Practice Questions for AMFI Test

1. A close-ended mutual fund has a fixed :

a.NAV
b.fund size
c.rate of return
d.number of distributors

2. The maximum load that a fund can charge is

determined by the :
a.AMC
b.SEBI
c.AMFI
d.distribution agents based on demand for the
fund

3. The amount required to buy 100 units of a scheme

having an entry load of 1.5% and NAV of Rs.20 is :

a.Rs.2000
b.Rs.2015
c.Rs.1985
d.Rs.2030

4. A gilt fund is a special type of fund that invests :

a.in very high quality equity only
b.in instruments issued by companies with a
sound track record
c.in short-term securities
d.in government securities only

5. Of the following fund types, the highest risk is

associated with
a.Balanced Funds
b.Gilt Funds
c.Equity Growth Funds
d.Debt Funds

6. The NAV of a mutual fund :

a.is always constant
b.keeps going up at a steady rate
 c.fluctuates with market price movements
d.cannot go down at all

7. An open-ended mutual fund is one that has :

a.an option to invest in any kind of security
b.units available for sale and repurchase at all
times
c.an upper limit on its NAV
d.a fixed fund size

8. An investor in a close-ended mutual fund can get

his/her money back by selling his/her units:

a.back to the fund
b.to a special trust at NAV
c.on a stock exchange where the fund is listed

d.to the agent through which he/she subscribed

to the units of the fund
9. The "load" charged to an investor in a mutual fund

is
a.entry fee
b.cost of the paper on which the unit certificates
are printed
c.the fee the agent charges to the investor
d.the expenses incurred by fund managers for
marketing a mutual fund scheme

10. A mutual fund is owned by

a.the Govt. of India
b.SEBI
c.all its investors
d.AMFI

11. Units from an open-ended mutual fund are bought

a.on a stock exchange
b.from the fund itself

c.from AMFI
d.from a stock broker

12. A mutual fund is not

a.owned jointly by all investors
b.a company that manages investment portfolios
 of high networth individuals
c.a pool of funds used to purchase securities on
behalf of investors
d.a collective investment vehicle

13. "Load" cannot be recovered

a.at the time of the investor's entry into the fund
b.as a fixed amount each year
c.at the time the investor exits the fund
d.from the fund's distribution agent

14. The most important advantage of a money market

mutual fund is
a.quick capital appreciation
b.high regular income
c.safety of principal
d.no loads

15. Some close-ended funds are quoted at a discount

to their NAV because

a.of high expense ratios
b.investors do not expect the current NAV to be
sustained in future
c.the repurchase price fixed by the fund in lower
than the NAV

d.of the inherent risk involved in investing in

such type of funds
16. The NAV of each scheme should be updated on

AMFI's website
a.every quarter
b.every month
c.every hour
d.every day

17. Debt funds target

a.low risk and stable income
b.protection of principal
 c.high growth with risk
d.long term capital appreciation

18. In which of the following do debt funds not invest

a.Government debt instruments
b.Corporate paper
c.Financial institutions' bonds
d.Equity of private companies

19. Which of the following risks do not affect a debt

funda.Default by issuer on payment of interest or

principal
b.Price fluctuations of the debt securities
c.Share price movements
d.Interest volatility

20. Assured return or guaranteed monthly income

plans are essentially

a.Hybrid funds
b.Growth Funds
c.Debt/Income funds
d.Sector funds

21. A Fixed Term Plan Series is

a.an open-ended fund

b.a close-ended fund
c.a fixed term bank deposit
d.a fixed term corporate bond

22. NAVs of equity funds are not affected by

a.Stock market movements
b.Events affecting the industry/sector in which
the fund has invested Happenings in the
companies in which the fund has invested
c.real estate prices

23. The greatest potential for growth in capital is

offered by
a.debt funds
b.gilt funds
 c.growth funds
d.balanced funds

24. A Systematic Withdrawal Plan, allows investors

to get back the principal amounts invested in addition
to the income on investment

a.True
b.False
25. Which of the following is untrue of an automatic

reinvestment plan?
a.The plan allows for automatic reinvestment of
all income and capital gains
b.Automatic reinvestment allows for
accumulation of additional units of the fund
c.The major benefit of automatic reinvestment is
compounding
d.The benefit of automatic reinvestment is often
lost on account of the heavy load charge on the
reinvestment

26. Constraints imposed by most funds on check

writing are:
a.Account balance should not fall below the
minimum capital required
b.Checks issued must be for at least the
minimum amount specified
c.Number of checks per month must not exceed
a specified number
d.Both a & b above

27. The performance of a fund is largely measured by

the success of
a.the marketing function
b.the operations function
c.the portfolio market function
d.none of the above

28. Generally invest in

a.unlisted
b.market-traded
 c.thinly traded
d.privately placed
29. Which of the following is not an equity
instrument
a.preference shares

b.equity warrants
c.ordinary debentures
d.convertible debentures

30. The drawback of an ordinary share is

A.possibility of capital appreciation
B.ownership privilege of the company
C.guaranteed dividend income
D.no guaranteed income or security

31. An owner of preference shares is given which of

the following rights

a.voting rights
b.fixed dividend income from post-tax profits
c.voting rights and unlimited dividend income
d.no guaranteed rights

32. Market capitalisation of a company is calculated

by multiplying the number of outstanding shares by

a.R.10
b.Face value of each share
c.Current market value of each share
d.dividend yield

33. The Price/Earnings (P/E) Ratio is an important

measure of a company's anticipated performance. It is

calculated using:
a.Market price and dividend
b.Market price and earning per share
c.Market capitalisation and dividend
d.Market price and face value

34. A company whose earnings are strongly related to

the state of economy is known as

a.Economy stocks
 b.Cyclical Stocks
c.Value Stocks
d.Growth stocks

35. A Growth stock refers to shares of a company

whose earnings are projected to grow at the normal
market rates

a.True
b.False
36. Which of the following is generally true for a

growth stock
a.steady capita appreciation and steady dividends
yields
b.high capital appreciation and high dividend
yields
c.high capital appreciation but low dividend
yields
d.steady capital appreciation but high dividend
yields

37. Shares of companies with large capital market

capitalisation
a.have greater growth potential
b.are more liquid
c.are not available
d.none of the above

38. Dividend yield for a stock is

a.dividend per share

b.dividend per face value

c.dividend per share to current market price
d.none of the above

39. Value stocks

a.have high current dividend yield
b.yield high growth in earnings
c.are currently under valued
d.none of the above

40. A better performance than the return on index is

given by
a.passive fund manager
b.an active fund manager
c.all fund managers
d.non fund manager

41. A change in key personnel especially the fund

manager of an AMC does not necessitate a revision
of the offer document

a.True
b.False

42. If fresh litigation cases or adjudication

proceedings are referred by SEBI against the fund
sponsors or a company associated with the sponsors,
then the offer document needs to be revised

a.True
b.False

43. The offer document need not be revised if the

management or the controlling interest in the AMC
change

a.True
b.False
44. An AMC cannot explain adverse variations
between expense estimates for the scheme on offer

and actual expenses for past schemes in

a.financial newspapers
b.business channels on TV
c.the offer document
d.AMFI newsletter

45. Information on estimated expenses to be incurred

by a scheme is not found in the offer document, but
in brochures of the fund

a.True
b.False
46. When comparing a fund's performance with that

of its peer group, the following cannot be compared

a.Two debt funds with 5 year maturities
b.A broad-based equity fund with an IT Sector
 Fund
c.A bond fund with a bond

d.A government securities fund with a

government security
47. An AMC must explain adverse variation between

expense estimates for the scheme on offer and actual

a.expenses for past schemes in
b.financial newspapers
c.business channels on TV
d.offer document
e.AMFI Newsletter

48. Information on estimated expenses to be incurred

by a scheme is not found in the offer document, but
in brochures of the fund

a.True
b.False
49. The offer document and key information

memorandum contain financial information for

a.all schemes of all mutual funds in the capital
market
b.all schemes launched by the particular fund
during the last 3 fiscal years
c.none of the schemes
d.companies in which investment is proposed

50. The functions and responsibilities of the sponsor,

AMC, trustees and custodian of the mutual fund are

listed in
a.offer document only
b.key information memorandum
c.both offer document and key information
memorandum
d.none of the above

51. Information about trusteeship fees is included in

the offer document but not in the key information
memorandum

e.True
 f.False
52. The following information about the constitution
of the mutual fund is found in both the offer

document and key information memorandum

e.activities of the sponsor
f.summary of trust deed provisions
g.name and addresses of the board of trustees
h.all of the above

53. The investment objectives of the fund an investor

selects for investment

e.are of no relevance
f.should be the same as his own investment
objectives
g.change with market movements
h.change with change in the AMC's key
personnel

54. The investment policies listed out in the offer

document of a fund do not include

e.the type of securities in which the scheme will

invest principally
f.asset allocation pattern
g.policy of diversification
h.the specific securities in which the fund will
invest

55. If a scheme's name implies that it will invest

primarily in a particular type of security or in certain
industry/sector, then it should invest atleast the
following percentage of its total assets in the
indicated type of security/industry/sector

e.100%
f.80%
g.65%
h.40%

56. For assured return schemes, information about the

guarantor's net worth which justifies the guarantor's
ability to meet any shortfalls in the returns assured
under the scheme can be found in
e.the offer document
f.the key information memorandum
g.both (a) and (b)
h.none of the above

57. The names and background of key personnel of

the AMC

e.need not be disclosed to investors

f.are of no relevance as they may change
g.are disclosed in the offer document
h.are declared in newspaper advertisements

58. The minimum amount to be raised, and the

maximum target amount

e.are not known before the offer is concluded
f.can be decided based on investor response to
the offer
g.are defined as per SEBI Regulations before the
offer is made
h.need not be disclosed in the offer document

59. The circumstances for refund of investment in the

initial offer and period within which refund must be
carried out are not specified in the offer document,
but only on the application

e.True
f.False
60. Offer related information required to be listed in
the offer document and key information

memorandum includes
e.dates of opening, closing, earliest closing,
allotment and despatch of certificates
f.procedure for transfer and transmission of units
g.both the above

h.neither of the above

61. In the offer document, funds are required to make

disclosures summarising associate transactions and
their impact on the performance of the scheme for the
last
e.one fiscal year
f.2 fiscal years
g.3 fiscal years
h.5 fiscal years

62. The circumstances under which a scheme shall be wound up are to be described in the offer document at the time of the initial launch of the
scheme itself

e.True
f.False
63. The following do not form a part of the

investment procedure described in an offer document

e.various plans under the scheme (e.g. dividend
reinvestment plant)
f.minimum initial (and subsequent) investment
g.details of who can invest
h.details of other competing mutual funds

