stoc2s often s. does not ha)e to go through the 0rocess of stoc2 selection t. does not ha)e to trac2 stoc2s 227 A fund manager managing an index fund o. has to 2ee0 fund ex0enses lo1 0. does not ha)e to research stoc2s '. does not ha)e to balance his 0ortfolio r. none of the abo)e 228 A gro1th manager loo2s for '. high current income r. under)alued stoc2s s. abo)e a)erage earnings gro1th t. none of the abo)e 22. A )alue manager does not loo2 for o. stoc2s that are currently under)alued in the mar2et 0. stoc2s 1hose 1orth 1ill be recognised by the mar2et in the long term '. high current yield r. long term ca0ital a00reciation 22- %rom an in)estor>s )ie10oint4 the most im0ortant is '. a fund>s in)estment style r. 0erformance of the fund s. the fund manager>s <udgement t. none of the abo)e 2&( %undamental analysis in)ol)es i. chec2ing the foundations of the com0any>s factory building <. research into the o0erations and finances of the com0any 2. studying the com0any>s share 0rices l. none of the abo)e 2&1. ?hich of the follo1ing is not considered for technical analysis '. historical data on the com0any>s share 0rice r. the com0any shares> trading )olume s. current mar2et sentiment t. the com0any>s regulatory en)ironment 2&2. Huantitati)e analysis is more li2ely to be done to e)aluate a 0articular sector or industry rather than any s0ecific stoc2 o. True 0. %alse 2&&. %undamental analysis forms the basis to decide '. 1hen to buy a gi)en share r. 1hether to buy a gi)en share or not s. 1hether to use technical analysis or 'uantitati)e analysis

t.

1hether the com0any>s factory can 1ithstand earth'ua2es

2&/. Technical analysis guides the decision on o. 1hether to buy or sell 0. the right time to buy or sell '. 1hether com0any>s technical 0ersonnel are ade'uately 'ualified r. none of the abo)e 2&*. ?hich of the follo1ing is not an in)estment 0hiloso0hy o. ca0italising on economic cycles 0. focusing on gro1th sectors '. ca0italisation r. finding )alue stoc2s 2&7. ?hen ex0ecting a fall in mar2et 0rice4 fund managers can reduce the loss in 0ortfolio )alue by 2. s0eculating l. not buying and selling shares at all for some days m. using e'uity deri)ati)es n. gi)ing TV inter)ie1s to im0ro)e sentiment 2&8. "'uity deri)ati)e instruments are o. shares 0. bonds '. contracts r. notes 2&.. A futures contract allo1s one to buy or sell the underlying shares4 but need not result in deli)ery '. True r. %alse 2&-. 6eri)ati)es cannot be based on mar2et indices '. True r. %ales 2/(. $n a mutual fund4 the o)erall decisions on allocating money to 0articular industries9sectors are ta2en by '. e'uity analysts r. fund managers s. security dealers t. trustees 2/1. ontinuous trac2ing of the com0anies in 1hich a mutual fund has in)ested is done by m. continuous trac2ing systems n. e'uity analysts o. trustees 0. security dealers 2/2. !ecurity dealers of a mutual fund o. guard the cabin of the fund manager 0. execute buy and sell orders for the fund '. decide 1hich shares to buy or sell r. none of the abo)e 2/&. As 0er !"#$>s re'uirements each scheme of a mutual fund should ha)e a different fund manager o. True 0. %alse

2//. 6ebt securities bought at a discount to their face )alue are generally m. interest bearing n. zero cou0on bonds o. 0aying interest at a floating rate 0. none of the abo)e 2/*. $n $ndia4 a large 0art of debt securities 0ay interest on m. a floating rate basis n. a fixed rate 0lus a )ariable 0ortion o. a fixed rate 0. zero cou0on basis 2/7. The $ndian debt mar2et is largely 1holesale in nature o. True 0. %alse 2/8. $n the 1holesale debt mar2et4 the largest 0ro0ortion of trading is seen in 1. 5o)ernment !ecurities 2. or0orate #onds &. T-#ills /. A!; #onds 2/.. The largest 0ro0ortion of trades done in the 1holesale debt mar2et is accounted by o. mutual funds 0. foreign ban2s '. $ndian ban2s r. financial institutions 2/-. ertificates of 6e0osits D 6sE are issued by o. ,egional ,ural #an2s 0. or0orates '. !cheduled commercial ban2s r. none of the abo)e 2*(. ommercial Aa0er is issued by or0orate bodies o. to meet short-term 1or2ing ca0ital re'uirements 0. to finance the ac'uisition of long term ca0ital assets '. to retire long term debt r. to 0ay di)idend 2*1. 5o)ernment securities are issued through the ,#$ s. True t. %alse 2*2. The yield on Treasury #ill DT-#illE us determined by s. the 5o)ernment of $ndia t. auction u. the !tate 5o)ernments ). floating rate method 2*&. ?hich of the follo1ing are not normally found in the 0ortfolio of a debt fund u. long-dated 5o)ernment !ecurities ). or0orate debentures 1. bonds issued by financial institutions x. certificates of de0osit issued by ban2s

2*/. ?hich of the follo1ing do not re0resent the amount an in)estor of a debt security 1ill be 0aid u0on maturity u. 0ar )alue ). face )alue 1. fair )alue x. redem0tion )alue 2**. ou0on of a debt security refers to s. a 0iece of 0a0er attached to the certificate t. the return on in)estor 1ould earn u. the amount rate of interest 0aid on 0ar )alue of the bond ). none of the abo)e 2*7. ?hich of the follo1ing do not a00ly to the term >maturity> of a debt securityB u. the date on 1hich the certificates becomes old ). the term of the bond 1. the date of redem0tion x. the date on 1hich the issuer has to re0ay the amount 2*8. all or 0ut 0ro)isions are used to modify the fixed maturity of debt securities u. True ). %alse 2*.. A call 0ro)ision in a debt issue allo1s the issuer to u. call out the names of the in)estors ). redeem the debt on maturity 1. extend the tenure of the debt x. redeem the debt before maturity 2*-. A 0ut 0ro)ision in a debt issue allo1s 1. in)estor to 0ut a1ay the certificates in safe de0osit )aults 2. in)estors to redeem debt 0rior to maturity &. issuers to redeem debt 0rior to maturity /. in)estors to extend the tenure of debt 27(. urrent yield relates interest on a security to u. its current mar2et 0rice ). its face )alue 1. its fair )alue x. the current 0rice of T-#ills 271. To com0are bonds 1ith different cou0on rates4 maturities and 0rices4 in)estors 1ould use: u. current yield ). technical analysis 1. yield to maturity x. fundamental analysis 272. ?hen interest rates rise4 bond 0rices 1. also rise 2. fall &. are not affected /. fluctuate either u0 or do1n 27&. Field cur)e is also 2no1n as s. ur)e of $nterest t. Term !tructure of $nterest ,ates

u. ).

