NISM VA – Ques�on Bank

Index

Module No. Module Name Weightage

Module 1 Investment Landscape 8%

Module 2 Concept & Role of a Mutual Fund 6%

Module 3 Legal Structure of Mutual Funds in India 4%

Module 4 Legal and Regulatory Framework 10%

Module 5 Scheme Related Informa�on 10%

Fund Distribu�on and Channel Management

Module 6 6%
Prac�ces

Net Asset Value, Total Expense Ra�o and

Module 7 8%
Pricing of units

Module 8 Taxa�on 4%

Module 9 Investor Services 15%

Module 10 Risk, Return and Performance of Funds 7%

Module 11 Mutual Fund Scheme Performance 7%

Module 12 Mutual Fund Scheme Selec�on 15%

 Module: 1. Investment Landscape – 8. The difference between the yield on Gilt and the yield on a
non-Government Debt security is called its ____________
Weightage - 8 marks
a) YTM
b) Credit Spread
1. When should an investor adopt a strategy of limi�ng equity
c) Yield to Call
exposure to index funds?
d) Risk Spread
a) In the Accumula�on phase
Answer: Credit Spread
b) In the Re�rement phase
c) In the Sudden wealth phase 9. When a Mutual fund scheme makes profits or losses, these
d) None of the above profits and losses belong to _____________

Answer: In the Re�rement phase a) The AMC

b) The Trustees
2. A person gets sudden wealth by winning a big lotery.
c) The Fund Manager
Which of the below op�ons is NOT advisable for him ?
d) The Investor
a) Investment in STP for inves�ng in equi�es
Answer: The Investor
b) Investment in liquid fund for a short period
c) Investment of the full amount in equi�es 10. Iden�fy the False statement -
d) Revisi�ng his financial plan
a) Mutual funds units which have been purchased on a
Answer: Investment of the full amount in equi�es stock exchange have a compulsory lock-in period
b) Mutual funds units can be bought on stock
3. When the Capital Base of an investor rises, his or her risk
exchanges but they cannot be sold there
appe�te will tend to_______
c) Both of the above are false
a) decrease d)
b) increase
Answer: Both of the above are false
c) remain same
d) change randomly 11. Risk Profilers are used to ascertain the risk appe�te of an
investor. State whether True or False?
Answer: increase
a) TRUE
4. Tac�cal Asset Alloca�on is suitable only for seasoned
b) FALSE
investors opera�ng with large inves�ble surpluses - State True
or False ?

a) TRUE
Answer: TRUE
b) FALSE
12. Mr. Tarun is in his 30's and has a steady job. He is inves�ng
most of his savings in bank deposits. Due to low rate of return
on bank deposits, he is pu�ng his financial goals at risk.
Answer: TRUE
Which behavioral bias is his por�olio suffering from?
5. At which price a Close Ended fund can be sold ?
a) Familiarity bias
a) At a price higher than NAV b) Anchoring
b) At a price lower than NAV c) Herd mentality
c) At a price same as NAV d) Confidence bias
d) At a price which can be higher or lower or same as
Answer: Familiarity bias
NAV
13. Different investors of the similar age group should always
Answer: At a price which can be higher or lower or same as
have the same asset alloca�on in their investment por�olios -
NAV
State whether True or False?
6. When compared to Goal based financial planning,
a) TRUE
Comprehensive financial planning requires more �me
b) FALSE
commitment - State True or False ?

a) TRUE
b) FALSE
Answer: FALSE

14. Who manages the contribu�ons from investors and takes

investment decisions in a mutual fund company?
Answer: TRUE
a) The Investors
7. An ongoing bond fund will lose value when the interest
b) The Trustees
rates in the market __________
c) The Asset Management Company (AMC)
a) Rise d) The Sponsors
b) Fall
Answer: The Asset Management Company (AMC)
c) remains same
15. Usually most investors might have invested across various
asset categories. However the problem with such asset
Answer: Rise
alloca�on is that ______________

a) such asset alloca�on earns low returns

 b) such asset alloca�on is done without defining any a) Alloca�ng a por�olio to cash
objec�ve or without any process b) Alloca�ng various mutual funds to investors
c) such asset alloca�on increases the por�olio risk c) Alloca�ng units to unit holders
d) such asset alloca�on increases the por�olio risk d) Alloca�ng a por�olio to different asset classes

Answer: such asset alloca�on is done without defining any Answer: Alloca�ng a por�olio to different asset classes
objec�ve or without any process
23. Decisions in Tac�cal Asset Alloca�on are taken on the basis
16. What does financial goal se�ng involve? of _________

a) Determina�on of risk profile a) likely behaviour of the markets

b) Es�ma�ng the amount required for a major life b) risk profile of the investor
event c) income level of the investor
c) Determining asset alloca�on d) All of these
d)
Answer: likely behaviour of the markets
Answer: Es�ma�ng the amount required for a major life event
24. Which is the first step that a mutual fund distributor
17. Decisions in Tac�cal Asset Alloca�on are taken on the basis should take in building a mutual fund por�olio for his
of _________ investors?

a) likely behaviour of the markets a) He should list the best performing funds for the
b) risk profile of the investor investor to select
c) income level of the investor b) He should set the financial goals of the investor
d) All of these c) He should invest the amount in a liquid fund and set
a Systema�c Transfer Plan in good equity funds
Answer: likely behaviour of the markets d) He should list good equity funds with the lowest
expense ra�o for the investor to select
18. Which is the first step that a mutual fund distributor
should take in building a mutual fund por�olio for his Answer: He should set the financial goals of the investor
investors?
25. A trader believes that he can always outperform the
a) He should list the best performing funds for the market. This is an example of _____bias.
investor to select
b) He should set the financial goals of the investor a) Recency
c) He should invest the amount in a liquid fund and set b) Overconfidence / Op�mism
a Systema�c Transfer Plan in good equity funds c) Herd Mentality
d) He should list good equity funds with the lowest d) Anchoring
expense ra�o for the investor to select
Answer: Overconfidence / Op�mism
Answer: He should set the financial goals of the investor
26. Commodi�es as an asset class does not include
19. A trader believes that he can always outperform the __________
market. This is an example of _____bias.
a) Art
a) Recency b) Fibers
b) He should set the financial goals of the investor c) Spices
c) Herd Mentality d) Energy products
d) Anchoring
Answer: Art
Answer: He should set the financial goals of the investor
27. Can an investor transact directly through the websites of
some mutual fund companies?

a) Yes, they can buy / sell units on the MFs website

Module: 2. Concept and role of a mutual b) No, this is not allowed in India
fund – Weightage - 6 marks

Answer: Yes, they can buy / sell units on the MFs website
20. Commodi�es as an asset class does not include
__________ 28. Who should invest more in liquid funds : Mr. A, who has a
small business OR Mr. B, who is senior manager with a
a) Art
mul�na�onal company?
b) Fibers
c) Spices a) Mr. A
d) Energy products b) Mr. B
Answer: Art

21. Iden�fy the false statement(s) - A) Share cer�ficate is a

Answer: Mr. A
physical asset B) Debenture is a physical asset as the paper on
which it is printed has value 29. What is the investment range in equity instruments for a
Conserva�ve hybrid fund?
a) Statement Ais false
b) Statement B is false a) Between 20 percent and 30 percent of total assets
c) Both statements A and b are false b) Between 30 percent and 40 percent of total assets
d) c) Between 10 percent and 25 percent of total assets
d) Between 5 percent and 20 percent of total assets
Answer: Statement Ais false
Answer: Between 10 percent and 25 percent of total assets
22. What does "Asset Alloca�on’ mean?
30. Iden�fy the TRUE statement with respect to a Gilt Fund? a) The mutual fund guarantees declaring the IDCW,
however the amount may differ
a) The minimum investment in G-secs (as a percentage b) The mutual fund guarantees declaring the IDCW,
of total assets) is 70% however the amount may differ
b) The minimum investment in G-secs (as a percentage c) The mutual fund cannot guarantee declaring the
of total assets) is 75% IDCW amount or frequency
c) The minimum investment in G-secs (as a percentage d) None of these
of total assets) is 80%
d) The minimum investment in G-secs (as a percentage Answer: The mutual fund cannot guarantee declaring the
of total assets) is 85% IDCW amount or frequency

Answer: The minimum investment in G-secs (as a percentage 37. In the case of a Sectoral Fund, the minimum investment in
of total assets) is 80% equity and equity related instruments of a par�cular sector of
total assets should be ________
31. In which of these cases will the "lock-in" in a re�rement
fund be lower than the prescribed 5 years ? a) 65%
b) 0.7
a) When the re�rement age is earlier than 5 years from c) 0.8
the date of investment d) 0.95
b) When the age of the investor at the �me of making
ini�al investment is not less than 50 years Answer: 0.8
c) When the targeted corpus is achieved before 5 years
d) All of these 38. Which of these informa�on is not contained in the Scheme
Informa�on Document (SID)?
Answer: When the re�rement age is earlier than 5 years from
the date of investment a) Names of securi�es in the scheme's por�olio
b) Investment objec�ve of the scheme
32. The minimum investment limit in equity/equity related c) Risk factors of the scheme
instruments of large cap companies for a Large Cap mutual d) Por�olio features
fund scheme is ______________of total assets.
Answer: Names of securi�es in the scheme's por�olio
a) 70%
b) 0.8 39. _____________ ensures that the informa�on contained in
c) 0.85 the scheme related documents (SID and SAl) are fully
d) 0.9 complied with.

Answer: 0.8 a) The Trustees

b) The Sponsor
33. What is the investment in equity and equity related c) The Fund Manager
instruments in a Balanced Hybrid Fund? d) The AMC

a) Between 20% to 30% of total assets Answer: The Trustees

b) Between 10% to 20% of total assets
c) Between 40% to 60% of total assets 40. For a Sector Fund, the minimum investment in equity and
d) Between 60% to 80% of total assets equity related instruments of a par�cular sector/ theme shall
be 90 percent of total assets. State whether True or False?
Answer: Between 40% to 60% of total assets
a) TRUE
34. An investor is interested in buying some units of a Close b) FALSE
ended fund a�er the NFO is over. How can he buy the same?

a) He can buy the units on the stock exchange from

market makers appointed by the mutual fund Answer: FALSE
b) He can buy the units on the stock exchange from
other investors who were alloted the units and are 41. Liquid Fund is an open-ended liquid scheme whose
interested in selling investment is into debt and money market securi�es with a
c) He can buy the units from the mutual fund itself maturity of up to _______days only
when they open the sale at periodic intervals as
a) 91
announced by the fund
b) 99
d) He cannot buy units of a close ended fund
c) 75
Answer: He can buy the units on the stock exchange from d) 51
other investors who were alloted the units and are interested
Answer: 91
in selling
42. In a Contra Fund, the minimum investment in equity &
35. Iden�fy the FALSE statement. 1. Arbitrage funds can invest
equity related instruments shall be __________of total assets.
in both Futures/Op�ons(F&O) and cash markets 2. The only
objec�ve of an Arbitrage fund is to provide capital a) 40%
apprecia�on 3. Arbitrage funds have lower risk compared to b) 0.5
Equity Funds c) 0.55
d) 0.65
a) Only 1
b) Only 2 Answer: 0.65
c) Both 2 and 3
d) Both 1 and 3 43. What is the investment range for the mutual fund house to
invest in debt instruments for a Balanced Hybrid Fund?
Answer: Only 2
a) 20 percent and 40 percent
36. Which of the following is true for a monthly income b) 40 percent and 60 percent
distribu�on cum capital withdrawal plan (IDCW) of a mutual c) 10 percent and 30 percent
fund scheme? d) 20 percent and 50 percent
Answer: 40 percent and 60 percent c) 10 percent and 30 percent
d) 20 percent and 50 percent
44. What is fixed in a Closed-end fund?
Answer: 40 percent and 60 percent
a) The Net Asset Value
b) The Rate of Return 52. What is fixed in a Closed-end fund?
c) The Unit Capital
d) The Market Price a) The Net Asset Value
b) The Rate of Return
Answer: The Unit Capital c) The Unit Capital
d) The Market Price
45. One of the objec�ves of is to___________ undertake
na�onwide investor awareness programme to promote proper Answer: The Unit Capital
understanding of the concept and working of mutual funds
53. Among these funds, which will have the lowest Interest
a) SEBI Rate Risk?
b) BSE / NSE
c) AMFI a) Money market fund
d) NISM b) Diversified Equity Fund
c) Pharma Sector fund
Answer: AMFI d) Dynamic Bond Fund

46. Which type of Hybrid Fund has the least exposure to Answer: Money market fund
equity?
54. In a Corporate Bond fund, the minimum investment in
a) Aggressive Hybrid Fund highest rated corporate bonds is _____________percent of the
b) Balanced Hybrid Fund total assets.
c) Conserva�ve Hybrid Fund
d) Arbitrage Hybrid Fund a) 50
b) 60
Answer: Conserva�ve Hybrid Fund c) 70
d) 80
47. Which of the following statement is true with respect to
"Mark to Market’ ? Answer: 80

a) Securi�es in the por�olio are valued at current 55. Which type of Hybrid Fund has the least exposure to
market prices equity?
b) Securi�es in the por�olio are valued at 52 week high
prices a) Aggressive Hybrid Fund
c) Securi�es in the por�olio are valued at 52 week low b) Balanced Hybrid Fund
prices c) Conserva�ve Hybrid Fund
d) Securi�es in the por�olio are valued at purchase d) Arbitrage Hybrid Fund
price
Answer: Conserva�ve Hybrid Fund
Answer: Securi�es in the por�olio are valued at current
56. At what price can investors buy or sell units of an open-
market prices
ended fund a�er the New Fund Offer?
48. Which of these is a Passive Fund? A) Gold Sector Fund B)
a) The NAV of the mutual fund units
Gold Mining Companies Fund C) Gold Exchange Traded Fund
b) The New Fund Offer (NFO) price
D) Gilt Funds
c) The face value
a) Both A and B d) The monthly average price
b) Only D
Answer: The NAV of the mutual fund units
c) Only C
d) All A, B, C and D 57. The units of a Close-ended mutual fund are traded
between the unit holders/investors and_____________on the
Answer: Only C
stock exchange.
49. A Closed-end fund will have a___________
a) The Mutual Fund
a) Fixed Dividend pay-out ra�o b) Other unit holders/investors
b) Fixed Unit Capital c) Specially appointed market makers to enhance
c) Fixed Net Asset Value (NAV) liquidity
d) Fixed Asset Under Management (AUM) d) The Sponsors

