AMFI Tests

HSBC
1. An investor in a closed-end mutual fund can get money back before maturity b
y selling units
(1-Mark)
Back to the fund
To a special trust at NAV
On a stock exchange where the fund is listed
To the agent through which he/she subscribed to the units of the fund
2. A closed-end mutual fund has a fixed

(1-Mark)
NAV
Tenure
Rate of return
Number of distributors
3. A mutual fund is owned by

(1-Mark)
The Govt of India
SEBI
All its investors
AMFI
4. Who is the primary guardian of unit holders funds?

(1-Mark)
The AMC
The Sponsor
The Trustees
The Custodians
5. The limit on maximum entry or exit load that a fund can charge is determined
by the
(1-Mark)
AMC
SEBI
AMFI
Distribution agents based on demand for the fund
6. Which of the following is not true for Equity Linked Savings Schemes?
(2-Mark)
Investors can claim an income tax benefit
There is a lock-in period before investment can be withdrawn
There are not specific restrictions on investment objectives for the fund manag
ers
These funds cannot invest in shares of listed companies
7. The fund sponsors should have a sound financial track record of

(1-Mark)
7 years
12 months
5 years
3 years
8. The agreement between the Trustees and the AMC is known as

(2-Mark)
Trust Deed
Investment Management Agreement
Agreement to manage Portfolio
AMC appointment letter
9. A closed-end scheme of a mutual fund is not governed by

(1-Mark)
Exchange Rules of the stock exchange where it is listed
Listing Agreement between the fund and the stock exchange
Guidelines issued by the Ministry of Commerce
Provisions of Companies Act, 1956 relating to transactions in securities
10. After dividend declaration, unit-holders are entitled to receive dividend w

ithin a period of
(1-Mark)
One week
30-days
42-days
Six weeks
11. The Board of Trustees of the UTI does not have nominees from
(1-Mark)
RBI
LIC
IDBI
The Bombay Stock Exchange (BSE)
12. The "Capital" of a scheme does not include

(1-Mark)
Unit capital
Reserves
Borrowing
Net worth of the AMC
13. The most important source of information for a prospective investor in mutu
al fund is
(1-Mark)
Offer document
Annual Report of the AMC

Economic Times
AMFI Newsletter
14. The offer document issued by mutual funds does not serve the purpose of
(1-Mark)
Announcing the launch of the scheme
Giving detailed information about the scheme
Explaining the risk factors of the scheme
Giving the fund manager's investment outlook for the next quarter
15. The offer document for a scheme remains valid even if

(2-Mark)
The AMC is reconstituted
Entry or exit loads are changed

The scheme's NAV changes
New plans are added to existing schemes
16. Standard risk reactors are the ones

(2-Mark)
Which are uniformly applicable for any mutual fund scheme
Different for different schemes
Which are made by a "standards" committee
None of the above
17. The prospectus or offer document containing the details of a new scheme is
first registered with the
(2-Mark)
AMFI
SEBI
Bombay Stock Exchange
Ministry of Finance
18. A scheme's policy on dividends and distribution

(2-Mark)
Is decided by the fund manager as per the market outlook
Can be changed to suit the requirements of the AMC
Need not be consistent
Should be disclosed at the time of initial launch
19. The following need not be covered in a Key Information Memorandum

(2-Mark)
Risk Factors
Opening and earliest closing date of the initial offer
Disclaimer clause
Functions and responsibilities of the sponsor, trustees, AMC and Custodian resp
onsibilities
20. The following are not termed as "sales practices"

(1-Mark)
Agents commission
Before-and after-sales service to investors
Advertising of schemes
Stock broking
21. Which of the following sales practices is prescribed by regulation

(1-Mark)
AMFI Code of Ethics
SEBI Advertising
AMFI's Code for Agents
None of the above
22. Which of the following document, a Mutual Fund distributor needs to refer t
o find out eligible category of investors in a particular Mutual Fund Scheme
(1-Mark)
SEBI Regulations Manual
AMFI booklet
Offer document
RBI Guidelines
23. Which of the following is not true

(2-Mark)
Companies can invest in mutual fund schemes
Registered societies can invest in mutual fund schemes
NRI can not invest in mutual fund
HUF can invest in mutual fund
24. Listed equity shares are to be valued at

(1-Mark)
The average price of the share in NSE
The lowest price of the day in BSE
Cost price or current market price whichever is lower
The last traded price in the stock exchange where the security is principally t
raded
25. As per SEBI (Mutual Fund) Regulations ,1996 an asset shall be classified as
NPA if
(1-Mark)
Interest warrant bounces twice
The issuer refuses to repay interest
If the interest/installment becomes overdue for a period of 180 days
If the interest/installment becomes overdue for a period of one quarter
26. For a open-end fund, the repurchase price should not be lower than
(2-Mark)
NAV
95% of NAV
93% of NAV
97% of NAV
27. For a no-load fund , the AMC can change an investment management fee not ex
ceeding
(2-Mark)
3.50%
4.00%
2.25%
0.50%
28. A funds NAV is affected by

(2-Mark)
Purchase and sale of investment securities
Valuation of all investment securities held
Accrual of income or expense
All of the above
29. If an investor switches from one scheme to another scheme within the same m
utual fund
(1-Mark)
No load will be charged
Only entry load will be charged in the new scheme
Only exit load will be charged in the old scheme
Depends on AMC and varies between different AMC
30. Which of the following is untrue of an automatic reinvestment plan?

(2-Mark)
The plan allows for automatic reinvestment of all income and capital gains
Automatic reinvestment allows for accumulation of additional units of the fund
The major benefit of automatic reinvestment is compounding
Its benefit is often lost on account of the heavy load charge on the reinvestme
nt
31. A passive fund manager

(1-Mark)
Researches stocks extensively
Does not buy and sell stocks often
Does not have to go through the process of stock selection
Does not have to track stocks
32. Coupon of a debt security refers to

(1-Mark)
A piece of paper attached to the certificate
The return-on investor would earn
The rate of interest paid on par value of the bond
None of the above
33. Certificates of Deposits (CDs) are issued by

(1-Mark)
Regional Rural Banks
Corporates
Scheduled commercial banks
None of the above
34. Value stocks

(1-Mark)
Have high current dividend yield
Yield high growth in earnings
Are currently under valued

None of the above
35. Mutual funds are allowed to lend

(1-Mark)
Loans
Securities
Physical assets
None of the above
36. An owner of preference shares is given which of the following rights

(1-Mark)
Voting rights
Fixed dividend income from post-tax profits
Voting rights and unlimited dividend income

No guaranteed rights
37. When interest rates for similar maturities' bonds are 11%, bond with a 9% c
oupon rate will sell
(2-Mark)
Above par
Below par
At par
At a price unrelated to the interest rates for similar securities
38. To compare bonds with different coupon rates, maturities and prices, invest
ors would use
(2-Mark)
Current yield
Technical analysis
Yield to maturity
Fundamental analyis
39. Yield curve is also known as

(2-Mark)
Curve of Interest
Term Structure of Interest Rates
Curve that yields
None of the above
40. As per SEBI norms, a fund's investments, in the equity shares of any one co
mpany are restricted to
(2-Mark)
25% of Net Assets
10% of Net Assets
50% of Net Assets
100% of Net Assets
41. Transaction costs include

(1-Mark)
All expenses related to purchase and sale of securities
All expenses charged to the fund
Distribution expenses
None of the above
42. The Expense Ratio is of least importance in which of the following

(1-Mark)
Debt fund
Index fund
Equity fund
Liquid fund
43. Turnover rates would be most relevant to analyze the performance of

(1-Mark)
Equity funds
Index funds
Debt funds
Value funds
44. Portfolio turnover rate refers to

(2-Mark)
Ratio of sales to the net assets of the fund
Ratio of purchases to the net assets of the fund
Ratio of sales or purchases( which ever is lower) to net assets of the fund
Ratio of sales or purchases( which ever is higher) to net assets of the fund
45. The rule of 72 is used to

(2-Mark)
Calculate entry load of a scheme
Calculate the period in which an investment will double at a given rate of retu
rn
Calculate the rate at which money will grow to double in a given period
both b and c
46. If there is an entry load in a scheme, the investors return

(2-Mark)
Will increase to the extent of load
Will not change because there will not be any exit load
Will reduce to the extent of load
None of the above
47. As per SEBI, mutual funds can borrow for short term to the extent of
(2-Mark)
Total net assets
50% of net assets
25% of net assets
20% of net assets
48. When selling a mutual fund, a good agent would never

(1-Mark)
Describe the past performance of the scheme
Compare the fund with other mutual funds
Assure a rate of return
Compare the fund with other financial products
49. Which of the following is not a characteristic of company fixed deposits

(1-Mark)
A higher rate of interest
Higher risk
Unfavorable effect of tax
Very high liquidity
50. Which of the following represent indirect investments?