ur)e that yields none of the abo)e

27/. An im0ortant indicator of ex0ected trends in interest rates is s. The "conomic Times t. the !ensex u. the Field ur)e ). the hief Minister>s !0eech 27*. $t may not be 0ossible to rein)est interest recei)ed at the same rate as 0rinci0al. This is 2no1n as s. rein)estment ris2 t. inflation ris2 u. interest-rate ris2 ). call ris2 277. A bond>s rating indicates its s. rein)estment ris2 t. default ris2 u. inflation ris2 ). interest-rate ris2 278. $f a bond cannot be sold at a 0rice near its )alue4 it means that in)estment in this bond has s. high li'uidity ris2 t. high default ris2 u. lo1 li'uidity ris2 ). inflation ris2 27.. The additional yield re'uired to account for the ris2 of default by the borro1er is 2no1n as '. yield 0lus r. yield s0read s. yield extra t. yield 0remium 27-. A high credit rating does not mean o. high yield s0read 0. high 0ercei)ed safety '. lo1 yield s0read r. lo1 ris2 0remium 28(. $f 1(-year go)ernment securities Neil 1(+ and a 1(-Fear fixed de0osit in a com0any yields 12+4 the yield s0read is u. 12+ ). 22+ 1. 1(+ x. 2+ 281. The :duration: of an interest-bearing bond is s. longer than its maturity t. less than its maturity u. e'ual to its maturity ). the 'uality of 0a0er used for the certificate 282. A bond 1ith a cou0on of -+ 1hen interest rates for similar maturities are 11+ 1ill sell 0. abo)e 0ar '. belo1 0ar r. at 0ar

s.

at a 0rice unrelated to the 0re)ailing interest rate

28&. hanges in foreign exchange rates ha)e no bearing on interest rates '. True r. %alse 28/. $nflation and interest rates are in)ersely 0ro0ortional s. True t. %alse 28*. $n)estment 0olicies of a mutual fund are determined by u. the fund manager ). the AM management 1. the mar2eting de0artment based on 1hat distributors 1ant x. the in)estors 287. ?hich of the follo1ing measures are not ta2en by !"#$ for 0rotecting in)estors of mutual funds s. mandating minimum le)els of di)ersification for mutual funds t. ensuring that the funds are not used to fa)our a fe1 com0anies u. that each fund has in)ested in trac2ing the securities ). ensuring that the funds are in)ested in a00ro)ed securities only 288. As 0er !"#$ norms4 a fund>s in)estments4 in the e'uity shares of any one com0any are restricted to u. 2*+ of NAV ). 1(+ of NAV 1. *(+ of NAV x. 1((+ of NAV 28.. A mutual fund manager is not allo1ed to sell short 1hen he ex0ects a crash in the mar2et s. True t. %alse 28-. $n a mutual fund4 ha)ing many schemes4 al securities bought can be held in a general account and transferred later to )arious schemes to attain certain 0rofit or loss ob<ecti)es u. True ). %alse 2.(. A mutual fund may in)est in short-term de0osits of scheduled commercial ban2s m. True n. %alse 2.1. Mutual funds are allo1ed to lend u. loans ). securities 1. 0hysical assets x. none of the abo)e 2.2. $n case of listed securities of grou0 com0anies of the s0onsor4 mutual fund is not allo1ed to in)est '. 2*+ of its net assets r. 1(+ of its net assets s. at all t. I*+ of net assets 2.&. A mutual fund may transfer in)estments from one scheme to another u. not at all ). at current mar2et rates

1. at cost 0rice x. at a fixed 0remium o)er mar2et rate 2./. $nterest ,ate ,is2 for an $ndian debt fund can be reduced by using s. %utures t. 30tions u. $nterest ,ate !1a0s ). none of the abo)e 2.*. The $nterest ,ate %orecasting ;nit of a debt fund is generally manned by s. technicians t. statisticians u. economists C econometricians ). accountants 2.7. AM s need not maintain records in su00ort of each in)estment decision o. True 0. %alse 2.8. ?hen interest rates for similar maturities> bonds are 11+4 bond 1ith a -+ cou0on rate 1ill sell s. abo)e 0ar t. belo1 0ar u. at 0ar ). at a 0rice unrelated to the interest rates for similar securities 2... The most suitable measure for a fund>s 0erformance does not de0end on the s. ty0e of fund t. in)estment ob<ecti)e of the fund u. financial mar2et conditions ). amount in)ested by in)estor 2.-. $f the NAV of an o0en-ended fund 1as ,s.17 at the beginning of the year and ,s.22 after 1& months4 the annualised change in NAV is s. 7.(+ t. &/.7+ u. /(.7+ ). &8.*+ 2-(. hange in NAV as a measure of fund 0erformance is more suitable for u. gro1th funds ). income funds 1. funds 1ith 1ithdra1al 0lans x. none of the abo)e 2-1. The difference bet1een NAV change and total return as measures of fund 0erformance is '. none r. total return ta2es di)idend into account 1hile NAV change does not s. total return does not ta2e NAVs into account t. total return does not ta2e the time 0eriod into account 2-2. the most suitable measure of fund 0erformance for all fund ty0es is s. NAV hange t. Total ,eturn u. Total ,eturn 1ith rein)estment ). none of the abo)e

2-&. The ex0ense ratio used for measuring fund 0erformance is an indicator of '. 0roduct mar2et condition r. gro1th in the economy s. 0re)alent mar2et 0ractices t. the fund>s efficiency 2-/. The "x0ense ,atio as a measure of a fund>s 0erformance is defined by a fund>s '. total ex0enses and a)erage net assets r. total ex0enses and total assets s. a)erage ex0enses and a)erage net assets t. none of the abo)e 2-*. ?hile com0uting the "x0ense ,atio for a fund4 bro2erage commissions on the fund>s transactions are not included in the fund ex0enses '. True r. %alse 2-7. The "x0ense ,atio is not of utmost im0ortance in case of '. 6ebt fund r. $ndex fund s. "'uity fund t. #ond fund 2-8. The "x0ense ,atio is not affected by 0. fund size '. a)erage account size r. 0ortfolio com0osition s. stoc2 mar2et conditions 2-.. The $ncome ,atio as a measure of a fund>s 0erformance is defined by the fund>s s. total income and total assets t. net in)estment income and net assets u. total income and net assets ). none of the abo)e 2--. The $ncome ,atio is more suitable for e)aluating the 0erformance of s. "'uity %unds t. 5ro1th %unds u. ,egular $ncome %unds ). $ndex %unds &((. Aortfolio turno)er rate of a fund measure the s. size of the fund>s 0ortfolio t. amount of buying and selling done by the fund u. the a)erage number of units sold by the fund in one day ). none of the abo)e &(1. A high turno)er rate for a fund indicates u. high transaction costs ). greater efficiency 1. high returns to the in)estor x. a rising mar2et &(2. Turno)er rates 1ould be most rele)ant to analyse the 0erformance of 1. e'uity funds x. gro1th funds

y. z.