Answer: Fixed Unit Capital Answer: Other unit holders/investors

50. In a Contra Fund, the minimum investment in equity & 58. Iden�fy the false statement(s) - A) Share cer�ficate is a
equity related instruments shall be __________of total assets. physical asset B) Debenture is a physical asset as the paper on
which it is printed has value
a) 40%
b) 50% a) Statement A is false
c) 55% b) Statement B is false
d) 65% c) Both statements A and b are false

Answer: 65% Answer: Both statements A and b are false

51. What is the investment range for the mutual fund house to
invest in debt instruments for a Balanced Hybrid Fund?

a) 20 percent and 40 percent

b) 40 percent and 60 percent
 a) Sponsors
Module: 3. Legal structure of Mutual funds in b) SEBI
India – Weightage - 4 marks c) Asset Management Company (AMC)
d) Custodian

Answer: Sponsors
59. The auditor appointed to audit the scheme accounts is the
same as the auditor of the AMC accounts - State True or 66. Iden�fy the FALSE statement : 1. As per AMFI guidelines,
False ? the intermediary has a no right of appeal to AMFI 2. It is not
the sole responsibility of the mutual fund distributors for
a) TRUE
spreading investor awareness
b) FALSE
a) Only 1 is false
b) Only 2 is false
c) Both 1 and 2 are false
Answer: FALSE
d)
60. Which one is the Self Regulatory Organisa�on (SRO) for
Answer: Only 1 is false
the mutual fund industry ?
67. The ARN is alloted to the mutual fund distributors by ___ .
a) SEBI
b) Sponsors a) SEBI
c) Trustees b) NISM
d) None of these c) AMC
d) AMFI
Answer: None of these
Answer: AMFI
61. Iden�fy which among the following is the first step in the
sequence of crea�ng a mutual fund product? 68. Redemp�on proceeds has to be paid to the mutual fund
unit holders within the �me specified by ________from �me
a) Launching the New Fund Offer (NFO)
to �me.
b) Filing of Scheme Informa�on Document (SID) with
SEBI for observa�on a) AMFI
c) Launch of adver�sing and public rela�ons campaigns b) SEBI
by AMC c) Registrar of Companies
d) Approval of Trustees and AMC board for the new d) Ministry of Finance
product and dra�ing of SID
Answer: SEBI
Answer: Approval of Trustees and AMC board for the new
product and dra�ing of SID 69. What is required for the termina�on of the services of an
Asset Management Company (AMC) ?
62. Mr. Ashu holds his mutual fund units in demat form. If he
wants to change his nominee or his bank account, he has to a) 75 % of the mutual funds distributors should
contact the ___________and complete the required approve the termina�on of the Asset Management
procedure. Company
b) 75 % of the unitholders should approve the
a) Stock Exchange termina�on of the Asset Management Company
b) Depository Par�cipant c) The custodian should approve the termina�on of the
c) R&T agent of the mutual fund Asset Management Company
d) AMC / Mutual fund d) AMF should approve the termina�on of the Asset
Management Company
Answer: Depository Par�cipant
Answer: 75 % of the unitholders should approve the
63. Which of these statements is true with respect to a Switch
termina�on of the Asset Management Company
transac�on?
70. Which of the following func�on can an Asset Management
a) Switch transac�on is allowed only a�er one year
Company (AMC) do in-house?
from date of purchase
b) Switch transac�on is similar to a purchase a) Custodial Services
transac�on b) Broking
c) Switch transac�on is similar to a sale transac�on c) Registrar and Transfer Agent
d) Switch transac�on is a redemp�on from one mutual
fund scheme and simultaneous purchase in to
another scheme Answer: Registrar and Transfer Agent

Answer: Switch transac�on is a redemp�on from one mutual 71. Who is NOT authorised to atest the documents submited
fund scheme and simultaneous purchase in to another scheme for Know Your Customer compliance, in case originals are not
produced at the �me of KYC?
64. iden�fy which of these is a func�on of Associa�on of
Mutual Funds in India’s (AMFI)? a) Notary Public
b) Manager of a Scheduled Commercial Bank
a) To calculate the correct NAVs c) Mutual Fund distributor
b) To make available the AUM, NAV and other d) Gazeted Officer
important data of the mutual fund industry
c) To regulate and control insider trading Answer: Mutual Fund distributor
d) To manage the Investor Protec�on Fund
72. ___________forms the basis of appointment of a
Answer: To make available the AUM, NAV and other important distributor by an AMC.
data of the mutual fund industry
a) SEBI approval
65. The trustees of a mutual fund is appointed by the - . b) Agreement between the investor and the distributor
c) Power of atorney from the AMC
 d) An agreement between the AMC and the Distributor a) Direct plan applica�on
b) Regular plan applica�on
Answer: An agreement between the AMC and the Distributor c) Incomplete and rejected
d) Incomplete and sent to the investor for comple�on
73. Who has the responsibility of overseeing legal compliance
in a mutual fund? Answer: Direct plan applica�on

a) The Custodian 80. Who applies to SEBI for the registra�on of a Mutual Fund?
b) The Sponsors
c) The AMC a) AMC
d) The Trustees b) Board of Trustees
c) The Sponsors
Answer: The Trustees d) Chief Fund Manager

74. Iden�fy the true statement with respect to Total Expense Answer: The Sponsors
Ra�o?
81. Who handles the appeals which are made against the
a) The AMC is not allowed to change the Total Expense rulings of SEBI?
Ra�o of a scheme during its en�re life �me
b) The AMC can change the Total Expense Ra�o and it a) Company Law Board
need not be communicated to the unit holders as its b) AMFI
an internal mater c) Securi�es Appellate Tribunal
c) The AMC can change the Total Expense Ra�o and it d) High Court
has to be communicated to all the unit holders
d) There is no term as - Total Expense Ra�o for a Answer: Securi�es Appellate Tribunal
mutual fund scheme
82. Iden�fy the TRUE statement?
Answer: The AMC can change the Total Expense Ra�o and it
a) Mutual funds which are bank sponsored are
has to be communicated to all the unit holders
regulated by RBI and not SEBI
75. Who applies to SEBI for the registra�on of a Mutual Fund? b) SEBI and AMFI both regulate mutual funds in India
c) Stock Exchanges regulates mutual funds in India
a) AMC d) SEBI regulates mutual funds in India
b) Board of Trustees
c) The Sponsors Answer: SEBI regulates mutual funds in India
d) Chief Fund Manager
83. Which of these is NOT a func�on of Registrars and Transfer
Answer: The Sponsors Agents?

76. Which of these is NOT a func�on of Registrars and Transfer a) Maintaining investors records
Agents ? b) Processing redemp�on and dividend payouts
c) Analysing mutual fund performance and making it
a) Maintaining investors records available to investors
b) Processing redemp�on and dividend payouts d) Upda�ng unit capital of fund
c) Analysing mutual fund performance and making it
available to investors Answer: Analysing mutual fund performance and making it
d) Upda�ng unit capital of fund available to investors

Answer: Analysing mutual fund performance and making it

Module: 4. Legal and regulatory framework –
available to investors
Weightage - 10 marks
77. One of the objec�ves of is to___________ undertake
na�onwide investor awareness programme to promote proper
understanding of the concept and working of mutual funds 84. _________is not a fair selling prac�ce by a mutual fund
distributor.
a) SEBI
b) BSE / NSE a) Informing the investor of the various investment
c) AMFI op�ons
d) NISM b) Carefully understanding the clients financial needs
c) Encouraging the churning of investments
Answer: AMFI
d) Giving personalised a�er sales service
78. Can the fundamental atributes of scheme be changed? If
Answer: Encouraging the churning of investments
yes - how?
85. All transac�ons of purchase and sale of securi�es by key
a) Yes- but with the consent of 100% of the unit
personnel of the AMC, who are directly involved in investment
holders
opera�ons shall be disclosed to the compliance officer of the
b) Yes - with the permission of SEBI and AMF
member at least on_____________
c) Yes - but this should be communicated to unit
holders who should be provided an op�on to exit a) Weekly basis
the scheme b) Monthly basis
d) No - the fundamental atributes cannot be changed c) Half-Yearly basis
as it is based on these atributes that investors have d) Yearly basis
invested their money
Answer: Half-Yearly basis
Answer: Yes - but this should be communicated to unit holders
who should be provided an op�on to exit the scheme 86. Can an investor redeem any amount from a Segregated
Por�olio. If Yes, than what are the restric�ons?
79. In a mutual fund applica�on form, if ‘Direct’ is men�oned
in the space provided for ARN and the choice of regular plan is a) There is no restric�on on redemp�ons from a
indicated then the applica�on will be considered as Segregated Por�olio
_____________
 b) Only 25 % of the value of current investments can be Answer: The amount paid will based on the prevailing NAV
redeemed from a Segregated Por�olio a�er adding the income earned on the unclaimed profits
c) Only 50 % of the value of current investments can be
redeemed from a Segregated Por�olio 92. Some of the costs incurred by the Asset Management
d) An investor cannot redeem any amount from a Companies to manage the mutual fund schemes can be
Segregated Por�olio from the AMC charged to _________in propor�on to their holding of units in
the scheme.
Answer: An investor cannot redeem any amount from a
Segregated Por�olio from the AMC a) Distributors
b) Stock Brokers
87. Which distributor will be covered under the due diligence c) Unit holders
process of the Asset Management Company as mandated by d) Independent Financial Advisors
SEBI?
Answer: Unit holders
a) A distributor who has presence in more than 10
loca�ons 93. Which of the following is INCORRECT with respect to
b) A distributor who has AUM of over Rs. 100 crores adver�sements of Mutual Funds by AMCs.
from non-ins�tu�onal investors
a) The adver�sements can use celebri�es for
c) A distributor who has received commission of over
endorsements
Rs 25 lakhs from one mutual fund
b) The adver�sements can show past performance of
d) ALL OF THESE
the scheme
Answer: A distributor who has AUM of over Rs. 100 crores c) The adver�sements can show the return numbers
from non-ins�tu�onal investors d) All of the above are incorrect

88. Iden�fy the true statement as per AMFI’'s Code of Conduct Answer: The adver�sements can use celebri�es for
for Intermediaries of Mutual Funds. endorsements

a) Intermediaries should rebate some of the 94. An Asset Management Company (AMC) can recover
commission received by them to the investors investment management and advisory fees on management of
b) Intermediaries should abstain from making nega�ve the unclaimed amounts, ___________
statements about any Asset Management Company
a) only on the actual expenses incurred in holding the
or scheme
funds
c) Intermediaries should split applica�ons so that they
b) at a maximum rate of 0.50 percent per annum
can earn higher transac�on charges
c) as per the fee applicable on the scheme from which
d)
the redemp�on was made
Answer: Intermediaries should abstain from making nega�ve d) No investment management and advisory fees can
statements about any Asset Management Company or scheme be charged on unclaimed amounts

89. What are the guidelines issued by AMFI for intermediaries Answer: at a maximum rate of 0.50 percent per annum
known as?
95. SEBI has regula�ons pertaining to restric�ons on the
a) SEBI Brokers and Intermediaries guidelines investment policies of mutual fund schemes for ensuring that
b) Know Your Distributor guidelines ___________
c) AMFI Guidelines & Norms for Intermediaries (AGNI)
a) The mutual scheme can improve their ra�ngs over a
d) ALL OF THESE
period of �me
Answer: ALL OF THESE b) The scheme returns are beter than the benchmark
returns
90. If an investor claims his unclaimed redemp�on amount c) The scheme returns are beter than the Ni�y/Sensex
a�er 3 years than the payment will be based on the______ d) The mutual fund scheme has a minimum
diversifica�on as per the requirements
a) average of the NAVs ie. current NAV and NAV at the
�me of original redemp�on Answer: The mutual fund scheme has a minimum
b) current NAV diversifica�on as per the requirements
c) NAV at the end of three years
d) NAV at the �me of original redemp�on 96. AMFI Code of Ethics states that ___________cannot
become a distributor of mutual fund.
Answer: NAV at the end of three years
a) Banks
91. On what basis will the payment be made to an investor b) HNIs
who claims his erstwhile unclaimed redemp�on amount c) Employees of AMC
within three years? d) Empanelled distributors

a) The amount paid will based on the prevailing NAV Answer: Employees of AMC
a�er adding the income earned on the unclaimed
profits 97. Iden�fy the TRUE statement -
b) The amount paid will based on the NAV at the �me
a) The mutual fund investor has the complete freedom
of original redemp�on plus income earned on the
to change the distributor any �me he wants
unclaimed amount
b) Once an investor had invested through a distributor,
c) The amount paid will based on the NAV at the �me
he cannot change the distributor
of original redemp�on plus income earned on the
c) Once an investor had invested by online method, he
unclaimed amount and deduc�ng any penalty on the
cannot change the distributor
same
d) Once an investor had invested through a distributor,
d) The amount paid will based on the average of the
he cannot invest directly with the mutual fund house
NAV at the �me original redemp�on and todays NAV
a�er accoun�ng for income earned and penalty if Answer: The mutual fund investor has the complete freedom
any to change the distributor any �me he wants
98. Iden�fy the ac�on which needs to be taken as per the d) Withheld
AMFI Code of Ethics for Mutual Funds when a mutual fund
enters into a transac�on for purchase or sale of securi�es with Answer: Cancelled
any of its associates?
104. Where is the informa�on regarding investor service
a) AMC should make certain that the transac�ons centers, minimum investment amount and how to make the
happens at a price that is beter than the closing purchases of mutual fund men�oned?
market price
a) Applica�on Form
b) AMC should take the approval of the trustees before
b) Nomina�on Form
undertaking the transac�ons
c) Transac�on Slip
c) AMC should jus�fy the fairness of the transac�on to
d) KIM
the Board of Trustees
d) AMC should inform the mutual fund unitholders of Answer: KIM
the intent to undertake the transac�on before it is
done 105. The investors of a mutual fund can terminate the AMC or
wind up a scheme if % or more of the unit holders agree to it.
Answer: AMC should jus�fy the fairness of the transac�on to
the Board of Trustees a) 0.5
b) 0.6
99. What is the maximum percentage of holding can a single c) 0.7
investor have in a mutual fund scheme? d) 0.75
a) 0.05 Answer: 0.75
b) 0.1
c) 0.2 106. Iden�fy the true statement with respect to ‘Unclaimed
d) 0.25 Dividend' in mutual fund schemes.

