NISM SERIES II B - REGISTRARS TO AN ISSUE & SHARE

TRANSFER AGENT (MUTUAL FUNDS) EXAM

 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

About PASS4SURE.in

PASS4SURE is a professional online practice test bank for various NSE NCFM, NISM and BSE exams. The team
behind PASS4SURE has decades of experience in the financial and stock markets and have succeeded in preparing
practice question bank which will help not only to pass the exams easily but also get good knowledge of the
subject.

Our online mock exams contain questions which are carefully analysed by the experts and have a high probability
of being asked in the exams. Thus all PASS4SURE questions are highly valued and contribute to an almost 100%
success rate.

We do not believe in offering you thousands of questions but most important 400 – 500 practice questions and
answers. PASS4SURE understands that time and money is valuable for our students, so we regularly update all our
exams. The old questions are deleted and new important questions are added. Our LAST DAY REVISION test are
on the spot. This is done to ensure that the students learns what is most important and pass the exams. You do
not have to try again and again wasting time and money.

Our simple aim is to simplify the NCFM, NISM and BSE exams. ALL THE BEST.

IMPORTANT – The viewing rights for this downloaded Question Bank will automatically
expire after 60 days from the date of purchase.

TEST DETAILS – The NISM Registrar to an Issue & Share Transfer Agent (Mutual Funds) exam is a 100 mark exam
with 50% as passing marks. The question paper will consist of 100 multiple choice questions. There is 0.25%
negative marking. The time duration is 120 Minutes.

All Rights Reserved. No Part of this documents may be reproduced, stored in a retrieval system, or transmitted, in any form or
by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission from
PASS4SURE.in. For any clarification regarding this document or if you feel there are errors in the question bank, please write
us at info@pass4sure.in
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

PRATICE TEST NO. 2

Question 1 SIPs can be made along with an NFO - State True or False ?

(a) TRUE

(b) FALSE

Question 2 Stock exchanges have been given complete powers to regulate and are not
controlled by SEBI - State True or False ?

(a) TRUE

(b) FALSE

Correct Answer 1 TRUE

Answer Explanation Systematic Investment Plans (SIP) can be made during a NFO.

Correct Answer 2 FALSE

Answer Explanation Indian stock exchanges have to follow SEBI guidelines.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 3 State True or False - Companies prefer equity capital because it is less expensive.

(a) TRUE

(b) FALSE

Question 4 If the institutional investor is allowed to invest as per its charter then no further
approvals are required - State True or False ?

(a) TRUE

(b) FALSE

Correct TRUE
Answer 3
Answer In debt capital the company has to make regular interest payments to the lenders even if
Explanation its not making any profits. In equity capital there is not such compulsion and the
dividends can be paid or not as per the financial situation and decisions of the Board. So
equity capital is less expensive.

Correct FALSE
Answer 4
Answer The process for institutional investors investing in mutual funds involves the following
Explanation three components:
- Authorisation for the organisation to undertake investment activity has to be in
its charter.
- Managers need approvals before investing the funds of the institution in
mutual funds.
- Authorised signatories should be designated to execute the decision on behalf of the
organisation.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 5 Units of a mutual fund have a similar connotation as shares of a company - State
True or False ?

(a) TRUE

(b) FALSE

Question 6 An investor can use only the pre-printed transaction slip that accompanies the
account statement for valid transactions - State True or False ?

(a) TRUE

(b) FALSE

Correct Answer 5 TRUE

Answer Explanation A mutual fund investor is called a unit holder just as an investor in equity shares
is called shareholder. The ownership of the fund is jointly held by all the unit
holders. Just as investors in equity hold shares of a company, mutual fund
investors hold units of the fund.

Correct Answer 6 FALSE

Answer Explanation An investor can either use a pre-printed transaction slip form or he can use a
blank transaction slip, which is available with AMC branches, distributors and
ISCs and write the folio number in the space provided.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 7 An investor can directly operate their account even after granting a PoA - State
True or False ?

(a) TRUE

(b) FALSE

Question 8 During the ‘No Transactions’• period, a fund allows only redemptions but no
fresh purchases - State True or False ?

(a) TRUE

(b) FALSE

Correct TRUE
Answer 7
Answer The grantor can continue to operate the account even after giving a Power of Attorney.
Explanation

Correct FALSE
Answer 8
Answer Once the NFO closes, there is a 'no transaction period' (usually 5 days). During this
Explanation period, the investors’ account folio details are created, cheques are banked, bounced
cheques are returned, and the final list of unit holders who form the register of
investors for the just closed NFO is created. So during this period no fresh purchases
or redemptions are allowed.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 9 The NAV in a re-investment option comes down after payment of dividend -
State True or False ?

(a) TRUE

(b) FALSE

Question 10 The sponsor contributes to the capital of the AMC - State True or False ?

(a) TRUE

(b) FALSE

Correct Answer 9 TRUE

Answer Explanation Under the dividend reinvestment option, the dividend is declared, but not
physically paid out. Instead, it is reinvested back into the scheme. So the NAV
will come down to the extent of dividend declared even for a Dividend Re-
investment option.

