NISM SERIES II B - REGISTRARS TO AN ISSUE & SHARE

TRANSFER AGENT (MUTUAL FUNDS) EXAM

 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

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 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

LAST DAY REVISION TEST 1.

Question 1 Demand draft is an accepted mode of payment for all investors in mutual
funds - State True or False ?

(a) TRUE

(b) FALSE

Question 2 Once the money is pooled from the investors, the fund defines the
investment objective and strategy of the scheme -State True or False ?

(a) TRUE

(b) FALSE

Correct Answer 1 FALSE

Answer Demand Drafts (DD) are accepted as payment instruments where a
Explanation location is not serviced by an ISC or branch.

Correct Answer 2 FALSE

Answer The investment objective etc. is stated before the money is pooled from
Explanation the investor. The investor invest the money based on the investment
objective of the scheme.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 3 Redemption proceeds may be paid to a third party on receiving

instructions from the investor - State True or False ?

(a) TRUE

(b) FALSE

Question 4 A mutual fund cannot have ________ liabilities on its balance sheet.

(a) Long-term

(b) Short-term

(c) Medium-term

(d) All of the above

Correct Answer 3 FALSE

Answer Redemption cheques are drawn payable only to the first holder in a folio.
Explanation Mutual funds cannot issue third party payments.

Correct Answer 4 Long-term

Answer A mutual fund can have short term borrowings not exceeding 20% of the
Explanation net assets of the scheme and for a period not exceeding six months may be
made for the purpose of redemption of units or paying dividends to the
unit holders. Therefore when we refer to liabilities, we are referring to
current liabilities, in terms of payables that may be due. There can be no
long term liabilities.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 5 If both the investor and the mutual fund have the bank accounts in the
same city local cheques are used for fund transfer- State True or False ?

(a) TRUE

(b) FALSE

Question 6 IRDA regulates the activities of the insurance industry only - State True
or False ?

(a) TRUE

(b) FALSE

Correct Answer 5 TRUE

Answer Local cheques are used for transfer of funds between accounts held in the
Explanation same city but in different banks.

Correct Answer 6 TRUE

Answer Insurance Regulatory Development Authority (IRDA) is the regulator for

Explanation insurance industry.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 7 Preference shareholders get preference over debenture holders in the

payment of dividend - State True or False ?

(a) TRUE

(b) FALSE

Question 8 The funds of the investor are held in the AMCs account to enable them to
invest and manage it - State True or False ?

(a) TRUE

(b) FALSE

Correct Answer 7 FALSE

Answer The interest on the debenture is an expense to be paid by the company
Explanation before calculating the profits on which tax has to be paid. Dividends on
preference shares are paid from the residual profits of the company after
all external liabilities, including tax, have been paid.

Correct Answer 8 FALSE

Answer The funds of each scheme are maintained in a separate bank account.
Explanation
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 9 If payment for an investment of Rs 25000 is received by DD and a DD

charge of Rs 250 is deducted from it, the mutual fund will make the
investment for Rs 25000 - State True or False ?

(a) TRUE

(b) FALSE

Question 10 The Authorised capital of the company can be raised if the company
wants to increase the capital once it is fixed - State True or False ?

(a) TRUE

(b) FALSE

Correct Answer 9 TRUE

Answer Demand draft charges are usually not reimbursed by the mutual fund.
Explanation The mutual fund instead bears the charges incurred to buy the DD,
subject to limits, and treats the gross amount as the amount invested.

Correct Answer 10 TRUE

Answer The authorised capital of a company can be increased or reduced

Explanation subsequently by the company by obtaining appropriate authorisation
from existing shareholders.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 11 Mr. A has invested Rs 10000 in a mutual fund scheme and received 1000
units. He now wants to redeem 30% of the units. Can he do it ?

(a) Yes

(b) No

Question 12 The Exit load ________ the redemption price for the investor.

(a) increases

(b) reduces

(c) discounts

(d) morderates

Correct Yes
Answer 11

Answer Investors can do part redemption.

Explanation
Investors can redeem all or part of the units in a folio; or they can redeem all or part of
the amount in the folio.