(1-Mark)
Investment in a mutual fund
Investment in shares
Investment in bank deposit

Investment in post office schemes
51. The most important reason for an investor to prefer a bank deposit to a mut
ual fund is
(1-Mark)
The creditworthiness of the bank
Because the bank does not invest in securities
That the bank offers a guarantee
All of the above
52. The constraint on financial planning due to insufficient resources can be r

emedied to some extent by
(1-Mark)
Decreasing the standard of living
Disciplining children
Disciplined monthly budgeting
None of the above
53. Structural characterization of an equity fund include

(1-Mark)
Costs of investing
The specific securities in which the fund has invested
The number of employees of the AMC
All of the above
54. Listing of shares at a stock exchange ensures

(1-Mark)
Guaranteed returns
Long term capital appreciation
Low risk
High liquidity
55. Mutual fund investors should be advised to expect

(1-Mark)
Low post tax returns
Dramatic results
Better returns than every other available option
Only realistic wealth accumulation goals
56. Once a financial advisor works out ideal Asset Allocation, it can be used f
or all his investors
(1-Mark)
True
False
-
-
57. A retired person generally needs a greater proportion

(1-Mark)
Debt funds
Equity funds
Money Market funds
All of the above
58. A fund with a high beta coefficient gives greater returns in a rising marke
t, and is more risky in a falling market
(1-Mark)
True
False
-
-
59. In which type of schemes should an unmarried professional working in HLL in
vest
(2-Mark)
Scheme investing 80% in debt securities
50% in equity funds and 50% in income funds
At least 75% in equity funds having a higher P/E Ratio than the market
All the money in a balanced fund
60. The best equity fund, relative to others, would have

(2-Mark)
Higher Ex Marks, lower Beta and higher Gross Dividend Yield
Higher Ex Marks, higher Beta and higher Gross Dividend Yield
Lower Ex Marks, lower Beta and lower Gross Dividend Yield
Lower Ex Marks, higher Beta and higher Gross Dividend Yield
61. An investor wishes to switch between a money market mutual fund and an equi
ty fund. What would you advise him?
(2-Mark)
It would be better to stick to one type of fund, the one that meets his investm
ent objective.
He should keep switching parts of his investment from the equity fund to the mo
ney market fund as the market rises and switch back to the equity fund when the
market falls
He should switch from the money market fund to the equity fund in a rising mark
et and switch back to money market fund when the market falls
none of the above
62. If a charitable trust approaches a distributor for investment in a mutual f

und, the distributor should
(2-Mark)
Accept the application without wasting time
Reject the application outright

Refer to the offer document
Accept the application as a direct application
63. Beta of an equity fund measures its

(2-Mark)
Performance
Risk
Both the above
None of the above
64. The basis of genuine investment advice should be
(2-Mark)
The current market situation
The agent commissions paid by different funds
Financial planning to suit the investor's needs
Planning to complete the agent's annual targets
65. One of your friends who has invested in a mutual fund is about to get Austr
alian citizenship. What would you advise?
(2-Mark)
He should transfer the investment to his relative
He should get RBI approval for continuing
He can continue to hold as PIO are allowed to invest in mutual funds in India
He should immediately redeem his investment since foreign citizens are not elig
ible investors
66. As per Bogle, asset allocation for older investors in accumulation phase sh
ould be
(2-Mark)
30% equity ; 70% debt
67. A steady holding of investments in an equity fund's portfolio indicates

(2-Mark)
Long-term orientation
Lower transaction costs
Both the above

None of the above
68. An investor should not invest in a mutual fund if

(2-Mark)
He expects a customized portfolio
He is able to carry out detailed investment research and monitor the stock mark
et
Both the above
None of the above
69. Which of the following is not true about the buy and hold strategy
(2-Mark)
It is preferred by a many investors
It does not involve rebalancing
It is very beneficial as investors may exit from poor performers and invest in
better ones
All of the above
1. The highest risk is associated with one of the following kind of funds
(1-Mark)
Balanced Funds
Gilt Funds
Equity Growth Funds
Debt Funds
2. An investor in a closed-end mutual fund can get money back before maturity b
y selling units
(1-Mark)
Back to the fund
To a special trust at NAV
On a stock exchange where the fund is listed
To the agent through which he/she subscribed to the units of the fund
3. Which of the following is not false about a mutual fund?

(1-Mark)
Open ended funds can be sold in secondary market
Closed ended fund do not have a fixed tenure
Open ended funds do not calculate their NAV on every business day
The NAV of a closed ended fund has to be calculated at least once in a week
4. Which of the following investment is not made by debt funds

(1-Mark)
Government debt instruments
Corporate paper
Financial institutions' bonds
Equity of private companies
5. Which of the following is not true for a mutual fund

(1-Mark)
The mutual fund is owned by all the investors
Mutual fund gives a diversified portfolio to investors
The objectives of investors of a mutual fund are diverse
The mutual funds do not invest in real estate
6. The amount required to buy 100 units of a scheme having an entry load of 1.5
% and NAV of Rs.20 is
(2-Mark)
Rs.2000
Rs.2015
Rs.1985
Rs.2030

(1-Mark)
7 years
12 months
5 years
3 years
8. The Board of Trustees of a mutual fund

(2-Mark)
Act as a protector of investors' interests
Directly manage the portfolio of securities

Do not have the right to dismiss the AMC
Cannot supervise and direct the working of the AMC
9. Unit-holders aggrieved by a mutual fund or an AMC can get redressed from

(1-Mark)
Consumer Courts
SEBI
AMFI
RBI
10. The largest corpus of investable funds in India is with

(1-Mark)
Bank-owned mutual funds
Private Sector mutual funds
UTI
Insurance Companies
11. The amount of authority enjoyed by a self-regulatory organization is define

d by
(1-Mark)
The apex regulatory authority
Company law board
Its own members
RBI
12. Investors have the right to receive interest from the AMC if redemption pro
ceeds are not dispatched within a period of
(1-Mark)
A month
14 days
14 working days
10 working days
(1-Mark)

14. The most important source of information for a prospective investor in mutu
al fund is
(1-Mark)
Offer document
Economic Times
AMFI Newsletter
15. The risk of a scheme's NAV moving up or down on the basis of capital market
movements is
(2-Mark)
An investment attribute
Scheme specific risk
Standard risk
Credit risk
16. Which of the following is true about the Fundamental attributes of a scheme
(2-Mark)
Investment objectives of a scheme is not a fundamental attribute
They can be changed after informing investors and taking approval from SEBI and
trustees
Offer document need not be updated after change in fundamental attribute of a s
cheme
All are false

(2-Mark)
None of the above
18. A due diligence certificate does not certify that

(2-Mark)
The draft offer document forwarded to SEBI is in accordance with SEBI regulatio
ns
All legal requirements connected with launching of the scheme have been complie
d with
Disclosures made in the offer document are true, fair and adequate
The AMC guarantees a good performance
19. Which the following is not false

(2-Mark)
The offer document need not be studied by an investor before investing in a sch
eme
The offer document is not a legal document
A change in key personnel of the AMC does not necessitate a revision of the off
er document
If fresh litigation cases or adjudication proceedings are referred by SEBI agai
nst the fund sponsors or a company associated with the sponsors, then the offer
document needs to be revised

(1-Mark)
Agents commission
Stock broking
21. The code of ethics for mutual funds published by AMFI

(1-Mark)
Is mandatory
Is in the form of recommended practices
Is unfavorable to investors
Does not cover distribution and selling practices
22. Along with the application form ,it is mandatory to attach

(1-Mark)
Investment rebate
Offer document
Key information memorandum
None of the above
23. Which of the following is not true

(2-Mark)
Companies can invest in mutual fund schemes
Registered societies can invest in mutual fund schemes
NRI can not invest in mutual fund

HUF can invest in mutual fund
24. As per SEBI (Mutual Fund) Regulations ,1996 an asset shall be classified as
NPA if
(1-Mark)
Interest warrant bounces twice
The issuer refuses to repay interest
If the interest/installment becomes overdue for a period of 180 days
If the interest/installment becomes overdue for a period of one quarter
25. Mutual funds have to value their investments
(1-Mark)
At purchase price
On a mark-to-market basis
At par
At book value
26. For a open-end fund, the sale price should not be

(2-Mark)
Higher than NAV
Higher than 107% of NAV
Lower than 107% of Repurchase price
Equal to NAV
27. As per SEBI regulations for valuation of investments held by mutual funds,
a security is considered "non-traded" when it
(2-Mark)
Has not been traded for 60 days prior to valuation
Is not listed on any stock exchange
Is held by the mutual fund without buying or selling
28. Liabilities in the balance sheet of a mutual fund are

(2-Mark)
In the form of long-term loans
Strictly short term in nature
Combination of long term and short term
Not allowed as per regulations
29. If an investor switches from one scheme to another scheme within the same m
utual fund
(1-Mark)
No load will be charged
Only entry load will be charged in the new scheme
Only exit load will be charged in the old scheme
Depends on AMC and varies between different AMC
30. Systematic Transfer Plan allows investors to

(2-Mark)
Transfer amount from one mutual fund to another mutual fund at regular interval
s
Transfer amount from one scheme to another with in the same mutual fund
Transfer amount from one scheme to his bank account
Transfer dividends of one scheme to another

(1-Mark)
Loans
Securities
Physical assets
None of the above
32. Which of the following is not an equity instrument?