64. A scheme's policy on dividends and distribution

e.is decided by the fund manager as per is market
outlook
f.can be changed to suit the requirements of the
AMC
g.need not be consistent
h.should be disclosed at the time of initial launch

65. SEBI restricts mutual fund investments in

companies forming part of the same group as the

AMC. This is:

e.not true
f.in the interest of investor protection
g.applied only to some mutual funds, not all
h.not favourable to investors at all

66. A disclosure should be made in the offer

document if an AMC has invested more than the
following percentage of its net assets in group

companies
e.50%
f.40%
 g.25%
h.10%

67. Mutual funds are allowed to borrow

e.freely to meet their requirements
f.for investment purposes
g.only to meet redemption demands
h.not allowed at all

68. As a part of borrowing policy, the following need

not be disclosed in an offer document

e.purpose and circumstances of borrowing
f.regulatory limits on borrowing
g.potential risk to AMC and unit-holders
h.names of lenders

69. Valuation norms for non-traded securities should

be disclosed
e.at the end of every financial year
f.every quarter
g.in the offer document at the time of launch of
the scheme
h.should not be disclosed, being confidential
information

70. Procedure for redemption or repurchase need not

e.be described in the offer document
f.include how redemption or repurchase price of
units would be determined
g.include names of centres where redemption
can be effected
h.indicate the redemption or repurchase price as
at the end of the current fiscal year

71. The fund need not describe its accounting policies

in the offer document as these are of no use to an
investor

e.True
f.False
72. The accounting policies of a fund should be in
accordance with
d.GAAP
e.SEBI regulations
f.ICAI Guidelines
g.American GAAP

73. Tax treatment of investments does not

e.form a section in the offer document
f.describe the tax elements applicable to
investors who invest in the fund
g.form a section in the key information
memorandum
h.offer tax advice to investors

74. Documents available to investors for inspection

do not include
c.Memorandum and Articles of Association of

AMC
d.consent of auditors and legal advisors
e.investment management reports
f.reports based on which actual investments are
made

75. Investors' rights under a scheme are

e.uniform for all schemes of all funds
f.not defined
g.listed in the offer document
h.available with stock exchanges

76. The offer document for a scheme should describe

how the NAV of the scheme is to be computed

e.True
f.False

77. An offer document contains an AMC's investor

grievance's history for the past

e.one fiscal year
f.2 fiscal years
g.3 fiscal years
h.six months
 78. Any pending cases or penalties levied on the
sponsors or AMC should be disclosed in the offer
document

e.True
f.False
79. Who among the following are not eligible to

invest in MF
e.Indian Companies
f.Banks
g.Non Banking Finance Companies
h.Foreign Citizens

80. NRIs are eligible to invest in Mutual Funds

a.True
b.False

81. The most important link between Mutual Fund

and Investors is
e.Government
f.SEBI
g.Fund distributors
h.AMFI

82. Are Overseas Corporate Bodies allowed to invest

in Mutual Funds
e.No
f.Yes
g.if Ministry of Finance approves

h.if AMFI approves

83. Who among the following are not Institutional

Investors
e.Banks
f.Resident Individuals
g.Provident Funds
h.Non Banking Finance Companies

84. It is compulsory to use fund agents/intermediaries

for investing MFs
e.True
f.False

85. Generally, which category of investors need

advice for Investing in Mutual Funds

c.Non Banking Finance Companies
d.Insurance Companies
e.Foreign Institutional Investors
f.Individuals

86. Most eligible investors of Mutual Funds can

broadly be grouped into either individual or
institutional investors

e.True
f.False
87. Commission rates or loads applicable to big

investors and small investors are

e.same
f.different
g.not charges to either
h.none of the above

88. What document Mutual Fund distributors need to

refer for finding out eligible category of investors in a

particular Mutual Fund Scheme

e.SEBI Regulations Manual
f.AMFI booklet
g.Offer document
h.RBI Guidelines

89. As per AMFI figures, how many agents

approximately, are there in India selling Mutual

Funds
e.50000
f.100000
g.75000
h.150000

90. Which Mutual Fund has majority of the agents

selling its Mutual Fund units in India
e.LIC Mutual Fund
f.UTI Mutual Fund
g.SBI Mutual Fund
h.None of the above

91. Mutual Fund agents/distributors are not allowed

to sell Financial Products other than Mutual Funds

c.True
d.False

92. Are Mutual Fund agents/distributors in India

required to pass any examination to qualify to sell

Mutual Fund Units

c.Yes, a test conducted by AMFI
d.Yes, a test conducted by SEBI
e.No
f.a Post Graduate university course

93. How many major distributor Companies are there

in India selling Mutual Fund units

c.approximately 9
d.approximately 11
e.approximately 10
f.approximately 25

94. The offer document is not a legal document

e.True
f.False

95. A copy of all changes in the offer document has to

be filed with SEBI

c.True
d.False

96. The legal responsibility for the accuracy of the

statements made in the offer document lies with
e.SEBI
f.the AMC
g.AMFI
h.the Company Law Board
 97. Though the offer document of a scheme is
prepared as per SEBI Regulations and is filed with
SEBI, SEBI does not certify the accuracy or
adequacy of the document

f.True
g.False
98. The following need not be covered in a Key

Information Memorandum
c.Risk Factors
d.Opening, Closing and earliest Closing Date of
the offer
e.Disclaimer Clause
f.Functions and responsibilities of the sponsor,
trustees, AMC and Custodian responsibilities

99. The front page of an offer document need not

cover
e.opening, closing and earliest closing date of the
offer
f.disclaimer clause
g.legal and regulator compliance
h.price of units

100. A "glossary" of Defined Terms must be included

in the offer document
e.True
f.False

101. Standard risk factors are not

g.market driven
h.common to all schemes
i.of relevance to novice investors
j.new to a regular investor

102. The risk of a scheme's NAV moving up or down

on the basis of capital market movements is a
standard risk factor

i.True
j.False
103. Past performance of a sponsor/AMC mutual
fund is not indicative of the future performance of the
scheme. This is
i.not true
j.a standard risk factor for all schemes
k.a scheme-specific risk factor
l.applicable only to gilt funds

104. Risk arising from a scheme's investment

objective/strategy and proposed asset allocation is

i.not present
j.common to all schemes
k.specific to that scheme
l.not applicable to debt funds

105. In an assured returns scheme, if assurance is

only for a limited period, it must be stated in the offer
document that there is no guarantee for sustaining the
assured return for the remaining duration of the
scheme

i.True
j.False
106. If the AMC is managing a fund for the first time,

this information can be found in

i.newspapers
j.SEBI
k.AMFI Newsletter
l.Offer document

107. A compliance officer

i.stands guarantee to the information contained

in the offer document
j.belongs to SEBI
k.cannot certify that the AMC's legal and
procedural obligations are fulfilled
l.cannot be appointed by the AMC

108. The due diligence certificate that must be

submitted to SEBI along with the draft offer

document cannot be signed by

i.the managing director of the AMC
j.an executive director of the AMC
 k.the compliance officer
l.Investor relations officer

109. A due diligence certificate does not certify that

g.the draft offer document forwarded to SEBI is
in accordance with SEBI regulations
h.all legal requirements connected with
launching of the scheme have been complied
with
i.disclosures made in the offer document are true,
fair and adequate
j.the AMC guarantees a good performance

110. In developed countries, an important Mutual

Fund marketing channel is through

i.Insurance Companies
j.Banks
k.Non-Banking Finance Companies
l.Retail Distributors

111. Emerging or new channel for

distributors/marketing of Mutual Fund in India is

i.Insurance Companies
j.Banks
k.Qualified Mutual Fund agents
l.Direct Sales agents of respective mutual funds

112. Mutual Funds often use their own employees to

mobilise funds from

g.retail investors
h.High Networth individuals/institutional
investors
i.all investors
j.foreign investors

113. Retail distribution channels are a critical element

in the distribution of mutual funds in India

i.True
j.False
114. "Sales Practices" cover the following areas
i.desirable marketing practices
j.agents' responsibilities to the investor
k.ethical code of conduct
l.all of the above

115. The following are not termed as "sales practices"

i.agents commission
j.before-and after-sales service to investors
k.advertising of schemes
l.stock broking

116. Sales practices are never mandated by

regulators, but arise from convention only

i.True
j.False

117. Agents are compensated by mutual funds

i.through salaries
j.through commissions
k.through an annual fee
l.not in cash but in kind

118. In India the minimum or maximum commissions

payable to distributors are not prescribed by law, but
are decided using the fund's own discretion

i.True
j.False

119. Lowest commissions are paid on

i.Equity funds
j.tax benefit schemes of mutual funds
k.debt funds
l.long-term investments in mutual funds

120. Excess distribution expenses are to be borne by

the
i.AMC
j.unit holders
k.SEBI
l.AMFI
 121. To cover fund distribution expenses, open ended

funds
g.charge a fee from agents
h.charge entry and exit loads from investors
i.create a reserve
j.sell investments

122. Trail commission means paying

h.no commission at all
i.the entire commission up-front
j.part of the commission up-front and the balance
in phases
k.the entire commission after five years

123. Sub-brokers serve as agents of the principal

broker and a mutual fund is not answerable for their
activities

i.True
j.False
124. In India, Mutual fund agents' rate and services
are at present defined by
g.SEBI rules
h.stock exchange bye-laws
i.AMFI rulesj.convention

125. Along with the application, it is mandatory to

distribute
i.investment rebate
j.offer document
k.key information memorandum
l.none of the above

126. To sell funds effectively, an agent need not

g.be fully aware of the important characteristics
of the scheme
h.know his/her client's risk profile
i.give after sales service
j.offer large investment rebates

127. For investors to correctly compare performance

of different funds SEBI's advertising codes include

i.uniform computation of yields
j.uniform presentations of dividends
 k.identical time periods
l.all of the above

128. SEBI's advertising code mandate that all

performance calculations in a fund's advertisement

should be based
g.NAV
h.the NSE Fifty Index
i.the BSE Sensex
j.none of the above

129. An agent's appointment by a fund

i.requires SEBI's approval
j.is a lengthy and cumbersome process
k.is mandatorily preceded by an AMFI test
l.does not require any approval

130. An investor does not have recourse to his agent

in case of errors, problems or the quality of the
investment

c.True
d.False

131. An agent can offer and sell a funds's units at

i.any price he chooses
j.a price determined by competition among
agents
k.a price based on demand for that fund's units
l.the public offering price currently in effect

132. All buy orders through an agent do not become

valid till the fund accepts and confirms the orders

i.True
j.False

133. When an agent purchases, offers or sells units,

ensuring compliance with applicable regulations is

the responsibility of
i.the fund
j.the agent
k.AMFI
l.SEBI
 134. The terms of appointment of a broker by a fund

are
g.laid down by SEBI
h.laid down by AMFI
i.not uniform to all funds
j.none of the above

