Chapter 1: Sample Questions

1. Which among the following investment avenues does not offer income on a regular basis?

a. Real estate

b. Physical Gold

c. Stocks

d. Debentures

2. Which amongst the following asset categories can also be purchased for consumption purposes
apart from an investment?

a. Real estate

b. Stocks

c. Bonds

d. Debentures

3. The purchasing power of currency changes on account of which of the following?

a. Asset allocation

b. Compound interest

c. Inflation

d. Diversification

4. What is the real rate of return?

a. Return that the investor gets after payment of all expenses

b. Return that the investor gets after taxes

c. Return that the investor gets after adjusting the risks

d. Return that the investor gets after adjusting inflation

5. When the interest rate in the economy increases, the price of existing bonds .

a. Increases

b. Fluctuate

c. Decreases

Chapter 2: Sample Questions

a. Asset Under Management

b. Net Asset Value

c. Market price

d. Exit load

2. Each mutual fund scheme must have a stated investment objective. State whether True or
False.

a. True

b. False

3. Which of the following is an advantage of mutual funds?

a. Customized portfolio

b. Convenience to buy stocks and bonds directly from the mutual fund

c. Economies of scale

4. The transparency levels in mutual funds are very low. State whether True or False.

a. True

b. False

5. Which amongst the following categories of mutual funds have a fixed maturity date?

a. Open-ended funds

b. Exchange Traded Funds

c. Close-ended funds

d. Interval funds

Chapter 3: Sample Questions

1. Mutual funds are constituted as ‘Trusts’ in India. Who are the beneficiaries of the trust?

a. The employees of the Asset Management Company

b. The mutual fund distributors

c. Unit holders
d. Trustees of the mutual fund

2. Who handles the day-to-day management of the mutual fund?

a. Asset Management Company

b. Registrar and Transfer Agency

c. Mutual Fund Trustees

d. Unit holders

3. Whose job is it to track the various corporate actions like a bonus, dividend, or rights issues in
companies where the mutual fund scheme has invested?

a. Registrar and Transfer Agency

b. Custodian

c. Auditors of the Asset Management Company

d. Unit holders

4. Registrar and Transfer Agency function must be independent of the Asset Management
Company, and it cannot be retained in-house. State whether this statement is True or False.

a. True

b. False

5. With which agency are the mutual fund distributors registered?

a. Securities and Exchange Board of India

b. Fund Accounting Team

c. Depositories

d. Association of Mutual Funds in India

Chapter 4-Sample Questions

1. Which of the following regulates mutual funds in India?

a. Securities and Exchange Board of India

b. Association of Mutual Funds in India

c. Asset Management Companies

d. Board of Trustees of mutual funds

a. True

b. False

3. What minimum percentage of the mutual fund scheme corpus must be invested in equity and
related instruments in the case of Equity Linked Savings Schemes (ELSS)?

a. 65 percent

b. 70 percent

c. 80 percent

d. 100 percent

4. Which of the following statements is ‘True’ with respect to celebrity endorsement for mutual
funds?

a. SEBI has permitted celebrity endorsement at the industry level for the purpose of increasing the
awareness of mutual funds

b. SEBI has permitted celebrity endorsements for the promotion of individual mutual fund schemes
c. Celebrities can endorse only NFOs

d. Celebrities can endorse only ongoing mutual fund schemes

5. Investors have the right to specify up to nominees for their mutual fund investment folios.

a. Zero

b. One

c. Two

d. Three

Chapter 5: Sample Questions

1. “Please read the scheme related documents carefully” – which documents does this line refer
to?

a. Scheme Information Document and audited balance sheet of the Asset Management Company

b. Trust deed and Key Information Memorandum

c. Statement of Additional Information and fund fact sheet

d. Scheme Information Document and Statement of Additional Information

a. These two documents are prepared in the format prescribed by Association of Mutual Funds in
India as part of AMFI’s Code of Conduct

b. These two documents are prepared in the format prescribed by Association of Mutual Funds in
India as part of AMFI’s Best Practices Circular

c. These two documents are prepared in the format prescribed by Securities and Exchange Board
of India

d. Each Asset Management Company is free to prepare these documents in the format they desire

3. How often should the Key Information Memorandum (KIM) be updated?

a. At least once a month

b. At least once every six months

c. At least once a year

d. It need not be updated after it is issued once

4. The NAV of scheme is disclosed on the website of ______?

a. RBI

b. AMC

c. Both a and b

d. Neither a nor b

5. Which among the following is not a statutory document?

a. Fund factsheet

b. Statement of Additional Information

c. Scheme Information Document

d. Key Information Memorandum

Chapter 6-Sample questions.