(1-Mark)
Preference shares
Equity warrants
Ordinary debentures
Convertible debentures
33. Commercial Paper is issued by Corporate bodies

(1-Mark)
To meet short-term working capital requirements
To finance the acquisition of long term capital assets
To retire long term debt
To pay dividend
34. Shares of companies with large capital market capitalization

(1-Mark)
Have greater growth potential
Are more liquid
Are not available
None of the above
35. The drawback of an ordinary share is

(1-Mark)
Possibility of capital appreciation
Ownership privilege of the company
Dividend income
No guaranteed income or security
36. If 10-year government securities yields 10% and a 10-Year fixed deposit in
a company yields 12%, the yield spread is
(1-Mark)
12%
22%
10%
2%
37. For an open ended scheme, investment in unlisted shares

(2-Mark)
Can not be lower than 10% of net assets
Should be equal to investment in listed shares

Can not exceed 5% of net assets
38. The additional yield required to account for the risk of default by the bor
rower is known as
(2-Mark)
Yield plus
Yield spread
Yield extra
Yield premium
39. When interest rates rise, prices of existing bonds

(2-Mark)
Also rise
Fall
Are not affected
Fluctuate either up or down
40. Market capitalization of a company is calculated by multiplying the number

of outstanding shares by
(2-Mark)
Rs.10
Face value of each share
Current market value of each share
Dividend yield
41. The expense ratio used for measuring fund performance is an indicator of
(1-Mark)
Product market condition
Growth in the economy
Prevalent market practices
The fund's efficiency
42. Portfolio turnover rate of a fund measures the

(1-Mark)
Size of the fund's portfolio
Amount of buying and selling done by the fund
The average number of units sold by the fund in one day
None of the above
43. Change in NAV as a measure of fund performance is more suitable for

(1-Mark)
Growth funds
Income funds
Funds with withdrawal plans
None of the above
44. Which of the following is not a SEBI regulation on returns

(2-Mark)
Standard measurements have to be used for computation of returns
Returns for a period of less than 1 year have to be annualized
Returns for 1, 3 and 5 years, or since inception which ever is later is to be p
rovided
CAGR to be used for funds which are more than 1 year old
45. Assets under management of a fund at the end of year are 125 Cr.The Average
Net assets of the fund are Rs. 100 crore and the total expenses of the fund in
that year are Rs. 2.5 Cr. What is the expense ratio?
(2-Mark)
2.00%
2.50%
1.25%
25.00%
46. A high turnover rate for a fund indicates
(2-Mark)
High transaction costs
Greater efficiency
High returns to the investor
A rising market
47. The Income Ratio as a measure of a fund's performance is defined by the fun
d's
(2-Mark)
Total income and total assets
Net investment income and net assets
Total income and net assets
None of the above
48. A mainstream diversified debt fund is most affected by

(1-Mark)
Re-investment risk
Liquidity risk
Interest rate risk
Default risk
49. Which of the following works with an investor on his overall financial situ
ation
(1-Mark)
Tax Advisor
Financial Planner
Insurance Agent
Financial Advisor
50. Which of the following investment products do not give guarantee for return
or capital
(1-Mark)
Bank deposits
Pubic provident fund (PPF)
National Savings Certificates (NSC)
Units of a mutual fund
51. In the dividend reinvestment option ,the number of units held by an investo
r increases because of
(1-Mark)
Growth in net asset value i.e. capital appreciation
Reinvestment of dividend which is like compounding
Interest received on the fund's assets
None of the above
52. For older investors who want to transfer their wealth

(1-Mark)
No financial planning is required
The right investment strategy depends upon who the beneficiaries are
The right investment strategy depends upon the state of the stock market
All the funds can be invested in aggressive equity funds
53. Which of the following is untrue for Public Provident Fund Schemes
(1-Mark)
The interest is tax-free
Post-tax returns are attractive
Liquidity is rather low
None of the above
54. Running a money market mutual fund requires more of

(1-Mark)
Credit analysis skills
Equity analysis skills
Patience
Trading skills

(1-Mark)
Costs of investing
All of the above
56. The biggest disadvantage of investment in real estate is

(1-Mark)
Less potential for capital appreciation
High purchase price
Depreciation in value as time passes
Value gets eroded due to inflation
57. The rate of interest paid by a company on debentures issued by it depends o

n
(1-Mark)
The stock market situation
SEBI guidelines
The company's credit rating
The amount of money being raised
58. From whom can a unit-holder seek redressal if his complaint is not entertai
ned by the mutual fund
(1-Mark)
AMC
Board of Trustees
SEBI
RBI
59. As per Bogle, asset allocation for younger investors in accumulation phase
should be
(2-Mark)
60. Which of the following is false about fixed asset allocation

(2-Mark)
It means maintaining the same ratio between various components of the portfolio
It involves rebalancing the portfolio in a disciplined manner
It means that the portfolio would never be rebalanced
It involves periodic review and returning to the original allocation

vest
(2-Mark)
62. An Ex-Mark of 100% is possible for

(2-Mark)
A growth fund
An aggressive growth fund
An index fund
A balanced fund
(2-Mark)
better ones
All of the above
64. Which of the following is true about an equity fund selection

(2-Mark)
Fund with higher percentage in cash should be selected
Funds with low market capitalization have more liquidity
Track record of fund managers is not important
Funds with higher x-marks are more diversified and have lower risk
65. Direct investment in stock market can be a better option than investing thr
ough mutual funds if the investor
(2-Mark)
Wants better returns than those offered by mutual funds
Has large capital, knowledge and resources for research

Has identified a bullish phase in the stock market
Wants to invest for the long term

(2-Mark)
67. Of the following, which type of fund would have a higher P/E multiple in co
mparison to the average market multiple
(2-Mark)
A Value Fund
A Growth Fund
An Index Fund
Could be any of the above three, one cannot generalize
68. What would you recommend to an investor who does not want to take any credi
t risk
(2-Mark)
Deposit with a chit fund company
Deposit with a local co-operative bank
A Gilt fund
A Diversified debt fund
69. The most important factor look for when investing in a corporate fixed depo
sit is the
(2-Mark)
Yield
Rate of interest
Credit rating of the deposit
None of the above
HSBC
1. The NAV of each scheme should be updated on AMFI's website
(1-Mark)
Every quarter
Every month
Every hour
Every day
2. Units from an open-end mutual fund are bought from
(1-Mark)
A stock exchange
The fund itself
AMFI
The Banks
3. A mutual fund can benefit from economies of scale because of

(1-Mark)
Indirect Investment
Large volumes of trade
Portfolio diversification
Fund manager
4. A mutual fund is not

(1-Mark)
Owned jointly by all investors
A company that manages investment portfolios of high net worth individuals
A pool of funds used to purchase securities on behalf of investors
A collective investment vehicle
5. Which of the following is not false about a mutual fund?

(1-Mark)
Open ended funds can be sold in secondary market
Closed ended fund do not have a fixed tenure
Open ended funds do not calculate their NAV on every business day
The NAV of a closed ended fund has to be calculated at least once in a week
(2-Mark)
ers
7. In India, Mutual Funds are formed as

(1-Mark)
A public limited company
A trust
A private limited company
A society
8. The fund sponsor has to contribute

(2-Mark)
Nothing to the AMC
The total net worth of the AMC
At least 40% of the AMC's net worth
Exactly 50%
9. Which of the following is an SRO (Self Regulatory Organization)

(1-Mark)
NSE
SEBI
AMFI
RBI
10. UTI Cannot

(1-Mark)
Provide corporate finance
Engage in real estate and property development business
Provide merchant banking services
Invest in securities

(1-Mark)

UTI
Insurance Companies
12. Unit holders' right to information does not include

(1-Mark)
Obtaining from the trustees any information having an adverse effect on their i
nvestments
Inspecting major documents of a fund
Receiving of a copy of the annual financial statements of that fund
Approving investment decisions of the fund
13. A compliance officer

(1-Mark)
Certifies that the information contained in the offer document is true and fair
Belongs to SEBI
Cannot certify that the AMC's legal and procedural obligations are fulfilled
Cannot be appointed by the AMC
(1-Mark)
15. Valuation norms for non-traded securities should be disclosed

(2-Mark)
At the end of every financial year
Every quarter
In the offer document at the time of launch of the scheme
Should not be disclosed, being confidential information
16. The investment objectives of a mutual fund scheme

(2-Mark)
Are of no relevance to the investor
Should be the same as his own investment objectives
Change with market movements
Change with a change in the AMC's key personnel
17. 'Key Information Memorandum' is

(2-Mark)
An abridged version of the offer document
The Memorandum and Articles of Association of the AMC
A sheet containing historical NAVs of other schemes of the same mutual fund
18. As a part of borrowing policy, the following need not be disclosed in an of

fer document
(2-Mark)
Purpose and circumstances of borrowing
Regulatory limits on borrowing
Potential risk to AMC and unit-holders
Names of lenders
19. For assured return schemes, information about the guarantor's net worth whi
ch justifies the guarantor's ability to meet any shortfalls in the returns assur
ed under the scheme, can be found in
(2-Mark)
The offer document
The key information memorandum
Both a) and b)
None of the above

(1-Mark)
Agents commission
Stock broking
21. An agent can offer and sell a fund's units at

(1-Mark)
Any price he chooses
A price determined by competition among agents
A price based on demand for that fund's units
The public offering price currently in effect
22. To sell funds effectively, an agent need not

(1-Mark)
Be fully aware of the important characteristics of the scheme
Know his/her client's risk profile
Give after sales service
Offer large investment rebates
23. Mutual Fund agents/distributors are not allowed to

(2-Mark)
Sell financial products other than mutual funds
Sell schemes of more than one mutual fund
Pass back the commissions earned to the investors
Work anywhere else
24. Investments made by a mutual fund on behalf of investors are accounted as

(1-Mark)
Assets
Liabilities
Capital
None of the above
25. Scheme-wise annual report of a mutual fund need not be

(1-Mark)
Sent to all unit-holders
Forwarded to SEBI
Published as an advertisement
Stock exchanges

(2-Mark)
Higher than NAV
Equal to NAV
27. A closed-end has average weekly net assets of Rs 200 crore.As per SEBI regu
lations, the AMC can charge the fund with investment and advisory fees upto
(2-Mark)
Rs 2.25 crore
Rs 2.00 crore
Rs 2.50 crore
Rs 3.00 crore
(2-Mark)
29. It is cumpulsory to quote PAN number

(1-Mark)
If the investor has PAN
If the investment is Rs. 1 Lac or more
If the investment is Rs. 50000 or more
If the investor is liable to pay tax in that year
30. Constraints imposed by most funds on check writing are

(2-Mark)
Account balance should not fall below the minimum capital required
Checks issued must be for at least the minimum amount specified
Number of checks per month must not exceed a specified number

Both a and b above
31. Equity derivative instruments are

(1-Mark)
Shares
Bonds
Contracts
Notes
32. Which of the following is not an equity instrument?