135. The code of ethics for mutual funds published

by AMFI

g.is mandatory
h.is in the form of recommended practices
i.is unfavourable to investors
j.does not cover distribution and selling practices

136. The AMFI code of ethics does not cover the

following prescriptions
g.Adequate disclosures should be made to the
investors
h.Funds should be managed in accordance with
stated investment objectives
i.conflict of interest should be avoided in
dealings with directors or employees
j.each investment decision should be approved

by investors
137. Distribution and sales practices are only partly
regulated by SEBI at present
i.True
j.False
138. Which of the following distribution channels is
preferred by private mutual funds
i.Individual Agents

j.Small Distribution companies

k.established distribution companies
l.the Internet

139. Which of the following sales practices is

prescribed by regulation
i.AMFI Code of Ethics
j.SEBI Advertising
k.AMFI's Code for Agents
l.None of the above
140. In a mutual fund investors' subscriptions are
accounted for as
i.liabilities
j.deposits
k.unit capital.none of the above
 141. Investments made by a mutual fund on behalf of

investors are accounted as

e.assets
f.liabilities
g.capital
h.none of the above

142. Liabilities in the balance sheet of a mutual fund

are
g.in the form of long-term loans
h.strictly short term in nature
i.combination of long term and short term
j.not allowed as per regulations

143. Net Asset Value (NAV) of a mutual fund scheme

is defined as the schemes

g.assets minus liabilities
h.assets per unit
i.assets minus liabilities per unit
j.none of the above

144. The day on which NAV is calculated by a fund

is known as
g.computation date
h.valuation date
i.record date
j.book closure date

145. A funds NAV is affected by

e.Purchase and sale of investment securities

f.valuation of all investment securities held
g.units sold or redeemed
h.all of the above

146. When computing NAV of fund SEBI requires

accrual of major expenses to be accounted

i.quarterly
j.annually
 k.on a day to day basis
l.when actually paid

147. If a fund calculates NAV daily, it will include all

the transaction concluded up to

h.last week
i.last two days
j.previous day
k.today

148. For a open-ended fund,the repurchase price

should not be lower than

g.NAV
h.95% of NAV
i.93% of NAV
j.97% of NAV

149. For a close-ended fund, the repurchase price

should not be lower than

i.NAV
j.95% of NAV
k.93% of NAV
l.97% of NAV

150. For a scheme that has a load, the AMC can

change an investment management fee not exceeding

g.1.50%
h.2.00%
i.1.25%
j.0.50%

151. Initial expenses of launching schemes should

not exceed
k.15% of amount received
l.10% of amount raised
m.6% of amount raised
n.5% of the amount raised

152. Which of the following expenses cannot be

charged to the scheme
k.Audit fees
l.costs related to investor communication
m.winding costs for terminating the scheme
n.penalties and fines for infraction of laws

153. Which of the following are not true for Equity

Linked Savings Schemes?

m.Investors can claim an income tax rebate
n.There is a lock-in period before investment can
be withdrawn
o.There are not specific restrictions on
investment objectives for the fund managers
p.These funds cannot invest in equity

154. Which of the following is not true for Index

Funds
m.These funds invests in the shares that
constitute a specific index
n.The investment in shares is in the same
proportion as in the index
o.These funds take only the overall market risk
p.These funds are not diversified

155. The structure which is required to be followed

by mutual funds in India is laid down by

k.Financial Ministry
l.Securities & Exchange Board of India (SEBI)
m.Fund Sponsor
n.Association of Mutual Funds of India (AMFI)

156. The Board of Trustees of a mutual fund:

m.act as a protector of investors' interests
n.directly mao.do not have the right to dismiss the AMC
p.cannot supervise and direct the working of the
AMC

157. The AMC of a mutual fund cannot

m.undertake advisory services or financial
consulting
n.cannot invest the funds in government paper
 o.act as a trustee of more than one mutual fund
p.cannot invest the funds in securities

158. The trust that manages a mutual fund is

appointed by
m.The Finance Ministry
n.R.B.I
o.SEBI
p.The sponsor of that mutual fund

159. The custodian of a mutual fund:

k.is appointed for safekeeping of securities
l.need not be an entity independent of the
sponsors
m.not required to be registered with SEBI
n.does not give or receive deliveries of physical
securities

160. Transfer Agents of a mutual fund are not

responsible for
m.issuing and redeeming units of the mutual
fund
n.updating investor records
o.preparing transfer documents
p.investing the funds in securities markets

161. Distributors or agents

m.can distribute several mutual funds
simultaneously
n.cannot appoint sub-agents or sub-brokers
o.should be only individuals not companies or
banks
p.should not be an employee or associate of the
AMC

162. A transfer in the management of a close-ended

scheme does not require the consent of

k.unit holders with 75% voting rights
l.SEBI
m.Trustees
n.AMC
163. The fund sponsor has to contribute
k.nothing to the AMC
l.the total networth of the AMC
m.atleast 40% of the AMC's networth
n.exactly 50%

164. The sponsor of a mutual fund may be compared

to
m.a director in a Company
n.the Chief Executive of a Company
o.Promoter of a Company
p.an equity shareholder in a Company

165. Issuing and redeeming units of a mutual fund is

the role
m.the custodian
n.the transfer agent
o.the trustees
p.the bankers

166. The fund sponsors should have a sound financial

track record of
k.7 years
l.12 months
m.5 years
n.3 years

167. The networth of an asset management company

should be greater than

m.Rs.100 Crores
n.can be decided by the Sponsor
o.should be atleast Rs. 10 Crores at all times
p.should be greater than Rs.10 Crores

168. The AMC and directors are answerable to

k.Stock Exchanges
l.The Board of Trustees
m.Agents and distributors
n.Stock Brokers
169. The role of an AMC is to act as
1.promoters
2.investment managers
3.distribution agents
4.regulators

170. A change in the following key people does not

materially impact the performance of the fund

m.Fund sponsors
n.Trustees of the fund
o.Fund Manager

p.Members of the AMFI Committee

171. To transfer the management of a scheme from
one AMC to another, the consent of the following is

required
k.SEBI
l.Unit holders
m.both SEBI and unit holders
n.none of the above

172. As per SEBI's principles, the AMC and the Board of Trustees of a fund should belong to the same sponsors

l.True
m.False

173. After UTI, the first mutual funds were started by

k.private sector banks
l.public sector banks
m.financial institutions
n.non-banking finance companies

174. The highest authority among the following is the

k.SEBI
l.Company Law Board
m.RBI
n.Ministry of Finance

175. The entity that SEBI does not regulate is

m.share registrars
n.mutual funds
o.stock exchanges
p.non-banking finance companies
 176. The accounts and all other records of an AMC

are filed with

k.AMFI
l.Registrar of Companies

m.Agents' Association
n.UTI
177. A close-ended scheme of a mutual fund is not

governed by
m.Exchange Rules of the stock exchange where
it is listed
n.Listing Agreement between the fund and the
stock exchange
o.guidelines issued by the Ministry of Commerce
p.Companies Act provisions relating to
transactions in securities

178. The entry of mutual funds in India was initiated

by mutual funds set up by

k.Public Sector Banks
l.Private Sector mutual funds
m.Unit Trust of India
n.mutual funds set up by insurance companies

179. For a close-ended scheme to change its

fundamental attributes, it must obtain the consent of

m.50% of unit holders
n.50% of trustees
o.75% of unit holders
p.none of the above

180. The largest corpus of investable funds in India is

with
e.Bank-owned mutual funds
f.Private Sector mutual funds
g.UTI
h.Insurance Companies

181. The Board of Trustees of the UTI does not have

nominees from
m.RBI
n.LIC
o.IDBI
p.The Bombay Stock Exchange (BSE)

182. UTI Cannot provide

k.corporate finance
l.engage in real estate and property development
business
m.provide merchant banking services
n.invest in securities

183. The "Capital" of a scheme does not include

m.unit capital
n.reserves
o.borrowing
p.networth of the AMC

184. Which of the following are Self Regulatory

Organisations
k.Bombay Stock Exchange
l.SEBI
m.AMFI
n.RBI

185. A Self Regulatory Organisation can regulate

k.all entities in the market
l.only its own members in a limited way
m.its own members with total jurisdiction
n.no entity at all

186. The amount of authority enjoyed by a

1.self-regulatory organisation is defined by
2.the apex regulatory authority
3.company law board
4.its own members
5.RBI

187. The role of AMFI in the mutual funds industry is

not to
k.promote the interests of the unit holders
l.set a Code of Ethics
m.regulate mutual funds
 n.increase public awareness of mutual funds in
the country188. The rights of investors in a mutual fund scheme

are laid down in

m.the Offer Document of that scheme
n.Quarterly Reports
o.Annual Reports
p.marketing brochures

189. Unit holders of a mutual fund scheme do not

have a right to
m.proportionate ownership of the scheme's assets
n.dividend declared for that scheme
o.dividend declared for other schemes of the
mutual funds
p.income declared under that scheme

190. After dividend declaration, unit-holders are

entitled to receive dividend within

m.one week
n.one month
o.42 days
p.six weeks

191. Unit holders' right to information does not

include
i.obtaining from the trustees any information
having an adverse effect on their investments
j.inspecting major documents of a fund
k.receiving of a copy of the annual financial
statements of that fund
l.approving investment decisions of the fund

192. Shortfalls in the case of assured returns schemes

are met
k.by sponsors of such schemes
l.only if the offer document specifically provided
such a guarantee by a named sponsor
m.the Government of India
n.AMFI
 193. Unit-holders aggrieved by a Fund or AMC can

get redressed from

k.Consumer Courts
l.SEBI
m.AMFI
n.RBI

194. If the Directors of an AMC commit fraud, Unit-

holders investments' cannot be protected by the
Department of Company Affairs and the Company
Law Board

k.True
l.False
195. The responsibilities of a unit-holder do not
include:

i.Monitor his investments carefully

j.being aware of information that affects his
investment in a major way
k.carefully studying the offer document
l.taking decisions about where the fund
managers should invest

196. UTIs scheme US-64 falls under the purview of

SEBI
m.True
n.False

197. UTI was set up by

l.SEBI
m.AMFI

n.A special act

o.RBI

198. Bank owned Mutual Funds are supervised by

k.SEBI
l.RBI
m.jointly by SEBI & RBI
n.AMFI

199. Investor does not have the right to receive any

interest from an AMC if his redemption proceeds are
not despatched within 10 working days

m.True
 n.False
200. If an investor failed to claim his redemption

proceeds within 3 years, he can claim the proceeds at

k.Par
l.Prevailing NAV
m.the on the date he has applied for redemption
n.15% below the prevailing NAV