Correct Reduces
Answer 12

Answer Exit load has the effect of reducing the redemption price for the investor.
Explanation
For example, at an NAV of Rs 30 per unit, redeeming 1000 units will get the investor
Rs 30,000. However, if the exit load is 1%, the redemption price is 30 - 0.30 = Rs 29.70.
Therefore the redemption proceeds are Rs 29,700 for 1000 units.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 13 Cut-off time has been prescribed by ______ for various categories of
funds and transactions.

(a) SEBI

(b) AMFI

(c) RBI

(d) IRDA

Question 14 What is like a recurring deposit with a mutual fund ?

(a) ATM

(b) SWP

(c) SIP

(d) STP

Correct SEBI
Answer 13

Correct SIP
Answer 14
Answer Most mutual funds offer the investors Systematic Investment Plan (SIP), a facility to
Explanation make periodic or recurring purchases in mutual fund schemes.

An SIP is like a recurring deposit with a mutual fund.

 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 15 The ________ of each unit of a mutual fund is generally Rs. 10

(a) Face Value

(b) Market Value

(c) NAV

(d) Stated Value

Question 16 Bonds whose _________ is not fixed, but reset with reference to a
_________, are called floating rate bonds.

(a) tenure , calendar

(b) maturity amount , coupon rate

(c) coupon rate , benchmark rate

(d) maturity , bench mark rate

Correct Face Value

Answer 15
Answer Just as investors in equity hold shares of a company, mutual fund investors hold units of the
Explanation fund. Each unit has a face value. This is typically Rs 10 per unit for most mutual funds.

Correct coupon rate , benchmark rate

Answer 16

Answer In Floating Rate Bond, instead of a pre-determined rate at which coupons are paid, the
Explanation 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) LAST DAY REVISION TEST 1

Question 17 State True or False - Entry load (if applicable ) increases the price at
which an investor buys the units.

(a) TRUE

(b) FALSE

Question 18 Mr. Suresh is an existing investor in a mutual fund scheme. He makes new purchases but
does not quote his folio number. What happens in this case ?

(a) The application of Mr. Suresh will be rejected

(b) The mutual fund will search for his folio number and add the units accordingly
(c) A new folio will be created
(d) Mr. Suresh will be asked to furnish more information

Correct FALSE
Answer 17
Answer For eg. If the Entry load is 1% and the NAV is Rs 100, than Re. 1 ( 1% of 100) is the entry
Explanation load per unit.
Thus the buying price for the investor increases by Re. 1 to Rs 101.

Correct Answer 18 A new folio will be created

Answer An existing investor may decide to make additional purchases under a
Explanation new folio. This will be considered as fresh purchase.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 19 Who sell Mutual Fund products across geographical locations ?

(a) Mutual Fund Brokers

(b) Distributors

(c) R&T agents

(d) Fund Managers

Question 20 Net Assets of a mutual fund will not include _____ .

(a) Unit capital

(b) Current assets

(c) Market value of portfolio

(d) Cash in hand

Correct Distributors
Answer 19
Answer AMCs appoint distributors who sell the mutual fund units to investors on behalf of the
Explanation mutual fund.

Distributors may be individuals or institutions such as banks, Non-Banking Finance

Companies
(NBFCs) or broking and distribution companies. Individual distributors form the
largest geographical network.

Correct Unit capital

Answer 20
Answer Net assets refer to the net value of the portfolio, after charging the daily Fund Recurring
Explanation Expenses (FRE). When we divide the net assets of a fund by the number of outstanding
units issued, we get net asset value (NAV) per unit.

Therefore net assets of a fund refer to the market value of the portfolio, plus accrued
incomes, less any current liabilities and accrued expenses.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 21 The shares in a rights issue are offered _______ .

(a) only to HNIs

(b) only to Institutional Investors

(c) only to new subscribers

(d) only to all existing shareholders

Question 22 Inflow and outflow resulting from transactions is reported to the ______

(a) Custodian

(b) ISC

(c) AMC Treasury

(d) Bankers

Correct only to all existing shareholders

Answer 21

Answer The rights shares are offered to the existing investors in a proportion as approved by
Explanation the Board of a company.

For example, the company may choose to issue rights at 1 for 1, to double its capital. This
means each existing shareholders will get one equity share for every one equity share that
they already hold.

Correct AMC Treasury

Answer 22
Answer Inflow and outflow resulting from transactions is reported to the AMC Treasury.
Explanation
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 23 Who generally carries out the mutual fund transaction for an
Institutional Investor ?