1. Only individuals are allowed to distribute mutual funds in India. State whether True or False.

a. True

b. False
2. Mutual Fund Distributors Certification Examination offered by ___ is required for becoming a
mutual fund distributor.

a. Securities and Exchange Board of India

b. National Institute of Securities Markets

c. Association of Mutual Funds in India

d. National Skills Development Corporation

3. In what form do mutual fund distributors earn revenue?

a. Commission from mutual funds for the distribution of the schemes

b. Fees collected from the investors

c. Commission received from Association of Mutual Funds in India

d. Investment advisory fee from mutual funds

4. Mutual fund distributors can only earn upfront commission from the mutual funds. State
whether True or False.

a. True

b. False

5. Mutual fund distributors earn no commission when the investor chooses to invest in “direct”
plans. State whether True or False.

a. True

b. False

Chapter 7: Sample Questions

1. As per the fair valuation principles laid out by SEBI, it is mandatory to disclose the valuation
policy in .

a. Statement of Additional Information

b. Statement of Accounts sent to investors periodically

c. Fund fact sheet

d. The fair valuation principles are not to be put in public

2. Investors have bought 20 crore units of a mutual fund scheme at Rs. 10 each. The scheme has
thus mobilized 20 crore units X Rs. 10 per unit i.e., Rs 200 crore. An amount of Rs. 140 crore is
invested in equities. The balance amount of Rs 60 crore, mobilized from investors, was placed in
bank deposits. Interest and dividend receivable (accrued but yet not received) by the scheme is Rs
8 crore, scheme expenses payable (accrued but not paid yet) is Rs 4 crore. Calculate the scheme’s
NAV per unit.

a. Rs. 20.40

b. Rs. 10.20

c. Rs. 20.00

d. Rs. 10.00

3. What is the maximum Total Expense Ratio chargeable in case of index funds?

a. 1 percent of the daily net assets

b. 1.5 percent of the daily net assets

c. It depends as the TER changes in line with the size of the scheme

d. Any amount that the AMC may deem appropriate

4. In case of mutual fund schemes, dividends can be paid only out of .

a. Premium reserve account

b. Unit capital

c. Distributable surplus generated by the scheme

d. Mark-to-market profits

5. Mutual funds are allowed to charge differential exit loads based on the amount of investment.

a. True

b. False

Chapter 8: Sample Questions:

1. What is the tax applicable on the income earned by the mutual fund schemes?

a. It is a function of the type of income since dividends, short term capital gains and long-term
capital gains attract different tax rates

b. Income earned by a mutual fund is exempt from taxes

c. 10 percent plus surcharge and cess

d. It is a function of the marginal rate of tax applicable to the respective investor in the mutual fund
scheme
2. Redemption from which of the following mutual fund schemes would attract Securities
Transaction Tax (STT) for an investor?

a. Multi-cap mutual fund

b. Government Securities Fund

c. Liquid Fund

d. Overnight Fund

3. In the non-equity-oriented funds, with equity in the range of 35 to 65 percent of portfolio, the
rate of long-term capital gains tax is .

a. 10 percent with indexation

b. 10 percent without indexation

c. 20 percent with indexation

d. 20 percent without indexation

4. In case of capital gains from mutual fund investments, Tax Deduction at Source (TDS) is
applicable for:

a. Minor through guardian

b. Non-Resident Indians(NRIs)

c. All investors, who have invested more than Rs. 5 lacs

d. TDS is not applicable in case of mutual funds

5. The Income Tax Act allows setting-off of the short-term capital loss against long term capital
gains. State whether True or False.