201. After closure of the initial offer an open ended

scheme, on going sales and repurchases must start

within
o.One week
p.30 days
q.45 days
r.180 days

202. For scheme to be able to change its fundamental

attributes, it must obtain the consent of

o.50% of the unit holders
p.50% of the trustees
q.75% of the unit holders
r.none of the above

203. The prospectus or Offer Document containing

the details of new scheme is first registered with the
q.AMFI
r.SEBI
s.Bombay Stock Exchange
t.Ministry of Finance
204. The offer document issued by mutual funds does

not serve the purpose of

q.announcing the scheme
r.giving detailed information about the scheme
s.inviting the the investors
t.giving the fund manager's investment outlook
for the next quarter

205. The prospectus of a close-ended fund is issued

o.every year
p.only once at the time of issue
q.every quarter
r.every six months
206. Fundamental attributes of scheme
q.do not include the objective of the scheme
r.can be changed without the investor's approval
or knowledge
s.include the terms of the scheme
t.are not necessary for deciding whether to invest
in the scheme or not

207. The offer document

q.contains the terms of issue
r.gives no information relevant for making an
investment decision
s.is not the operating document describing the
scheme
t.cannot be called a reference document

208. SEBI does not require the following to be

included in the offer document issued by a mutual
fundq.details of the Sponsor and the AMC

r.Description of the Scheme & investment

objective/strategy
s.Investors' Rights and Services
t.Performance of other mutual funds

209. 'Key Information Memorandum' is

o.an abridged version of the offer document
p.the Memorandum & Articles of Association of

the AMC

q.a sheet containing historical NAVs of other

fund schemes
r.Annual Report of the AMC

210. The offer document for a scheme remains valid

even if
q.the AMC is reconstituted
r.entry or exit load are changed
s.the scheme's NAV changes
t.new plans are added to existing schemes

211. The offer document has to be fully revised and

updated
q.every six months
r.once in two years
s.every quarter
t.every month

212. An addendum giving details of material change

in the offer document should be circulated

o.distributors/brokers
p.unit holders
q.SEBI
r.all of the above

213. Which of the following is not true for offer

documents of open-ended schemes

o.it is first issued at the time the scheme is
launched
p.it is registered with SEBI
q.it has to be revised periodically
r.it need not be revised at all

214. All important disclosures that the mutual fund is required to make, by regulation, are contained in the offer document

q.True
r.False

215. The offer document issued when an open-ended

scheme is launched is valid for all times, until
amended

q.True
r.False
216 The most important source of information for a

prospective investor is
o.offer document
p.Annual Report of the AMC
q.Economic Times
r.AMFI Newsletter

217 The offer document need not be studied by an

investor before investing in a scheme
q.True
r.False
218 The offer document is not a legal document
o.True
p.False

219 Initial issue expenses are charged to a scheme in

the first year itself

m.True
n.False

220 Scheme-wise annual report of a mutual fund

need not be
q.sent to all unit-holders
r.forwarded to SEBI
s.published as an advertisement
t.stock exchanges

221 Mutual funds value their investments

o.at purchase price
p.on a mark-to-market basis
q.at par
r.at book value

222 Investors are totally exempt from paying any tax

on the dividend income they receive from mutual
funds

n.True
o.False
223 Income distributed to unit-holders by a debt fund

is liable to dividend distribution tax

o.True
p.False

224 A close-ended has average weekly net assets of Rs 200 crore.As per SEBI regulations, the AMC can charge the fund with investment and
advisory fees upto:o.Rs 2.25 crore

p.Rs 2.00 crore q.Rs 2.50 crore r.Rs 3.00 crore

225 A passive fund manager

q.researches stocks extensively

r.does not buy and sell stocks often
 s.does not have to go through the process of
stock selection
t.does not have to track stocks

226 A fund manager managing an index fund

o.has to keep fund expenses low
p.does not have to research stocks
q.does not have to balance his portfolio
r.none of the above

227 A growth manager looks for

q.high current income

r.undervalued stocks
s.above average earnings growth
t.none of the above

228 A value manager does not look for

o.stocks that are currently undervalued in the
market

p.stocks whose worth will be recognised by the

market in the long term
q.high current yield
r.long term capital appreciation

229 From an investor's viewpoint, the most important

is
q.a fund's investment style
r.performance of the fund
s.the fund manager's judgement
t.none of the above

230 Fundamental analysis involves

i.checking the foundations of the company's
factory building
j.research into the operations and finances of the
company
k.studying the company's share prices
l.none of the above

231. Which of the following is not considered for

technical analysis
q.historical data on the company's share price
r.the company shares' trading volume
s.current market sentiment
t.the company's regulatory environment

232. Quantitative analysis is more likely to be done to evaluate a particular sector or industry rather than any specific stock

o.True
p.False

233. Fundamental analysis forms the basis to decide

q.when to buy a given share
r.whether to buy a given share or not
s.whether to use technical analysis or
quantitative analysis
t.whether the company's factory can withstand
earthquakes

234. Technical analysis guides the decision on

o.whether to buy or sell
p.the right time to buy or sell
q.whether company's technical personnel are
adequately qualified
r.none of the above

235. Which of the following is not an investment

philosophy
o.capitalising on economic cycles
p.focusing on growth sectors
q.capitalisation
r.finding value stocks

236. When expecting a fall in market price, fund

managers can reduce the loss in portfolio value by

k.speculating
l.not buying and selling shares at all for some
days
m.using equity derivatives
n.giving TV interviews to improve sentiment
237. Equity derivative instruments are
o.shares
p.bonds
q.contracts

r.notes
238. A futures contract allows one to buy or sell the
underlying shares, but need not result in delivery
q.True
r.False
239. Derivatives cannot be based on market indices
q.True
r.False

240. In a mutual fund, the overall decisions on

allocating money to particular industries/sectors are
taken by

q.equity analysts
r.fund managers
s.security dealers
t.trustees
241. Continuous tracking of the companies in which
a mutual fund has invested is done by
m.continuous tracking systems
n.equity analysts
o.trustees
p.security dealers

242. Security dealers of a mutual fund

o.guard the cabin of the fund manager
p.execute buy and sell orders for the fund
q.decide which shares to buy or sell
r.none of the above

243. As per SEBI's requirements each scheme of a

mutual fund should have a different fund manager

o.True
p.False

244. Debt securities bought at a discount to their face

value are generally

m.interest bearing
n.zero coupon bonds
o.paying interest at a floating rate
p.none of the above

245. In India, a large part of debt securities pay

interest on
m.a floating rate basis
n.a fixed rate plus a variable portion
o.a fixed rate
p.zero coupon basis

246. The Indian debt market is largely wholesale in

nature
o.True
p.False
247. In the wholesale debt market, the largest

proportion of trading is seen in

1.Government Securities
2.Corporate Bonds
3.T-Bills
4.PSU Bonds

248. The largest proportion of trades done in the

wholesale debt market is accounted by

o.mutual funds
p.foreign banks
q.Indian banks
r.financial institutions

249. Certificates of Deposits (CDs) are issued by

o.Regional Rural Banks
p.Corporates
q.Scheduled commercial banks
r.none of the above

250. Commercial Paper is issued by Corporate bodies

o.to meet short-term working capital
requirements
p.to finance the acquisition of long term capital
assets
q.to retire long term debt
r.to pay dividend

251. Government securities are issued through the

RBI
s.True
t.False
252. The yield on Treasury Bill (T-Bill) us
determined by
s.the Government of India
t.auction
u.the State Governments
v.floating rate method

253. Which of the following are not normally found

in the portfolio of a debt fund

u.long-dated Government Securities
v.Corporate debentures

w.bonds issued by financial institutions

x.certificates of deposit issued by banks
254. Which of the following do not represent the
amount an investor of a debt security will be paid

upon maturity
u.par value
v.face value
w.fair value
x.redemption value

255. Coupon of a debt security refers to

s.a piece of paper attached to the certificate
t.the return on investor would earn
u.the amount rate of interest paid on par value of
the bond
v.none of the above

256. Which of the following do not apply to the term

'maturity' of a debt security?

u.the date on which the certificates becomes old
v.the term of the bond
w.the date of redemption
x.the date on which the issuer has to repay the
amount

257. Call or put provisions are used to modify the

fixed maturity of debt securities
u.True
v.False
258. A call provision in a debt issue allows the issuer

to
u.call out the names of the investors
 v.redeem the debt on maturity
w.extend the tenure of the debt
x.redeem the debt before maturity

259. A put provision in a debt issue allows

1.investor to put away the certificates in safe
deposit vaults
2.investors to redeem debt prior to maturity
3.issuers to redeem debt prior to maturity
4.investors to extend the tenure of debt

260. Current yield relates interest on a security to

u.its current market price
v.its face value
w.its fair value
x.the current price of T-Bills

261. To compare bonds with different coupon rates,

maturities and prices, investors would use:

u.current yield
v.technical analysis
w.yield to maturity

x.fundamental analysis

262. When interest rates rise, bond prices

1.also rise
2.fall
3.are not affected
4.fluctuate either up or down

263. Yield curve is also known as

s.Curve of Interest
t.Term Structure of Interest Rates
u.Curve that yields
v.none of the above

264. An important indicator of expected trends in

interest rates is
s.The Economic Times
t.the Sensex
 u.the Yield Curve
v.the Chief Minister's Speech

265. It may not be possible to reinvest interest

received at the same rate as principal. This is known

as
s.reinvestment risk
t.inflation risk
u.interest-rate risk
v.call risk

266. A bond's rating indicates its

s.reinvestment risk
t.default risk
u.inflation risk
v.interest-rate risk

267. If a bond cannot be sold at a price near its value,

it means that investment in this bond has

s.high liquidity risk
t.high default risk
u.low liquidity risk
v.inflation risk

268. The additional yield required to account for the

risk of default by the borrower is known as

q.yield plus
r.yield spread
s.yield extra
t.yield premium

269. A high credit rating does not mean

o.high yield spread
p.high perceived safety
q.low yield spread
r.low risk premium

270. If 10-year government securities Neil 10% and a

10-Year fixed deposit in a company yields 12%, the
yield spread is
u.12%
v.22%
w.10%
x.2%
271. The "duration" of an interest-bearing bond is
s.longer than its maturity
t.less than its maturity
u.equal to its maturity
v.the quality of paper used for the certificate