(a) The shareholder of the Institutional Investor company

(b) The bankers of the Institutional Investor

(c) The Board of Directors of the Institutional Investor

(d) The authorized signatories of the Institutional Investor

Question 24 When do equity investors get dividends ?

(a) When there is a profit and the dividend is approved

(b) Atleast once every year

(c) Every year only when there is a profit

(d) Once in every 2 years

Correct The authorized signatories of the Institutional Investor

Answer 23
Answer Institutional investors have to follow a process before they can invest in mutual funds.
Explanation
Institutions usually authorise specific individuals to execute the investment decision on
their behalf.

Correct When there is a profit and the dividend is approved

Answer 24
Answer Dividend is paid if the company makes sufficient profits and the management of the
Explanation company feels it is appropriate for some of the profits to be distributed among the
shareholders. So the dividend has to be approved before its distribution.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 25 As per Sec 80 C of the Income Tax Act, what is the maximum amount
that can be invested in an ELSS to claim tax benefits ?

(a) Rs 10000

(b) Rs 50000

(c) Rs 100000

(d) Rs 150000

Question 26 When a folio is registered with a PoA , the R&T agent will hold the
signature(s) of _____ .

(a) the PoA alone

(b) the Grantor alone

(c) the PoA and the Banker

(d) the Grantor and PoA

Correct Answer 25 Rs 150000

Answer Investment up to Rs. 1,50,000/- in a year in ELSS funds can be deducted

Explanation from taxable income of individual investors, as per Section 80C of the
Income Tax Act.

Correct the Grantor and PoA

Answer 26

Answer A Power of Attorney has two parties – the grantor who is the primary investor who grants
Explanation the rights; and the Attorney (or holder of PoA) who is authorised to execute an agreed set
of actions on behalf of the grantor.
The R&T agent will keep in its record the signature of both these parties.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 27 Who is the service provider for KYC with respect to Mutual Funds ?

(a) Custodians

(b) R&T Agents

(c) KRAs

(d) AMFI

Question 28 The ________ collect payment instruments through the clearing process
to realise the funds paid by the investors.

(a) bankers

(b) custodians

(c) agents

(d) R&T agents

Correct Answer 27 KRAs

Answer The information for KYC is uploaded by the intermediary onto the
Explanation 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.

Correct Answer 28 bankers

 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 29 Usually what is the minimum investment in a monthly SIP ?

(a) Rs 100

(b) Rs 500

(c) Rs 1000

(d) Rs 2500

Question 30 Which of the following is not announced when a debenture is issued ?

(a) The interest rate payable

(b) The date on which the debenture will be redeemed

(c) The trading price of the debenture in the secondary market

(d) The periodicity of payment of interest

Correct Answer 29 Rs 500

Correct Answer 30 The trading price of the debenture in the secondary market
Answer The price at which it a debenture will trade is determined by the market
Explanation forces like demand / supply , prevalent interest rates etc.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 31 When can the PAID UP capital of a company be less than the ISSUED
CAPITAL ?

(a) In case of Convertible Debentures

(b) In case of Preference Shares

(c) When only a part of authorized capital is issued

(d) When the issued shares are not fully paid up

Question 32 At what rates are STP and SWP subject to Income Tax ?

(a) 10%

(b) 25%

(c) NIL

(d) As applicable to the respective schemes

Correct When the issued shares are not fully paid up

Answer 31

Answer
Explanation When investors subscribe to the capital issued by a company, they may be required to
pay the entire price at the time of issue or in installments as application money, allotment
money and call money.

The portion of the issued capital that has been fully paidup by the allottees is the paid-up
capital of the company. If only part portion of issued capital is paid than the paid up
capital will be less than the issued capital.

Correct Answer 32 As applicable to the respective schemes

 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 33 Mutual funds have to obtain SEBI approval ________ .

(a) after they set up their business.

(b) during their setting up of business.

(c) before they set up their business.

(d) Any time

Question 34 On which NAV are the transactions processed which are received at the
investor service center ?

(a) Same day NAV

(b) Applicable NAV

(c) Current NAV

(d) Prospective NAV

Correct before they set up their business.