(1-Mark)
Preference shares
Equity warrants
Ordinary debentures
33. Security dealers of a mutual fund

(1-Mark)
Guard the cabin of the fund manager
Execute buy and sell orders for the fund
Decide which shares to buy or sell
None of the above
34. Fundamental analysis forms the basis to decide
(1-Mark)
When to buy a given share
Whether to buy a given share or not
Whether to use technical analysis or quantitive analysis
Whether the company's factory can withstand earthquakes
35. Commercial Paper is issued by Corporate bodies

(1-Mark)
To meet short-term working capital requirements
To finance the acquisition of long term capital assets
To retire long term debt
To pay dividend
36. An owner of preference shares is given which of the following rights

(1-Mark)
Voting rights
Fixed dividend income from post-tax profits
Voting rights and unlimited dividend income
No guaranteed rights
37. The Price/Earnings (P/E) Ratio is calculated using

(2-Mark)
Market price and dividend
Market price and earning per share
Market capitalization and dividend
Market price and face value
38. Which of the following is true regarding borrowing powers of a mutual fund
(2-Mark)
A mutual fund can not borrow at all
A mutual fund can borrow only up to 20% of net assets
A mutual fund can borrow for a maximum period of one year
A mutual fund can borrow for investment purposes
39. Continuous tracking of the companies in which a mutual fund has invested is
done by
(2-Mark)
Continuous tracking systems
Equity analysts
Trustees
Security dealers
40. It may not be possible to reinvest interest received at the same rate as pr
incipal. This is known as
(2-Mark)
Reinvestment risk
Inflation risk
Interest-rate risk
Call risk

(1-Mark)

None of the above
42. The major sources of return to an investor from investment in mutual funds
are
(1-Mark)
Interest and capital appreciation
Dividend and rent
Dividend and capital appreciation
Dividend
43. To choose an appropriate benchmark for a scheme, all of the following are r
equired except
(1-Mark)
The composition and size of the portfolio
The investment objective
Historical data of fund performance
The nature of investments
44. On 1 Jan '05 NAV was Rs. 20/-. On 1 April '04 fund declared dividend of 12%
.On 31 Dec '04 NAV was Rs. 22.80. What is the return as per total return method.
(2-Mark)
20%
40%
12%
18%
45. As per SEBI, mutual funds can borrow for short term to the extent of
(2-Mark)
Total net assets
50% of net assets
25% of net assets
20% of net assets
46. Standard deviation is a measure of

(2-Mark)
Market risk
Total risk
Credit risk
Re-investment risk

(2-Mark)
Greater efficiency
A rising market
48. Of the following, which would be more suitable for a retiree with a modest
risk appetite
(1-Mark)
Value Fund
Diversified Equity Fund

Growth Fund
Balanced Fund
49. The differerentiating factor among debt funds of comparable maturity and qu
ality is
(1-Mark)
Gross yields
Costs
Fund age
Tenure of the fund manager
50. The biggest advantage of investment in gold is

(1-Mark)
High returns
High appreciation in value
Low Purchase price
Hedge against inflation

n
(1-Mark)
SEBI guidelines

52. Debt schemes are popular because

(1-Mark)
The Indian Stock Market is always going down
The returns are more predictable
Most investors are always in debt
All of the above
53. Most individuals invest in life insurance policies for

(1-Mark)
Risk protection
Tax benefits
Easy liquidity
High returns
54. A wealth preserving affluent investor is likely to invest in

(1-Mark)
Direct Equity
Real Estate
Growth funds
Debt funds or fixed income securities
55. Among the following, which is more important for an investor
(1-Mark)
Size of the fund
Funds suitability for an investor
Past performance of the fund
Fund Manager
56. Investing through mutual fund is a better option than investing directly in
the stock market because
(1-Mark)
Identifying stocks is a difficult process
Agents get commissions on mutual fund investment
Returned are guaranteed by mutual funds
All of the above
57. To satisfy a young investor's need for growth, a greater proportion of inve
stment should be advised in
(1-Mark)
Gilt funds
Income Funds
Equity Growth funds
Liquid funds
58. Which of the following is not an advantage of bank deposits?

(1-Mark)
Liquidity
High perceived safety
Low entry price
High yield after tax
59. A Flexible Ratio of Asset Allocation means

(2-Mark)
Continuously changing the ratio of various assets in the portfolio
Not doing any re-balancing and letting the profits run
Active switching
None of the above
(2-Mark)
better ones
All of the above
61. The basis of genuine investment advice should be

(2-Mark)
The current market situation
The agent commissions paid by different funds
Financial planning to suit the investor's needs
Planning to complete the agent's annual targets
62. As per Bogle, asset allocation for older investors in distribution phase sh
ould be
(2-Mark)
63. Which of the following would you recommend to Mr. Sharma who wants to inves
t Rs. 3 lac for three months
(2-Mark)
Bank Fixed Deposit
A Debt fund having duration of 3 years
A Liquid Fund
A Balanced Fund
64. The size of the market capitalization of a fund's equity holdings is invers
ely proportional to the
(2-Mark)
Returns that can be expected from the fund
Level of risk assumed by the fund
State of the stock market
All of the above
65. Yield-to-maturity of a debt fund's portfolio gives an indication of

(2-Mark)
Current income
Total return
Liquidity
All of the above
66. A steady holding of investments in an equity fund's portfolio indicates

(2-Mark)
Both the above
None of the above
(2-Mark)

68. Which of the following will result in higher percentage of equity than in d
ebt during bullish phase of the equity markets
(2-Mark)
Fixed Asset Allocation
Flexible Asset Allocation
both a and b
neither a nor b
69. Which of the following debt investments is not rated

(2-Mark)
Corporate Bonds
Commercial Paper
Company Deposit
Debt mutual fund
Test2
1. A no-load fund is one in which
(1-Mark)
The entry load is not charged
The exit load is not charged
* The entry load as well as exit load is not charged
The initial issue expenses are not charged to the investor
2. A mutual fund can benefit from economies of scale because of

(1-Mark)
Indirect Investment
Large volumes of trade
Portfolio diversification
Fund manager
3. Which of the following is not true for Index Funds

(1-Mark)
These funds invests in the shares that constitute a specific index
The investment in shares is in the same proportion as in the index
These funds aim to minimize the tracking error
These funds are not diversified
4. The NAV of each scheme should be updated on AMFI's website

(1-Mark)
Every quarter
Every month
Every hour
Every day
5. Which of the following investment option does not give the benefit of compou
nding
(1-Mark)
Growth option
Dividend payout option
Dividend Reinvestment option
None of the above
6. CDSC is a kind of
(2-Mark)
Entry load
Entry load, which varies with holding period of an investor
Exit load, which varies with the holding period of an investor
None of the above
7. The structure which is required to be followed by mutual funds in India is l

aid down by
(1-Mark)
Financial Ministry
Securities and Exchange Board of India (SEBI)
Fund Sponsor
Association of Mutual Funds of India (AMFI)
8. The AMC of a mutual fund cannot

(2-Mark)
Undertake advisory services or financial consulting
Invest the funds in government paper
Indulge in an activity not related to financial services
Invest the funds in listed securities

(1-Mark)
UTI
Insurance Companies
10. The entity that SEBI does not regulate is

(1-Mark)
Share registrars
Mutual funds
Stock exchanges
Non-banking finance companies
11. The responsibilities of a unit-holder do not include

(1-Mark)
Monitoring his investments carefully
Being aware of information that affects his investment in a major way
Carefully studying the offer document
Taking decisions about where the fund managers should invest
12. The rights of investors in a mutual fund scheme are laid down in
(1-Mark)
The Offer Document of that scheme
Quarterly Reports
Annual Reports
Marketing brochures
(1-Mark)
14. SEBI does not require the following to be included in the offer document is
sued by a mutual fund
(1-Mark)
Details of the Sponsor and the AMC
Description of the Scheme and investment objective/strategy
Investors' Rights and Services
Performance of other mutual funds
15. Which the following is not false

(2-Mark)
The offer document need not be studied by an investor before investing in a sch
eme
The offer document is not a legal document
A change in key personnel of the AMC does not necessitate a revision of the off
er document
If fresh litigation cases or adjudication proceedings are referred by SEBI agai
nst the fund sponsors or a company associated with the sponsors, then the offer
document needs to be revised
16. The following information about the constitution of the mutual fund is foun
d in the offer document
(2-Mark)
Activities of the sponsor
Summary of trust deed provisions
Name and addresses of the board of trustees
All of the above
17. The offer document of an open ended fund has to be fully revised and update
d
(2-Mark)
Every six months
Once in two years
Every quarter
Every month
18. Which of the following is not true for offer documents of open-end schemes
(2-Mark)
It is first issued at the time the scheme is launched
It is registered with SEBI
It has to be revised every month

It contains all important disclosures that a mutual fund is reguired to make

(2-Mark)
None of the above
20. In India the minimum or maximum commissions payable to distributors is deci

ded by
(1-Mark)
Distributors
AMC
SEBI
Trustees of the mutual funds
21. The code of ethics for mutual funds published by AMFI

(1-Mark)
Is mandatory
Is unfavorable to investors
Does not cover distribution and selling practices
(1-Mark)
AMFI Code of Ethics
SEBI Advertising
None of the above
23. Mutual Fund agents/distributors are not allowed to

(2-Mark)
Sell financial products other than mutual funds
Sell schemes of more than one mutual fund
Pass back the commissions earned to the investors
Work anywhere else
24. Which of the following is not a treatment of NPA?