debt funds )alue funds

&(&. Transaction costs include y. all ex0enses related to trading z. all ex0ense charged to the fund aa. distribution ex0enses bb. none of the abo)e &(/. ?hich of the follo1ing are not included in Transaction costsB y. bro2erage commissions z. stam0 duty on transfers aa. custodians fees bb. agent commissions &(*. ?hich of the follo1ing transaction costs are not 'uantified in the offer document 1. bro2erage commissions x. dealer s0reads y. custodian>s fees z. registrar>s fees &(7. The size of a fund has no bearing on its 0erformance y. True z. %alse &(8. As 0er !"#$4 mutual funds can borro1 for short term to the extent of 1. total net assets x. *(+ of net assets y. 2*+ of net assets z. 2(+ of net assets &(.. ?hich of the follo1ing is of no rele)ance in e)aluating a fund>s 0erformance y. The 0erformance of the stoc2 mar2et as a 1hole z. The 0erformance of other mutual funds aa. The returns gi)en by other com0arable financial 0roducts bb. The change in 1holesale 0rice index &(-. The choice of an a00ro0riate benchmar2 for e)aluating a fund>s 0erformance de0ends on s. the fund manager t. the in)estment ob<ecti)e of the fund u. !"#$ ). AM%$ &1(. An acti)ely managed e'uity fund ex0ects to y. be able to beat the benchmar2s z. earn the same returns as the benchmar2 aa. ha)e no benchmar2s bb. under0erform 1hen com0ared 1ith the benchmar2 &11. %or e)aluating funds4 the 0referred benchmar2 1ould be the y. #!" !ensex z. !CA NJ Nifty aa. #!" 2(( bb. !CA NJ !ectoral $ndices &12. To e)aluate a close-ended debt-fund4 a suitable benchmar2 1ould be

s. t. u. ).

#!" !ensex $-!ec>s $-#"J interest on ban2 fixed de0osits of similar maturity !CA NJ 6efty

&1&. ?hen com0aring 0erformance of t1o funds4 the follo1ing need not be similar 1. ,is2 0rofiles x. $n)estment ob<ecti)es y. %und size z. %und managers &1/. ?hich of the follo1ing is falseB 1. ,3$ is a measure similar to Total ,eturn 1ith ,ein)estment of distribution x. Total ,eturn 1ith ,ein)estment of distributions assumes rein)estment at NAV on the distribution date y. As a measure of 0erformance4 Total ,eturn 1ith ,ein)estment of distribution see2s to o)ercome the shortcomings of sim0le Total ,eturn z. #ecause of its sim0licity4 sim0le Total ,eturn is 0referred in 0ractice to Total ,eturn 1ith ,ein)estment of distribution &1*. The basis of genuine in)estment ad)ice should be 1. the current mar2et situation 2. the agent commissions 0aid by different funds &. financial 0lanning to suit the in)estor>s situation /. 0lanning to com0lete the agent>s annual targets &17. %inancial goals do not include 1. buying a home x. 1inning a s0orts gold medal y. 0lanning for retirement z. sa)ing for child>s education &18. %inancial 0lanning allo1s a 0erson 1. to become a billionaire x. to achie)e financial goals through 0ro0er management of finances y. to in)est in foreign countries z. none of the abo)e &1.. %inancial 0lans do not alter in any 1ay the amount of tax an in)estor 0ays as the tax is on his income u. True ). %alse &1-. ?hich of the follo1ing 1or2s 1ith an in)estor on his o)erall financial situation s. Tax Ad)isor t. %inancial Alanner u. $nsurance Agent ). %inancial Ad)isor &2(. A financial 0lanner ta2es res0onsibility for the financial 1ell-being of his9her clients y. True z. %alse &21. %inancial 0lanners and their clients should focus on 1. allocating funds to asset classes De.g. debt4 e'uity etc.E x. allocating funds to indi)idual securities y. trac2ing stoc2s 1hich they feel ha)e 0otential z. none of the abo)e

&22. ?ithin an asset class4 1hich indi)idual security to in)est in should be decided by t. the financial 0lanner u. the in)estor himself ). a 0rofessional fund manager 1. an ob<ecti)e ad)isor &2&. %inancial Alanning com0rises s. defining a client>s 0rofile and goals t. recommending a00ro0riate asset allocation u. monitoring financial 0lanning recommendations ). all of the abo)e &2/. %inancial 0lanning is rele)ant only for high net1orth indi)iduals u. True ). %alse &2*. %inancial 0lanning does 1or2 for older clients y. True z. %alse &27 %inancial 0lanning is 0rimarily tax 0lanning 1. True x. %alse &28 $n financial 0lanning4 all res0onsibility ends 1ith the financial 0lanner and the client has no res0onsibilities y. True z. %alse &2. The constraint on financial 0lanning due to insufficient in)estable resources can be remedied to some extent by u. decreasing the standard of li)ing ). disci0lining children 1. disci0lined monthly budgeting x. none of the abo)e &2- $n the gro1th o0tion offered by mutual funds4 the number of units held by an in)estor increases because of 1. gro1th in net asset )alue i.e. ca0ital a00reciation x. rein)estment of di)idend 1hich is li2e com0ounding y. interest recei)ed on the fund>s assets z. none of the abo)e &&( To maximise returns on in)estment4 once an in)estor buys into a fund4 he9she should hold on to it no matter 1hat ha00ens o. True 0. %alse &&1 $f an in)estor 2ee0s in)esting a fixed amount at regular inter)als4 the a)erage cost of his 0urchases 1ill al1ays be less than if he ma2es in)estment at irregular 0eriods y. True z. %alse &&2. ?hich of the follo1ing lets an in)estor boo2 0rofits in a rising mar2et and increase holdings in a falling mar2et u. %ixed ,ates of Asset Allocation ). %lexible ,atio of Asset Allocation 1. $n)estment 1ithout any asset allocation 0lan x. #uy and @old !trategy

&&&. A %lexible ,atio of Asset Allocation means y. continuously changing the ratio of )arious assets in the 0ortfolio z. not doing any re-balancing and letting the 0rofits run aa. acti)e s1itching bb. none of the abo)e &&/. The strategy ad)isable for an in)estor to maximise in)estment return in the long run is 1. buy and hold on to in)estments for a long time x. li'uidate 0oorly 0erforming in)estments from time to time y. li'uidate good 0erforming in)estments fro time to time z. s1itch from 0oor 0erformers to good 0erformers &&*. A criticism of ru0ee-cost a)eraging is 1. $n)estment is for the same amount at regular inter)als x. 3)er a 0eriod of time4 the a)erage 0urchase 0rice 1ill 1or2 out higher than if one tries to guess the mar2et highs and lo1s y. $t does not tell you 1hen to buy4 sell or s1itch from one scheme to another z. ,u0ee cost a)eraging has no serious shortcomings &&7. $n $ndia4 indi)idual in)estors do not ha)e direct access to '. ca0ital mar2et instruments r. real estate s. bullion t. money mar2et instruments &&8. ?hich of the follo1ing entities can gi)en loans against securities 1. ;T$ x. #an2s y. Mutual funds z. none of the abo)e &&.. ?hich of the follo1ing in)estment 0roducts do not gi)e guarantee for return or ca0ital 1. #an2 de0osits x. Aubic 0ro)ident fund DAA%E y. National !a)ings ertificates DN! E z. ;nits of a mutual fund &&-. The biggest ad)antage of in)estment in gold is 1. @igh returns x. @igh a00reciation in )alue y. =o1 Aurchase 0rice z. @edge against inflation &/(. The biggest disad)antage of in)estment in real estate is y. =ess 0otential for ca0ital a00reciation z. @igh 0urchase 0rice aa. 6e0reciation in )alue as time 0asses bb. Value gets eroded due to inflation &/1. ?hich of the follo1ing is not an ad)antage of ban2 de0ositsB u. =i'uidity ). @igh 0ercei)ed safety 1. =o1 entry 0rice x. @igh yield after tax