Answer 33

Correct Applicable NAV

Answer 34

Answer All financial transactions are processed in the R&T system as per the applicable NAV
Explanation according to the recorded time stamp on the document.

The applicable NAV is based on the time stamp made at the AMC office. It can be the
NAV of the same day or the next day or previous day etc. as per the SEBI / AMFI rules.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 35 How can a Stock Exchange change its bye-laws ?

(a) With the prior approval of RBI

(b) With the prior approval of High Court of the state its based in

(c) With the prior approval of SEBI

(d) By simply informing SEBI

Question 36 An investor wishes to directly credit the mutual fund account for the
purchase of units. What details should he know ?

(a) The bank branch location

(b) The bank account number

(c) The MICR number

(d) The bank branch name

Correct Answer 35 With the prior approval of SEBI

Answer The requirements for granting recognition to a stock exchange include
Explanation representation of SEBI on the board of the stock exchange and an
undertaking to make and amend their rules only with the prior approval
of SEBI.

Correct Answer 36 The bank account number

Answer In order to complete the electronic transfer of funds, investors must know
Explanation the scheme’s account details.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
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Question 37 Liquid funds generally invest in debt securities which have a maturity of
one year or more - State True or False ?

(a) TRUE

(b) FALSE

Question 38 A mutual fund scheme may appoint one or more collecting bankers -
State True or False ?

(a) TRUE

(b) FALSE

Correct Answer 37 FALSE

Answer Very short term debt funds are also called as liquid funds or money
Explanation market funds. They invest in short term debt instruments. Liquid funds
invest in debt securities with less than 91 days to maturity such as
treasury bills, commercial papers and certificate of deposits.

Correct Answer 38 TRUE

Answer A mutual fund scheme may appoint one or more collecting bankers. The
Explanation names of such banks and their branches are listed in the NFO application
form.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 39 In a Puttable bond, the investor can protect himself against rising interest
rates - State True or False ?

(a) TRUE

(b) FALSE

Question 40 In a floating rate bond, the tenure is fixed but the interest rate fluctuates -
State True or False ?

(a) TRUE

(b) FALSE

Correct TRUE
Answer 39
Answer Bonds that provide the investor with the right to seek redemption from the issuer, prior to
Explanation the maturity date, are called puttable bonds.

A put option provides the investor the right to sell a low coupon-paying bond to the issuer,
and invest in higher coupon paying bonds, if interest rates move up.

Correct TRUE
Answer 40
Answer Bonds whose coupon (interest payable) rate is not fixed, but reset with reference to a
Explanation benchmark rate, are called floating rate bonds.

The coupon on a floating rate bond thus varies along with the benchmark rate, and is
reset periodically.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 41 Cheques have to be drawn on _______ when investing in a mutual fund.

(a) the name of the collecting bank

(b) the name of the mutual fund

(c) the name of the mutual fund scheme

(d) the name of the mutual fund agent

Question 42 Investments made from NRO accounts ______ .

(a) Are from funds earned abroad

(b) Cannot be repatriated freely on redemption

(c) Can be repatriated freely

(d) Are dollar accounts

Correct Answer 41 the name of the mutual fund scheme

Correct Answer 42 Cannot be repatriated freely on redemption

Answer NRO (Non Resident Ordinary) accounts are rupee accounts. Investments
Explanation made from NRO accounts can be redeemed and repatriated only to the
extent of USD one million each financial year.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 43 ___ impressions are made by the time stamping machine on the
transaction documents.

(a) 1

(b) 2

(c) 3

(d) 4

Question 44 Who uses the transaction slips ?

(a) HNI Investors

(b) Foreign Investors

(c) New Investors

(d) Existing Investors

Correct Answer 43 3

Answer The time stamping machine captures the time of receipt of a transaction
Explanation at the Investor Service Center. The machine records a required number
of impressions, usually three.

Correct Existing Investors

Answer 44
Answer The application form is designed to capture all investor information for the first time.
Explanation Existing investors can use a transaction slip for most subsequent transactions.
A transaction slip has the folio number to identify the investor in the system.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 45 The funds contributed by the investors are used for ______ .

(a) paying salaries of the AMC staff

(b) creating investment portfolios

(c) for starting investor service centers

(d) for acquiring new companies

Question 46 How many bank accounts can a mutual fund scheme have ?