Answer: 0.25 a) If the plan is a regular plan, then it is the distributors

responsibility that the investor claims the dues
100. In case a fund manager is managing more than six funds, b) It is the sole responsibility of the investor that
then _____________in all performance related he/she claims the dues
adver�sements. c) The Asset Management Company (AMC) is expected
to make a con�nuous effort to remind the investors
a) the total number of schemes managed by him hs to
through leters to claim their dues.
be disclosed
d) All of these
b) performance data need not be given
c) performance data of top 2 and botom 2 schemes Answer: The Asset Management Company (AMC) is expected
has to be disclosed to make a con�nuous effort to remind the investors through
d) performance data of top 3 and botom 3 schemes leters to claim their dues.
has to be disclosed
107. Who handles the appeals which are made against the
Answer: performance data of top 3 and botom 3 schemes has rulings of SEBI ?
to be disclosed
a) Company Law Board
101. A mutual fund scheme can invest ________ in the equity b) AMFI
instruments of a company. c) Securi�es Appellate Tribunal
d) High Court
a) 5% of the net assets
b) 10% of the net assets Answer: Securi�es Appellate Tribunal
c) 15% of the net assets
d) 25% of the net assets 108. Iden�fy the TRUE statement?

Answer: 10% of the net assets a) Mutual funds which are bank sponsored are
regulated by RBI and not SEBI
102. The AMFI Code of Ethics (ACE) sets out ________ b) SEBI and AMFI both regulate mutual funds in India
c) Stock Exchanges regulates mutual funds in India
a) The standards of good prac�ces to be followed by
d) SEBI regulates mutual funds in India
the AMCs in their opera�ons and in their dealings
with investors, intermediaries and the public. Answer: SEBI regulates mutual funds in India
b) The standards of good prac�ces to be followed by
the AMCs in their opera�ons and in their dealings 109. As per SEBI Code of Conduct, mutual fund schemes
with mass media por�olios should be managed in the interest of .
c) The standards of good prac�ces to be followed by
mutual fund distributors in their dealings with AMFI, a) Trustees
AMCs and investors b) Sponsors
d) The standards of good prac�ces to be followed by c) Brokers
fund managers in their dealings with AMFI and d) All classes of unit holders
investors
Answer: All classes of unit holders
Answer: The standards of good prac�ces to be followed by the
110. ___________forms the basis of appointment of a
AMCs in their opera�ons and in their dealings with investors,
distributor by an AMC.
intermediaries and the public.
a) SEBI approval
103. If there is a breach of the Code of Conduct by an
b) Agreement between the investor and the distributor
intermediary and a second viola�on by the intermediary is
c) Power of atorney from the AMC
proved then the registra�on of the intermediary is
d) An agreement between the AMC and the Distributor
__________
Answer: An agreement between the AMC and the Distributor
a) Not renewed
b) Cancelled
c) Suspended
111. In case a fund manager is managing more than six funds, loca�ons) b. AUM raised over Rs. 100 crore across industry in
then _____________in all performance related the non-ins�tut
adver�sements.
a) Income accruals
a) the total number of schemes managed by him hs to b) Dividends which are received from equity
be disclosed investments
b) performance data need not be given c) Realized gain from sale of investments
c) performance data of top 2 and botom 2 schemes d) Unrealized apprecia�on in value of investments
has to be disclosed
d) performance data of top 3 and botom 3 schemes Answer: Unrealized apprecia�on in value of investments
has to be disclosed
118. Iden�fy the true statement with respect to ‘Unclaimed
Answer: performance data of top 3 and botom 3 schemes has Dividend' in mutual fund schemes.
to be disclosed
a) If the plan is a regular plan, then it is the distributors
112. The AMFI Code of Ethics (ACE) sets out ________ responsibility that the investor claims the dues
b) It is the sole responsibility of the investor that
a) The standards of good prac�ces to be followed by he/she claims the dues
the AMCs in their opera�ons and in their dealings c) The Asset Management Company (AMC) is expected
with investors, intermediaries and the public. to make a con�nuous effort to remind the investors
b) The standards of good prac�ces to be followed by through leters to claim their dues.
the AMCs in their opera�ons and in their dealings d) All of these
with mass media
c) The standards of good prac�ces to be followed by Answer: The Asset Management Company (AMC) is expected
mutual fund distributors in their dealings with AMFI, to make a con�nuous effort to remind the investors through
AMCs and investors leters to claim their dues.
d) The standards of good prac�ces to be followed by
119. What will happen if one of the joint holders of a mutual
fund managers in their dealings with AMFI and
fund folio dies?
investors
a) The folio will be cancelled and the amount refunded
Answer: The standards of good prac�ces to be followed by the
b) The units will be transferred to nominee/s
AMCs in their opera�ons and in their dealings with investors,
c) The units will be transferred to heir of deceased
intermediaries and the public.
holder
113. If there is a breach of the by an intermediary and a d) The units will con�nue to be held by surviving joint
second viola�on by the intermediary is proved then the holders
registra�on of the intermediary is __________
Answer: The units will con�nue to be held by surviving joint
a) Not renewed holders
b) Cancelled
c) Suspended Module: 5. Scheme related Information -
d) Withheld
Weightage - 10 marks
Answer: Cancelled

114. Who has the responsibility of overseeing legal 120. Which of the following is an important aspect of an
compliance in a mutual fund? OFFER DOCUMENT?
a) The Custodian a) To inform the investors about the AMC's views on
b) The Sponsors Stock Markets
c) The AMC b) To inform the investors on the performance of the
d) The Trustees scheme
c) To provide a comparison of the schemes
Answer: The Trustees
d) To inform the investors on the detailed informa�on
115. The investors of a mutual fund can terminate the AMC or about the scheme
wind up a scheme if________ % or more of the unit holders
Answer: To inform the investors on the detailed informa�on
agree to it.
about the scheme
a) 50%
121. The Offer Document will NOT give any informa�on on
b) 60%
______ .
c) 70%
d) 75% a) The risk factors of the scheme
b) The name of stocks in which the scheme is likely to
Answer: 75%
invest
116. AMCs has to put in place a due diligence process to c) Investment objec�ves of the scheme
regulate distributors who ______ d) The features of the por�olio of the scheme

a) has received commission received of over Rs. 25 Answer: The name of stocks in which the scheme is likely to
Lakhs from a single mutual fund invest
b) mutual fund has raised AUM of over Rs. 25 crores
122. Condensed financial informa�on for schemes launched in
from non-ins�tu�onal investors
last 3 financial years is men�oned in the_______
c) has presence in more than 20 loca�ons
d) All of these a) SID
b) SAI
Answer: has presence in more than 20 loca�ons
c) Fact Sheet
117. SEBI has mandated AMCs to put in place a due diligence d) Prospectus
process to regulate distributors who qualify any one of the
Answer: SAI
following criteria: a. Mul�ple point presence (More than 20
123. The _____is used by the fund manager to communicate Answer: SIP returns of the schemes
their views on the economy and the markets to the investors
131. Iden�fy the false statement/s with respect to a New Fund
a) KIM Offer (NFO). 1. A Closed-ended mutual fund NFO will have a
b) SAI NFO opening date, a NFO closing date and a scheme Re-
c) SID opening date 2. A Open-ended mutual fund NFO will have a
d) Fund Factsheet NFO opening date, a NFO clos

Answer: Fund Factsheet a) Only 1 is false

b) Only 2 is false
124. SEBI has to approve the Scheme Related Documents c) Both 1 and 2 are false
in________ d) None of these

a) 7 DAYS Answer: Only 1 is false

b) 15 DAYS
c) 1 MONTHS 132. An Addendum has to be issued for changes in ________
d) SEBI does not approve the Scheme Related
Documents. It only gives its observa�ons a) Fund Fact Sheet
b) Half yearly results of the mutual fund
Answer: SEBI does not approve the Scheme Related c) SID
Documents. It only gives its observa�ons d) SAI

125. Key Informa�on Memorandum (KIM) and Scheme Answer: SID

Informa�on Document (SID) are two broad types of scheme
documents - State whether True or False? 133. From the below men�oned en��es associated with a
mutual fund, who has to mandatorily contribute to the corpus
a) TRUE of the mutual fund?
b) FALSE
a) The Trustees
b) The Custodians
c) The Asset Management Company
Answer: FALSE d) The Sponsors

126. Which of the following do not impact the calcula�on of Answer: The Sponsors
Net Asset Value (NAV) ?
134. The minimum number of investors that a mutual fund
a) Change in value of investments held by the scheme scheme should have :
b) Daily accrual of expenses
c) Daily accrual of income a) 1000%
d) Change in the number of investors in the fund b) 2000%
c) 5000%
Answer: Change in the number of investors in the fund d) 10000%

127. While the SID, SAl and KIM need to be updated Answer: 2000%
periodically, the interim changes are updated by the AMC
through the issuance . 135. When does the market price of close-end mutual fund
scheme converge with the NAV price?
a) Fact Sheet
b) Director's Report a) During the New Fund Offer
c) Auditor's Report b) Before the New Fund Offer
d) Addendum c) Toward maturity
d) It never converges
Answer: Addendum
Answer: Toward maturity
128. Iden�fy from the following what is not considered as a
scheme fundamental atribute? 136. __________ is NOT accepted as a photo iden�ty
documenta�on for Micro SIP.
a) Type of scheme
b) Investment objec�ve a) Debit card with a photo
c) Investment patern b) Permanent Re�rement Account Number (PRAN) card
d) Name of fund manager issued to Na�onal Pension System (NPS)
c) Employee ID cards issued by companies registered
Answer: Name of fund manager with the Registrar of Companies
d) Credit card
129. The Key Informa�on Memorandum (KIM) is an abridged
version of which of these documents? Answer: Credit card

a) The yearly statement of the por�olio of the fund 137. Which of these statements is true with respect to Key
b) The half yearly statement of the financial statement Informa�on Memorandum (KIM)?
of the fund
c) The annual accounts of the fund a) KIM is a document that provides key informa�on of
d) Scheme related documents SID and SAI the past performance of the scheme
b) KIM is the annual newsleter of the mutual fund
Answer: Scheme related documents SID and SAI c) KIM provided NAV history of all mutual fund
schemes
130. Iden�fy the informa�on which is NOT included in the d) KIM is a document which must accompany all
Statement of Addi�onal Informa�on (SAl). mutual fund applica�on forms
a) Rights of Unit-holders Answer: KIM is a document which must accompany all mutual
b) Transmission procedure fund applica�on forms
c) SIP returns of the schemes
d) Investment Valua�on Norms
138. According to guidelines given by SEBI, every mutual fund d) Before the end of 3 months of every financial year
scheme should have a minimum of investors.
Answer: Before the end of 3 months of every financial year
a) 1000%
b) 2000% 146. Who issues a due diligence cer�ficate sta�ng compliance
c) 2500% with all legal formali�es at the �me of making a new offer of
d) 5000% mutual fund units?

Answer: 2000% a) Board of Trustees

b) AMC
139. Iden�fy the true statement(s) - A) An Addendum must c) Compliance Officer
accompany the KIM B) Addendum is considered to be a part of d) Custodian
the Scheme Related Documents
Answer: AMC
a) Only A is true
b) Only B is true 147. How o�en does a mutual fund disclose the informa�on
c) Both A and B are true on Total Expense Ra�o charged to a mutual fund scheme and
d) None of them are true where is this published?

Answer: Both A and B are true a) Daily - on the mutual fund website
b) Weekly - on the mutual fund website
140. A synopsis of the scheme related informa�on documents c) Once a month in the fund Factsheet
is found in the ___________ d) Once a year when it makes the mandatory
disclosures to SEBI and AMFI
a) Statement of Addi�onal Informa�on - SAI
b) Ar�cles of Associa�on Answer: Daily - on the mutual fund website
c) Trust Deed
d) Key Informa�on Memorandum - KIM 148. What is the �me dura�on in which SEBI has to approve
the scheme related documents?
Answer: Key Informa�on Memorandum - KIM
a) 7 working days
141. Which document has the statutory informa�on about the b) 3 working days
mutual fund or AMC, that is offering the scheme. c) 14 working days
d) SEBI does not approve the documents. It gives its
a) SID observa�ons
b) SAI
c) Red Herring Prospectus Answer: SEBI does not approve the documents. It gives its
d) Fund Fact Sheet observa�ons

Answer: SAI 149. An investor chooses a mutual fund scheme based on

whether his / her ________matches with that of the scheme.
142. At what price can investors buy or sell units of an open-
ended fund a�er the New Fund Offer? a) Investment period
b) Investment objec�ve
a) The NAV of the mutual fund units c) Investment strategy
b) The New Fund Offer (NFO) price d)
c) The face value
d) The monthly average price Answer: Investment objec�ve

Answer: The NAV of the mutual fund units 150. If one wants to know the General Risk Factors, then
which document should he read?
143. If a third party payment is to be made for subscribing to a
mutual fund scheme, then which of the following is/are a) Fund Fact Sheet
essen�ally required? b) Documents filed with SEBI
c) KIM
a) The minimum investment has to be Rs. 50,000 d) SID
b) The third party has to provide PAN details and also
comply with the KYC norms Answer: SID
c) The third party should also have a folio with the
mutual fund 151. Iden�fy the false statement with respect to mutual fund
d) All of these scheme related documents.