&/2. =isting of shares at a stoc2 exchange ensures 1. guaranteed returns x. long term ca0ital a00reciation y. lo1 ris2 z. high li'uidity &/&. The rate of interest 0aid by a com0any on debentures issued by it de0ends on u. the stoc2 mar2et situation ). !"#$ guidelines 1. the com0any>s credit rating x. the amount of money being raised &//. ?hich of the follo1ing is not a characteristic of com0any fixed de0osits u. A higher rate of interest ). higher ris2 1. unfa)orable effect of tax x. )ery high li'uidity &/*. ?hich of the follo1ing is untrue for Aublic Aro)ident %und !chemes s. The interest is tax-free t. Aost-tax returns are attracti)e u. =i'uidity is rather lo1 ). none of the abo)e &/7. $ndira Vi2as Aatra is an in)estment 0roduct 0o0ular 1ith u. rural in)estors ). in)estors in high tax brac2et 1. urban in)estors x. ris2 ta2ing in)estors &/8. %inance Acts of 2((( and 2((1 ha)e reduced tax-free interest on Aublic Aro)ident %und to t. 12+ u. 1(.*+ ). -+ 1. 11+ &/. Most indi)iduals in)est in life insurance 0olicies for 1. ris2 0rotection x. tax benefits y. easy li'uidity z. high returns &/-. Annual contribution to Aublic Aro)ident %und should be 1. ,s.1(((( x. bet1een 1(( and ,s.7((( y. bet1een ,s.7(( and ,s.1((( z. none of the abo)e &*(. The current yield on $ndira Vi2as Aatra 1or2s out to 1. 1(.*+ x. 11+ y. 1(+ z. -+ 351. The tenure of an Indira Vikas Patra is

y. z. aa. bb.

7 years 6 years 5 years 3 years

352. The maturity period of R I Re!ief onds is aa. 5 years bb. 6 years "". 7 years dd. # years 353. The annua! yie!d on R I Re!ief onds is "". $.5% dd. $.5% before ta& ee. #.5% before ta& ff. #.5% after ta& 35'. Indi(idua! in(estors do not norma!!y in(est in )o(ernment *e"urities be"ause "". indi(idua! in(estors re not a!!o+ed to in(est in )o(ernment *e"urities dd. the amount re,uired for in(estment is (ery !ar-e ee. safety of prin"ipa! is not -uaranteed ff. none of the abo(e 355. The amount an insuran"e "ompany +ou!d pay to the nominee if a po!i"yho!der died is kno+n as the aa. premium bb. sum assured "". fa"e (a!ue dd. rea! (a!ue 356. .i(idends distributed by mutua! funds are aa. ta&ed at sour"e bb. ta&ed in the hands of the in(estors "". are sub/e"t to "apita! -ains ta& dd. are ta&0free in the hands of the in(estor 357. In(estin- throu-h mutua! fund is a better option than in(estin- dire"t!y in the sto"k market be"ause a Identifyin- sto"ks is a diffi"u!t pro"ess b 1-ents -et "ommissions on mutua! fund in(estment " Returned are -uaranteed by mutua! funds d a!! of the abo(e 35#. 1 sma!! in(estor "an bui!d a di(ersified portfo!io by aa. buyin- one share ea"h of a!! !isted "ompanies bb. in(estin- in a mutua! fund "". borro+in- enou-h money to buy shares of +e!!0mana-ed "ompanies dd. none of the abo(e 35$. 2hi"h of the fo!!o+in- is not an ad(anta-e of mutua! fund in(estment o(er dire"t in(estment "". 3i-her !i,uidity dd. 4o+er transa"tion "osts ee. )reater "on(enien"e ff. -uaranteed returns 365. There is no "ontra"tua! -uarantee for repayment of prin"ipa! or interest to an in(estor in +. bank deposit &. debt fund

y. z.

se"ured debentures a!! of the abo(e

361. 2hi"h of the fo!!o+in- debt in(estments is not rated "". 6orporate onds dd. 6ommer"ia! Paper ee. 6ompany .eposit ff. .ebt 7und 362. )o!d and rea! estate are attra"ti(e in(estment options on!y in hi-h inf!ation e"onomies "". True dd. 7a!se 363. .ire"t in(estment in sto"k market "an be a better option than in(estin- throu-h mutua! funds if the in(estor +. +ants better returns than those offered by mutua! funds &. has !ar-e "apita!8 kno+!ed-e and resour"es for resear"h y. has identified a bu!!ish phase in the sto"k market z. +ants to in(est for the !on- term 36'. .e"idin- on strate-ies su"h as !on-0term "ompoundin-8 "ost a(era-in-8 (a!ue a(era-in-8 a"ti(e s+it"hin-8 a!! depend on the aa. sto"k market situation on date bb. amount of money to be in(ested "". in(estor9s risk to!eran"e dd. phase throu-h +hi"h the e"onomy is passin365. 7inan"ia! P!annin- in(o!(es aa. studyin- finan"ia! mana-ement bb. mana-in- the risks of in(estin"". finan"in- the "!ient9s in(estments dd. none of the abo(e 366. )reater returns "ome on!y from assurin- hi-her risks8 and a hi-her risk portfo!io -uarantees hi-her returns +. True &. 7a!se 367. The risk to!eran"e of an in(estors is independent of aa. his a-e bb. his in"ome "". the sto"k market mo(ements dd. his /ob se"urity 36#. 1 se"tor fund is a aa. !o+ risk fund bb. moderate risk fund "". hi-h risk fund dd. !o+0to0moderate risk fund 36$. Internationa! funds in(est in (arious and so are !o+ risk funds +. True &. 7a!se 375. In(estment in -o!d is a hed-e a-ainst inf!ation but in(estment in a pre"ious meta! fund fa!!s in the hi-h risk "ate-ory