(1-Mark)
Accrual of income of NPA has to be stopped
Income accrued but not received on the asset classified as NPA has to be provid
ed
NAV has to be reduced by 1%
Provision has to be made for the principal due in a graded manner

(1-Mark)
At purchase price
At par
At book value
26. When computing NAV of fund, SEBI requires accrual of major expenses to be a
ccounted
(2-Mark)
Quarterly
Annually
On a day to day basis
When actually paid
27. For a closed end scheme, initial issue expenses

(2-Mark)
Can be amortized over a period of 10 years
Can be amortized over a period not exceeding 5 years
Can not be recovered from investors
Can be amortized over the life of the scheme
28. For a no-load fund , the AMC can change an investment management fee not ex
ceeding
(2-Mark)
3.50%
4.00%
2.25%
0.50%
29. It is cumpulsory to quote PAN number

(1-Mark)
If the investor has PAN
If the investment is Rs. 1 Lac or more
If the investment is Rs. 50000 or more
If the investor is liable to pay tax in that year

(2-Mark)
Both a and b above
(1-Mark)
12%
22%
10%
2%
32. An accurate measure of the sensitivity of a debt portfolio to changes in in

terest rate is the
(1-Mark)
Yield curve
Credit rating of each security
Duration of the portfolio
Current yield
33. A passive fund manager

(1-Mark)
Researches stocks extensively
Does not buy and sell stocks often
Does not have to go through the process of stock selection
Does not have to track stocks
34. Fundamental analysis involves

(1-Mark)
Checking the foundations of the company's factory building
Research into the operations and finances of the company

Studying the company's share prices
None of the above
35. A call provision in a debt issue allows the issuer to

(1-Mark)
Call out the names of the investors
Redeem the debt on maturity
Extend the tenure of the debt
Redeem the debt before maturity
36. The largest proportion of trades done in the wholesale debt market is accou
nted by
(1-Mark)
Mutual funds
Foreign banks
Indian banks
Financial institutions
37. For an open ended scheme, investment in unlisted shares

(2-Mark)
Can not be lower than 10% of net assets
Should be equal to investment in listed shares
38. Debt securities bought at a discount to their face value are generally
(2-Mark)
Interest bearing
Zero coupon bonds
Paying interest at a floating rate
None of the above
39. Current yield relates interest on a security to

(2-Mark)
Its current market price
Its face value
Its fair value
The current price of T-Bills
40. The yield on Treasury Bill (T-Bill) is determined by

(2-Mark)
The Government of India
Auction
The State Governments
Floating rate method
41. When comparing fund performance with peer group funds

(1-Mark)
The age of funds should be same
The AMCs should have same net worth
Size and composition of the portfolios should be comparable
All of the above
42. The choice of an appropriate benchmark for evaluating a fund's performance

depends on
(1-Mark)
The fund manager
The investment objective and the asset allocation pattern of the fund
SEBI
AMFI
(1-Mark)
44. To evaluate a closed-end debt-fund, a suitable benchmark would be

(2-Mark)
BSE Sensex
I-Sec's I-BEX
Interest on bank fixed deposits of similar maturity
S and P CNX Deft
45. The Income Ratio as a measure of a fund's performance is defined by the fun
d's
(2-Mark)
Total income and total assets
Net investment income and net assets
Total income and net assets
None of the above

(2-Mark)
Greater efficiency
A rising market
47. The rule of 72 is used to

(2-Mark)
Calculate entry load of a scheme
Calculate the period in which an investment will double at a given rate of retu
rn
Calculate the rate at which money will grow to double in a given period
both b and c
48. From whom can a unit-holder seek redressal if his complaint is not entertai
ned by the mutual fund
(1-Mark)
AMC
Board of Trustees
SEBI
RBI
49. Short Term bond funds are

(1-Mark)
Low risk funds
Moderate risk funds
High risk
None of the above
50. An equity fund can be said to be concentrated when

(1-Mark)
When it invests in only in two or three stocks
When it invests in may companies of the same sector
When top ten holdings account for more than 50% of net assets invested
51. The biggest disadvantage of investment in real estate is

(1-Mark)
Less potential for capital appreciation
High purchase price
Depreciation in value as time passes
Value gets eroded due to inflation
(1-Mark)
Gilt funds
Income Funds
Equity Growth funds
Liquid funds
53. Within an asset class, which individual security to invest in should be dec
ided by
(1-Mark)
The financial planner
The investor himself
A professional fund manager
An objective advisor
54. The differerentiating factor among debt funds of comparable maturity and qu
ality is
(1-Mark)
Gross yields
Costs
Fund age
Tenure of the fund manager
55. One of the most effective ways to invest through mutual funds is to
(1-Mark)
Develop a model portfolio
Buy a few units of every mutual fund scheme available

Invest all the money in one fund scheme
Invest all the money in different schemes of the same fund family

(1-Mark)
Patience
Trading skills
57. Debt schemes are popular because

(1-Mark)
The Indian Stock Market is always going down
The returns are more predictable

Most investors are always in debt
All of the above
ual fund is
(1-Mark)
All of the above
59. One of your friends who has invested in a mutual fund is about to get Austr
alian citizenship. What would you advise?
(2-Mark)
He should transfer the investment to his relative
He should get RBI approval for continuing
He can continue to hold as PIO are allowed to invest in mutual funds in India
He should immediately redeem his investment since foreign citizens are not elig
ible investors
60. If yield is expected to fall, a debt fund manager will do all of the follow
ing except
(2-Mark)
Sell short maturity securities and buy long maturity securities
See that the fund's average duration becomes longer than the market's average d
uration
Sell long duration securities and buy short duration securities
Sell high coupon securities and buy low coupon securities
61. Which of the following is true about Jacob's Model Portfolio for investors
in distribution phase
(2-Mark)
Investment in diversified equity should be around 15% - 30%
Investment in income and gilt funds should be around 15% - 30%
Investment in liquid funds should be around 15% - 30 %
None of the above
62. Beta of an equity fund measures its

(2-Mark)
Performance
Risk
Both the above
None of the above
63. What will you answer if an investor asks whether a debt mutual fund can giv
e negative returns?
(2-Mark)
Yes, but only if AMC makes some fraud in calculating NAV
Yes, because the value of debt securities may move down
Never
You will decide not to advice any thing at all
64. A criticism of rupee-cost averaging is

(2-Mark)
Investment is for the same amount at regular intervals
Over a period of time, the average purchase price will work out higher than if
one tries to guess the market highs and lows
It does not an investor when to buy, sell or switch from one scheme to another
Rupee cost averaging has no serious shortcomings
65. Which of the following is an important criteria to select a money market fu

nd
(2-Mark)
Portfolio turnover
Duration of the fund
The expense ratio

All of the above
(2-Mark)
in accumulation phase
(2-Mark)
Investment in diversified equity should be around15% - 30%

Investment in liquid funds should be around 5%
None of the above
68. Which of the following is a disadvantage of Standard Deviation as a measure

of risk
(2-Mark)
Standard Deviation measures total risk, not just market risk
It is based on past returns, which does not necessarily indicate further perfor
mance
It is an independent number
All types of funds can be measured with standard deviation
69. Which of the following is not a relevant criteria to select an equity fund
(2-Mark)
Percentage of cash in portfolio
Concentration of portfolio
Market capitalization of the fund
The interest rate environment
--------------------------------------------------------------------------------
-----------------------------------------------------------------------------
Test 1
1. Which of the following is not true for Index Funds (1-Mark)
These funds invests in the shares that constitute a specific index
The investment in shares is in the same proportion as in the index
These funds aim to minimize the tracking error
These funds are not diversified
2. The NAV of each scheme should be updated on AMFI's website (1-Mark)
Every quarter
Every month
Every hour
Every day
3. Which of the following investment option does not give the benefit of compou
nding (1-Mark)
Growth option
Dividend payout option
Dividend Reinvestment option
None of the above
4. A mutual fund is owned by (1-Mark)
The Govt of India
SEBI
All its investors
AMFI
5. Which of the following is not applicable if the schemes of one mutual fund a
re taken over by another mutual fund (1-Mark)
The schemes' offer documents have to be changed and updated
There is a change in the AMC of the schemes that are taken over
There is a change in the sponsor of the schemes that are taken over
The schemes have to wound up compulsorily
6. The amount required to buy 100 units of a scheme having an entry load of 1.5
% and NAV of Rs.20 is (2-Mark)
Rs.2000
Rs.2015
Rs.1985
Rs.2030
7. The fund sponsors should have a sound financial track record of (1-Mark)
7 years
12 months
5 years
3 years
8. The fund sponsor has to contribute (2-Mark)
Nothing to the AMC
The total net worth of the AMC
At least 40% of the AMC's net worth
Exactly 50%
9. The regulation which governs the working of mutual funds in India is (1-Mar
k)
SEBI Act , 1992
Companies Act, 1956
Income Tax Act, 1961
SEBI (Mutual Funds) Regulations, 1996
10. UTI Cannot (1-Mark)
Provide corporate finance
Engage in real estate and property development business
Provide merchant banking services
Invest in securities
11. UTI was set up by (1-Mark)
SEBI
AMFI
A special act
RBI
12. Unit holders of a mutual fund scheme do not have a right to (1-Mark)
Proportionate ownership of the scheme's assets
Declare Dividend for that scheme
Declare Dividend for other schemes of the mutual fund
All of the above
13. The functions and duties of the sponsor, AMC, trustees and custodian of the
mutual fund are listed in (1-Mark)
Offer document only
Key information memorandum only
Both offer document and key information memorandum
None of the above
14. The names and background of key personnel of the AMC (1-Mark)
Need not be disclosed to investors
Are of no relevance as they may change
Are disclosed in the offer document
Are declared in newspaper advertisements
15. Standard risk reactors are the ones (2-Mark)
None of the above
16. Which of the following is not true for offer documents of open-end schemes
(2-Mark)
It has to be revised every month
It contains all important disclosures that a mutual fund is reguired to make
17. The risk of a scheme's NAV moving up or down on the basis of capital market
movements is
(2-Mark)
An investment attribute
Scheme specific risk
Standard risk
Credit risk
18. A scheme's policy on dividends and distribution