272. A bond with a coupon of 9% when interest rates

for similar maturities are 11% will sell

p.above par
q.below par

r.at par
s.at a price unrelated to the prevailing interest
rate
273. Changes in foreign exchange rates have no
bearing on interest rates
q.True
r.False
274. Inflation and interest rates are inversely

proportional
s.True
t.False

275. Investment policies of a mutual fund are

determined by
u.the fund manager
v.the AMC management

w.the marketing department based on what

distributors want
x.the investors

276. Which of the following measures are not taken

by SEBI for protecting investors of mutual funds

s.mandating minimum levels of diversification
for mutual funds
t.ensuring that the funds are not used to favour a
few companies
u.tracking the securities that each fund has
invested in
v.ensuring that the funds are invested in
approved securities only

277. As per SEBI norms, a fund's investments, in the

equity shares of any one company are restricted to
u.25% of NAV
v.10% of NAV
 w.50% of NAV
x.100% of NAV
278. A mutual fund manager is not allowed to sell

short when he expects a crash in the market

s.True
t.False

279. In a mutual fund, having many schemes, al

securities bought can be held in a general account and
transferred later to various schemes to attain certain
profit or loss objectives

u.True
v.False
280. A mutual fund may invest in short-term deposits

of scheduled commercial banks

m.True
n.False

281. Mutual funds are allowed to lend

u.loans
v.securities
w.physical assets
x.none of the above

282. In case of listed securities of group companies

of the sponsor, mutual fund is not allowed to invest

q.25% of its net assets
r.10% of its net assets
s.at all
t.>5% of net assets

283. A mutual fund may transfer investments from

one scheme to another

u.not at all
v.at current market rates
w.at cost price
x.at a fixed premium over market rate

284. Interest Rate Risk for an Indian debt fund can be

reduced by using
s.Futures
t.Options
u.Interest Rate Swaps
v.none of the above

285. The Interest Rate Forecasting Unit of a debt

fund is generally manned by

s.technicians
t.statisticians
u.economists & econometricians
v.accountants

286. AMCs need not maintain records in support of

each investment decision
o.True
p.False

287. When interest rates for similar maturities' bonds

are 11%, bond with a 9% coupon rate will sell

s.above par
t.below par
u.at par
v.at a price unrelated to the interest rates for
similar securities

288. The most suitable measure for a fund's

performance does not depend on the

s.type of fund
t.investment objective of the fund
u.financial market conditions
v.amount invested by investor

289. If the NAV of an open-ended fund was Rs.16 at

the beginning of the year and Rs.22 after 13 months,

the annualised change in NAV is

s.6.0%
t.34.6%
u.40.6%

v.37.5%
 290. Change in NAV as a measure of fund

performance is more suitable for

u.growth funds
v.income funds
w.funds with withdrawal plans
x.none of the above

291. The difference between NAV change and total

return as measures of fund performance is

q.none
r.total return takes dividend into account while
NAV change does not
s.total return does not take NAVs into account
t.total return does not take the time period into
account

292. The most suitable measure of fund performance

for all fund types is s.NAV Change t.Total Return

u.Total Return with reinvestment

v.none of the above
293. The expense ratio used for measuring fund

performance is an indicator of
q.product market condition
r.growth in the economy
s.prevalent market practices
t.the fund's efficiency

294. The Expense Ratio as a measure of a fund's

performance is defined by a fund's

q.total expenses and average net assets

r.total expenses and total assets
s.average expenses and average net assets
t.none of the above

295. While computing the Expense Ratio for a fund,

brokerage commissions on the fund's transactions are
not included in the fund expenses

q.True
r.False
296. The Expense Ratio is not of utmost importance
in case of
q.Debt fund
r.Index fund
s.Equity fund
t.Bond fund

297. The Expense Ratio is not affected by

p.fund size
q.average account size
r.portfolio composition
s.stock market conditions

298. The Income Ratio as a measure of a fund's

performance is defined by the fund's

s.total income and total assets
t.net investment income and net assets
u.total income and net assets
v.none of the above

299. The Income Ratio is more suitable for

evaluating the performance of

s.Equity Funds
t.Growth Funds
u.Regular Income Funds
v.Index Funds

300. Portfolio turnover rate of a fund measure the

s.size of the fund's portfolio
t.amount of buying and selling done by the fund
u.the average number of units sold by the fund in
one day
v.none of the above
301. A high turnover rate for a fund indicates
u.high transaction costs
v.greater efficiency
w.high returns to the investor
x.a rising market

302. Turnover rates would be most relevant to

analyse the performance of
w.equity funds
 x.growth funds
y.debt funds
z.value funds

303. Transaction costs include

y.all expenses related to trading
z.all expenes charged to the fund
aa.distribution expenses
bb.none of the above

304. Which of the following are not included in

Transaction costs?
y.brokerage commissions
z.stamp duty on transfers
aa.custodians fees
bb.agent commissions

305. Which of the following transaction costs are not

quantified in the offer document

w.brokerage commissions
x.dealer spreads
y.custodian's fees
z.registrar's fees

306. The size of a fund has no bearing on its

performance
y.True
z.False
307. As per SEBI, mutual funds can borrow for short

term to the extent of

w.total net assets
x.50% of net assets
y.25% of net assets
z.20% of net assets

308. Which of the following is of no relevance in

evaluating a fund's performance

y.The performance of the stock market as a
whole
z.The performance of other mutual funds
aa.The returns given by other comparable
 financial products
bb.The change in wholesale price index

309. The choice of an appropriate benchmark for

evaluating a fund's performance depends on

s.the fund manager
t.the investment objective of the fund
u.SEBI

v.AMFI

310. An actively managed equity fund expects to

y.be able to beat the benchmarks
z.earn the same returns as the benchmark
aa.have no benchmarks
bb.underperform when compared with the
benchmark

311. For evaluating funds, the preferred benchmark

would be the
y.BSE Sensex
z.S&P CNX Nifty
aa.BSE 200
bb.S&P CNX Sectoral Indices
312. To evaluate a close-ended debt-fund, a suitable

benchmark would be
s.BSE Sensex
t.I-Sec's I-BEX
u.interest on bank fixed deposits of similar
maturity

v.S&P CNX Defty

313. When comparing performance of two funds, the

following need not be similar

w.Risk profiles
x.Investment objectives
y.Fund size
z.Fund managers

314. Which of the following is false?

w.ROI is a measure similar to Total Return with
Reinvestment of distribution
x.Total Return with Reinvestment of
distributions assumes reinvestment at NAV on
 the distribution date
y.As a measure of performance, Total Return
with Reinvestment of distribution seeks to
overcome the shortcomings of simple Total
Return
z.Because of its simplicity, simple Total Return
is preferred in practice to Total Return with
Reinvestment of distribution

315. The basis of genuine investment advice should

be
1.the current market situation
2.the agent commissions paid by different funds
3.financial planning to suit the investor's
situation
4.planning to complete the agent's annual targets

316. Financial goals do not include

w.buying a home
x.winning a sports gold medal
y.planning for retirement
z.saving for child's education

317. Financial planning allows a person

w.to become a billionaire
x.to achieve financial goals through proper
management of finances
y.to invest in foreign countries

z.none of the above

318. Financial plans do not alter in any way the

amount of tax an investor pays as the tax is on his
income

u.True
v.False
319. Which of the following works with an investor
on his overall financial situation
s.Tax Advisor
t.Financial Planner
u.Insurance Agent
v.Financial Advisor
320. A financial planner takes responsibility for the
financial well-being of his/her clients
y.True
z.False
321. Financial planners and their clients should focus
 on
w.allocating funds to asset classes (e.g. debt,
equity etc.)

x.allocating funds to individual securities

y.tracking stocks which they feel have potential
z.none of the above

322. Within an asset class, which individual security

to invest in should be decided by

t.the financial planner
u.the investor himself
v.a professional fund manager
w.an objective advisor

323. Financial Planning comprises

s.defining a client's profile and goals
t.recommending appropriate asset allocation
u.monitoring financial planning
recommendations
v.all of the above

324. Financial planning is relevant only for high

networth individuals
u.True
v.False
325. Financial planning does work for older clients
y.True
z.False
326 Financial planning is primarily tax planning
w.True
x.False
327 In financial planning, all responsibility ends with
the financial planner and the client has no
responsibilities
y.True
z.False
328 The constraint on financial planning due to
insufficient investable resources can be remedied to

some extent by
u.decreasing the standard of living
v.disciplining children
w.disciplined monthly budgeting
x.none of the above

329 In the growth option offered by mutual funds, the

number of units held by an investor increases because

of
w.growth in net asset value i.e. capital
appreciation
x.reinvestment of dividend which is like
compounding
y.interest received on the fund's assets
z.none of the above

330 To maximise returns on investment, once an

investor buys into a fund, he/she should hold on to it
no matter what happens

o.True
p.False

331 If an investor keeps investing a fixed amount at

regular intervals, the average cost of his purchases
will always be less than if he makes investment at
irregular periods

y.True
z.False

332. Which of the following lets an investor book

profits in a rising market and increase holdings in a
falling market

u.Fixed Rates of Asset Allocation

v.Flexible Ratio of Asset Allocation
w.Investment without any asset allocation plan
x.Buy and Hold Strategy
333. A Flexible Ratio of Asset Allocation means

y.continuously changing the ratio of various

assets in the portfolio
z.not doing any re-balancing and letting the
profits run
aa.active switching
bb.none of the above

334. The strategy advisable for an investor to

maximise investment return in the long run is
w.buy and hold on to investments for a long time

x.liquidate poorly performing investments from

time to time
y.liquidate good performing investments fro time
to time
 z.switch from poor performers to good
performers

335. A criticism of rupee-cost averaging is

w.Investment is for the same amount at regular
intervals
x.Over a period of time, the average purchase
price will work out higher than if one tries to
guess the market highs and lows
y.It does not tell you when to buy, sell or switch
from one scheme to another
z.Rupee cost averaging has no serious
shortcomings

336. In India, individual investors do not have direct

access to
q.capital market instruments
r.real estate
s.bullion
t.money market instruments

337. Which of the following entities can given loans

against securities
w.UTI

x.Banks
y.Mutual funds
z.none of the above

338. Which of the following investment products do

not give guarantee for return or capital

w.Bank deposits
x.Pubic provident fund (PPF)
y.National Savings Certificates (NSC)
z.Units of a mutual fund

339. The biggest advantage of investment in gold is

w.High returns
x.High appreciation in value
y.Low Purchase price
z.Hedge against inflation

340. The biggest disadvantage of investment in real

estate is
y.Less potential for capital appreciation
z.High purchase price
aa.Depreciation in value as time passes
bb.Value gets eroded due to inflation

341. Which of the following is not an advantage of

bank deposits?
u.Liquidity
v.High perceived safety

w.Low entry price

x.High yield after tax

342. Listing of shares at a stock exchange ensures

w.guaranteed returns
x.long term capital appreciation
y.low risk
z.high liquidity