+. True &. 7a!se 371. y their (ery nature8 -ro+th funds are "onsidered as hi-h risk funds aa. True bb. 7a!se 372. *hort Term bond funds are aa. !o+ risk funds bb. moderate risk funds "". hi-h risk dd. of the abo(e dependin- on the market 373. The risk !e(e! of "ommodity funds is &. hi-h risk "ate-ory y. determined by the "ommodity pri"e mo(ements z. "annot be spe"ified aa. !o+ risk "ate-ory 37'. 1s "ompared to a fund +ith f!u"tuatin- tota! returns8 a fund +ith stab!e positi(e earnin-s +. -i(es hi-her returns &. is !ess risky y. -i(es !o+er returns z. is more risky 375. :Risk: is e,uated +ith +. (o!ati!ity of earnin-s &. !e(e! of earnin-s y. the number of in(estors in a fund z. the number of s"hemes of a fund fami!y 376. Vo!ati!ity of an e,uity fund portfo!io is independent of the aa. kind of sto"ks in the portfo!io bb. de-ree of di(ersifi"ation of the portfo!io "". fund mana-er9s su""ess at market timindd. number of in(estors in the s"heme 377. ;,uity pri"e risks are y. "ompany spe"ifi" z. market !e(e! aa. se"tor spe"ifi" bb. a!! of the abo(e 37#. .i(ersifi"ation redu"es aa. "ompany spe"ifi" risk bb. market !e(e! risk "". both of the abo(e dd. none of the abo(e 37$. 2hi"h of the fo!!o+in- is most risky< y. In(estin- in a money market mutua! fund z. In(estin- in an inde& fund aa. *hort term in(estment in an e,uity fund bb. 4on- term in(estment in an e,uity fund

3#5. 1 fund +ith a hi-h beta "oeffi"ient -i(es -reater returns in a risin- market8 and is more risky in a fa!!in- market aa. True bb. 7a!se 3#1. 2hi"h of the fo!!o+in- is a disad(anta-e of *tandard .e(iation as a measure of risk ,. *tandard .e(iation measures tota! risk8 not /ust market risk r. It is based on past returns8 +hi"h does not ne"essari!y indi"ate further performan"e s. It is an independent number t. 1!! types of funds "an be measured +ith standard de(iation 3#2. The ro!e of an a-ent is to aa. point out the features and benefits of (arious in(estments options bb. he!p the in(estor de(e!op the ri-ht approa"h to in(estin"". re"ommend some in(estment option a(ai!ab!e dd. offer ad ho" ad(ise +hene(er the in(estor has surp!us money a(ai!ab!e 3#3. =ne of the most effe"ti(e +ays to in(est throu-h mutua! funds is to y. de(e!op a mode! portfo!io z. buy a fe+ units of e(ery mutua! fund s"heme a(ai!ab!e aa. in(est a!! the money in one fund s"heme bb. in(est a!! the money in different s"hemes of the same fund fami!y 3#'. >utua! fund shou!d be ad(ised to e&pe"t "". !o+ post ta& returns dd. dramati" resu!ts ee. better returns than e(ery other a(ai!ab!e option ff. on!y rea!isti" +ea!th a""umu!ation -oa!s 3#5. 1sset 1!!o"ation is aa. keepin- "ertifi"ates of the physi"a! se"urities in proper p!a"es bb. a!!o"ation the a(ai!ab!e money to a!! the se"urities a(ai!ab!e "". a!!o"atin- the ri-ht proportion of funds to e,uity8 debt and money market se"urities dd. none of the abo(e 3#6. =n"e a finan"ia! ad(isor +orks out idea! 1sset 1!!o"ation8 it "an be used for a!! in(estors +hom he?she ad(ises aa. True bb. 7a!se 3#7. 1sset distribution amon- e,uity8 debt and money market se"urities shou!d "orrespond to the in(estors9 need for "apita! -ro+th8 in"ome and !i,uidity u. True (. 7a!se 3##. The !i,uidity needs of an in(estor are met throu-h aa. ;,uity 7unds bb. Inde& 7unds "". >oney >arket 7unds dd. *e"tor 7unds 3#$. 1 retired person -enera!!y needs a -reater proportion of aa. .ebt funds bb. ;,uity funds "". >oney >arket funds

dd. 1!! of the abo(e 3$5. To satisfy a youn- in(estor9s need for -ro+th8 a -reater proportion of in(estment shou!d be ad(ised in aa. )i!t funds bb. In"ome 7unds "". ;,uity )ro+th funds dd. 4i,uid funds 3$1. 1 (ery hi-h proportion of in(estment in a!! types of e,uity funds is ad(isab!e for in(estors "". in distribution phase dd. in a""umu!ation phase ee. in transition phase ff. +ho are +ea!th preser(in- aff!uent indi(idua!s 3$2. The transition phase of an in(estor9s +ea!th "y"!e is +hen y. the finan"ia! -oa!s ha(e been a!ready met z. the in(estor has retired aa. finan"ia! -oa!s are approa"hinbb. in(estor sudden!y -ets a +indfa!! 3$3. 1 hi-h proportion of in(estment in in"ome funds is re,uired by aa. a""umu!atin- in(estors bb. aff!uent in(estors "". in(estors in the inter0-enerationa! transfer phase dd. in(estors in the distribution phase 3$'. Retired in(estors shou!d y. not dra+ do+n on their "apita! z. not in(est in se"urities +hi"h bear risk of "apita! erosion aa. "ontinue ho!din- a ma/or portion of their ho!din- in e,uity -ro+th funds bb. ne(er in(est in e,uity 3$5. 7or o!der in(estors +ho +ant to transfer their +ea!th y. no finan"ia! p!annin- is re,uired z. the ri-ht in(estment strate-y depends upon +ho the benefi"iaries are aa. the ri-ht in(estment strate-y depends upon the state of the sto"k market bb. a!! the funds "an be in(ested in a--ressi(e e,uity funds 3$6. In(estors +ho a",uire sudden +ea!th +. "an spe"u!ate +ith a!! the a",uired money in the sto"k markets &. shou!d not use any of the ne+ +ea!th to in(est in e,uity y. shou!d take the effe"t of ta&es into a""ount z. need not pay any ta&es on the ne+!y a",uired +ea!th as it is not a part of their re-u!ar in"ome 3$7. =n!y if a spe"ia!ty offshore fund has "onsistent!y -i(en (ery -ood performan"e8 it "an be "onsidered for in(estment by a retiree y. True z. 7a!se 3$#. Past performan"e shou!d not be so!e!y re!ied on for se!e"tin- a fund &. True y. 7a!se

3$$. et+een the past performan"e of a fund and its suitabi!ity for an in(estor8 past performan"e is more important aa. True bb. 7a!se '55. *tru"tura! "hara"terisations of an e,uity fund in"!ude aa. "osts of in(estinbb. the spe"ifi" se"urities in +hi"h the fund has in(ested "". the number of emp!oyees of the 1>6 dd. a!! of the abo(e /(1. An e'uity fund>s age and size are irrele)ant 1hen selecting a fund for in)estment cc. True dd. %alse /(2. The charge to an in)estor at the time of he redeems his units from the fund is 2no1n as ee. reco)ery charge ff. re0urchase load gg. redem0tion 1eight hh. exit load /(&. The load amount charged to a scheme o)er a 0eriod of time is called gg. entry load hh. exit load ii. deferred load <<. no-load /(/. ontingent 6eferred !ales harge D 6! E gg. is higher for in)estors 1ho stay in)ested in the scheme longer hh. is lo1er for in)estors 1ho stay in)ested in the scheme longer ii. is the same for all in)estors irres0ecti)e of ho1 long they stay in)ested <<. is not allo1ed to be charged to mutual fund in)estors in $ndia /(* A fund>s declared NAV does not include loads ee. True ff. %alse /(7. ?hich of the follo1ing fund ty0es are com0arable ee. An aggressi)e e'uity fund and a money mar2et mutual fund ff. A )alue fund and a go)ernment securities fund gg. A bond fund and a debt fund hh. A di)ersified e'uity fund and a debt fund /(8. ?ho is the 0rimary guardian of unitholders> funds9assets ee. The AM ff. The Trustees gg. The ,egistrars hh. The custodians /(.. $n case of a fund merger or Ta2e-o)er gg. @igh ourt a00ro)al may not be necessary hh. !"#$ a00ro)al is a must ii. all unitholders must be informed <<. all of the abo)e /(-. ;nits of a money mar2et mutual fund can be issued to

aa. bb. cc. dd.