Correct Answer 10 TRUE

Answer Explanation The sponsor is the promoter of a mutual fund, who sets up the trust and the
AMC, appoints the custodian, board of trustees and the board of directors of the
AMC.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 11 The unit capital which type of fund/scheme changes when investors enter into
purchase and redemption transaction ?

(a) Debt fund

(b) Fund of Fund

(c) Close ended

(d) Open ended

Question 12 In India, who are the beneficiaries of a mutual fund ?

(a) The trustees of the fund

(b) The sponsors of the fund

(c) The constituents who manage the fund

(d) The investors of the fund

Correct Open ended

Answer 11
Answer The unit capital of a fund is the number of units issued x NAV of the fund.
Explanation
The unit capital of an open-ended fund is not fixed, but varies according to
the purchase and redemption transactions of investors.
Correct The investors of the fund
Answer 12
Answer In India, mutual funds are created as trusts. The investors are the beneficial owners of the
Explanation investments held by the trust.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 13 The interest on company fixed deposits is paid _______.

(a) only on a cumulative basis

(b) Can be either quarterly, annually or in cumulative manner

(c) only on an annual basis

(d) only on a half yearly basis

Question 14 Who sends the Statement of Account to the investors on behalf of the mutual funds ?

(a) The Sponsors

(b) The Custodians

(c) The AMC

(d) The R&T Agents

Correct Can be either quarterly, annually or in cumulative manner

Answer 13
Answer Companies raise fixed deposits from the retail investors to meet their
Explanation borrowing requirements.
The interest on such fixed deposits can either be paid periodically, such as annual,
semi-annual, or quarterly or it is paid cumulatively at the end of the term along with
the repayment of the principal.

Correct The R&T Agents

Answer 14
Answer Statement of Account is proof of investment for the investor. R&T agents, on behalf of
Explanation mutual funds, dispatch SoAs to investors.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 15 Which of these statement is true with respect to a Foreign Currency Convertible
bond (FCCB) ?

(a) FCCB pays interest in foreign currency and converts into foreign shares

(b) FCCB pays interest in foreign currency and converts Indian shares

(c) FCCB pays interest in rupees and converts into foreign shares

(d) FCCB pays interest in rupees and converts into Indian shares

Question 16 Bond whose interest amount fluctuates in step with the market interest rates, or
some other external measure is called as a _________ .

(a) Convertible Debenture

(b) Floating Rate bond

(c) Benchmark bond

(d) reset bond

Correct FCCB pays interest in foreign currency and converts Indian shares
Answer 15
Answer FCCBs are bonds issued by Indian companies and subscribed to by a non-resident in
Explanation foreign currency. They carry a fixed interest or coupon rate and are convertible into a
certain number of ordinary shares at a preferred price.
FCCBs are issued as convertible debentures abroad, with the debt component
in foreign currency and the equity on conversion, into Indian equity shares.

Correct Floating Rate bond

Answer 16
Answer Instead of a pre-determined rate at which coupons are paid, it is possible to structure
Explanation bonds, where the rate of interest is re-set periodically, based on a benchmark rate.
Such bonds whose coupon rate is not fixed, but reset with reference to a benchmark
rate, are called floating rate bonds.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 17 Some funds give investors the choice of withdrawing a fixed sum over a defined
period. This is known as _______ .

(a) Fixed Option

(b) Appreciation Option

(c) Redemption Option

(d) Reduction Option

Question 18 _______ are considered as a Retail Investor in Mutual Funds.

(a) Partnership Firms

(b) NRIs

(c) Trusts

(d) Societies

Correct Fixed Option

Answer 17
Answer Some funds give investors the choice of withdrawing or transferring a fixed sum over
Explanation a defined period. This is known as the fixed option.

Under this option, a unit holder withdraws or switches a fixed amount of not less than
the minimum from his unit account.

Correct NRIs
Answer 18

Answer An individual investor, who is residing outside India, is called an NRI (Non Resident
Explanation Indian) and is a retail investor.

Partnership firms, Trusts , Societies etc. are Institutional Investors.

 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 19 An 'at par cheque' is equivalent to a _____ .

(a) local cheque

(b) foreign cheque

(c) outstation cheque

(d) transfer cheque

Question 20 First the mutual fund has to state its _______ which shows how the money will
be invested.

(a) Fund vision

(b) Fund mission

(c) Investment objective

(d) Target returns

Correct local cheque.

Answer 19
Answer Banks offer multi-city cheques or at par cheques facility to their preferred or current
Explanation account customers.
At par implies that the instrument is as good as drawn on any other branch of the same
bank. An at-par cheque is a local cheque when presented at any of the bank’s
branches and goes into local clearing.

Correct Investment objective

Answer 20
Answer A mutual fund product is first described by its investment objective. Investors then
Explanation invest their money in the product. The money is pooled together and is invested
according to the stated objective.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 21 If there are material changes, than the Scheme Information Document (SID) has
to revised accordingly every three months to show the changes - State True or
False ?