(2-Mark)
Is decided by the fund manager as per the market outlook
Can be changed to suit the requirements of the AMC
Need not be consistent
Should be disclosed at the time of initial launch
19. For assured return schemes, information about the guarantor's net worth whi
ch justifies the guarantor's ability to meet any shortfalls in the returns assur
ed under the scheme, can be found in
(2-Mark)
The offer document

Both a) and b)
None of the above

(1-Mark)
AMFI Code of Ethics
SEBI Advertising
None of the above
21. Which of the following distribution channels is preferred by private mutual

funds
(1-Mark)
Individual Agents
Small Distribution companies
Established distribution companies
The internet
22. Which of the following document, a Mutual Fund distributor needs to refer t
o find out eligible category of investors in a particular Mutual Fund Scheme
(1-Mark)
SEBI Regulations Manual
AMFI booklet
Offer document
RBI Guidelines
23. SEBI's advertising code mandate that performs calculations in a fund's adve
rtisement should be based on
(2-Mark)
The NAV
The NSE Fifty Index
The BSE Sensex
None of the above
24. The maximum amount of initial issue expenses that can be recovered from the
investors is limited to
(1-Mark)
Rs. 10 Crores
2.25% of NAV
6% of the amount mobilized during NFO
Unlimited
25. Listed equity shares are to be valued at

(1-Mark)
The average price of the share in NSE
The lowest price of the day in BSE
Cost price or current market price whichever is lower
The last traded price in the stock exchange where the security is principally t
raded
26. When computing NAV of fund, SEBI requires accrual of major expenses to be a
ccounted
(2-Mark)
Quarterly
Annually
On a day to day basis
When actually paid
27. Which of the following expenses cannot be charged to the scheme?

(2-Mark)
Audit fees
Costs related to investor communication
Winding costs for terminating the scheme
Penalties and fines for infraction of laws
28. If the average annual assets of a equity mutual fund scheme are Rs.1,000 Cr
ore, then what will be the maximum amount of annual recurring expenses chargeabl
e as per SEBI guidelines
(2-Mark)
Rs. 6 Cr
Rs. 20.50 Cr
Rs. 23.25 Cr
As per actuals
29. In case of joint holding, on redemption, the proceeds are paid to the
(1-Mark)
Nominee
Last holder
First holder
As per the request of all the holders

(2-Mark)
Both a and b above
(1-Mark)
12%
22%
10%
2%
32. Technical analysis guides the decision on

(1-Mark)
Whether to buy or sell
The right time to buy or sell
Whether company's technical personnel are adequately qualified
None of the above
33. Which of the following measures are not taken by SEBI for protecting invest
ors of mutual funds?
(1-Mark)
Mandating minimum levels of diversification for mutual funds
Ensuring that the funds are not used to favor a few companies
Tracking the securities that each fund has invested in
Ensuring that the funds are invested in approved securities only
34. Which of the following is not considered for technical analysis?

(1-Mark)
Historical data on the company's share price
The company shares' trading volume
Current market sentiment
The company's regulatory environment
35. In a mutual fund, the overall decisions on allocating money to particular i

ndustries/sectors are taken by
(1-Mark)
Equity analysts
Fund managers
Security dealers
Trustees
36. A call provision in a debt issue allows the issuer to

(1-Mark)
Call out the names of the investors
Redeem the debt on maturity
Extend the tenure of the debt
Redeem the debt before maturity
37. Dividend yield for a stock is

(2-Mark)
Dividend per share
Dividend per face value
Dividend per share to current market price
None of the above

(2-Mark)
Its face value
Its fair value
39. A mutual fund may transfer investments from one scheme to another
(2-Mark)
Not at all
At current market rates
At cost price
At a fixed premium over market rate
40. Which of the following is true regarding borrowing powers of a mutual fund
(2-Mark)
A mutual fund can not borrow at all
A mutual fund can borrow only up to 20% of net assets
A mutual fund can borrow for a maximum period of one year
A mutual fund can borrow for investment purposes
41. The most suitable measure of fund performance for all fund types is
(1-Mark)
NAV Change
Total Return
Total Return with dividend reinvestment method
None of the above

(1-Mark)
None of the above
43. The Expense Ratio is of least importance in which of the following

(1-Mark)
Debt fund
Index fund
Equity fund
Liquid fund
44. Assets under management of a fund at the end of year are 125 Cr.The Average
Net assets of the fund are Rs. 100 crore and the total expenses of the fund in
that year are Rs. 2.5 Cr. What is the expense ratio?
(2-Mark)
2.00%
2.50%
1.25%
25.00%
45. An actively managed equity fund expects to

(2-Mark)
Be able to beat the benchmark returns
Earn the same returns as the benchmark

Have no benchmarks
Underperform when compared with the benchmark

(2-Mark)
None of the above

(2-Mark)

48. Which of the following is not a part of life cycle stage of an investor
(1-Mark)
Childhood stage
College stage
Pre-retirement stage
Post-retirement stage
ual fund is
(1-Mark)
All of the above

(1-Mark)
Direct Equity
Real Estate
Growth funds

(1-Mark)
Costs of investing
All of the above
52. Of the following, which would be more suitable for a retiree with a modest
risk appetite
(1-Mark)
Value Fund
Diversified Equity Fund
Growth Fund
Balanced Fund

(1-Mark)
Guaranteed returns
Low risk
High liquidity
54. In India, individual investors do not have direct access to

(1-Mark)
Capital market instruments
Real estate
Bullion
Money market instruments
55. The role of an advisor is to

(1-Mark)
Point out the features and benefits of various investments options
Help the investor develop the right approach to investing
Recommend some investment option available
Offer adhoc advise whenever the investor has surplus money available
56. Which of the following is not a characteristic of company fixed deposits

(1-Mark)
A higher rate of interest
Higher risk
Unfavorable effect of tax
Very high liquidity
57. Deciding on strategies such as cost averaging, value averaging, active swit
ching, all depend on the
(1-Mark)
Stock market situation on date
Amount of money to be invested
Investor's risk tolerance
Phase through which the economy is passing
58. Asset Allocation is

(1-Mark)
Keeping certificates of the physical securities in proper places
Allocation the available money to all the securities available
Allocating the right proportion of funds to equity, debt and money market secur
ities
None of the above
59. Which of the following is an important criteria to select a money market fu

nd
(2-Mark)
Portfolio turnover
Duration of the fund
The expense ratio
All of the above
60. Circumstances that might cause an investor to change the composition of his
portfolio
(2-Mark)
Cyclical changes in economy
Unforeseen economic changes affecting the portfolio's preferred sectors
Both the above
None of the above
61. Which of the following characterize the fund that a risk averse investor sh
ould choose
(2-Mark)
Gross dividend yield 15% Beta 1.5, Ex-Marks 90
Gross dividend yield 10%, Beta 1, Ex-Marks 70
Gross dividend yield 11%, Beta 0.9, Ex-Marks 80
Gross dividend yield 12%, Beta 1.2, Ex-Marks 80
62. Which of the following debt investments is not rated

(2-Mark)
Corporate Bonds
Commercial Paper
Company Deposit
Debt mutual fund
63. The transition phase of an investor's wealth cycle is when the

(2-Mark)
Financial goals have been already met
The investor has retired
Financial goals are approaching
Investor suddenly gets a windfall
64. Which of the following is true about an equity fund selection

(2-Mark)
Fund with higher percentage in cash should be selected
Funds with low market capitalization have more liquidity
Track record of fund managers is not important
Funds with higher x-marks are more diversified and have lower risk
65. Which of the following is false about fixed asset allocation

(2-Mark)
It means maintaining the same ratio between various components of the portfolio
It involves rebalancing the portfolio in a disciplined manner
It means that the portfolio would never be rebalanced
It involves periodic review and returning to the original allocation
66. Investors who follow the fixed Asset Allocation approach

(2-Mark)
Maintain balance in their portfolio by liquidating some investments from the as
set class which has given higher return and reinvesting in the other asset class
which has lower return
Are not disciplined