(a) 1

(b) 2

(c) 4

(d) Any number

Correct Answer 45 creating investment portfolios

Answer Fund managers invest the pool of money into securities such as equity and
Explanation debt to create an investment portfolio, according to the stated investment
objective of the fund. The risk and return of the fund depend on
the investment portfolio of the fund. The benefits from the investment
portfolio accrue to those that contribute to the pool.

Correct Answer 46 Any number

 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 47 KYC norms have to be fulfilled before opening ________ .

(a) Demat Account

(b) Trading Account

(c) Bank Account

(d) All of the above

Question 48 In a switch, which scheme is called the source scheme ?

(a) The redeeming scheme

(b) The purchasing scheme

(c) The target scheme

(d) None of the above

Correct Answer 47 All of the above

Answer KYC norms apply to opening bank accounts, trading accounts, demat
Explanation accounts and all such financial relationships.

Correct The redeeming scheme

Answer 48

Answer When a person shifts his investment from one scheme of a mutual fund to another scheme
Explanation of the same mutual fund, its called a Switch.

A switch is a redemption and purchase transaction rolled into one. A redeeming scheme
is called source scheme from which money is switched out. The purchasing scheme is
called target scheme, into which the money is switched in.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 49 When a company issues its shares at a premium, it means that it is

collecting more amount than its face value - State True or False ?

(a) TRUE

(b) FALSE

Question 50 Under which act are the Private and Public Companies set up ?

(a) Indian Companies Act

(b) SEBI Act

(c) Mercantile Act

(d) RBI Act

Correct TRUE
Answer 49
Answer The capital may be issued by the company either at its face value or at a premium
Explanation (higher than the face value) or at a discount (lower than the face value).

For eg. A share of face value Rs 10 is issued at Rs 50, this means its issued at a premium of
Rs 40.

Correct TRUE
Answer 50

Answer Private and Public Companies - These are companies set up under the Indian Companies
Explanation Act, and have the Memorandum of Association (MoA) and Articles of Association (AoA)
which lay out what their objectives and functions are. They are governed by their Board
of Directors.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 51 _________ are equity funds which invest in all segments of equity market.

(a) Large Cap Funds

(b) Sectoral Funds

(c) Diversified Funds

(d) Mid Cap Funds

Question 52 A time stamp is not fixed on _______ .

(a) The control sheet of the distributor

(b) The acknowledgement slip

(c) The transaction slip

(d) The payment instrument like cheque

Correct Diversified Funds

Answer 51
Answer Diversified Equity Funds - These are funds that can invest in the broad equity markets,
Explanation without any restrictions.

These funds also feature a lower risk, compared to equity funds that invest in a specific
sector or segment of equity markets.

Examples: SBI Equity Fund, Franklin Templeton Equity Fund.

Correct Answer 52 The control sheet of the distributor

Answer As per the SEBI Regulations, a document evidencing purchase and its
Explanation corresponding payment instrument should have the same time stamp
serial number. That is, an application form (with the acknowledgement)
and the accompanying cheque should have identical time stamping
impressions.
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(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 53 Electronic payment instruments are modern facilities, where the clearing
process need not be initiated by the _________ .

(a) investor

(b) mutual fund

(c) AMC

(d) R&T agent

Question 54 Where can one carry out purchase and sales transactions in a listed close ended fund ?
(a) In the offices of the respective mutual fund
(b) At the offices of investor service centers
(c) At the Stock Exchange
(d) One cannot carry out purchase and sales transactions in a close ended mutual fund

Correct mutual fund

Answer 53
Answer Electronic payment instruments are modern facilities, where the clearing process need
Explanation not be initiated by the mutual fund.
The investor completes the transfer of funds, and provides the proof of such transfer to
the mutual fund. In order to complete the electronic transfer of funds, investors must
know the scheme’s account details. AMCs provide this information to investors.

Correct Answer 54 At the Stock Exchange

Answer SEBI has made it mandatory for units of all closed-end schemes to be
Explanation listed on stock exchanges. Investors buy and sell the units among
themselves, at the price prevailing in the stock market.
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Question 55 A change in bank mandate application by an corporate investor has to be

signed by ______ .