Answer: The third party has to provide PAN details and also a) KIM and SID are two broad types of scheme
comply with the KYC norms documents
b) SID has details of the par�cular scheme
144. When compared to open ended funds, investors in close c) SAl has statutory informa�on about the mutual fund
ended funds face a higher level of______________ d) KIM is essen�ally a summary of the SID and SAl

a) Credit risk Answer: KIM and SID are two broad types of scheme
b) Liquidity risk documents
c) Market risk
d) Investment risk 152. Mutual funds must publish their unaudited accounts once
every six months___________
Answer: Liquidity risk
a) on the AMFI website
145. When is the Statement of Addi�onal Informa�on (SAl) b) on the AMC website
updated ? c) on the SEBI website
d) in atleast two English newspaper
a) Every month
b) Before 10th of January and 10th of July every six Answer: on the AMC website
months
c) Every three months
153. What is the maximum permissible limit of investment a c) Compliance Officer
single investor can have in a scheme? d) Custodian

a) 5% of the corpus Answer: AMC

b) 10% of the corpus
c) 20% of the corpus 161. How o�en does a mutual fund disclose the informa�on
d) 25% of the corpus on Total Expense Ra�o charged to a mutual fund scheme and
where is this published?
Answer: 25% of the corpus
a) Daily - on the mutual fund website
154. What is the maximum percentage of holding can a single b) Weekly - on the mutual fund website
investor have in a mutual fund scheme? c) Once a month in the fund Factsheet
d) Once a year when it makes the mandatory
a) 5% disclosures to SEBI and AMFI
b) 10%
c) 20% Answer: Daily - on the mutual fund website
d) 25%
162. Where is the informa�on regarding investor service
Answer: 25% centers, minimum investment amount and how to make the
purchases of mutual fund men�oned?
155. Iden�fy the true statement(s) - A) An Addendum must
accompany the KIM B) Addendum is considered to be a part of a) Applica�on Form
the Scheme Related Documents b) Nomina�on Form
c) Transac�on Slip
a) Only A is true d) KIM
b) Only B is true
c) Both A and B are true Answer: KIM
d) None of them are true
163. Which of these documents is not required to be
Answer: Both A and B are true submited for inves�ng in mutual funds by a charitable
organisa�on?
156. A synopsis of the scheme related informa�on documents
is found in the ___________ a) List of authorized signatories
b) Trust deed
a) Statement of Addi�onal Informa�on - SAI c) Board resolu�on
b) Ar�cles of Associa�on d) Memorandum and Ar�cles of Associa�on
c) Trust Deed
d) Key Informa�on Memorandum - KIM Answer: Memorandum and Ar�cles of Associa�on

Answer: Key Informa�on Memorandum - KIM 164. What is the �me dura�on in which SEBI has to approve
the scheme related documents?
157. Which document has the statutory informa�on about the
mutual fund or AMC, that is offering the scheme. a) 7 working days
b) 3 working days
a) SID c) 14 working days
b) SAI d) SEBI does not approve the documents. It gives its
c) Red Herring Prospectus observa�ons
d) Fund Fact Sheet
Answer: SEBI does not approve the documents. It gives its
Answer: SAI observa�ons

158. If a third party payment is to be made for subscribing to a 165. If one wants to know the General Risk Factors, then
mutual fund scheme, then which of the following is/are which document should he read?
essen�ally required?
a) Fund Fact Sheet
a) The minimum investment has to be Rs. 50,000 b) Documents filed with SEBI
b) The third party has to provide PAN details and also c) KIM
comply with the KYC norms d) SID
c) The third party should also have a folio with the
mutual fund Answer: SID
d) All of these
166. Iden�fy the false statement with respect to mutual fund
Answer: The third party has to provide PAN details and also scheme related documents.
comply with the KYC norms
a) KIM and SID are two broad types of scheme
159. When is the Statement of Addi�onal Informa�on (SAl) documents
updated? b) SID has details of the par�cular scheme
c) SAl has statutory informa�on about the mutual fund
a) Every month d) KIM is essen�ally a summary of the SID and SAl
b) Before 10th of January and 10th of July every six
months Answer: KIM and SID are two broad types of scheme
c) Every three months documents
d) Before the end of 3 months of every financial year
167. Which expenses can be charged by the AMC to a mutual
Answer: Before the end of 3 months of every financial year fund scheme?

160. Who issues a due diligence cer�ficate sta�ng compliance a) Expenses which are incurred to manage the fund
with all legal formali�es at the �me of making a new offer of b) Expenses which are incurred to launch the fund
mutual fund units? c) Expenses which are incurred by the AMC
d) Expenses which are incurred by the investors in
a) Board of Trustees buying the fund
b) AMC
Answer: Expenses which are incurred to manage the fund d) All of these

168. Mutual funds must publish their unaudited accounts once Answer: A mutual fund distributor who receives commission
every six months___________ of over Rs. 50 Lakhs from a single mutual fund

a) on the AMFI website 175. Iden�fy the factor which must be considered to
b) on the AMC website determine the asset alloca�on for an investor?
c) on the SEBI website
d) in atleast two English newspaper a) Financial goals of the investor and his financial
situa�on
Answer: on the AMC website b) AUM of the scheme
c) Scheme expenses
d) Past performance of the scheme
Module: 6. Fund Distribution and channel
Answer: Financial goals of the investor and his financial
management practices – Weightage - 6 situa�on
marks
176. Iden�fy the true statement with respect to investments
in mutual funds through Stock Exchanges?
169. The distributors are mainly compensated through
a) Stock exchanges have now become another
________by the mutual funds.
important channel for mutual fund companies to sell
a) Commissions their units to investors
b) Salaries b) One can buy mutual fund units on stock exchange
c) Por�olio profits but cannot sell them on stock exchange
d) Annual fees c) The mutual fund units purchased through a stock
exchange have a mandatory lock-in period of 30 days
Answer: Commissions d) None of these

170. The stock exchanges which provide mutual fund trading Answer: Stock exchanges have now become another
facili�es also have to provide for setlement guarantee - State important channel for mutual fund companies to sell their
True or False ? units to investors

a) TRUE 177. How can the empanelment of a mutual fund distributor

b) FALSE be terminated?

a) The empanelment gets automa�cally terminated on

the comple�on of the term of empanelment
Answer: FALSE b) Asset Management Company can terminate the
empanelment at any �me
171. distributors can ‘opt-out’ of charging transac�on charges c) When all the clients of the distributor shi� to Direct
_________. Plans
d) All of the above
a) at AMC level
b) at investor level Answer: Asset Management Company can terminate the
c) at scheme level empanelment at any �me
d) at distributor level
178. Amongst the distribu�on channel men�oned below,
Answer: at distributor level which one is likely to sell funds of only a single mutual fund
house?
172. Iden�fy the TRUE statement. 1. Retail investors can buy
units of Gold ETF 2. Banks as well as Mutual Funds, both offer a) Distribu�on Company
Gold deposit schemes 3. Gold ETF is a closed ended fund and b) Independent financial advisor
so the holdings are not for perpetuity c) Ins�tu�onal sales team of the Asset Management
Company
a) Only statement 1 is true
d) Bank
b) Only statement 2 is true
c) Only statement 3 is true Answer: Ins�tu�onal sales team of the Asset Management
d) All 1,2 and 3 are true Company

Answer: Only statement 1 is true 179. When a mutual fund distributor empanels with an AMC,
he/she has to sign a declara�on for___________
173. The Asset Management Company primarily compensates
the mutual fund distributors through____________ a) declaring the rebates given back to the investors
b) ensuring that all employees who are selling mutual
a) Commissions
funds will have more than on ARN code
b) Salaries
c) Guarantee of adding a minimum of 25 investors
c) Salary + Commission
every month
d) Share in AMC's profit
d) Commitment to abide by statutory codes, guidelines
Answer: Commissions and circulars

174. For which mutual fund distributors is a due diligence Answer: Commitment to abide by statutory codes, guidelines
process mandated by SEBI? and circulars

a) A mutual fund distributor who services more than 180. How can the fundamental atributes of a mutual fund
25 investors scheme be changed?
b) A mutual fund distributor who receives commission
a) The fundamental atributes cannot be changed
of over Rs. 50 Lakhs from a single mutual fund
b) The fundamental atributes can be changed but this
c) A mutual fund distributor who brings in investments
should be communicated to all the unit holders who
from investors of over Rs. 1 crore for a single mutual
should be provided an op�on to exit the scheme
fund
 c) The fundamental atributes can be changed with the a) When the investor purchases mutual fund units
permission of SEBI and AMFI worth Rs 5000 through a mutual fund distributor
d) The fundamental atributes can be changed but only b) When the investor purchases mutual fund units
with the consent of 100 percent of unit holders worth Rs 10000 through a mutual fund distributor
c) When the investor purchases mutual fund units
Answer: The fundamental atributes can be changed but this worth Rs 5000 through the website of the mutual
should be communicated to all the unit holders who should be fund
provided an op�on to exit the scheme d) When the investor purchases mutual fund units
worth Rs 10000 through the website of the mutual
181. Shweta purchases through a distributor 5000 units of a
fund
mutual fund scheme at a NAV of Rs 30. The current NAV of the
scheme is Rs 28. What will be the trail commission for today if Answer: When the investor purchases mutual fund units
the trail commission rate is 1% per annum worth Rs 10000 through a mutual fund distributor

a) 13.8356 188. Can the fundamental atributes of scheme be changed? If

b) 7.2256 yes - how?
c) 3.8356
d) 26.7463 a) Yes- but with the consent of 100% of the unit
holders
Answer: 3.8356 b) Yes - with the permission of SEBI and AMF
c) Yes - but this should be communicated to unit
182. Where is the performance data for all schemes across the
holders who should be provided an op�on to exit
mutual fund industry available?
the scheme
a) SID d) No - the fundamental atributes cannot be changed
b) KIM as it is based on these atributes that investors have
c) AMFI Website invested their money
d) The Fund Fact Sheet
Answer: Yes - but this should be communicated to unit holders
Answer: AMFI Website who should be provided an op�on to exit the scheme

183. An investor purchases through a distributor 5000 units of 189. Which transac�on of an open ended fund is based on the
a mutual fund scheme at a NAV of Rs 25. The current NAV of Net Asset Value (NAV) pricing?
the scheme is Rs 43. What will be the trail commission for
a) Purchase of units
today if the trail commission rate is 1% per annum.
b) Redemp�on of units
a) 2150 c) Both purchase and redemp�on of units
b) 33.1854 d)
c) 3.4246
Answer: Both purchase and redemp�on of units
d) 5.8904
190. As per SEBI rules, commissions cannot be paid to ___
Answer: 5.8904
a) Brokers of the stock exchange
184. Rising Sun Mutual Fund holds shares of AAA Ltd. in its
b) Banks
por�olio. When the NAV of the scheme is calculated on 10th
c) Sponsor distributors
April, then each share of AAA Ltd. will be valued at
d) Investors
__________ .
Answer: Investors
a) Average traded price of AAA Ltd. on 10th April across
all stock exchanges 191. 15 become a mutual fund distributor in India, one has to
b) Opening price of AAA Ltd. on 10th April at BSE / NSE pass an exam which is conducted by
c) Closing price of AAA Ltd. on 10th April at BSE / NSE
d) Average traded price of AAA Ltd. on 10th April at BSE a) Securi�es and Exchange Board of India - SEBI
/ NSE b) Na�onal Stock Exchange - NSE NCFM
c) Na�onal Ins�tute of Securi�es Markets - NISM
Answer: Closing price of AAA Ltd. on 10th April at BSE / NSE d) Associa�on of Mutual Funds in India’s - AMFI

185. The NAV of an equity fund is Rs. 76.45 and the face value Answer: Na�onal Ins�tute of Securi�es Markets - NISM
is Rs. 10. An investor invests Rs 30,000. How many units will
be alloted to him? (There is no entry load) 192. AMCs has to put in place a due diligence process to
regulate distributors who ______
a) 1866.43
b) 477 a) has received commission received of over Rs. 25
c) 392.41 Lakhs from a single mutual fund
d) 3000 b) mutual fund has raised AUM of over Rs. 25 crores
from non-ins�tu�onal investors
Answer: 392.41 c) has presence in more than 20 loca�ons
d) All of these
186. ___________is not a mutual fund distribu�on channel.
Answer: has presence in more than 20 loca�ons
a) Branches of Public sector banks
b) Branches of Reserve Bank of India 193. SEBI has mandated AMCs to put in place a due diligence
c) Branches of Private sector banks process to regulate distributors who qualify any one of the
d) Branches of Foreign banks following criteria: a. Mul�ple point presence (More than 20
loca�ons) b. AUM raised over Rs. 100 crore across industry in
Answer: Branches of Reserve Bank of India
the non-ins�tut
187. In which of the following cases is the transac�on charge
a) Income accruals
to be paid to the mutual fund distributor, deducted from the
b) Dividends which are received from equity
gross investment of the investor ?
investments
c) Realized gain from sale of investments
 d) Unrealized apprecia�on in value of investments 201. Iden�fy the true statement(s) - A) The nominee is the
beneficial owner of the mutual fund units B) Nomina�on does
Answer: Unrealized apprecia�on in value of investments not create any �tle or beneficial interest in the units in favour
of the nominee a�er the death of the unit-holder
194. The empanelment of a mutual fund distributor by an
Asset Management Company can be terminated __________ a) Only A is true
b) Only B is true
a) In case all the investors of the distributors shi� to
c) Both A and B are true
direct plans
d) Both A and B are false
b) When the term of empanelment is aver
c) Any �me by the AMC Answer: Only B is true
d) All of these

Answer: Any �me by the AMC Module: 7. Net Asset value, TER and pricing of
195. Mr. Suresh invests Rs 2,00,000 in a mutual fund with a
units – Weightage - 8 marks
facevalue of Rs 10 and NAV of Rs. 50. How many units will be
alloted to him?
202. Mutual funds CANNOT distribute income / dividend out
a) 4000 units of_______
b) 20000 units
c) Will be lower than 4000 units due to entry load a) Dividends which are received from equity
d) Will be lower than 20000 units due to entry load investments
b) Unrealised apprecia�on in value of investments
Answer: 4000 units c) Income accruals
d) Realised gains from sale of investments
196. ___________is not a mutual fund distribu�on channel.
Answer: Unrealised apprecia�on in value of investments
a) Branches of Public sector banks
b) Branches of Reserve Bank of India 203. In case of________the Net Asset Value has to be declared
c) Branches of Private sector banks for upto 4 decimal points.
d) Branches of Foreign banks
a) Mid Cap and Small Cap Funds
Answer: Branches of Reserve Bank of India b) Liquid Funds
c) Aggressive Hybrid Funds
197. In which of the following cases is the transac�on charge d) ELSS Funds
to be paid to the mutual fund distributor, deducted from the
gross investment of the investor? Answer: Liquid Funds