a. True

b. False

Chapter 9: Sample Questions

1. What term is used to describe the Net Asset Value (NAV) of the scheme after the dividend is
paid out (Remember the NAV would have dropped to the extent of the dividend paid)?

a. Ex-Dividend NAV

b. Cum-Dividend NAV

c. Lower NAV
d. Dividend NAV

2. At what price are the bonus units issued to the unit holder?

a. The price is decided by the AMC in consultation with the trustees

b. The bonus units are allotted free of cost

c. At the prevailing NAV

d. At the prevailing NAV divided by the bonus ratio

3. Which of the following statements is True?

a. Hindu Undivided Families (HUFs) are not allowed to invest in mutual fund schemes

b. Minors cannot invest in mutual fund schemes

c. Foreign investors can invest in Indian mutual fund schemes, provided they have completed the
Know-Your-Client (KYC) formalities

4. Whose KYC needs to be completed in case of an application by a minor?

a. The minor

b. The guardian

c. Any family member of the minor

d. No KYC is required in case of applications by minors

5. How many (maximum) bank accounts can a resident individual investor register with a mutual
fund folio?

a. 1

b. 2

c. 3

d. 5

Chapter 10: Sample Questions

1. Government securities can be considered to be completely risk-free from defaults. State

a. True

b. False

2. Unsystematic risk can be reduced through diversification. State whether True or False.
a. True

b. False

3. Which of the following type of analysis tracks the price and volume data related to trading in
the security?

a. Quantitative analysis

b. Fundamental analysis

c. Technical analysis

d. Situation analysis

4. An investor invested in scheme A when the scheme’s NAV was Rs. 120 per unit. The investor
redeemed the investments at the NAV of Rs. 135. Calculate the simple return.

a. 10.00 percent

b. 11.11 percent

c. 12.50 percent

d. 15.00 percent

5. Which of the following is a measure of fluctuation in periodic returns in an equity mutual fund
scheme?

a. Variance

b. Sharpe ratio

c. Modified duration

d. Jensen’s Alpha

Chapter 11: Sample Questions

1. ‘Once it is finalized, a mutual fund scheme’s benchmark cannot be changed at a later date.’
State whether the statement is True or False.

a. True

b. False

2. Which amongst the following is a measure of risk-adjusted returns of mutual fund scheme?

a. Standard deviation

b. Beta
c. Variance

d. Sharpe ratio

3. Which of the following cannot be considered for the purpose of selecting a scheme’s
benchmark?

a. Mutual fund scheme’s investment objective

b. Investment strategy of the MF scheme

c. Scheme’s asset allocation pattern

d. Scheme’s past returns

4. Takes into account all dividends generated from the basket of constituents that make up the
index in addition to the capital gains.

a. Total return index

b. Price return index

c. Dividend return index

5. Which is the most appropriate measure of evaluating how closely an index fund is tracking its
benchmark?

a. Treynor ratio

b. Tracking error

c. Total Expense Ratio (TER)

d. Assets Under Management (AUM)

Chapter 12-Sample Questions

1. Which of the following scheme categories would be considered the least risky in terms of credit
risk?

a. Credit risk fund

b. Corporate bond fund

c. Dynamic bond

d. Gilt fund

2. For an investor to get a quick sense of the level of risk involved in a mutual fund scheme, SEBI
suggested a simplified framework known as .
a. Risk-o-meter

b. Risk factors

c. Fact sheet

d. Investor’s risk profile

3. Passive funds are safe, as the NAV of such funds do not go down even when the respective
markets fall. State whether this is True or False.

a. True

b. False

4. Which among the following schemes would have lower risk of concentration?

a. Multi-cap fund

b. Focused fund

c. Thematic fund

d. Sector fund

5. Are close-ended debt funds?

a. Fixed maturity plans (FMPs)

b. Overnight funds

c. Dynamic debt funds

d. Arbitrage funds

6. As per the SEBI guidelines, how often should the mutual fund scheme’s portfolio be
published?*

a. Monthly
b. Half-yearly
c. Annually
d. Never