343. The rate of interest paid by a company on

debentures issued by it depends on

u.the stock market situation
v.SEBI guidelines
w.the company's credit rating
x.the amount of money being raised

344. Which of the following is not a characteristic of

company fixed deposits

u.A higher rate of interest
v.higher risk
w.unfavourable effect of tax
x.very high liquidity

345. Which of the following is untrue for Public

Provident Fund Schemes

s.The interest is tax-free
t.Post-tax returns are attractive
u.Liquidity is rather low
v.none of the above

346. Indira Vikas Patra is an investment product

popular with
u.rural investors
v.investors in high tax bracket
w.urban investors
x.risk taking investors

347. Finance Acts of 2000 and 2001 have reduced

tax-free interest on Public Provident Fund to

t.12%
u.10.5%

v.9%
w.11%
348 Most individuals invest in life insurance policies

for
w.risk protection
x.tax benefits
y.easy liquidity
z.high returns

349. Annual contribution to Public Provident Fund

should be
w.Rs.10000
x.between 100 and Rs.6000
y.between Rs.600 and Rs.1000
z.none of the above
350. The current yield on Indira Vikas Patra works
out to
w.10.5%

x.11% y.10% z.9%

351. The tenure of an Indira Vikas Patra is

y.7 years
z.6 years
aa.5 years
bb.3 years

352. The maturity period of RBI Relief Bonds is

aa.5 years
bb.6 years
cc.7 years
dd.8 years

353. The annual yield on RBI Relief Bonds is

cc.9.5%
 dd.9.5% before tax
ee.8.5% before tax
ff.8.5% after tax

354. Individual investors do not normally invest in

Government Securities because

cc.individual investors re not allowed to invest in
Government Securities
dd.the amount required for investment is very
large
ee.safety of principal is not guaranteed
ff.none of the above

355. The amount an insurance company would pay to

the nominee if a policyholder died is known as the

aa.premium
bb.sum assured
cc.face value
dd.real value

356. Dividends distributed by mutual funds are

aa.taxed at source
bb.taxed in the hands of the investors
cc.are subject to capital gains tax
dd.are tax-free in the hands of the investor

357. Investing through mutual fund is a better option

than investing directly in the stock market because
identifying stocks is a difficult process
agents get commissions on mutual fund investment
returned are guaranteed by mutual funds
all of the above

358. A small investor can build a diversified portfolio

by

aa.buying one share each of all listed companies

bb.investing in a mutual fund
cc.borrowing enough money to buy shares of
well-managed companies
dd.none of the above

359. Which of the following is not an advantage of

mutual fund investment over direct investment
cc.Higher liquidity
dd.Lower transaction costs
ee.Greater convenience
ff.guaranteed returns

360. There is no contractual guarantee for repayment

of principal or interest to an investor in

w.bank deposit
x.debt fund
y.secured debentures
z.all of the above

361. Which of the following debt investments is not

ratedcc.Corporate Bonds

dd.Commercial Paper
ee.Company Deposit
ff.Debt Fund

362. Gold and real estate are attractive investment

options only in high inflation economies

cc.True
dd.False

363. Direct investment in stock market can be a

better option than investing through mutual funds if

the investor
w.wants better returns than those offered by
mutual funds
x.has large capital, knowledge and resources for
research
y.has identified a bullish phase in the stock
market
z.wants to invest for the long term

364. Deciding on strategies such as long-term

compounding, cost averaging, value averaging, active

switching, all depend on the

aa.stock market situation on date
bb.amount of money to be invested
 cc.investor's risk tolerance
dd.phase through which the economy is passing

365. Financial Planning involves

aa.studying financial management
bb.managing the risks of investing

cc.financing the client's investments

dd.none of the above

366. Greater returns come only from assuring higher

risks, and a higher risk portfolio guarantees higher
returns

w.True
x.False
367. The risk tolerance of an investors is independent

of
aa.his age
bb.his income
cc.the stock market movements
dd.his job security

368. A sector fund is a

aa.low risk fund

bb.moderate risk fund
cc.high risk fund
dd.low-to-moderate risk fund

369. International funds invest in various and so are

low risk funds
w.True
x.False

370. Investment in gold is a hedge against inflation but investment in a precious metal fund falls in the high risk category

w.True
x.False
371. By their very nature, growth funds are

considered as high risk funds

aa.True
bb.False

372. Short Term bond funds are

aa.low risk funds
 bb.moderate risk funds
cc.high risk
dd.of the above depending on the market

373. The risk level of commodity funds is

x.high risk category
y.determined by the commodity price
movements
z.cannot be specified
aa.low risk category

374. As compared to a fund with fluctuating total

returns, a fund with stable positive earnings

w.gives higher returns
x.is less risky
y.gives lower returns

z.is more risky

375. "Risk" is equated with

w.volatility of earnings
x.level of earnings
y.the number of investors in a fund
z.the number of schemes of a fund family

376. Volatility of an equity fund portfolio is

independent of the
aa.kind of stocks in the portfolio
bb.degree of diversification of the portfolio
cc.fund manager's success at market timing
dd.number of investors in the scheme

377. Equity price risks are

y.company specific
z.market level
aa.sector specific
bb.all of the above

378. Diversification reduces

aa.company specific risk
bb.market level risk
 cc.both of the above
dd.none of the above

379. Which of the following is most risky?

y.Investing in a money market mutual fund
z.Investing in an index fund
aa.Short term investment in an equity fund
bb.Long term investment in an equity fund

380. A fund with a high beta coefficient gives greater

returns in a rising market, and is more risky in a
falling market

aa.True
bb.False
381. Which of the following is a disadvantage of

Standard Deviation as a measure of risk

q.Standard Deviation measures total risk, not just
market risk
r.It is based on past returns, which does not
necessarily indicate further performance
s.It is an independent number
t.All types of funds can be measured with
standard deviation

382. The role of an agent is to

aa.point out the features and benefits of various
investments options
bb.help the investor develop the right approach
to investing
cc.recommend some investment option available

dd.offer ad hoc advise whenever the investor has

surplus money available
383. One of the most effective ways to invest through

mutual funds is to
y.develop a model portfolio
z.buy a few units of every mutual fund scheme
available
aa.invest all the money in one fund scheme
 bb.invest all the money in different schemes of
the same fund family

384. Mutual fund should be advised to expect

cc.low post tax returns
dd.dramatic results
ee.better returns than every other available
option
ff.only realistic wealth accumulation goals

385. Asset Allocation is

aa.keeping certificates of the physical securities

in proper places
bb.allocation the available money to all the
securities available
cc.allocating the right proportion of funds to
equity, debt and money market securities
dd.none of the above

386. Once a financial advisor works out ideal Asset

Allocation, it can be used for all investors whom
he/she advises

aa.True
bb.False

387. Asset distribution among equity, debt and money

market securities should correspond to the investors'
need for capital growth, income and liquidity

u.True
v.False
388. The liquidity needs of an investor are met

through
aa.Equity Funds
bb.Index Funds
cc.Money Market Funds
dd.Sector Funds

389. A retired person generally needs a greater

proportion of
aa.Debt funds
bb.Equity funds
 cc.Money Market funds
dd.All of the above

390. To satisfy a young investor's need for growth, a

greater proportion of investment should be advised in

aa.Gilt funds
bb.Income Funds
cc.Equity Growth funds
dd.Liquid funds

391. A very high proportion of investment in all types

of equity funds is advisable for investors

cc.in distribution phase
dd.in accumulation phase
ee.in transition phase
ff.who are wealth preserving affluent individuals

392. The transition phase of an investor's wealth

cycle is when
y.the financial goals have been already met
z.the investor has retired
aa.financial goals are approaching
bb.investor suddenly gets a windfall

393. A high proportion of investment in income funds

is required by
aa.accumulating investors
bb.affluent investors
cc.investors in the inter-generational transfer
phase
dd.investors in the distribution phase

394. Retired investors should

y.not draw down on their capital
z.not invest in securities which bear risk of
capital erosion
aa.continue holding a major portion of their
holding in equity growth funds
bb.never invest in equity

395. For older investors who want to transfer their

wealth
y.no financial planning is required
z.the right investment strategy depends upon
who the beneficiaries are
aa.the right investment strategy depends upon
the state of the stock market
bb.all the funds can be invested in aggressive

equity funds

396. Investors who acquire sudden wealth

w.can speculate with all the acquired money in
the stock markets
x.should not use any of the new wealth to invest
in equity
y.should take the effect of taxes into account
z.need not pay any taxes on the newly acquired
wealth as it is not a part of their regular income

397. Only if a specialty offshore fund has

consistently given very good performance, it can be
considered for investment by a retiree
y.True
z.False
398. Past performance should not be solely relied on
for selecting a fund
x.True
y.False

399. Between the past performance of a fund and its suitability for an investor, past performance is more important

aa.True
bb.False
400. Structural characterisations of an equity fund

include
aa.costs of investing
bb.the specific securities in which the fund has
invested
cc.the number of employees of the AMC
dd.all of the above

401. An equity fund's age and size are irrelevant

when selecting a fund for investment

cc.True
dd.False

402. The charge to an investor at the time of he

redeems his units from the fund is known as
ee.recovery charge
ff.repurchase load
gg.redemption weight
hh.exit load

403. The load amount charged to a scheme over a

period of time is called

gg.entry load
hh.exit load
ii.deferred load
jj.no-load

404. Contingent Deferred Sales Charge (CDSC)

gg.is higher for investors who stay invested in
the scheme longer
hh.is lower for investors who stay invested in the
scheme longer
ii.is the same for all investors irrespective of how
long they stay invested
jj.is not allowed to be charged to mutual fund
investors in India

405 A fund's declared NAV does not include loads

ee.True
ff.False

406. Which of the following fund types are

comparable
ee.An aggressive equity fund and a money
market mutual fund
ff.A value fund and a government securities fund
gg.A bond fund and a debt fund
hh.A diversified equity fund and a debt fund

407. Who is the primary guardian of unitholders'

funds/assets
ee.The AMC
ff.The Trustees
gg.The Registrars
hh.The custodians

408. In case of a fund merger or Take-over

gg.High Court approval may not be necessary
 hh.SEBI approval is a must
ii.all unitholders must be informed
jj.all of the above

409. Units of a money market mutual fund can be

issued to
aa.individuals
bb.banks
cc.trusts
dd.all of the above

410. Though Indian mutual funds have restrictions on

borrowings (only20% of net assets and for six
months only) which are to meet cash needs for
redemption only, UTI is allowed to borrow within
more relaxed norms

gg.True
hh.False
411. An equity fund can be said to be concentrated
whenee.when it invests in only in two or three stocks

ff.when it invests in may companies of the same

sector
gg.when top ten holdings account for more than
50% of net assets invested
hh.when top ten holdings account for more than
25% of net assets invested