a) When the investor purchases mutual fund units 204. When can mutual funds charge an addi�onal expense of
worth Rs 5000 through a mutual fund distributor 0.30% of daily net assets of the scheme?
b) When the investor purchases mutual fund units
worth Rs 10000 through a mutual fund distributor a) If the new inflows from beyond top 30 ci�es are at
c) When the investor purchases mutual fund units least (a) 30 percent of gross new inflows in the
worth Rs 5000 through the website of the mutual scheme or (b) 15 percent of the average assets
fund under management (year to date) of the scheme,
d) When the investor purchases mutual fund units whichever is higher
worth Rs 10000 through the website of the mutual b) If the new inflows from beyond top 30 ci�es are at
fund least (a) 20 percent of gross new inflows in the
scheme or (b) 5 percent of the average assets under
Answer: When the investor purchases mutual fund units management (year to date) of the scheme,
worth Rs 10000 through a mutual fund distributor whichever is higher
c) If the new inflows from beyond top 15 ci�es are at
198. As per SEBI rules, commissions cannot be paid to ___ least (a) 25 percent of gross new inflows in the
scheme or (b) 15 percent of the average assets
a) Brokers of the stock exchange
under management (year to date) of the scheme,
b) Banks
whichever is higher
c) Sponsor distributors
d) If the new inflows from beyond top 15 ci�es are at
d) Investors
least (a) 10 percent of gross new inflows in the
Answer: Investors scheme or (b) 5 percent of the average assets under
management (year to date) of the scheme,
199. To become a mutual fund distributor in India, one has to whichever is higher
pass an exam which is conducted by
Answer: If the new inflows from beyond top 30 ci�es are at
a) Securi�es and Exchange Board of India - SEBI least (a) 30 percent of gross new inflows in the scheme or (b)
b) Na�onal Stock Exchange - NSE NCFM 15 percent of the average assets under management (year to
c) Na�onal Ins�tute of Securi�es Markets - NISM date) of the scheme, whichever is higher
d) Associa�on of Mutual Funds in India’s - AMFI
205. The addi�onal Total Expense Ra�o (TER) charged has to
Answer: Na�onal Ins�tute of Securi�es Markets - NISM be credited back to the Mutual Fund in which of these
situa�ons?
200. The empanelment of a mutual fund distributor by an
Asset Management Company can be terminated __________ a) When the performance of the mutual fund declines
as compared to previous year
a) In case all the investors of the distributors shi� to b) When the inflows from beyond the top 30 ci�es are
direct plans redeemed within a period of 1 year from the date of
b) When the term of empanelment is over investment.
c) Any �me by the AMC c) When the TER of the mutual fund exceeds the limit
d) All of these specified under the regula�ons
d) All of these
Answer: Any �me by the AMC
Answer: When the inflows from beyond the top 30 ci�es are Answer: TRUE
redeemed within a period of 1 year from the date of
investment. 212. In case of any conflict between the Principles of Fair
Valua�on and AMC's Valua�on Guidelines____________
206. In which of the following case can a mutual fund charge
the addi�onal expense of 0.30 % of daily net assets of the a) The Valua�on Guidelines will prevail
scheme ? b) The Principles of Fair Valua�on will prevail
c) Both are same so there will never be an conflict
a) When the new inflows from beyond top 30 ci�es is d) SEBI will decide which is correct
at least i) 30% of the gross new inflows in the
scheme OR ii) 15% of the average AUM (Year To Answer: The Principles of Fair Valua�on will prevail
Date) of the scheme, which ever is higher
213. Iden�fy which statement is true?
b) When the new inflows from beyond top 25 ci�es is
at least 30% of the gross new inflows a) Investors cannot hold the units of a mutual fund in
c) When the new inflows from beyond top 30 ci�es is frac�on of 1 unit
at least 10% of the gross new inflows b) Investors can hold the units of a mutual fund in
d) When the new inflows from beyond top 15 ci�es is frac�on of 1 unit
at least 20% of the gross new inflows c) Investors can hold the units of a mutual fund in
market lots of 50 units
Answer: When the new inflows from beyond top 30 ci�es is at
d) Investors can hold the units of a mutual fund in
least i) 30% of the gross new inflows in the scheme OR ii) 15%
market lots of 100 units
of the average AUM (Year To Date) of the scheme, which ever
is higher Answer: Investors can hold the units of a mutual fund in
frac�on of 1 unit
207. Iden�fy the TRUE statement - A. It is mandatory for the
AMC to disclose the valua�on policy B. The AMC is not 214. Which expenses can be charged by the AMC to a mutual
accountable for policies and procedures for detec�ng and fund scheme?
preven�ng incorrect valua�on
a) Expenses which are incurred to manage the fund
a) Only A is true b) Expenses which are incurred to launch the fund
b) Only B is true c) Expenses which are incurred by the AMC
c) Both A and B are true d) Expenses which are incurred by the investors in
d) None of these buying the fund
Answer: Only A is true Answer: Expenses which are incurred to manage the fund
208. Iden�fy the FALSE statement(s) - A) For Index funds, the 215. When a dividend is paid, the NAV of the units ______to
NAV is calculated upto 4 decimal points B) The AMC and a that extent.
mutual fund scheme of the AMC can have the same auditor
a) rises
a) Only A is false b) falls
b) Only B is false c) There is no change
c) Both A and B are false d)
d)
Answer: falls
Answer: Only B is false
216. A mutual fund scheme can invest ________ in the equity
209. Iden�fy the False statement/s. A. Valua�on gains are instruments of a company.
ignored but valua�on losses need to be adjusted against the
profits while calcula�ng distributable surplus B. The Mark-to- a) 5% of the net assets
market gains form a part of the distributable reserves in case b) 10% of the net assets
of mutual fun c) 15% of the net assets
d) 25% of the net assets
a) Only A is false
b) Only B is false Answer: 10% of the net assets
c) Both A and B are false
217. If a Segregated por�olio is created, it shall be effec�ve
from_______
Answer: Only B is false
a) the day of credit event
210. Which document is used by fund ra�ng agencies and also b) seven days prior to the credit event
by investors to check the performance of various schemes of a c) one year from the date of the credit event
mutual funds? d) the day that security was bought in the por�olio

a) KIM Answer: the day of credit event

b) SID
c) Annual accounts of the AMC 218. Which transac�on of an open ended fund is based on the
d) Fund Fact Sheet Net Asset Value (NAV) pricing?

Answer: Fund Fact Sheet a) Purchase of units

b) Redemp�on of units
211. The addi�onal Total Expense Ra�o (TER) charged has to c) Both purchase and redemp�on of units
be credited back to the Mutual Fund if the inflows from d)
beyond the top 30 ci�es are redeemed within a period of 1
year from the date of investment. State whether True or Answer: Both purchase and redemp�on of units
False?
219. Iden�fy the true statement with respect to Total Expense
a) TRUE Ra�o?
b) FALSE
a) The AMC is not allowed to change the Total Expense
Ra�o of a scheme during its en�re life �me
 b) The AMC can change the Total Expense Ra�o and it 225. In which of the following cases can Goods and Service Tax
need not be communicated to the unit holders as its (GST) be charged to the mutual fund scheme over and above
an internal mater the Total Expense Ra�o of the scheme ?
c) The AMC can change the Total Expense Ra�o and it
has to be communicated to all the unit holders a) GST applicable on AMC fees only can be charged to
d) There is no term as - Total Expense Ra�o for a the scheme over and above the Total Expense Ra�o
mutual fund scheme b) GST applicable on any fees must be within the Total
Expense Ra�o
Answer: The AMC can change the Total Expense Ra�o and it c) GST applicable on distributor commission only can
has to be communicated to all the unit holders be charged to the scheme over and above the Total
Expense Ra�o
220. In case of any conflict between the Principles of Fair d) GST applicable on AMC fees as well as distributor
Valua�on and AMC's Valua�on Guidelines____________ commission can be charged to the scheme over and
above the Total Expense Ra�o
a) The Valua�on Guidelines will prevail
b) The Principles of Fair Valua�on will prevail Answer: GST applicable on AMC fees only can be charged to
c) Both are same so there will never be an conflict the scheme over and above the Total Expense Ra�o
d) SEBI will decide which is correct
226. What happens in the process of Indexa�on?
Answer: The Principles of Fair Valua�on will prevail
a) In indexa�on, the impact of capital gains tax is
221. Which of the following statement is true with respect to reduced in case of both short term and long term
"Mark to Market’ ? capital gains
b) In indexa�on, the mutual fund's performance is
a) Securi�es in the por�olio are valued at current
benchmarked against a suitable index
market prices
c) In indexa�on, the cost of acquisi�on is adjusted
b) Securi�es in the por�olio are valued at 52 week high
upwards to reflect the impact of infla�on
prices
d) None of these
c) Securi�es in the por�olio are valued at 52 week low
prices Answer: In indexa�on, the cost of acquisi�on is adjusted
d) Securi�es in the por�olio are valued at purchase upwards to reflect the impact of infla�on
price
227. On whom is the compliance requirement under Foreign
Answer: Securi�es in the por�olio are valued at current Account Tax Compliance Act (FATCA) applicable?
market prices
a) Only on those mutual funds who have foreign
222. Iden�fy which statement is true? ins�tu�ons as their sponsors
b) Only on those mutual funds who are registered with
a) Investors cannot hold the units of a mutual fund in
a foreign agency
frac�on of 1 unit
c) All financial ins�tu�ons including mutual funds
b) Investors can hold the units of a mutual fund in
d) Only Indian mutual funds
frac�on of 1 unit
c) Investors can hold the units of a mutual fund in Answer: All financial ins�tu�ons including mutual funds
market lots of 50 units
d) Investors can hold the units of a mutual fund in 228. Long term capital loss from an investment can be set off
market lots of 100 units against ______.

Answer: Investors can hold the units of a mutual fund in a) short term capital gains only
frac�on of 1 unit b) short term capital gain or long term capital gain
c) long term capital gains only
d) long term capital loss cannot be set off
Module: 8. Taxa�on - Weightage - 4 marks Answer: long term capital gains only

229. Who uses the informa�on collected under the Foreign

Account Tax Compliance Act (FATCA)?
223. The benchmark for a debt mutual fund scheme could be
chosen on the basis of Scheme Type and Scheme Size. - State a) Foreign Government or foreign agencies
whether True or False? b) Indian Government
c) Indian Tax authori�es
a) TRUE
d) ALL OF THESE
b) FALSE
Answer: ALL OF THESE

230. Iden�fy the false statement(s). A) When an investor

Answer: FALSE wants to redeem from a scheme, the distributor must suggest
redemp�on from the scheme with the maximum exit load B)
224. For units of Equity Linked Savings Scheme (ELSS), the
The mutual fund distributors can ignore the impact of exit
lock-in period is_________ .
load at the �me of repurc
a) three years from the date of original investment,
a) Only A is false
even in case of subsequent purchases by SIP
b) Only B is false
b) three years from the date of original investment for
c) Both A and B are false
each individual unit for purchases made by SIP
c) There is no lock-in period if tax exemp�on is claimed
Answer: Both A and B are false
Answer: three years from the date of original investment for 231. The compliance requirements under the Foreign Account
each individual unit for purchases made by SIP Tax Compliance Act (FATCA) applies only to mutual funds and
not to other financial ins�tu�ons - State whether True or
False?
 a) TRUE a) There is NIL TDS on capital gains in mutual fund for
b) FALSE all investors
b) TDS is required to be deducted at 10 percent on all
declared dividend
c) All capital gains from mutual fund investments are
Answer: FALSE subject to TDS @ 10%
d) TDS is not applicable on capital gains for resident
232. Short term capital loss from an investment can be set off
individuals but is applicable for Non Resident
against ________________
Individuals (NRI)
a) short term capital gains only
Answer: TDS is not applicable on capital gains for resident
b) short term capital gain or long term capital gain
individuals but is applicable for Non Resident Individuals (NRI)
c) long term capital gains only
d) Short term capital loss cannot be set off 239. What is Indexa�on?

Answer: short term capital gain or long term capital gain a) Reduc�on of short and long term capital gains tax by
using an index based calcula�on
233. Which of the statement is true with respect to
b) Benchmarking the index fund against a suitable
applicability of TDS in case of capital gains from mutual fund
index like Sensex / Ni�y
units?
c) Adjus�ng the cost of acquisi�on upwards to reflect
a) There is NIL TDS on capital gains in mutual fund for the impact of infla�on
all investors d) Adjus�ng the cost of acquisi�on downward to reflect
b) TDS is required to be deducted at 10 percent on all the impact of infla�on
declared dividend
Answer: Adjus�ng the cost of acquisi�on upwards to reflect
c) All capital gains from mutual fund investments are
the impact of infla�on
subject to TDS @ 10%
d) TDS is not applicable on capital gains for resident 240. The Securi�es Transac�on Tax levied on re-purchase of
individuals but is applicable for Non Resident units of debt mutual funds is___________
Individuals (NRI)
a) 0.001%
Answer: TDS is not applicable on capital gains for resident b) 0.025%
individuals but is applicable for Non Resident Individuals (NRI) c) 0.25%
d) STT is not applicable
234. What is Indexa�on ?
Answer: STT is not applicable
a) Reduc�on of short and long term capital gains tax by
using an index based calcula�on 241. When there is a need to withdraw money from a scheme
b) Benchmarking the index fund against a suitable (i.e. repurchase / redemp�on), the distributor must assess the
index like Sensex / Ni�y implica�ons of __________ and___________ on the investors
c) Adjus�ng the cost of acquisi�on upwards to reflect por�olio.
the impact of infla�on
d) Adjus�ng the cost of acquisi�on downward to reflect a) entry loads and exit loads
the impact of infla�on b) capital gains tax and exit loads
c) capital gains tax and entry loads
Answer: Adjus�ng the cost of acquisi�on upwards to reflect d) entry loads and dividend tax
the impact of infla�on
Answer: capital gains tax and exit loads
235. The Securi�es Transac�on Tax levied on re-purchase of
units of debt mutual funds is___________

a) 0.001%
b) 0.025% Module: 9. Investor Service - Weightage - 15
c) 0.0025 marks
d) STT is not applicable

Answer: STT is not applicable

242. The mechanism used to ensure that the cutoff �ming is
236. Mr. X has invested Rs. 2,00,000 in a 370 day FMP and on strictly followed is called_______
maturity he received Rs. 2,15,832. What is the capital gain in
a) Stamp �me
this transac�on?
b) Time verifica�on
a) 7916 c) Time stamping
b) 13750 d) Audi�ng
c) 15832
Answer: Time stamping
d) Insufficient Data
243. Investors in India are usually highly organised in
Answer: 15832
managing their financial transac�ons and taking decisions
237. Short term capital loss from an investment can be set off related to Financial Planning - State True or False ?
against ________________
a) TRUE
a) short term capital gains only b) FALSE
b) short term capital gain or long term capital gain
c) long term capital gains only
d) Short term capital loss cannot be set off
Answer: FALSE
Answer: short term capital gain or long term capital gain
244. An investor gives a local cheque of Rs 3 crore for
238. Which of the statement is true with respect to investment in Gilt scheme at 11.30 am. What would be the
applicability of TDS in case of capital gains from mutual fund applicable NAV for this investment ?
units?
 a) The closing NAV of the day preceding the date of b) When the investor's folio was a NRI account before
applica�on change
b) The closing NAV of the next working day c) When the investor's place of birth is other than India
c) The closing NAV of the applica�on day d) When the investor is a resident of USA or UK only
d) The NAV of the business day on which the funds are
available for u�lisa�on Answer: When the investor's place of birth is other than India

Answer: The NAV of the business day on which the funds are 251. What is the Net Asset Value (NAV) a�er dividend
available for u�lisa�on payment called?

245. Which of the below investors will require the approval of a) ex-Dividend NAV
board before inves�ng in mutual funds ? b) ex-Load NAV
c) cum-Dividend NAV
a) Non Resident investors d) Net - NAV
b) Ins�tu�onal investors
c) High Networth investors Answer: ex-Dividend NAV
d) Retail investors
252. Which of these statement is TRUE with respect to Cut-off
Answer: Ins�tu�onal investors �mings?