indi)iduals ban2s trusts all of the abo)e

/1(. Though $ndian mutual funds ha)e restrictions on borro1ings Donly2(+ of net assets and for six months onlyE 1hich are to meet cash needs for redem0tion only4 ;T$ is allo1ed to borro1 1ithin more relaxed nor ms gg. True hh. %alse /11. An e'uity fund can be said to be concentrated 1hen ee. 1hen it in)ests in only in t1o or three stoc2s ff. 1hen it in)ests in may com0anies of the same sector gg. 1hen to0 ten holdings account for more than *(+ of net assets in)ested hh. 1hen to0 ten holdings account for more than 2*+ of net assets in)ested /12. The size of the mar2et ca0italisation of a fund>s e'uity holdings is in)ersely 0ro0ortional to the returns that aa. can be ex0ected from the fund bb. le)el of ris2 assumed by the fund cc. state of the stoc2 mar2et dd. all of the abo)e /1&. A steady holding of in)estments in an e'uity fund>s 0ortfolio indicates ee. long-term orientation ff. lo1er transaction costs gg. both the abo)e hh. none of the abo)e /1/. "x-Mar2 of an e'uity fund measures its ee. 0erformance ff. ris2 gg. both the abo)e hh. none of the abo)e /1*. #eta of an e'uity fund measures its y. 0erformance z. ris2 aa. both the abo)e bb. none of the abo)e /17. The best e'uity fund4 relati)e to others4 1ould ha)e ee. higher "x Mar2s4 lo1er #eta and higher 5ross 6i)idend Field ff. higher "x Mar2s4 higher #eta and higher 5ross 6i)idend Field gg. lo1er "x Mar2s4 lo1er #eta and lo1er 5ross 6i)idend Field hh. lo1er "x Mar2s4 higher #eta and higher 5ross 6i)idend Field /18. ?hen selecting e'uity funds for in)esting4 those at the to0 of the 0erformance ran2ings should be a)oided ee. True ff. %alse /1.. A debt fund>s age and size are not im0ortant 1hen selecting a fund for in)estment y. True z. %alse /1-. 6ebt schemes are 0o0ular because y. the $ndian !toc2 Mar2et is al1ays going do1n

z. the returns are more 0redictable aa. most in)estors are al1ays in debt bb. all of the abo)e /2(. Field-to-maturity of a debt fund>s 0ortfolio is more im0ortant 1hen the in)estment ob<ecti)e is cc. current income dd. total return ee. li'uidity ff. all of the abo)e /21. om0ared to e'uity funds4 income margins for debt funds are ee. narro1 ff. higher gg. the same hh. almost nil /22. 6ebt funds 1ith long-term in)estments carry higher ris2 of ca0ital loss bb. True cc. %alse /2&. The differerentiating factor among debt funds of com0arable maturity and 'uality is aa. gross yields bb. costs cc. fund age dd. tenure of the fund manager /2/. 6istribution tax should be ta2en into into account 1hen com0uting net returns from aa. e'uity funds bb. debt funds cc. both the abo)e dd. none of the abo)e /2*. All debt fund in)estors are ex0osed to ris2 of 0rinci0al loss ee. True ff. %alse /27. ,unning a money mar2et mutual fund re'uires more of cc. credit analysis s2ills dd. e'uity analysis s2ills ee. 0atience ff. trading s2ills /28. ?hich is the most im0ortant in selecting debt fund for better return ee. 0ast 0erformance ff. le)el of interest rates gg. fund ex0ertise hh. the securities in 1hich it has in)ested /2.. $n)estors should be ad)ised to a)oid in)esting in a debt fund 1ith a cc. lo1er rated 0ortfolio and higher ex0ense ratio dd. higher rated 0ortfolio and lo1er ex0ense ratio ee. lo1er rated 0ortfolio and lo1er ex0ense ratio ff. lo1er rated 0ortfolio and higher ex0ense ratio /2-. An ideal money mar2et mutual fund must ha)e cc. lo1er returns

dd. lo1er ex0ense ratio ee. lo1 'uality of in)estments ff. all the abo)e /&(. ircumstances that might cause an in)estor to change the com0osition of his 0ortfolio u. cyclical changes in economy ). unforeseen economic changes affecting the 0ortfolio>s 0referred sectors 1. both the abo)e x. none of the abo)e /&1. $f a charitable trust a00roaches a distributor 1ith an a00lication for in)estment in a mutual fund4 the distributor should ee. acce0t the a00lication 1ithout 1asting time ff. re<ect the a00lication outright gg. refer to the offer document hh. acce0t the a00lication as a direct a00lication /&2. An a00lication form for in)estment in a mutual fund is a)ailable 1ith cc. the offer document dd. the abridged annual re0ort ee. the 2ey information memorandum ff. a ban2 challan /&&. An aggrie)ed unit-holder of a mutual fund can sue gg. the AM hh. the trustees ii. the s0onsor if returns ha)e been guaranteed by them <<. none of the abo)e /&/. As 0er !"#$ regulations for )aluation of in)estments held by mutual funds4 a security is considered :nontraded: 1hen it ee. has not been traded for 7( days 0rior to )aluation ff. has not been traded for &( days 0rior to )aluation gg. is not listed on any stoc2 exchange hh. is held by the mutual fund 1ithout buying or selling /&*. An "x-Mar2 of 1((+ is 0ossible for cc. a gro1th fund dd. an aggressi)e gro1th fund ee. an index fund ff. a balanced fund /&7. A trail commission is <ustified 1hen 1. an in)estor cancels his in)estment x. the in)estor redeems his in)estment in a )ery short time y. an agent in)ests his o1n money4 not that of a client z. an agent sells many mutual funds /&8. 3f the follo1ing4 1hich ty0e of fund 1ould ha)e a higher A9" multi0le in com0arison to the a)erage mar2et multi0le ee. A Value %und ff. A 5ro1th %und gg. An $ndex %und hh. ould be any of the abo)e three4 one cannot generalise /&.. ?hich of the follo1ing is not true as 0er !"#$ ,egulations for 6ebt %undsB