(a) TRUE

(b) FALSE

Question 22 To make a fresh purchase in a mutual fund, the new investors have to ______ .

(a) submit a demand draft only

(b) submit a transaction slip

(c) submit a filled purchase order

(d) submit an application form

Correct FALSE
Answer 21
Answer The SID has to be updated every financial year if there is no change in the material
Explanation factors.

However, if there is a change in the fundamental attributes, the SID has to be revised
immediately.

Correct submit an application form

Answer 22
Answer Fresh purchases can be made by investors by submitting an application form complete
Explanation in all respects.

Existing investors can make a purchase by filling in the transaction slip and mentioning
their folio number.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 23 The Coupon Rate of a bond can vary every day but its Current Yield is always
fixed - State True or False ?

(a) TRUE

(b) FALSE

Question 24 Sponsor's work includes ______ .

(a) Set up the trust

(b) Set up the AMC

(c) Appoint the custodians

(d) All of the above

Correct FALSE
Answer 23
Answer The Coupon rate ie. the Rate of Interest of a bond is always fixed
Explanation
The Current yield varies as per the market price of the bond. Current yield simply
compares the coupon of a bond with its market price. For example, if a bond paying an
annual coupon of 12% is trading in the markets for Rs. 109.50, we compute the current
yield as:
12/109.5 =10.95%

So the coupon rate is 12% but current yield is 10.95%

Correct All of the above
Answer 24
Answer The sponsor is the promoter of a mutual fund, who sets up the trust and the AMC,
Explanation appoints the custodian, board of trustees and the board of directors of the AMC..
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 25 Who send the Statement of Accounts to investors on behalf of the Mutual Fund ?

(a) Stock Exchange

(b) The bank of the mutual fund

(c) AMC

(d) R&T Agent

Question 26 Who centrally maintains the address details of the unit holders ?

(a) AMC

(b) SEBI

(c) AMFI

(d) SEBI registered KRA

Correct R&T Agent

Answer 25
Answer Statement of account (SoA) is proof of investment for the investor. Registrar and
Explanation transfer - R&T agents, on behalf of mutual funds, despatch SoAs to investors,
whenever there is a transaction on a folio.

If there are no transactions in a folio in a six month period, a SoA will be sent giving
the latest closing balance

Correct SEBI registered KRA

Answer 26
Answer The information for KYC ie. the Name, Address etc. is uploaded by the intermediary
Explanation onto the system provided by a centralized agency called by the KYC
Registration Agency (KRA).

The KRA will maintain the information and make it available to the intermediaries.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 27 The NAV of Day T includes portfolio value of Day _____ and unit capital of Day _____.

(a) T,T+1

(b) T,T+2

(c) T,T-1

(d) T,T-2

Question 28 ________ is predefined by a Mutual Fund.

(a) Fund Manager

(b) Investment objective

(c) AUM

(d) NAV

Correct T,T-1
Answer 27
Answer NAV of Day T includes portfolio value of Day T (Numerator) and the unit capital of day
Explanation T minus 1 (Denominator).

Correct Investment objective

Answer 28
Answer A mutual fund is a collective investment vehicle. Usually a mutual fund product is
Explanation first described by its investment objective.

For example, growth funds seek capital appreciation and therefore invest in equity;
income funds invest with the objective of generating regular income and create a
portfolio of debt securities.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Question 29 In SIP investments, the investors confirm a periodic investment over a _____ .

(a) fluctuating period of time

(b) long period of time

(c) short period of time

(d) chosen period of time

Question 30 ________ hold the cash and securities (assets) of the mutual fund

(a) AMC

(b) Fund Manager

(c) Trustees

(d) Custodian

Correct Answer 29 chosen period of time

Answer Explanation For a SIP, investors commit a periodic investment over a chosen length of time -
say 1 year, 2 years , 5 years etc.

Correct Answer 30 Custodian

Answer Explanation Custodians hold the cash and securities of the mutual fund and are responsible
for their safekeeping. They hold actual custody of the assets of the mutual fund.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2

Practice Question Banks also available for :

NISM

NISM Series I: Currency Derivatives Certification Exam

NISM Series V A: Mutual Fund Distributors Certification Exam
NISM Series VI: NISM Series VI - Depository Operations Certification Exam
NISM Series VII: Securities Operations and Risk Management
NISM Series VII: Equity Derivatives Certification Exam
NISM Series III A: Securities Intermediaries Compliance Certification Exam
NISM Series X A : Investment Adviser (Level 1) Certification Exam
NISM Series X B: Investment Adviser (Level 2) Certification Exam
NISM Series X V: Research Analyst Certification Exam

NCFM

NCFM Financial Markets: A Beginners Module

NCFM Capital Market (Dealers) Module
NSE FIMMDA : Debt Market (Basic) Module
NCFM Derivative Market (Dealers) Module

BSE

Certificate on Security Market (BCSM)

NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) EXAM –PRACTICE TEST 2