(a) The Chairman

(b) The Managing Director or the Company Secretary

(c) The authorised signatories

(d) The auditors

Question 56 What is the cut off time for Non Liquid fund purchase and redemption ?

(a) 3.00 pm

(b) 12.00 pm

(c) 1.30 pm

(d) 2:00 PM

Correct The authorised signatories

Answer 55
Answer Institutional / Corporate investors are allowed to invest in mutual funds. At the time of
Explanation making the investment they need to provide authorization for the investment, approval for
the same and a list of signatories who can act on their behalf.

Correct 3.00 pm
Answer 56
Answer For all Equity oriented funds and debt funds (Non Liquid), the cut off time is 3.00 pm for
Explanation the same day NAV to be applicable.

If the application form is received after 3.00 pm, the next working day's NAV is
applicable.
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Question 57 Investments made from NRO accounts can be repatriated freely - State
True or False ?

(a) TRUE

(b) FALSE

Question 58 Mutual funds may be structured either as a company or as a _______ .

(a) Proprietorship firm

(b) Association of persons

(c) Partnership firm

(d) Trust

Correct Answer 57 FALSE

Answer NRO (Non Resident Ordinary) accounts are rupee accounts. Investments
Explanation made from NRO accounts cannot be redeemed and repatriated freely but
only to the extent of USD one million each financial year.

Correct Answer 58 Trust

Answer Mutual funds may be structured either as a company in which investors
Explanation hold shares or as a trust in which investors are the beneficiaries.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
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Question 59 The portion of ________ capital that has been issued to investors is called
issued capital.

(a) owners

(b) paid up

(c) authorised

(d) seed

Question 60 In which type of securities do Income Funds invest ?

(a) Government securities

(b) Arbitrage opportunities

(c) A wide range of bonds

(d) Equity

Correct Authorized
Answer 59

Answer The company may issue a portion of its authorised capital as and when it requires capital.
Explanation The capital may be issued to the promoters, public or to specified investors.

The portion of authorised capital that has been issued to investors is called issued capital.

Correct A wide range of bonds

Answer 60

Answer Debt funds that invest pre-dominantly in a wide range of medium-term and long-term debt
Explanation instruments issued by the government, companies, banks and financial institutions
are called income funds.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 61 Who settles the capital market transactions of a mutual fund like
receiving securities and settling funds ?

(a) The Depositories

(b) The Custodian

(c) The R&T agents

(d) The AMC

Question 62 While calculating the returns on a bond, the YTM method takes into
account the redemption price of a bond where as the Current Yield
method takes into account the current price of the bond - State True or
False ?

(a) TRUE

(b) FALSE

Correct The Custodian

Answer 61
Answer Custodians settle the securities transactions of the mutual fund.
Explanation They deliver and accept securities and funds, to complete transactions made in
the investment portfolio of the mutual fund.

Correct TRUE
Answer 62
Answer Current yield compares the coupon of a bond with its market price.
Explanation
Yield to maturity (YTM) is a popular and extensively used method for computing the
return on a bond investment. Every bond is made up of a set of cash flows that accrue at
various points in time, from the time the bond is acquired, until it is sold or redeemed.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 63 Registrar and transfer agents (R&T agents) are primarily responsible
for providing services to the _______ .

(a) AMC

(b) Sponsors

(c) Investors

(d) Custodians

Question 64 The trading price of a close ended fund on a stock exchange can be _____
than the actual NAV.

(a) Higher

(b) Lower

(c) Equal

(d) Higher or lower

Correct Answer 63 Investors

Answer Registrar and transfer agents (R&T agents) are primarily responsible
Explanation for providing services to the investors. They accept and process investor
transactions.

Correct Answer 64 Higher or lower

Answer The units of a close ended fund may trade on the exchange at a discount
Explanation or premium to the NAV depending upon investors' perception.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

Question 65 Who provides the collection services to mutual funds ?

(a) R&T Agents

(b) Banks

(c) Custodians

(d) Trustees

Correct Answer 65 Banks

Answer Banks provide collection services to mutual funds. Investor cheques and
Explanation drafts are collected into the mutual fund scheme accounts by banks.
 NISM SERIES IIB – REGISTRAR TO AN ISSUE
(MUTUAL FUND) LAST DAY REVISION TEST 1

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) LAST DAY REVISION TEST 1