246. State True or False - Gilt schemes have more risks than a) Cut-off �mings are prescribed by SEBI from �me to
liquid schemes as their NAV fluctuates more due to changes in �me
the yield market. b) Cut-off �mings are agreed upon between the AMC
and the Collec�on centres
a) TRUE c) Cut-off �mings are different from AMC to AMC
b) FALSE d) Cut-off �mings are different for different RTAs

Answer: Cut-off �mings are prescribed by SEBI from �me to

�me
Answer: TRUE
253. Mr.Ais an exis�ng investor in a mutual fund scheme and
247. The NFO price of a mutual fund scheme was Rs. 10 and its he is now inves�ng Rs. 5000 in the direct plan of the scheme.
current Net Asset Value (NAV) is Rs. 8. What would happen if What will be his net investment in the scheme a�er
the transac�ons were to happen at NFO price? considering the transac�on charges?

a) The new investors as well as the exis�ng investors in a) 4950

this scheme would stand to lose b) 4900
b) The new investors as well as the exis�ng investors in c) 4875
this scheme would stand to gain d) 5000
c) The new investors stand to gain at the cost of
exis�ng investors Answer: 5000
d) The new investors stand to lose at the cost of
254. A board resolu�on for inves�ng in a mutual fund scheme
exis�ng investors
is compulsorily required by______
Answer: The new investors stand to lose at the cost of exis�ng
a) Non Resident Indians - NRIs
investors
b) Hindu Undivided Family - HUF
248. State whether the statement is True or False - Investment c) Ins�tu�onal Investors
in Income Distribu�on cum Capital Withdrawal re-investment d) Minors
op�on grows faster than Growth op�on as the investor gets
Answer: Ins�tu�onal Investors
addi�onal units.
255. ____________can be used in lieu of dividend payouts.
a) Its true for all categories of mutual fund schemes
b) Its false for all categories of mutual fund schemes a) SWP
c) Its true only for equity funds b) STP
d) It depends on whether the fund is open-end or c) SIP
close-end d) Total Redemp�on
Answer: Its false for all categories of mutual fund schemes Answer: SWP
249. How will the AMC /R&T agent process an applica�on for 256. Where should the change in status of an individual from a
subscribing to mutual fund units if the ARN is wrongly Resident to a Non-Resident Indian updated for mutual fund
men�oned in it? investments?
a) It will be processed as a direct plan applica�on a) It should be updated with the Registrar and Transfer
b) It will be rejected as incomplete applica�on Agent
c) It will be considered as an incomplete applica�on b) It should be updated with the KYC Registra�on
and sent back for comple�on Agency
d) It will be treated as a regular plan subject to the c) It should be updated with the directly with the
error being corrected in the required �me frame Mutual Fund
d) It can be updated with any of the three op�ons
Answer: It will be treated as a regular plan subject to the error
provided
being corrected in the required �me frame
Answer: It should be updated with the KYC Registra�on
250. When has the investor in mutual funds provide
Agency
informa�on under the Foreign Account Tax Compliance Act
(FATCA) ? 257. Investments have to be made only through authorized
signatories for investments by_________
a) When the investment is made through a foreign
bank account a) Ins�tu�onal investors
b) Hindu Undivided Family (HUF)
 c) Non Resident Indians (NRI) Answer: Expenses
d) High net worth individuals (HNI)
264. Opening of �me stamping machine needs to be
Answer: Ins�tu�onal investors documented and reported to the Asset Management
Company (AMC) - State whether True or False?
258. Iden�fy the FALSE statement(s) -
a) TRUE
A - Authorised signatories have to sign the request for b) FALSE
transac�ons of ins�tu�onal investors in mutual funds

B - Even if the Memorandum of Associa�on and Ar�cles of

Associa�on does not permit invest in mutual funds Answer: FALSE

a) Statement Ais false 265. If a investor has to change his default account, he/she has
b) Statement B is false to do it with ________ .
c) Both statements A and b are false
d) a) The KYC Registra�on agency
b) AMFI
Answer: Statement B is false c) Either KRA or AMFI
d) The mutual fund (AMC) directly
259. The form for registering a change in the default bank
account has to be signed____________ Answer: The mutual fund (AMC) directly

a) by the first holder only 266. Which of these investors CANNOT do CASH investments
b) by all the holders of the falio in mutual funds up to a limit of Rs. 50,000?
c) according to the mode of holding of the folio
d) by all the holders of the bank account a) Investments made by a PIO (Person of Indian Origin)
b) Investments made by Sole Proprietorship firm
Answer: according to the mode of holding of the folio c) Investments made by minors
d) Investments made by resident Indian investors
260. Ms. Apeksha invests Rs 2 crore in a Gilt scheme at 2 pm
without PAN
with a local cheque. What would be the applicable NAV for
allotment of units? Answer: Investments made by a PIO (Person of Indian Origin)

a) Closing NAV of date of applica�on 267. Which is the Source Scheme in a Systema�c Transfer Plan
b) Closing NAV of next business day ?
c) Closing NAV of day immediately preceding the date
of applica�on a) It is the scheme with the lower NAV
d) NAV of the business day on which the funds are b) It is the scheme from which funds are transferred
available for u�liza�on c) It is the scheme to which funds are transferred
d) It is the scheme with the higher NAV
Answer: NAV of the business day on which the funds are
available for u�liza�on Answer: It is the scheme from which funds are transferred

261. If a mutual fund enters into a transac�on for purchase or 268. Once the mutual fund units are pledged, the unit
sale of securi�es with any of its associates, then the members holder/s __________
of Asset Management Company of the mutual fund have to
_________ a) Cannot sell the units
b) Can sell the units bit a�er a period of 3 months
a) Inform the mutual fund unitholders of the intent to c) Cannot sell the units but can switch the units to
undertake the transac�on before it is done another scheme
b) Jus�fy the fairness of the transac�on to the Board of d) Cannot do addi�onal purchase in the same account
Trustees
c) Make certain that the transac�ons happens at a Answer: Cannot sell the units
price that is beter than the closing market price
269. Iden�fy the true statement(s) - A) A systema�c
d) Take the approval of the trustees before undertaking
transac�on cannot be cancelled B) Assuming a mutual fund
the transac�ons
scheme is profitable then the investors can keep encashing
Answer: Jus�fy the fairness of the transac�on to the Board of some profits through a Systema�c Withdrawal Plan
Trustees
a) Only A is true
262. Iden�fy the false statement/s. A. Investments in mutual b) Only B is true
funds can be made on a repatriable basis by NRIs B. The c) Both A and B are true
mutual fund will automa�cally pay in Dollars when the NRI
redeems his investments which were made on a repatriable
Answer: Only B is true
basis
270. Iden�fy the TRUE statements with respect to
a) Only A is false
Transmission of mutual fund units - A) Before the transfer is
b) Only B is false
effected, the mutual fund will insist for an indemnity against
c) Both A and B are false
future problems for the mutual fund arising out of the transfer
B) Before the transfe
Answer: Only B is false
a) A and B are true
263. _____is the most relevant factor for comparing b) B and C are true
performance of liquid funds of similar category offered by c) A and C are true
various mutual fund houses. d) All A, B and C are true

a) Expenses Answer: A and C are true

b) Maturity
271. Mr. Mohit has filled up a applica�on form for subscribing
c) Current NAV
to a mutual fund scheme. However the address men�oned in
d) Taxa�on
the applica�on form is different from the address provided at 278. An investor already has a folio in a mutual fund scheme
the �me of KYC compliance. Which address will be included in where he is a joint holder. Now he wants to do addi�onal
the mutual fu investments in the same scheme as a sole holder. How can he
make the change?
a) The address provided for KYC compliance
b) The address provided in the applica�on form a) He will have to do the investments under a new folio
c) Mr. Mohit can indicate which address is correct and select the mode of holding as single
d) The address provided in the applica�on form will be b) He can do the investments by men�oning the mode
used for all communica�ons of holding in the applica�on as single to apply only
for the fresh investments being made
Answer: The address provided for KYC compliance c) He can do the investment by changing the mode of
holding for the addi�onal units a�er the investment
272. Which of these statements are TRUE with respect to �me
has been made.
stamping on mutual fund documents? A) Time stamping is
d)
relevant for non-financial mutual fund transac�ons B) The
daily �me stamping of applica�on does not start with serial 1 Answer: He will have to do the investments under a new folio
C) Breakdown of �me and select the mode of holding as single

a) A and B are true 279. Informa�on under Foreign Account Tax Compliance Act
b) B and C are true (FATCA) is to be provided _____________
c) A and C are true
d) A, B and C are true a) Only if the investment is made from a foreign bank
account
Answer: B and C are true b) Only if the country of
birth/ci�zenship/na�onality/tax residency is other
273. Investors who have not transacted during the previous
than India
________ are known as dormant investors.
c) Only if an NRI is doing the investment
a) 15 MONTHS d) Only if the investor is a resident of USA or Europe
b) 12 MONTHS
Answer: Only if the country of
c) 9 MONTHS
birth/ci�zenship/na�onality/tax residency is other than India
d) 6 MONTHS
280. In a mutual fund applica�on form, if ‘Direct’ is men�oned
Answer: 6 MONTHS
in the space provided for ARN and the choice of regular plan is
274. Which of these en��es can invest in Indian mutual indicated then the applica�on will be considered as
funds? A) Foreign por�olio investor B) Insurance company C) _____________
Salaried individual
a) Direct plan applica�on
a) Only C b) Regular plan applica�on
b) A and B c) Incomplete and rejected
c) B and C d) Incomplete and sent to the investor for comple�on
d) All A, Band C
Answer: Direct plan applica�on
Answer: All A, Band C
281. Which informa�on has to be provided by a normal
275. Which of these statement(s) is/are TRUE? A) If the investor to be iden�fied as an exis�ng investor in the mutual
mutual fund units are held in demat form, they cannot be fund?
converted in to physical form B) When a mutual fund is
a) PAN
redeemed or when there is a dividend pay-out, the amount
b) PEKRN
will be credited to the bank accoun
c) Folio Number
a) Only A is correct d) KYC acknowledgement
b) Only B is correct
Answer: Folio Number
c) Both A and B are correct
282. Which investor need not provide a PAN card at the �me
of making a mutual fund investment ?
Answer: Only B is correct
a) Investor who is inves�ng up to Rs. 50,000 in a
276. Iden�fy the true statement(s) with respect to stamping of
mutual fund scheme (excluding SIPs) per year per
applica�on for Non Financial transac�ons of a mutual fund. A)
mutual fund
Time stamping is relevant B) Date stamping is per�nent C)
b) Investor who is inves�ng up to Rs. 50,000 in a
Date and Time stamping is done
mutual fund scheme (including SIPs) per year per
a) All A, B and C are true mutual fund
b) Only A and B are true c) Investor who is inves�ng up to Rs. 1,00,000 in a
c) Only B and C are true mutual fund scheme (excluding SIPs) per year per
d) Only A and C are true mutual fund
d) Investor who is inves�ng up to Rs. 1,00,000 in a
Answer: Only B and C are true mutual fund scheme (including SIPs) per year per
mutual fund
277. When a dividend is paid, the NAV of the units ______to
that extent. Answer: Investor who is inves�ng up to Rs. 50,000 in a mutual
fund scheme (including SIPs) per year per mutual fund
a) rises
b) falls 283. Which of these documents is not required to be
c) There is no change submited for inves�ng in mutual funds by a charitable
organisa�on?

Answer: falls a) List of authorized signatories

b) Trust deed
c) Board resolu�on
 d) Memorandum and Ar�cles of Associa�on c) cannot sell but can switch the units to another
scheme
Answer: Memorandum and Ar�cles of Associa�on d) cannot do addi�onal purchase

284. Mr. Sandesh invests Rs 75 lakh in a Gilt Fund and gives a Answer: cannot sell the units
local cheque at 3.30 pm. What will be the applicable NAV for
allotment of units? 291. Which of these statement(s) is/are TRUE? A) If the
mutual fund units are held in demat form, they cannot be
a) NAV of the business day on which the funds are converted in to physical form B) When a mutual fund is
available for u�lisa�on redeemed or when there is a dividend pay-out, the amount
b) Same day NAV if received before cut off �me. will be credited to the bank accoun
c) Closing NAV of the next business day
d) Closing NAV of day immediately preceding the date a) Only A is correct
of applica�on b) Only B is correct
c) Both A and B are correct
Answer: NAV of the business day on which the funds are
available for u�lisa�on
Answer: Only B is correct
285. Iden�fy the true statement(s) - A) Individuals can register
upto five bank accounts with a mutual fund B) A Non- 292. Who is NOT authorised to atest the documents
Individual can register upto ten bank accounts with a mutual submited for Know Your Customer compliance, in case
fund originals are not produced at the �me of KYC?

a) Only A is correct a) Notary Public

b) Only B is correct b) Manager of a Scheduled Commercial Bank
c) Both A and B are correct c) Mutual Fund distributor
d) Both A and B are incorrect d) Gazeted Officer

Answer: Both A and B are correct Answer: Mutual Fund distributor

286. ____________is considered as an Ins�tu�onal Investor. 293. Iden�fy the true statement(s) with respect to stamping of
applica�on for Non Financial transac�ons of a mutual fund. A)
a) NRI Time stamping is relevant B) Date stamping is per�nent C)
b) Trusts Date and Time stamping is done
c) PIO
d) High Networth Individuals a) All A, B and C are true
b) Only A and B are true
Answer: Trusts c) Only B and C are true
d) Only A and C are true
287. A minor has one more year to become a major. A 3 year
SIP is started in the minors folio. Which of the following Answer: Only B and C are true
statement is true in this case?
294. An investor already has a folio in a mutual fund scheme
a) The SIP will be registered for 3 years where he is a joint holder. Now he wants to do addi�onal
b) The SIP will be registered for only 2 years investments in the same scheme as a sole holder. How can he
c) The SIP will be registered for only 1 year �ll the make the change?
investor atains majority
d) The SIP will be registered for 3 years from the date a) He will have to do the investments under a new folio
of ataining majority and select the mode of holding as single
b) He can do the investments by men�oning the mode
Answer: The SIP will be registered for only 1 year �ll the of holding in the applica�on as single to apply only
investor atains majority for the fresh investments being made
c) He can do the investment by changing the mode of
288. What will happen if one of the joint holders of a mutual
holding for the addi�onal units a�er the investment
fund folio dies?
has been made.
a) The folio will be cancelled and the amount refunded d)
b) The units will be transferred to nominee/s
Answer: He will have to do the investments under a new folio
c) The units will be transferred to heir of deceased
and select the mode of holding as single
holder
d) The units will con�nue to be held by surviving joint 295. Informa�on under Foreign Account Tax Compliance Act
holders (FATCA) is to be provided _____________
Answer: The units will con�nue to be held by surviving joint a) Only if the investment is made from a foreign bank
holders account
b) Only if the country of
289. Iden�fy the true statement(s) - A) The nominee is the
birth/ci�zenship/na�onality/tax residency is other
beneficial owner of the mutual fund units B) Nomina�on does
than India
not create any �tle or beneficial interest in the units in favour
c) Only if an NRI is doing the investment
of the nominee a�er the death of the unit-holder
d) Only if the investor is a resident of USA or Europe
a) Only A is true
Answer: Only if the country of
b) Only B is true
birth/ci�zenship/na�onality/tax residency is other than India
c) Both A and B are true
d) Both A and B are false 296. Which informa�on has to be provided by a normal
investor to be iden�fied as an exis�ng investor in the mutual
Answer: Only B is true
fund?
290. In case the units are pledged, the unit holder_______
a) PAN
a) can sell the units a�er the lockin period b) PEKRN
b) cannot sell the units c) Folio Number
 d) KYC acknowledgement