Increase their equity position when equity prices tend to climb
None of the above
67. Which of the following is a disadvantage of Standard Deviation as a measure

of risk
(2-Mark)
Standard Deviation measures total risk, not just market risk
It is based on past returns, which does not necessarily indicate further perfor
mance
It is an independent number
All types of funds can be measured with standard deviation
68. Which of the following would you suggest if your client suddenly wins Rs 1
Cr in a Game show
(2-Mark)
Invest whole amount in equity directly
Invest half in equity mutual funds and the other half in debt mutual funds
Invest in money market mutual fund till the time he decides on the use of the m
oney
Spend, gift and invest as per his wish
69. An Ex-Mark of 100% is possible for

(2-Mark)
A growth fund
An aggressive growth fund
An index fund
A balanced fund
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
---------
HSBC
Test 2
1. An open-end mutual fund is one that has
(1-Mark)
An option to invest in any kind of security
Units available for sale and repurchase at all times
An upper limit on its NAV
A fixed fund size
2. Which of the following is not true for a mutual fund

(1-Mark)
The mutual fund is owned by all the investors
Mutual fund gives a diversified portfolio to investors
The objectives of investors of a mutual fund are diverse
The mutual funds do not invest in real estate
3. CDSC stands for

(1-Mark)
Contingent Deferred Sales Charge
Commission and Discounts Structure Committee
Commonly Disclosed Sales Commission
Compounded and Discounted Sales Commitment
4. Which of the following risks do not affect a pure debt fund

(1-Mark)
Default by issuer on payment of interest or principal
Price fluctuations of the debt securities
Share price movements
Interest volatility
5. A closed-end mutual fund has a fixed

(1-Mark)
NAV
Tenure
Rate of return
Number of distributors
(2-Mark)
ers

(1-Mark)
7 years
12 months
5 years
3 years
8. The AMC of a mutual fund cannot

(2-Mark)
Undertake advisory services or financial consulting
Invest the funds in government paper
Indulge in an activity not related to financial services
Invest the funds in listed securities
9. The Board of Trustees of the UTI does not have nominees from
(1-Mark)
RBI
LIC
IDBI
The Bombay Stock Exchange (BSE)
10. After dividend declaration, unit-holders are entitled to receive dividend w

ithin a period of
(1-Mark)
One week
30-days
42-days
Six weeks
(1-Mark)
UTI
Insurance Companies
12. A Self Regulatory Organization can

(1-Mark)
Regulate all entities in the market
Regulate only its own members in a limited way
Regulate its own members with total jurisdiction
Regulate no one
13. The functions and duties of the sponsor, AMC, trustees and custodian of the
mutual fund are listed in
(1-Mark)
Offer document only
Key information memorandum only
None of the above
14. An addendum giving details of material change in the offer document should
be circulated to
(1-Mark)
Distributors/brokers
Unit holders
SEBI
All of the above
15. A due diligence certificate does not certify that

(2-Mark)
The draft offer document forwarded to SEBI is in accordance with SEBI regulatio
ns
All legal requirements connected with launching of the scheme have been complie
d with
Disclosures made in the offer document are true, fair and adequate
The AMC guarantees a good performance
16. The following need not be covered in a Key Information Memorandum
(2-Mark)
Risk Factors
Opening and earliest closing date of the initial offer
Disclaimer clause
Functions and responsibilities of the sponsor, trustees, AMC and Custodian resp
onsibilities
17. The offer document of a closed-end fund is issued

(2-Mark)
Every year
Only once at the time of issue
Every quarter
Every six months

(2-Mark)
None of the above
19. The following does not form a part of the investment procedure described in
an offer document
(2-Mark)
Various plans under the scheme (e.g. dividend reinvestment plan)
Minimum initial (and subsequent) investment
Details of who can invest
Details of other competing mutual funds
20. Excess distribution expenses are to be borne by the

(1-Mark)
AMC
Unit holders
SEBI
AMFI
21. Agents are compensated by mutual funds

(1-Mark)
Through salaries
Through commissions
Through an annual fee
Not in cash but in kind
22. Generally, which category of investors are less aware about mutual funds an
d needs more advice
(1-Mark)
Non Banking Finance Companies
Insurance Companies
Foreign Institutional Investors
Individuals
23. Which of the following is true regarding mutual fund agents/intermediaries

(2-Mark)
It is compulsory to invest in mutual funds through agent/intermediary
Agents have to be registered with AMFI
Only males are allowed to be agents
Agents can pass back the commissions to investors
24. Which of the following is not true about dividends of a mutual fund?
(1-Mark)
Dividends are tax-free in the hands of investors
Debt mutual funds have to pay dividend distribution tax
Dividends can be paid out of unrealized profits of the mutual funds
Equity mutual funds do not have to pay dividend distribution tax

(1-Mark)
At purchase price
At par
At book value
26. Profit and loss on sale of securities of a mutual fund has to be calculated
on the basis of
(2-Mark)
LIFO Method
Average Cost Method
FIFO method
Any of the above

(2-Mark)
Higher than NAV
Equal to NAV
(2-Mark)

29. Each investor is mandatorily required to give details of which of the follo
wing in his application form
(1-Mark)
Nominee
E-mail Address
Bank Account
PAN
30. Which of the following is true about Systematic Investment Plan

(2-Mark)
SIP does not give the benefit of rupee cost averaging
STP in one scheme can be effectively used to get the benefit of SIP in another
scheme
SIP tells an investor when to invest and when to exit from a scheme
All are false
31. In a mutual fund, the overall decisions on allocating money to particular i

ndustries/sectors are taken by
(1-Mark)
Equity analysts
Fund managers
Security dealers
Trustees
32. Security dealers of a mutual fund

(1-Mark)
Guard the cabin of the fund manager
Execute buy and sell orders for the fund
Decide which shares to buy or sell
None of the above
33. The Indian debt market is largely

(1-Mark)
Wholesale in nature
Retail in nature
Dominated by NRIs
All of the above
34. An important indicator of expected trends in interest rates is

(1-Mark)
The Economic Times
The Sensex
The Yield Curve
The Chief Minister's Speech
35. Which of the following is not considered for technical analysis?

(1-Mark)
Historical data on the company's share price
The company shares' trading volume
Current market sentiment

The company's regulatory environment

(1-Mark)
Loans
Securities
Physical assets
None of the above
37. Dividend yield for a stock is
(2-Mark)
Dividend per share
None of the above
38. As per SEBI norms, a fund's investments, in the equity shares of any one co
mpany are restricted to
(2-Mark)
25% of Net Assets
10% of Net Assets
50% of Net Assets
100% of Net Assets

(2-Mark)
Its face value
Its fair value
40. To compare bonds with different coupon rates, maturities and prices, invest
ors would use
(2-Mark)
Current yield
Technical analysis
Yield to maturity
Fundamental analyis
41. To choose an appropriate benchmark for a scheme, all of the following are r
equired except
(1-Mark)
The composition and size of the portfolio
The investment objective
Historical data of fund performance
The nature of investments
42. The choice of an appropriate benchmark for evaluating a fund's performance

depends on
(1-Mark)
The fund manager
The investment objective and the asset allocation pattern of the fund
SEBI
AMFI
(1-Mark)
44. Beta co-efficient is a measure of

(2-Mark)
Market risk
Total risk
Credit risk
Re-investment risk
45. On 1 Jan '04 NAV was Rs. 12/-. On 1 April '04 fund declared dividend of 14%
which was reinvested at the ex-dividend NAV of Rs.14/-. On 31 Dec '04 NAV was R
s. 20. What is the return as per total return with dividend reinvestment method
(2-Mark)
75%
25.33%
83.33%
93.33%

(2-Mark)
None of the above

(2-Mark)
48. A sectoral fund is a

(1-Mark)
Low risk fund
Moderate risk fund
High risk fund
Low-to-moderate risk fund

n
(1-Mark)
SEBI guidelines

(1-Mark)
Direct Equity
Real Estate
Growth funds
51. Mutual fund investors should be advised to expect

(1-Mark)
Low post tax returns
Dramatic results
Better returns than every other available option
Only realistic wealth accumulation goals
52. Annual contribution to Public Provident Fund should be

(1-Mark)
Rs.10000
Between 100 and Rs.60000
Between Rs.600 and Rs.1000
None of the above
53. Which of the following is most risky?

(1-Mark)
Investing in a money market mutual fund
Investing in an index fund
Short term investment in an equity fund
Long term investment in an equity fund

(1-Mark)
Guaranteed returns
Low risk
High liquidity
55. International funds invest in various countries therefore they are low risk
funds
(1-Mark)
True
False
-
-

(1-Mark)
Patience
Trading skills
57. Which of the following is not an advantage of bank deposits?