412. The size of the market capitalisation of a fund's

equity holdings is inversely proportional to the

returns that
aa.can be expected from the fund
bb.level of risk assumed by the fund
cc.state of the stock market
dd.all of the above

413. A steady holding of investments in an equity

fund's portfolio indicates

ee.long-term orientation
ff.lower transaction costs
 gg.both the above
hh.none of the above

414. Ex-Mark of an equity fund measures its

ee.performance
ff.risk
gg.both the above
hh.none of the above

415. Beta of an equity fund measures its

y.performance
z.risk
aa.both the above
bb.none of the above

416. The best equity fund, relative to others, would

haveee.higher Ex Marks, lower Beta and higher

Gross Dividend Yield

ff.higher Ex Marks, higher Beta and higher
Gross Dividend Yield
gg.lower Ex Marks, lower Beta and lower Gross

Dividend Yield
hh.lower Ex Marks, higher Beta and higher
Gross Dividend Yield

417. When selecting equity funds for investing, those

at the top of the performance rankings should be
avoided

ee.True
ff.False
418. A debt fund's age and size are not important
when selecting a fund for investment
y.True
z.False

419. Debt schemes are popular because

y.the Indian Stock Market is always going down
z.the returns are more predictable
aa.most investors are always in debt
bb.all of the above

420. Yield-to-maturity of a debt fund's portfolio is

more important when the investment objective is

cc.current income
 dd.total return
ee.liquidity
ff.all of the above

421. Compared to equity funds, income margins for

debt funds are

ee.narrow
ff.higher
gg.the same
hh.almost nil

422. Debt funds with long-term investments carry

higher risk of capital loss

bb.True
cc.False

423. The differerentiating factor among debt funds of

comparable maturity and quality is

aa.gross yields
bb.costs
cc.fund age
dd.tenure of the fund manager

424. Dstribution tax should be taken into into account

when computing net returns from
aa.equity funds

bb.debt funds
cc.both the above
dd.none of the above

425. All debt fund investors are exposed to risk of

principal loss
ee.True
ff.False

426. Running a money market mutual fund requires

more of
cc.credit analysis skills
dd.equity analysis skills
 ee.patience
ff.trading skills

427. Which is the most important in selecting debt

fund for better return

ee.past performance
ff.level of interest rates
gg.fund expertise
hh.the securities in which it has invested

428. Investors should be advised to avoid investing in

a debt fund with a

cc.lower rated portfolio and higher expense ratio
dd.higher rated portfolio and lower expense ratio
ee.lower rated portfolio and lower expense ratio
ff.lower rated portfolio and higher expense ratio

429. An ideal money market mutual fund must have

cc.lower returns
dd.lower expense ratio

ee.low quality of investments

ff.all the above
430. Circumstances that might cause an investor to

change the composition of his portfolio

u.cyclical changes in economy
v.unforeseen economic changes affecting the
portfolio's preferred sectors
w.both the above
x.none of the above

431. If a charitable trust approaches a distributor with

an application for investment in a mutual fund, the

distributor should
ee.accept the application without wasting time
ff.reject the application outright
gg.refer to the offer document
hh.accept the application as a direct application

432. An application form for investment in a mutual

fund is available with
cc.the offer document
dd.the abridged annual report
ee.the key information memorandum
ff.a bank challan

433. An aggrieved unit-holder of a mutual fund can

sue
gg.the AMC

hh.the trustees
ii.the sponsor if returns have been guaranteed by
them
jj.none of the above

434. As per SEBI regulations for valuation of

investments held by mutual funds, a security is

considered "non-traded" when it

ee.has not been traded for 60 days prior to
valuation
ff.has not been traded for 30 days prior to
valuation
gg.is not listed on any stock exchange
hh.is held by the mutual fund without buying or
selling

435. An Ex-Mark of 100% is possible for

cc.a growth fund
dd.an aggressive growth fund
ee.an index fund
ff.a balanced fund

436. A trail commission is justified when

w.an investor cancels his investment

x.the investor redeems his investment in a very
short time

y.an agent invests his own money, not that of a

client
z.an agent sells many mutual funds
 437. Of the following, which type of fund would
have a higher P/E multiple in comparison to the
average market multiple

ee.A Value Fund

ff.A Growth Fund

gg.An Index Fund

hh.Could be any of the above three, one cannot
generalise

438. Which of the following is not true as per SEBI

Regulations for Debt Funds?

ee.Investment in rated debt securities of a single
issuer should not exceed 15% of NAV
ff.Total investment in unrated debt securities of a
single issuer should not exceed 25% of NAV
gg.Total investment in unrated debt securities
below investment grade should not exceed 25%
of NAV
hh.Total investment in rated debt securities
below investment grade should not exceed 25%
of NAV

439. A Money Market Mutual Fund is most likely to

invest in
ee.Corporate Bonds
ff.Equity Shares
gg.Government Securities with maturity less
than 1 year
hh.All of the above

440. Of the following, which would be suitable for a

retiree with a modest risk appetite

gg.Value Fund
hh.Diversified Equity Fund
ii.Growth Fund
jj.Balanced Fund

441. A high portfolio turnover for a fund indicates

cc.that the fund is active
dd.higher transaction costs
 ee.both the above
ff.none of the above

442. Unit Trust of India's US-64 Scheme

ee.is listed on stock exchanges
ff.has a fixed price for sale and repurchase
gg.has its sale and repurchase price declared
periodicaly by UTI
hh.has its price determined by market forces

443. The Indian debt market

cc.is Wholesale in natur

dd.comprises large players like financial

institutions and banks
ee.witnesses large scale trading in government
securities
ff.all of the above

444. A fund that charges a load is better than a no-

load fund
cc.True
dd.False

445. An AMC can approach investors either directly

or with the help of

aa.individual agents
bb.banks and non-banking finance companies
cc.distribution companies
dd.all of the above

446. Which of the following is true for Equity Linked

Savings Scheme (ELSS)

aa.A tax rebate is available to investors in these
schemes
bb.The investment has to be locked in for 3 years
cc.The minimum amount for investment is fixed
dd.All of the above

447. A prospective investor

 z.has the same status as a unit-holder of a fund
aa.can sue the AMC/trustee
bb.has no legal recourse
cc.all of the above
448. An investor can assess the performance of his

mutual fund by comparing it with the performance of

cc.other mutual fund of the same type
dd.the stock market
ee.other financial products
ff.all of the above

449. Unrated securities in the portfolio of a mutual

fund are not to be valued

ee.True
ff.False

450. An exit load guarantees a higher return

aa.True
bb.False

451 Bonds held in the portfolio of a mutual fund are

valued at yield to maturity

ee.True
ff.False

452 The Valuation of non-traded equity shares is

done at the trading price 30 days prior to valuation
date

ii.True
jj.False
453 If a unit-holder does not agree to the merger of

his fund with another, he has not exit option

kk.True
ll.False

454. The most important factor look for when

investing in a corporate fixed deposit is the

kk.yield
ll.rate of interest
mm.credit rating of the deposit
nn.none of the above
 455. The most important reason for an investor to

prefer a bank deposit to a mutual fund is

gg.the credit worthiness of the bank
hh.because the bank does not invest in securities
ii.that the bank offers a guarantee
jj.all of the above

456. A deep discount bond

ii.is always sold at a discount to its issue price

jj.bears interest annually
kk.is redeemed at a price much higher than issue
price
ll.bears interest at varying interests

457. A mutual fund in India is a

ii.body corporate
jj.company
kk.trust
ll.an asset management company

458. When selling a mutual fund, a good agent would

never
kk.describe the past performance of the scheme
ll.compare the fund with other mutual funds
mm.assure a rate of return
nn.compare the fund with other financial
products

459. An investor buys one unit of a fund at an NAV

of Rs.20. He receives a dividend of Rs.3 when the
NAV is Rs.21. The unit is redeemed at an NAV of

Rs.22. Total Return is

ee.25.71%
ff.Rs.27.51
gg.21.27%
hh.Rs.21.75

460. A fund sells 100 units of face value Rs.10/- at an

NAV of Rs.12.25. How much would be credited to
unit capital?
 ii.Rs.1225
jj.Rs.225

kk.Rs.1000
ll.none of the above
461. When a scheme with assured returns is being
launched, which of the following need not be

published in the offer document?

ii.Means of fulfilling the guarantee
jj.Information for all schemes launched by the
fund in the past
kk.comparison with other mutual funds
ll.Investment objective

462. Mutual fund units can be distributed by

ee.trustees of the fund
ff.the AMC
gg.Non-banking finance companies
hh.banks
463. A debt fund distributes 10% dividend. How
much tax does the investor have to pay on this

dividend?
ii.10%
jj.12%
kk.20%
ll.None

464. A debt fund distributes a 10% dividend. How

much tax does the fund have to pay?

ii.10%
jj.12%
kk.10.2%
ll.None

465. How many scrips is the NIFTY constitutes of

cc.40
dd.100
ee.30
ff.none of the above

466. Which of the following is the first step in

financial planning
ii.Asset Allocation
 jj.Selection of fund
kk.Studying the features of a scheme
ll.None of the above

467. Why should one buy an insurance policy?

gg.It gives high current returns
hh.It gives good capital appreciation over its
term
ii.It should be bought due to the need for
insurance and not as an investment
jj.All of the above

468. SEBI Regulations for Mutual Funds were

formulated in

aa.1992
bb.1993
cc.1995
dd.1996

469. Expenses incurred by a fund for printing of Key

Information Memorandum can be amortised over

cc.10 Yrs
dd.5 Yrs
ee.15 Yrs

ff.Cannot be amortised

470. A mutual funds' investments are guided by the

gg.AMC
hh.Board of Trustees
ii.Investment Objectives
jj.Unit holders

471. UTI was the only mutual fund for the period
ii.1984 to 1988
jj.1963 to 1988
kk.1964 to 1992
ll.none of the above

472. Investors who follow the fixed Asset Allocation

approach
dd.maintain balance in their portfolio by
 liquidating a part of the position in the asset class
which has given higher return and reinvesting in
the other asset class which has lower return
ee.are not disciplined
ff.increase their equity position when equity
prices tend to climb
gg.none of the above

473. An investor should not invest in a mutual fund if

ee.his capital base is large
ff.he is able to carry out detailed investment
research and monitor the stock market
gg.both the above
hh.none of the above

474. Mutual fund can benefit from economies of

scale because of
ee.portfolio diversification
ff.risk reduction
gg.large volume of trades
hh.none of the above

475. Which of the following is a disadvantage

suffered by a mutual fund investor?