Answer: Folio Number

Module 10. Risk, return and performance of
297. Which investor need not provide a PAN card at the �me funds – Weightage - 7 marks
of making a mutual fund investment?

a) Investor who is inves�ng up to Rs. 50,000 in a

mutual fund scheme (excluding SIPs) per year per 303. When the interest rates are rising, the bond funds which
mutual fund have short average maturity are more likely to outperform -
b) Investor who is inves�ng up to Rs. 50,000 in a State True or False ?
mutual fund scheme (including SIPs) per year per
a) TRUE
mutual fund
b) FALSE
c) Investor who is inves�ng up to Rs. 1,00,000 in a
mutual fund scheme (excluding SIPs) per year per
mutual fund
d) Investor who is inves�ng up to Rs. 1,00,000 in a Answer: TRUE
mutual fund scheme (including SIPs) per year per
mutual fund 304. By inves�ng in mutual funds an investor uses the services
of ________
Answer: Investor who is inves�ng up to Rs. 50,000 in a mutual
fund scheme (including SIPs) per year per mutual fund a) a professional actuary
b) a professional insurance agent
298. Mr. Sahid invests Rs 75 lakh in a Gilt Fund and gives a c) a professional investment manager
local cheque at 3.30 pm. What will be the applicable NAV for d) a professional tax planner
allotment of units?
Answer: a professional investment manager
a) NAV of the business day on which the funds are
available for u�lisa�on 305. The NAV of a mutual fund unit changes every day due to
b) Same day NAV if received before cut off �me. changes in____________
c) Closing NAV of the next business day
a) number of investors in the mutual fund
d) Closing NAV of day immediately preceding the date
b) market value of the mutual fund por�olio
of applica�on
c) the size of the por�olio
Answer: NAV of the business day on which the funds are d) the units remaining in the por�olio
available for u�lisa�on
Answer: market value of the mutual fund por�olio
299. Iden�fy the true statement(s) - A) Individuals can register
306. Iden�fy the FALSE statement/s : 1. A mutual fund
upto five bank accounts with a mutual fund B) A Non-
inves�ng across many countries will keep its benchmark index
Individual can register upto ten bank accounts with a mutual
which is based on US equity markets 2. For Gold ETF, gold
fund
prices will be the ideal benchmark
a) Only A is correct
a) Only 1 is false
b) Only B is correct
b) Only 2 is false
c) Both A and B are correct
c) Both 1 and 2 are false
d) Both A and B are incorrect

Answer: Both A and B are correct

Answer: Only 1 is false
300. ____________is considered as an Ins�tu�onal Investor.
307. _________risk arises because of difference in price
a) NRI movement of the deriva�ve vis-a-vis that of the security being
b) Trusts hedged.
c) PIO
a) Model Risk
d) High Networth Individuals
b) Basis Risk
Answer: Trusts c) Market Liquidity Risk
d) Credit Risk
301. A minor has one more year to become a major. A 3 year
SIP is started in the minors folio. Which of the following Answer: Basis Risk
statement is true in this case?
308. Iden�fy the TRUE statement(s) : a. A diversified index will
a) The SIP will be registered for 3 years have a Beta of 1 b. Unsystema�c risk can be measured by Beta
b) The SIP will be registered for only 2 years c. A por�olio which has Beta of less than 1 is less risky than
c) The SIP will be registered for only 1 year �ll the the market
investor atains majority
a) a and b
d) The SIP will be registered for 3 years from the date
b) a and c
of ataining majority
c) b and c
Answer: The SIP will be registered for only 1 year �ll the d) Only b
investor atains majority
Answer: a and c
302. In case the units are pledged, the unit holder_______
309. Iden�fy the true statement with respect to measuring
a) can sell the units a�er the lockin period returns for Mutual Funds schemes. 1. Simple Return can be
b) cannot sell the units calculated using the formula : Sale Price - Cost Price / Sale
c) cannot sell but can switch the units to another Price 2. Compounded Annual Growth Rate 'CAGR' technique
scheme has been prescribed by SE
d) cannot do addi�onal purchase
a) 1and 2
Answer: cannot sell the units b) 2and 3
c) 3 and 1
 d) 1,2and 3 d) usually be the worst performer in the next years to
come
Answer: 2and 3
Answer: May or may not be the top performer in the next
310. Which of these statement(s) is/are TRUE? 1. There cannot years to come
be a price impact on mutual fund units due to por�olio
rebalancing and/or liquidity demands on account of 317. Iden�fy the FALSE statements. 1. Arbitrage funds have
redemp�ons. 2. Market liquidity of mutual fund units can get lower risk as compared to Equity Funds 2. The main objec�ve
impacted on account of compan of an Arbitrage Fund is to provide capital apprecia�on 3.
Arbitrage funds can invest in both Futures/Op�ons(F&O) and
a) Only 1 cash markets
b) Only 2
c) Both 1 and 2 a) Only 1 is false
d) b) Only 2 is false
c) Both 2 and 3 are false
Answer: Only 2 d) Both 1 and 3 are false

311. Iden�fy the TRUE statements - A) Unsystema�c risk is Answer: Only 2 is false
measured by its Beta B) The diversified stock index has a Beta
of 1 C) An investment with a beta of 0.7 will move 7 percent 318. What is the disadvantage of company fixed deposits
when markets move by 10 percent when compared to bank fixed deposits?

a) A and B are true a) Lower rate of interest

b) B and C are true b) Lower safety
c) Aand C are true c) Highly vola�le
d) AllA, B and C are true d) Difficult to liquidate

Answer: B and C are true Answer: Lower safety

312. A fundamental analyst will study the Candle-S�ck charts 319. Iden�fy the TRUE statement with respect to ‘Jensen’s
and also the financial statement of a company. State whether Alpha’ of a mutual fund scheme?
True or False?
a) It is a measure of outperformance a�er adjus�ng for
a) TRUE the risk taken
b) FALSE b) It is a measure of risk and outperformance is related
to returns
c) It is a measure of simple outperformance,
irrespec�ve of the risk taken
Answer: FALSE d) None of these

313. The return from a mutual fund scheme is 8.3% and the Answer: It is a measure of outperformance a�er adjus�ng for
Standard Devia�on is 0.6. The risk-free rate of return is 5%. the risk taken
Calculate the Sharpe ra�o.
320. The return from a fund is 9 %, Standard Devia�on is 0.75
a) 3..5 and the Beta is 1.4. The risk free rate of return is 7%. What is
b) 5.5 the DENOMINATOR in the calcula�on of the Sharpe Ra�o?
c) 4
d) 2.87 a) 9
b) 0.4
Answer: 5.5 c) 7
d) 0.75
314. Iden�fy the TRUE statements. 1. The market liquidity can
get impacted due to market related events and company Answer: 0.75
factors 2. There cannot be a price impact on mutual fund units
due to liquidity demands due to redemp�on or por�olio 321. Iden�fy the TRUE statement. A) While calcula�ng scheme
rebalancing returns for an investor, if there is an entry load, then the ini�al
value of the Net Asset Value (NAV) is taken as NAV minus
a) Only 1 is true Entry Load B) While calcula�ng scheme returns for an investor,
b) Only 2 is true if there
c) Both 1 and 2 are true
d) Both 1 and 2 are false a) Only A is true
b) Only B is true
Answer: Only 1 is true c) Both A and B are true
d)
315. Calculate the Average holding period if the por�olio
turnover ra�o is 25 percent. Answer: Only B is true
a) 25 months 322. Iden�fy the TRUE statement/s with respect to the risks
b) 48 DAYS associated with short selling and stock lending. 1. There is
c) 40 MONTHS counterparty risk and liquidity risk in short selling 2. There is
d) 4 YEARS no risk associated with stock lending as the transac�on is
done through
Answer: 4 YEARS
a) Only 1 is true
316. A top performing scheme within a category ________
b) Only 2 is true
a) Is the best choice for an investor to invest his funds c) Both 1 and 2 are true
b) May or may not be the top performer in the next d)
years to come
Answer: Only 1 is true
c) usually remains the top performer for a long period
of �me 323. Iden�fy the TRUE statement/s : 1. The Beta of a
diversified stock index is greater than 1 2. An investment with
a beta of 0.8 will move 8 percent when markets move by 10% d) 80
3. Beta as a measure of risk is relevant only for equity
schemes. Answer: 80

a) Only 1 and 2 are true 331. Which of these funds has the highest risk?
b) Only 2 and 3 are true
a) Index Funds
c) Only 1 and 3 are true
b) Diversified Equity fund
d) All 1, 2 and 3 are true
c) Long Dura�on Funds
Answer: Only 2 and 3 are true d) Gilt Funds

324. The Net Asset Value (NAV) of a segregated por�olio has Answer: Diversified Equity fund
to be declared on a_________
332. Which of these statement(s) is/are true? A. In equity
a) Daily basis a�er the credit event investments, the probability of losing money over a long term
b) Weekly basis (on every Saturday) a�er the credit is lesser than losing money in the short term B. Fundamental
event Analysis consists of studying the financial statements of a
company and the ca

a) Only Ais correct

Answer: Daily basis a�er the credit event b) Only B is correct
c) Both A and B are correct
325. __________ would not be an originator to a special d) None of these
purpose vehicle, in case of securi�zed asset.
Answer: Only Ais correct
a) Reserve Bank of India (RBI)
b) Non-banking finance company 333. If a Segregated por�olio is created, it shall be effec�ve
c) A Commercial Bank from_______
d) Housing finance company
a) the day of credit event
Answer: Reserve Bank of India (RBI) b) seven days prior to the credit event
c) one year from the date of the credit event
326. These debt mutual funds have been arranged from d) the day that security was bought in the por�olio
lowest risk to highest risk. Iden�fy the risk which we are
discussing : 1. Liquid Funds 2. Money market funds 3. Medium Answer: the day of credit event
term bond funds
334. In case of a securi�zed asset, ____________will not be an
a) Interest Rate Risk originator to a Special Purpose Vehicle (SVP) ?
b) Concentra�on Risk
a) housing finance company
c) Default Risk
b) non-banking finance company
d) Credit Risk
c) commercial bank
Answer: Interest Rate Risk d) RBI

327. Indicate which of these funds have the lowest to highest Answer: RBI
risk sequence? A) Liquid Fund B) Credit Risk Fund C) Corporate
335. A mutual fund manager is planning to invest in Indian
Bond Fund
pharma companies as these companies are se�ng up new
a) B-C-A manufacturing capaci�es. Iden�fy the investment style of the
b) C-A-B fund manager.
c) A-B-C
a) Value investment style
d) A-C-B
b) Cyclical investment style
Answer: A-C-B c) Target investment style
d) Growth investment style
328. Among these funds, which will have the lowest Interest
Rate Risk? Answer: Growth investment style

a) Money market fund 336. A ______ investor will prefer lower risk and will setle for
b) Diversified Equity Fund a lower return.
c) Pharma Sector fund
a) Aggressive
d) Dynamic Bond Fund
b) Adventurous
Answer: Money market fund c) Moderate
d) Conserva�ve
329. An exis�ng bond fund will tend to lose value when
market interest rates ________ Answer: Conserva�ve

a) Rise 337. Iden�fy the true statement(s) - A) Beta is a measure of

b) Fall risk only for equity schemes B) Variance is a measure of risk
c) remains constant for both debt and equity schemes C) A fall in prices of the debt
d) are equal to yields securi�es due to default etc is known as a ‘credit event’

Answer: Rise a) Only A and B are true

b) Only A and C are true
330. In a Corporate Bond fund, the minimum investment in c) Only B and C are true
highest rated corporate bonds is _____________percent of the d) All A, B and C are true
total assets.
Answer: All A, B and C are true
a) 50
b) 60 338. a person who wants to retain liquidity in his investments
c) 70 will invest in_____________
 a) ELSS Schemes a) Value investment style
b) Fixed Deposits b) Cyclical investment style
c) PPFs c) Target investment style
d) Liquid Funds d) Growth investment style

Answer: Liquid Funds Answer: Growth investment style

339. Iden�fy the false statement(s). A) The best strategy in 346. Iden�fy the true statement(s) - A) Beta is a measure of
selec�ng a mutual fund scheme is that based on its past risk only for equity schemes B) Variance is a measure of risk
performance B) When an investor wants to redeem from a for both debt and equity schemes C) A fall in prices of the debt
scheme, the distributor must suggest redemp�on from the securi�es due to default etc is known as a ‘credit event’
scheme with the maximum exit
a) Only A and B are true
a) Only statement A is false b) Only A and C are true
b) Only statement B is false c) Only B and C are true
c) Both statements A and B are false d) All A, B and C are true
d)
Answer: All A, B and C are true
Answer: Both statements A and B are false
347. Iden�fy the TRUE statement(s) a) In an Assured Return
340. Iden�fy the TRUE statement(s) a) In an Assured Return scheme, if the scheme is not able to pay the assured return
scheme, if the scheme is not able to pay the assured return amount then the guarantor has to pay the same b) Investor
amount then the guarantor has to pay the same b) Investor returns might vary from the scheme returns on account of
returns might vary from the scheme returns on account of choices regarding investm
choices regarding investm
a) ‘b and 'c' are true
a) ‘b and 'c' are true b) ‘a’ and 'c’ are true
b) ‘a’ and 'c’ are true c) ‘a 'and 'b" are true
c) ‘a 'and 'b" are true d) All 'a", 'b" and 'c' are true
d) All'a", 'b" and 'c' are true
Answer: ‘a 'and 'b" are true
Answer: ‘a 'and 'b" are true
348. Mr. Suresh invests Rs 2,00,000 in a mutual fund with a
341. Mrs. Neeta needs Rs. 5,00,000 in 3 years from now. The facevalue of Rs 10 and NAV of Rs. 50. How many units will be
interest rate is 6%. By which formula can we calculate the alloted to him?
amount which is required to be invested today to achieve the
goal? a) 4000 units
b) 20000 units
a) 500000 * (1+0.06)*3 c) Will be lower than 4000 units due to entry load
b) 500000 / (1+0.06)"3 d) Will be lower than 20000 units due to entry load
c) 500000 / (1+0.06)*3
d) 500000 * (1- 0.06)*3 Answer: 4000 units