ee. $n)estment in rated debt securities of a single issuer should not exceed 1*+ of NAV ff. Total in)estment in unrated debt securities of a single issuer should not exceed 2*+ of NAV gg. Total in)estment in unrated debt securities belo1 in)estment grade should not exceed 2*+ of NAV hh. Total in)estment in rated debt securities belo1 in)estment grade should not exceed 2*+ of NAV /&-. A Money Mar2et Mutual %und is most li2ely to in)est in ee. or0orate #onds ff. "'uity !hares gg. 5o)ernment !ecurities 1ith maturity less than 1 year hh. All of the abo)e //(. 3f the follo1ing4 1hich 1ould be suitable for a retiree 1ith a modest ris2 a00etite gg. Value %und hh. 6i)ersified "'uity %und ii. 5ro1th %und <<. #alanced %und //1. A high 0ortfolio turno)er for a fund indicates cc. that the fund is acti)e dd. higher transaction costs ee. both the abo)e ff. none of the abo)e //2. ;nit Trust of $ndia>s ;!-7/ !cheme ee. is listed on stoc2 exchanges ff. has a fixed 0rice for sale and re0urchase gg. has its sale and re0urchase 0rice declared 0eriodicaly by ;T$ hh. has its 0rice determined by mar2et forces //&. The $ndian debt mar2et cc. is ?holesale in nature dd. com0rises large 0layers li2e financial institutions and ban2s ee. 1itnesses large scale trading in go)ernment securities ff. all of the abo)e ///. A fund that charges a load is better than a no-load fund cc. True dd. %alse //*. An AM can a00roach in)estors either directly or 1ith the hel0 of aa. indi)idual agents bb. ban2s and non-ban2ing finance com0anies cc. distribution com0anies dd. all of the abo)e //7. ?hich of the follo1ing is true for "'uity =in2ed !a)ings !cheme D"=!!E aa. A tax rebate is a)ailable to in)estors in these schemes bb. The in)estment has to be loc2ed in for & years cc. The minimum amount for in)estment is fixed dd. All of the abo)e //8. A 0ros0ecti)e in)estor z. has the same status as a unit-holder of a fund aa. can sue the AM 9trustee bb. has no legal recourse

cc. all of the abo)e //.. An in)estor can assess the 0erformance of his mutual fund by com0aring it 1ith the 0erformance of cc. other mutual fund of the same ty0e dd. the stoc2 mar2et ee. other financial 0roducts ff. all of the abo)e //-. ;nrated securities in the 0ortfolio of a mutual fund are not to be )alued ee. True ff. %alse /*(. An exit load guarantees a higher return aa. True bb. %alse /*1 #onds held in the 0ortfolio of a mutual fund are )alued at yield to maturity ee. True ff. %alse /*2 The Valuation of non-traded e'uity shares is done at the trading 0rice &( days 0rior to )aluation date ii. True <<. %alse /*& $f a unit-holder does not agree to the merger of his fund 1ith another4 he has not exit o0tion 22. True ll. %alse /*/. The most im0ortant factor loo2 for 1hen in)esting in a cor0orate fixed de0osit is the 22. yield ll. rate of interest mm. credit rating of the de0osit nn. none of the abo)e /**. The most im0ortant reason for an in)estor to 0refer a ban2 de0osit to a mutual fund is gg. the credit 1orthiness of the ban2 hh. because the ban2 does not in)est in securities ii. that the ban2 offers a guarantee 1 <<. all of the abo)e /*7. A dee0 discount bond ii. is al1ays sold at a discount to its issue 0rice <<. bears interest annually 22. is redeemed at a 0rice much higher than issue 0rice ll. bears interest at )arying interests /*8. A mutual fund in $ndia is a ii. body cor0orate <<. com0any 22. trust ll. an asset management com0any /*.. ?hen selling a mutual fund4 a good agent 1ould ne)er 22. describe the 0ast 0erformance of the scheme ll. com0are the fund 1ith other mutual funds mm. assure a rate of return nn. com0are the fund 1ith other financial 0roducts

/*-. An in)estor buys one unit of a fund at an NAV of ,s.2(. @e recei)es a di)idend of ,s.& 1hen the NAV is ,s.21. The unit is redeemed at an NAV of ,s.22. Total ,eturn is ee. 2*.81+ ff. ,s.28.*1 gg. 21.28+ hh. ,s.21.8* /7(. A fund sells 1(( units of face )alue ,s.1(9- at an NAV of ,s.12.2*. @o1 much 1ould be credited to unit ca0italB ii. ,s.122* <<. ,s.22* 22. ,s.1((( ll. none of the abo)e /71. ?hen a scheme 1ith assured returns is being launched4 1hich of the follo1ing need not be 0ublished in the offer documentB ii. Means of fulfilling the guarantee <<. $nformation for all schemes launched by the fund in the 0ast 22. com0arison 1ith other mutual funds ll. $n)estment ob<ecti)e /72. Mutual fund units can be distributed by ee. trustees of the fund ff. the AM gg. Non-ban2ing finance com0anies hh. ban2s /7&. A debt fund distributes 1(+ di)idend. @o1 much tax does the in)estor ha)e to 0ay on this di)idendB ii. 1(+ <<. 12+ 22. 2(+ ll. None /7/. A debt fund distributes a 1(+ di)idend. @o1 much tax does the fund ha)e to 0ayB ii. 1(+ <<. 12+ 22. 1(.2+ ll. None /7*. @o1 many scri0s is the N$%TF constitutes of cc. /( dd. 1(( ee. &( ff. none of the abo)e /77. ?hich of the follo1ing is the first ste0 in financial 0lanning ii. Asset Allocation <<. !election of fund 22. !tudying the features of a scheme ll. None of the abo)e /78. ?hy should one buy an insurance 0olicyB gg. $t gi)es high current returns hh. $t gi)es good ca0ital a00reciation o)er its term ii. $t should be bought due to the need for insurance and not as an in)estment

<<. All of the abo)e /7.. !"#$ ,egulations for Mutual %unds 1ere formulated in aa. 1--2 bb. 1--& cc. 1--* dd. 1--7 /7-. "x0enses incurred by a fund for 0rinting of Gey $nformation Memorandum can be amortised o)er cc. 1( Frs dd. * Frs ee. 1* Frs ff. annot be amortised /8(. A mutual funds> in)estments are guided by the gg. AM hh. #oard of Trustees ii. $n)estment 3b<ecti)es <<. ;nit holders /81. ;T$ 1as the only mutual fund for the 0eriod ii. 1-./ to 1-.. <<. 1-7& to 1-.. 22. 1-7/ to 1--2 ll. none of the abo)e /82. $n)estors 1ho follo1 the fixed Asset Allocation a00roach dd. class 1hich has gi)en higher return maintain balance in their 0ortfolio by li'uidating a 0art of the 0osition in the asset and rein)esting in the other asset class 1hich has lo1er return ee. are not disci0lined ff. increase their e'uity 0osition 1hen e'uity 0rices tend to climb gg. none of the abo)e /8&. An in)estor should not in)est in a mutual fund if ee. his ca0ital base is large ff. he is able to carry out detailed in)estment research and monitor the stoc2 mar2et gg. both the abo)e hh. none of the abo)e /8/. Mutual fund can benefit from economies of scale because of ee. 0ortfolio di)ersification ff. ris2 reduction gg. large )olume of trades hh. none of the abo)e /8*. ?hich of the follo1ing is a disad)antage suffered by a mutual fund in)estorB gg. @igh li'uidity hh. di)ersification ii. no tailor made 0ortfolio <<. lo1 in)estment /87. A disad)antage suffered by mutual fund in)estor is that he has no control o)er the costs of in)esting gg. True hh. %alse /88. ?hich of the follo1ing statements about ;T$ is untrue

ii. <<. 22. ll.