gg.High liquidity
hh.diversification
ii.no tailor made portfolio
jj.low investment

476. A disadvantage suffered by mutual fund investor

is that he has no control over the costs of investing

gg.True
hh.False

477. Which of the following statements about UTI is

untrue
ii.It was set up in 1963
jj.It was formed by RBI
kk.It was established by an act of Parliament
ll.It was not given a monopoly status
478. Which scheme has the largest investor base?
gg.ULIP
hh.UTI Mastershare
ii.US-64
jj.SBI Magnum

479. Which was the first diversified equity

investment scheme in India

gg.SBI Magnum
hh.UTI Mastershare
ii.MEP-91
jj.Mastergain-92

480. The private sector was granted permission to

enter the mutual fund industry in

y.1992
z.1993
aa.1998
bb.1995

481. The first non-UTI mutual fund was

ii.SBI MF

jj.LIC MF
kk.Canbank MF
ll.Indian Bank MF

482. The organisation responsible for a

comprehensive set of regulations for all mutual funds

in India is
gg.RBI
hh.SEBI
ii.AMFI
jj.SHCIL

483. The 1999 Union Government Budget helped the

Mutual Fund industry by

kk.regulating the industry practices
ll.exempting all mutual fund dividends in the
hands of investors from income tax
mm.approving the code of ethics formulated by
AMFI
 nn.doing away with all regulations for mutual
funds

484. During the period 1992-99, the mobilisation of

funds by the mutual fund industry was about

ii.5% - 6% of gross domestic savings
jj.2% - 4% of gross domestic savings
kk.7% - 10% of gross domestic savings
ll.25% - 40% of gross domestic savings

485. Which of the following about Public Providend

Fund (PPF) are untrue

gg.50% of the balance of the 4th year can be
withdrawn in the 7th year
hh.The interest is tax free
ii.The rate of interest is 12% p.a.
jj.contributions upto Rs.60000 are eligible for tax
rebate

486. A close-ended scheme is quoted on the stock

exchange at a discount to its NAV when

aa.the markets are bearish
bb.investors perceive that the fund will be unable
to maintain the NAV
cc.the assets of the fund are undervalued
dd.none of the above

487. Which of the following is a fundamental

attribute of a mutual fund scheme

ii.The names and addresses of the registrars and
custodians
jj.The nature of the scheme being income
bearing
kk.The specified stocks in the scheme's portfolio
ll.The name and address of the compliance
officer

488. Offer Document of a mutual fund is

ii.required by investors
jj.required by the AMC for its own reference
 kk.required as per SEBI regulations
ll.not mandatory as per SEBI

489. The units of a scheme being sold and

repurchases as per the procedure laid down is one of
the fundamental attributes of a scheme

ii.True
jj.False
490. The steps involved in the selection of an equity

fund for investment are

kk.sector selection, asset classification, selection
of fund managers and schemes
ll.sector selection, selection of fund managers
and schemes, asset classification
mm.asset classification, sector selection,
selection of fund managers and schemes

nn.selection of fund managers and schemes,

sector selection, asset classification

491. Compounding of interest is best explained by a

gg.balanced fund
hh.growth fund
ii.value fund
jj.income fund

492. From whom can a unit-holder seek redressal if

his complaint is not entertained by the mutual fund

ii.AMC
jj.Board of Trustees
kk.SEBI
ll.RBI

493. An investor wishes to switch between a money

market mutual fund and an equity fund. What would

you advise him?

gg.It would be better to stick to one type of fund,
the one that meets his investment objective.
hh.He should keep switching parts of his
investment from the equity fund to the money
market fund as the market rises and switch back
to the equity fund when the market falls
 ii.He should switch from the money market fund
to the equity fund in a rising market and switch
back to money market fund when the market
falls
jj.none of the above

494. For choosing an appropriate benchmark to

measure a scheme's performance, all of the following

are required except

ee.the composition and size of the portfolio
ff.the investment objective
gg.historical data of fund performance
hh.the nature of investments

495. Which of the following characterise the fund

that a risk averse investor should choose

ee.Gross dividend yield 15% Beta 1.5, Ex-Marks
90
ff.Gross dividend Neil 10%, Beta 1, Ex-Marks
70
gg.Gross dividend yield 11%, Beta 0.9, Ex-
Marks 80

hh.Gross dividend yield 12%, Beta 1.2, Ex-

Marks 80
496. A mainstream diversified debt fund is most
affected by
ee.reinvestment risk
ff.liquidity risk
gg.interest rate risk
hh.default risk
497. If yields fall, a debt fund manager will do all of
the following except
dd.sell short maturity securities and buy long
maturity securities

ee.see that the fund's average duration becomes

longer than the market's average duration
ff.sell long duration securities and buy short
duration securities
gg.sell high coupon securities and buy low
coupon securities

498. In which type of schemes should an unmarried

professional working HLL invest

gg.Scheme investing 80% in debt securities
 hh.50% in equity funds and 50% in income
funds
ii.90% in equity funds having a higher P/E Ratio
than the market
jj.all the money in a balanced fund

499. An investor buys units in a fund that has given excellent returns in the past, but his expectations are not met as the fund does not perform
well this year. The investor can

gg.sue the AMC

hh.sue the Trustees

ii.sue the agent
jj.none of the above

500. A fund's investments at market value total

Rs.700 crores, Total liabilities stand at Rs.50 lacs and
the number of units outstanding is Rs.28 Crores.

What is the NAV

cc.Rs.30.19
dd.Rs.24.98
ee.Rs.32.15
ff.Rs.40.49

Answers to Practice Question

Q. No Ans
Q. No
Ans
Q. No
Ans
Q. No
Ans
Q. No
Ans
1
b
51
a
101
d
151
c
201
b
2
b
52
d
102
a
152
d
202
d
3
d
53
b
103
b
153
d
203
b
4
d
54
d
104
c
154
d
204
d

5
c
55
c
105
a
155
b
205
b
6
c
56
c
106
d
156
a
206
c
7
b
57
c
107
a
157
c
207
a
8
c
58
c
108
d
158
d
208
d
9
d
59
b
109
d
159
a
209
a
10
c
60
d
110
b
160
d
210
c
11
b
61
c
111
b
161
a
211
b
12
b
62
a
112
c
162
d
212
d
13
d
63
d
113
a
163
c
213
d
14
c
64
d
114
d
164
c
214
a
15
b
65
b
115
d
165
b
215
a
16
d
66
c
116
b
166
d
216
a
17
b
67
c
117
b
167
c
217
b
18
d
68
d
118
a
168
b
218
b
19
c
69
c
119
c
169
b
219
b
20
c
70
d
120
a
170
d
220
d
21
b
71
b
121
b
171
c
221
b
22
d
72
b
122
c
172
b
222
a
23
c
73
d
123
a
173
b
223
b
24
a
74
d
124
d
174
d
224
a
25
d
75
c
125
c
175
d
225
c
26
d
76
a
126
d
176
b
226
a
27
c
77
c
127
d
177
c
227
c
28
b
78
a
128
a
178
c
228
c
29
c
79
d
129
d
179
c
229
b
30
d
80
a
130
a
180
c
230
b
31
b
81
c
131
d
181
d
231
d
32
c
82
b
132
a
182
b
232
a
33
b
83
b
133
b
183
d
233
b
34
b
84
b
134
c
184
c
234
b
35
b
85
d
135
b
185
b
235
c
36
c
86
a
136
d
186
a
236
c
37
b
87
b
137
a
187
c
237
c
38
c
88
c
138
c
188
a
238
a
39
a
89
b
139
b
189
d
239
b
40
b
90
b
140
c
190
b
240
b
41
b
91
b
141
a
191
d
241
b
42
a
92
c
142
b
192
b
242
b
43
b
93
c
143
c
193
b
243
a
44
c
94
b
144
b
194
a
244
b
45
b
95
a
145
d
195
d
245
c
46
b
96
b
146
c
196
b
246
a
47
c
97
a
147
d
197
c
247
a
48
b
98
d
148
c
198
c
248
c
49
B
99
c
149
b
199
b
249
c
50
A
100
a
150
c
200
a
250
a
Answers to Practice Question for AMFI Test
Q. No
Ans
Q. No
Ans
Q. No
Ans
Q. No
Ans
Q. No
Ans
251
a
301
a
351
b
401
b
451
a
252
b
302
a
352
a
402
c
452
b
253
d
303
a
353
d
403
c
453
b
254
c
304
d
354
b
404
b
454
c
255
c
305
b
355
b
405
a
455
a
256
a
306
b
356
d
406
c
456
c
257
a
307
d
357
a
407
c
457
c
258
d
308
d
358
b
408
d
458
c
259
b
309
b
359
d
409
d
459
a
260
a
310
a
360
b
410
a
460
c
261
c
311
d
361
d
411
c
461
c
262
b
312
c
362
a
412
b
462
d
263
b
313
d
363
b
413
c
463
d
264
c
314
d
364
c
414
a
464
c
265
a
315
c
365
b
415
b
465
d
266
b
316
b
366
b
416
a
466
a
267
a
317
b
367
c
417
a
467
c
268
b
318
b
368
c
418
a
468
d
269
a
319
b
369
b
419
b
469
b
270
d
320
a
370
a
420
b
470
c
271
b
321
a
371
b
421
a
471
b
272
b
322
c
372
b
422
a
472
a
273
b
323
d
373
a
423
a
473
c
274
b
324
b
374
b
424
b
474
c
275
b
325
a
375
a
425
a
475
c
276
c
326
b
376
d
426
d
476
a
277
b
327
b
377
d
427
c
477
d
278
a
328
c
378
a
428
a
478
c
279
b
329
b
379
c
429
b
479
b
280
a
330
b
380
a
430
c
480
b
281
b
331
a
381
b
431
c
481
a
282
a
332
a
382
b
432
c
482
b
283
b
333
b
383
a
433
c
483
b
284
c
334
d
384
d
434
b
484
a
285
c
335
c
385
c
435
c
485
c
286
b
336
d
386
b
436
b
486
b
287
b
337
b
387
a
437
b
487
b
288
d
338
d
388
c
438
b
488
c
289
c
339
d
389
a
439
c
489
a
290
a
340
b
390
c
440
d
490
c
291
b
341
s
391
b
441
c
491
b
292
c
342
d
392
c
442
c
492
c
293
d
343
c
393
d
443
d
493
b
294
a
344
d
394
b
444
b
494
c
295
a
345
d
395
b
445
d
495
c
296
c
346
c
396
c
446
d
496
c
297
d
347
b
397
b
447
a
497
c
298
b
348
b
398
a
448
d
498
c
299
c
349
b
399
b
449
b
499
d
300
b
350
a
400
b
450
b
500
b