Answer: 500000 / (1+0.06)"3

342. When compared to open ended funds, investors in close

Module 11. Mutual Fund Scheme
ended funds face a higher level of______________
performance – Weightage - 7 marks
a) Credit risk
b) Liquidity risk
c) Market risk 349. In which type of fund is the risk of investor not selec�ng
d) Investment risk the correct sector maximum ?
Answer: Liquidity risk a) Thema�c Funds
b) Sector Funds
343. Which of these statement(s) is/are true? A. In equity
c) Arbitrage Funds
investments, the probability of losing money over a long term
d) Index Funds
is lesser than losing money in the short term B. Fundamental
Analysis consists of studying the financial statements of a Answer: Sector Funds
company and the ca
350. As per SEBI guidelines, ___________is/are vested with
a) Only A is correct the responsibility of developing indices as benchmark for debt
b) Only B is correct mutual fund schemes.
c) Both A and B are correct
d) None of these a) AMFI
b) Research and ra�ng agencies
Answer: Only A is correct c) The mutual fund themselves
d) The risk management department of the AMC's
344. In case of a securi�zed asset, ____________will not be an
originator to a Special Purpose Vehicle (SVP)? Answer: Research and ra�ng agencies
a) housing finance company 351. Which of these can be a benchmark for a Banking Fund?
b) non-banking finance company
c) commercial bank a) S&P BSE FMCG Index
d) RBI b) S&P BSE Auto
c) S&P BSE Bankex
Answer: RBI d) S&P BSE 500
345. A mutual fund manager is planning to invest in Indian Answer: S&P BSE Bankex
pharma companies as these companies are se�ng up new
manufacturing capaci�es. Iden�fy the investment style of the 352. The indices based on Government securi�es will be an
fund manager. appropriate benchmark for which type of funds?
 a) Credit Risk Funds Answer: Fund Fact Sheet
b) Gilt Funds
c) Money Market Funds 360. A mutual fund scheme performance must always be
d) Liquid Funds measured rela�ve to the___________

Answer: Gilt Funds a) Asset class

b) Index
353. person wants to create a synthe�c index. Guide him as to c) Investment objec�ve
in which of these categories the weightage of equity index d) Benchmark
would be the lowest?
Answer: Benchmark
a) Super aggressive hybrid fund
b) Aggressive hybrid fund 361. Iden�fy the true statement(s) with respect to benchmark
c) Balanced hybrid fund for Sector Funds. A) Its ideal to benchmark a sector fund
d) Conserva�ve hybrid fund against an index represen�ng the respec�ve sector B) Its
advisable to benchmark a sector fund against a diversified
Answer: Conserva�ve hybrid fund fund to get the correc

354. The choice of benchmark for a Debt Scheme could be a) Only A is true
chosen on the basis of : 1. Scheme Size 2. Scheme Type 3. b) Only B is true
Investment Universe c) Both A and B are true
d)
a) Both 1 and 2
b) Both 2 and 3 Answer: Only A is true
c) Both 1 and 3
d) All1,2and 3 362. For which of the following fund can NSE’s MIBOR be used
as an benchmark?
Answer: Both 2 and 3
a) ELSS Fund
355. In case one of the joint holders dies, than the units will b) Liquid Fund
_________ c) 5 year constant maturity G-sec fund
d) Long dura�on fund
a) be transferred to the HUF of deceased holder
b) be transferred to nominee/s Answer: Liquid Fund
c) con�nue to be held by surviving joint holders
d) be transferred to nominee/s 363. Iden�fy the true statement(s) with respect to benchmark
for mutual fund schemes. A) For Interna�onal Equity fund, the
Answer: con�nue to be held by surviving joint holders ideal benchmark will be BSE 500 index as it is a very broad
based index covering 500 companies B) For Gold ETF, gold
356. ‘Not more than 25% of the Net Assets will be invested in prices will be the
the Deriva�ves Market’ - This statement best describes
__________ the of the mutual fund scheme. a) Only A is correct
b) Only B is correct
a) Investment Objec�ve c) Both A and B are correct
b) Investment Interest d) Neither A nor B are correct
c) Investment Strategy
d) Investment Policy Answer: Only B is correct

Answer: Investment Policy 364. Iden�fy the true statement(s) with respect to Scheme
Performance Disclosures? A) The data related to fund
357. Iden�fy the FALSE statement/s with respect to performance of all mutual funds is available on the AMFI
benchmarks for mutual fund schemes. A. A Mul�-Cap fund website B) SEBI has mandated disclosure of performance data
can have Ni�y 500 index as its benchmark B. A Mul�-Cap fund by all the AMCs
can have BSE Sensex as its benchmark
a) Only A is true
a) Only A is false b) Only B is true
b) Only B is false c) Both A and B are true
c) Both A and B are false d) Both A and B are false
d) None of these
Answer: Both A and B are true
Answer: Only B is false
365. To measure the fund managers’ performance, the
358. Smita is a young investor and her parents advice her to difference between scheme’s actual return and its op�mal
invest in fixed deposits of banks so that these funds can be return is calculated and this is known as __________
used for her re�rement. If Smita follows her parents advice,
what risk does she face? a) Alpha
b) Beta
a) She has to select the correct bank which is c) Sharpe
financially strong d) Treynor
b) There is a high risk of default in her por�olio
c) There is a risk of low returns Answer: Alpha
d) There is no risk as fixed deposits are quiet safe
366. In which document is a commentary on the current state
Answer: There is a risk of low returns of economy and markets is also generally provided?

359. In which document is a commentary on the current state a) SAI

of economy and markets is also generally provided? b) KIM
c) Fund Fact Sheet
a) SAI d) SID
b) KIM
c) Fund Fact Sheet Answer: Fund Fact Sheet
d) SID
367. A mutual fund scheme performance must always be
measured rela�ve to the___________ Module 12. Mutual Fund Scheme selec�on –
Weightage - 15 marks
a) Asset class
b) Index
c) Investment objec�ve
374. State True or False - The Thema�c funds will always have
d) Benchmark
a wider exposure than Sector funds.
Answer: Benchmark
a) TRUE
368. Iden�fy the true statement(s) with respect to benchmark b) FALSE
for Sector Funds. A) Its ideal to benchmark a sector fund
against an index represen�ng the respec�ve sector B) Its
advisable to benchmark a sector fund against a diversified
Answer: TRUE
fund to get the correc
375. Usually ac�ve funds give higher returns as investors bear
a) Only A is true
a higher fund management expense - State True or False ?
b) Only B is true
c) Both A and B are true a) TRUE
b) FALSE
Answer: Only A is true

369. For which of the following fund can NSE’s MIBOR be used
Answer: FALSE
as an benchmark?
376. Which of the following have the highest credit risk?
a) ELSS Fund
b) Liquid Fund a) Money Market Fund
c) 5 year constant maturity G-sec fund b) Junk Bond
d) Long dura�on fund c) G-Sec Fund
d) Income Fund
Answer: Liquid Fund
Answer: Junk Bond
370. Iden�fy the true statement(s) with respect to benchmark
for mutual fund schemes. A) For Interna�onal Equity fund, the 377. Mr. Anand has Rs. 5 lakhs to invest but he may need
ideal benchmark will be BSE 500 index as it is a very broad money in the short term. In which of these funds should he
based index covering 500 companies B) For Gold ETF, gold NOT invest?
prices will be the
a) Liquid Fund
a) Only A is correct b) Money-market fund
b) Only B is correct c) Index fund
c) Both A and B are correct d) Overnight fund
d) Neither A nor B are correct
Answer: Index fund
Answer: Only B is correct
378. Iden�fy the TRUE statement with respect to Time Horizon
371. Iden�fy the true statement(s) with respect to Scheme to the financial goal.
Performance Disclosures? A) The data related to fund
performance of all mutual funds is available on the AMFI a) Longer the horizon to the goal, the ability to take risk
website B) SEBI has mandated disclosure of performance data is higher
by all the AMCs b) Longer the horizon to the goal, the ability to take risk
is lower
a) Only A is true c) Shorter the horizon to the goal, the ability to take
b) Only B is true risk is higher
c) Both A and B are true d) Time horizon has no link to financial goals
d) Both A and B are false
Answer: Longer the horizon to the goal, the ability to take risk
Answer: Both A and B are true is higher
372. To measure the fund managers’ performance, the 379. What would be the impact on an Interna�onal fund
difference between scheme’s actual return and its op�mal inves�ng in US stocks when the US Dollar appreciates against
return is calculated and this is known as __________ Indian Rupee?
a) Alpha a) The NAV of the scheme in Indian Rupees will
b) Beta appreciate
c) Sharpe b) The NAV of the scheme in Indian Rupees will
d) Treynor depreciate
c) No impact on the fund as its inves�ng in stocks and
Answer: Alpha
not currency
373. On which of the following factors does returns from an d)
interna�onal fund depend on?
Answer: The NAV of the scheme in Indian Rupees will
a) Asset Class performance appreciate
b) Foreign currency exchange rates
380. Dividing an individual’s por�olio alloca�on between Core
c) Both 1 and 2
por�olio and Satellite por�olio is dependent on the risk
d)
profile of the investor - State whether True or False?
Answer: Both 1 and 2
a) TRUE
b) FALSE
 Answer: TRUE c) registrar services for transfer of units sold
d) GST - Goods and Service tax
381. What does a higher transac�on costs imply?
Answer: so�ware development
a) It implies higher transac�on costs
b) It implies higher capital gains 389. What does "Asset Alloca�on’ mean?
c) It implies lower capital gains
d) It implies a long term orienta�on of the fund a) Alloca�ng a por�olio to cash
b) Alloca�ng various mutual funds to investors
Answer: It implies higher transac�on costs c) Alloca�ng units to unit holders
d) Alloca�ng a por�olio to different asset classes
382. _______invest in those securi�es which have maturity
matching the maturity of the scheme. Answer: Alloca�ng a por�olio to different asset classes

a) Fixed Maturity Plans 390. On which of the following factors does returns from an
b) Exchange Traded Funds interna�onal fund depend on?
c) ELSS Funds
d) High Yield Funds a) Asset Class performance
b) Foreign currency exchange rates
Answer: Fixed Maturity Plans c) Both 1 and 2

383. Which of these funds will generally have a higher fund

management cost? Answer: Both 1 and 2

a) Debt Fund 391. The units of a Close-ended mutual fund are traded
b) Passive Equity Fund between the unit holders/investors and_____________on the
c) Ac�ve Equity Fund stock exchange.
d) Equity Index Fund
a) The Mutual Fund
Answer: Ac�ve Equity Fund b) Other unit holders/investors
c) Specially appointed market makers to enhance
384. The investment objec�ve of a/an ______ is to seek capital liquidity
apprecia�on. d) The Sponsors
a) Growth Fund Answer: Other unit holders/investors
b) Income Fund
c) Arbitrage Fund 392. When there is a need to withdraw money from a scheme
d) Liquid Fund (i.e. repurchase / redemp�on), the distributor must assess the
implica�ons of __________ and___________ on the investors
Answer: Growth Fund por�olio.

385. Iden�fy the FALSE statement : A. When the mutual fund a) entry loads and exit loads
distributor understands the needs of his investor, one can b) capital gains tax and exit loads
ignore the investment objec�ve of the mutual fund schemes c) capital gains tax and entry loads
B. The best strategy in selec�ng a mutual fund scheme is that d) entry loads and dividend tax
based on its past p
Answer: capital gains tax and exit loads
a) Only A is false
b) Only B is false 393. An exis�ng bond fund will tend to lose value when
c) Both A and B are false market interest rates ________
d) None of these
a) Rise
Answer: Both A and B are false b) Fall
c) remains constant
386. The por�olio of a fund of funds consists of______ d) are equal to yields

a) Equity securi�es only Answer: Rise

b) Debt securi�es only
c) Units of other mutual fund schemes 394. What does financial goal se�ng involve?
d) Money market securi�es only
a) Determina�on of risk profile
Answer: Units of other mutual fund schemes b) Es�ma�ng the amount required for a major life
event
387. ______is not included in the fundamental atributes of a c) Determining asset alloca�on
mutual fund scheme.

a) Exit loads Answer: Es�ma�ng the amount required for a major life event
b) Liquidity provisions such as lis�ng, repurchase,
redemp�on 395. Which of these funds has the highest risk?
c) These debt mutual funds have been arranged from
lowest risk to highest risk. Iden�fy the risk which we a) Index Funds
are discussing : 1. Liquid Funds 2. Money market b) Diversified Equity fund
funds 3. Medium term bond funds c) Long Dura�on Funds
d) Any safety net or guarantee provided d) Gilt Funds

Answer: Exit loads Answer: Diversified Equity fund

388. The expenses of__________ cannot be charged to a 396. A ______ investor will prefer lower risk and will setle for
mutual fund scheme. a lower return.

a) custodian fees a) Aggressive

b) so�ware development b) Adventurous
c) Moderate
 d) Conserva�ve

Answer: Conserva�ve

397. An investor chooses a mutual fund scheme based on

whether his / her ________matches with that of the scheme.

a) Investment period
b) Investment objec�ve
c) Investment strategy

Answer: Investment objec�ve

398. Which of these is a Passive Fund? A) Gold Sector Fund B)

Gold Mining Companies Fund C) Gold Exchange Traded Fund
D) Gilt Funds

a) Both A and B
b) Only D
c) Only C
d) All A, B, C and D

Answer: Only C

399. A person who wants to retain liquidity in his investments

will invest in_____________

a) ELSS Schemes
b) Fixed Deposits
c) PPFs
d) Liquid Funds

Answer: Liquid Funds

400. Iden�fy the false statement(s). A) The best strategy in

selec�ng a mutual fund scheme is that based on its past
performance B) When an investor wants to redeem from a
scheme, the distributor must suggest redemp�on from the
scheme with the maximum exit

a) Only statement A is false

b) Only statement B is false
c) Both statements A and B are false

Answer: Both statements A and B are false