$t 1as set u0 in 1-7& $t 1as formed by ,#$ $t 1as established by an act of Aarliament $t 1as not gi)en a mono0oly status

/8.. ?hich scheme has the largest in)estor baseB gg. ;=$A hh. ;T$ Mastershare ii. ;!-7/ <<. !#$ Magnum /8-. ?hich 1as the first di)ersified e'uity in)estment scheme in $ndia gg. !#$ Magnum hh. ;T$ Mastershare ii. M"A--1 <<. Mastergain--2 /.(. The 0ri)ate sector 1as granted 0ermission to enter the mutual fund industry in y. 1--2 z. 1--& aa. 1--. bb. 1--* /.1. The first non-;T$ mutual fund 1as ii. !#$ M% <<. =$ M% 22. anban2 M% ll. $ndian #an2 M% /.2. The organisation res0onsible for a com0rehensi)e set of regulations for all mutual funds in $ndia is gg. ,#$ hh. !"#$ ii. AM%$ <<. !@ $= /.&. The 1--- ;nion 5o)ernment #udget hel0ed the Mutual %und industry by 22. regulating the industry 0ractices ll. exem0ting all mutual fund di)idends in the hands of in)estors from income tax mm. a00ro)ing the code of ethics formulated by AM%$ nn. doing a1ay 1ith all regulations for mutual funds /./. 6uring the 0eriod 1--2---4 the mobilisation of funds by the mutual fund industry 1as about ii. *+ - 7+ of gross domestic sa)ings <<. 2+ - /+ of gross domestic sa)ings 22. 8+ - 1(+ of gross domestic sa)ings ll. 2*+ - /(+ of gross domestic sa)ings /.*. ?hich of the follo1ing about Aublic Aro)idend %und DAA%E are untrue gg. *(+ of the balance of the /th year can be 1ithdra1n in the 8th year hh. The interest is tax free ii. The rate of interest is 12+ 0.a. <<. contributions u0to ,s.7(((( are eligible for tax rebate /.7. A close-ended scheme is 'uoted on the stoc2 exchange at a discount to its NAV 1hen aa. the mar2ets are bearish bb. in)estors 0ercei)e that the fund 1ill be unable to maintain the NAV

cc. the assets of the fund are under)alued dd. none of the abo)e /.8. ?hich of the follo1ing is a fundamental attribute of a mutual fund scheme ii. The names and addresses of the registrars and custodians <<. The nature of the scheme being income bearing 22. The s0ecified stoc2s in the scheme>s 0ortfolio ll. The name and address of the com0liance officer /... 3ffer 6ocument of a mutual fund is ii. re'uired by in)estors <<. re'uired by the AM for its o1n reference 22. re'uired as 0er !"#$ regulations ll. not mandatory as 0er !"#$ /.-. The units of a scheme being sold and re0urchases as 0er the 0rocedure laid do1n is one of the fundamental attributes of a scheme ii. True <<. %alse /-(. The ste0s in)ol)ed in the selection of an e'uity fund for in)estment are 22. sector selection4 asset classification4 selection of fund managers and schemes ll. sector selection4 selection of fund managers and schemes4 asset classification mm. asset classification4 sector selection4 selection of fund managers and schemes nn. selection of fund managers and schemes4 sector selection4 asset classification /-1. om0ounding of interest is best ex0lained by a gg. balanced fund hh. gro1th fund ii. )alue fund <<. income fund /-2. %rom 1hom can a unit-holder see2 redressal if his com0laint is not entertained by the mutual fund ii. AM <<. #oard of Trustees 22. !"#$ ll. ,#$ /-&. An in)estor 1ishes to s1itch bet1een a money mar2et mutual fund and an e'uity fund. ?hat 1ould you ad)ise himB gg. $t 1ould be better to stic2 to one ty0e of fund4 the one that meets his in)estment ob<ecti)e. hh. @e should 2ee0 s1itching 0arts of his in)estment from the e'uity fund to the money mar2et fund as the mar2et rises and s1itch bac2 to the e'uity fund 1hen the mar2et falls ii. @e should s1itch from the money mar2et fund to the e'uity fund in a rising mar2et and s1itch bac2 to money mar2et fund 1hen the mar2et falls <<. none of the abo)e /-/. %or choosing an a00ro0riate benchmar2 to measure a scheme>s 0erformance4 all of the follo1ing are re'uired exce0t ee. the com0osition and size of the 0ortfolio ff. the in)estment ob<ecti)e gg. historical data of fund 0erformance hh. the nature of in)estments /-*. ?hich of the follo1ing characterise the fund that a ris2 a)erse in)estor should choose ee. 5ross di)idend yield 1*+ #eta 1.*4 "x-Mar2s -(

ff. 5ross di)idend Neil 1(+4 #eta 14 "x-Mar2s 8( gg. 5ross di)idend yield 11+4 #eta (.-4 "x-Mar2s .( hh. 5ross di)idend yield 12+4 #eta 1.24 "x-Mar2s .( /-7. A mainstream di)ersified debt fund is most affected by ee. rein)estment ris2 ff. li'uidity ris2 gg. interest rate ris2 hh. default ris2 /-8. $f yields fall4 a debt fund manager 1ill do all of the follo1ing exce0t dd. sell short maturity securities and buy long maturity securities ee. see that the fund>s a)erage duration becomes longer than the mar2et>s a)erage duration ff. sell long duration securities and buy short duration securities gg. sell high cou0on securities and buy lo1 cou0on securities /-.. $n 1hich ty0e of schemes should an unmarried 0rofessional 1or2ing @== in)est gg. !cheme in)esting .(+ in debt securities hh. *(+ in e'uity funds and *(+ in income funds ii. -(+ in e'uity funds ha)ing a higher A9" ,atio than the mar2et <<. all the money in a balanced fund /--. An in)estor buys units in a fund that has gi)en excellent returns in the 0ast4 but his ex0ectations are not met as the fund does not 0erform 1ell this year. The in)estor can gg. sue the AM hh. sue the Trustees ii. sue the agent <<. none of the abo)e *((. A fund>s in)estments at mar2et )alue total ,s.8(( crores4 Total liabilities stand at ,s.*( lacs and the number of units outstanding is ,s.2. rores. ?hat is the NAV cc. ,s.&(.1dd. ,s.2/.-. ee. ,s.&2.1* ff. ,s./(./-

Answers to Practice Question for AMFI Test

Q . N o 2 5 1 2 5 2 2 5 3 2 d A n s 1 Q. No A n s a Q. No A n s b Q. No A n s b Q. No A n s a

351

351

'51

'51

352

352

'52

"

'52

353

353

'53

"

'53

"

35'

35'

'5'

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