(1-Mark)
Liquidity
High perceived safety
Low entry price
High yield after tax
(1-Mark)
Gilt funds
Income Funds
Equity Growth funds
Liquid funds
59. A criticism of rupee-cost averaging is

(2-Mark)
Investment is for the same amount at regular intervals
Over a period of time, the average purchase price will work out higher than if
one tries to guess the market highs and lows
It does not an investor when to buy, sell or switch from one scheme to another
Rupee cost averaging has no serious shortcomings

(2-Mark)

vest
(2-Mark)
62. Which of the following lets an investor book profits in a rising market and
increase holdings in a falling market
(2-Mark)
Fixed Ratio of Asset Allocation
Flexible Ratio of Asset Allocation
Investment without any asset allocation plan
Buy and Hold Strategy
in distribution phase
(2-Mark)
Investment in diversified equity should be around 15% - 30%
Investment in liquid funds should be around 15% - 30 %
None of the above
64. What of the following will have the least standard deviation (volatility)?
(2-Mark)
Liquid fund
Short term debt fund
Equity fund
ELSS scheme
65. What will you answer if an investor asks whether a debt mutual fund can giv
e negative returns?
(2-Mark)
Yes, but only if AMC makes some fraud in calculating NAV
Yes, because the value of debt securities may move down
Never
You will decide not to advice any thing at all
66. Dividends distributed by mutual funds are

(2-Mark)
Taxed at source
Taxed in the hands of the investors
Subject to capital gains tax
Tax-free in the hands of the investor
67. Which of the following would you suggest if your client suddenly wins Rs 1
Cr in a Game show
(2-Mark)
Invest whole amount in equity directly
Invest half in equity mutual funds and the other half in debt mutual funds
Invest in money market mutual fund till the time he decides on the use of the m
oney
Spend, gift and invest as per his wish
68. Of the following, which type of fund would have a higher P/E multiple in co
mparison to the average market multiple
(2-Mark)
A Value Fund
A Growth Fund
An Index Fund
Could be any of the above three, one cannot generalize
69. Financial planning helps a person

(2-Mark)
To become a billionaire
To achieve financial goals through proper management of finances
To invest in foreign countries
None of the above
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
---------
HDFC
Test 3
Q No : 1 Asset Management Company manages the fund in accordance with which o
f the following documents? Marks 2
Trust deed
SEBI Regulations
RBI policy
1 &2
All of the above
None of the above
Q No : 2 Peer Group Comparison for two Debt funds should be Marks 1
For Debt Funds having similar Credit Quality & Maturity Profile
Only on their Credit Quality
Only on their Maturity Profile
None of the Above
Q No : 3 The Correct Approach for Benchmarking of any fund is done by looking
at Marks 1
Asset Class it invests in
The Fund's Stated Investment Objective
Only 1
Only 2
Both 1 & 2
Neither
Q No : 4 Factors to be considered while investing in a Balanced Fund are Mar
ks 1
Costs
Portfolio Balance
Returns
all of the above
None of these
only 1 & 2
Q No : 5 The principal amount that investors will be paid upon maturity of a
bond is called Marks 1
price value
market value
par value
discounted value
present value
Q No : 6 All advertisements released by the Mutual Fund are required to be fi
led with SEBI within Marks 2
10 days from the date of issue
None of the above
Q No : 7 The appointment of AMC for the Mutual Fund can be terminated by Mar
ks 2
Majority of Directors of the Trustee
50 % of the Unitholders
45% of the Unitholders
Cannot be terminated
Q No : 8 A Bond has par value of Rs. 1000 and coupon of 10%. It is currently
trading at a yield of 8%. Its market price would be Marks 2
Rs. 850
Rs. 1000
Rs. 1250
Rs. 1300
Q No : 9 What is the maximum duration for which a Mutual Fund can borrow mone
y ? Marks 1
One Year
Two Years
One Month
Six Month
None of the Above
Q No : 10 Validate the statement - A prospective investor enjoys all the righ
ts of an existing investor of a mutual fund Marks 1
Completely true
Rarely true
Completely false
Partly false
Selectively true
None of the above
Q No : 11 In which year was AMFI incorporated Marks 1
1990
1985
1995
1999
1980
2000
Q No : 12 Discounted instruments usually bear Marks 1
Fixed rate interest payments
floating rate interest payments
no interest payments
None of the above
Q No : 13 In the event of failure to despatch the redemption proceeds within
the specified period, interest will have to be paid at the rate of Marks 1
10%
15%
20%
None of the above
Q No : 14 The term used to denote the inability of an index fund to replicate
the performance of the index Marks 1
Tracking error
Performance Error
Return Error
Standard Error
Q No : 15 An agent must act on behalf of the (a) Mutual fund (b) Investor Ma
rks 1
a only
b only
Either
Neither
Q No : 16 Factors to be considered while investing in a Money Market fund are
Marks 1
Costs
Portfolio Quality
None of the above
both 1 & 2
Q No : 17 Which is the policy especially designed for women by LIC? Marks 1
Jeevan Shree
Jeevan Akshay
Jeevan Sneha
Bima Nivesh
Q No : 18 Income earned from an investment in Mutual Fund is covered under M
arks 1
Gift Tax
Income Tax
Wealth Tax
Sales Tax
All of the above
None of the above
Q No : 19 Which of the following mutual funds is eligible to borrow in India

& abroad, from any person? Marks 2
UTI only
Public Sector Bank sponsored funds only
Private sector Mutual Funds
UTI, Bank sponsored Mutual Funds, Private sector Mutual Funds
UTI & Public Sector Bank sponsored funds
None of the above
Q No : 20 An investor invests Rs. 30,000/- under an Equity Linked Savings Sch
eme (ELSS). The maximum tax rebate which can be availed by the investor is Mark
s 1
6000
No rebate can be availed as the scheme is not covered under section 88 of Inco
me Tax Act
2000
3000
1000
None of the above
Q No : 21 Does Mutual Fund investments attract deduction of tax at source for
domestic unit holders Marks 1
Yes
No
All of the above
None of the above
Q No : 22 Distribution tax on the income distributed by debt fund is paid as
per the section Marks 2
88
196
94
194
115 R
None of the above
Q No : 23 UTI, set up by a special statute is empowered to conduct the follow
ing businesses Marks 2
Invest in various securities, Launch savings cum insurance schemes
Grant loans against security, enter into bills discounting
Acquire immovable property, Provide leasing/hire purchase finance & merchant b
anking services
Option 1 only
Option 1 & 2
Option 1, 2 & 3
Q No : 24 Trading volumes in the WDM Segment of the National Stock Exchange a
re dominated by Marks 2
Corporate Bonds
Treasury Bills
PSU Bonds
Government Securities
Commercial Paper
Others
Q No : 25 Issuing and redeeming of units of a Mutual Fund is a function of M
arks 1
Bankers
Custodian
The transfer agent
Trustees
Q No : 26 Risk factors may not be mentioned in Marks 2
Product launch advertisement
Tombstone advertisement
Performance advertisement
All of the above advertisements
Q No : 27 Which of the following portfolio maturities would be most exposed t
o interest rate risk? Marks 1
2yrs 6 mths
3 years 5 months
4.5 years
6 years
Q No : 28 How many stocks does the BSE Sensitive (Sensex) Index include? Mar
ks 1
20
30
40
50
Q No : 29 Which of these instruments do not carry a credit rating domesticall
y? Marks 2
Commercial Paper
Certificates of Deposit
Corporate Debentures
PSU Bonds
Treasury Bills
Bank/ FI Bonds
Q No : 30 What does the Sharpe Ratio use as a measure of volatility? Marks 1
Standard Deviation
Standard Variance
Beta Coefficient
Duration
Q No : 31 Which is the policy of LIC which is covered u/s 80 CCC of Income Ta

x Act, 1961 ? Marks 1
Jeevan Shree
Jeevan Akshay
Jeevan Suraksha
Bima Nivesh
Q No : 32 Mutual Fund investing in financial assets only, do not invest in th
e following Marks 1
Equity
Corporate Bond
Gold
Govt.Securities
Q No : 33 Which is a better investment option whilst selecting an equity fund
? Marks 2
Ex Marks- 75%, Beta- 0.9, Gross Dividend Yield- 8%
Either 1 or 3
Q No : 34 In the recent years there is a shift in preference from retail to i
nstitutional brokers Marks 1
True
False
Partially true
True for a few AMCs
Q No : 35 Value stocks would ideally be shares with Marks 2
High P/E ratios
Low P/E ratios
P/E ratio would not be considered
Companies with high dividend payout
Q No : 36 Which one of these can be termed a near perfect hedge against infla
tion if your holding period is ten years or more? Marks 1
Debt Fund
Company FD
Index Fund
Balanced Fund
Q No : 37 Guidelines for Mutual Fund advertising are laid down by Marks 1
RBI
SEBI
AMFI
None of the above
Q No : 38 An Index Fund cannot invest in the following Marks 1
Nifty
BSE 100
BSE 30
Commodities Exchange
Q No : 39 The income earned such as Dividend & Interest by the schemes of a M
utual Fund are to be accounted on : Marks 2
Accrual basis
Receipt basis
Combination of both
None of the above
Q No : 40 All Mutual Fund advertisements must indicate Marks 1

The name of the Sponsor
The name of the Trustee
The name of the AMC
All of the above
None of the above
Q No : 41 Which legal document specfies the activities that the Mutual Fund c
annot undertake? Marks 2
Prospectus
Offer Document
Trust Deed
All of the Above
None of the above
Q No : 42 The following cannot invest in Mutual Funds in India Marks 1
Non-Resident Individuals
Overseas Corporate Bodies
Foreign Nationals
Foreign Institutional investors
Q No : 43 Investors which invest in stocks that are undervalued are: Marks 1
Value investors
Growth investors
Cyclical investors
Index investors
Q No : 44 Dividend Yield of a Company is the ratio of : Marks 2
Dividend per share upon Face Value per share
Dividend per share upon Book Value per share
Dividend per share upon Market Price per share
Dividend per share upon replacement cost per share
Q No : 45 Which of the following is not an equity instrument? Marks 1
Ordinary shares
Equity Warrants
Preference shares
None of the above
Q No : 46 Who among the following can nominate? Marks 2
Unitholder acting as a Trust
Unitholder holding units as holder of an office
Both the above
None of the above
Q No : 47 Distribution Tax of 10.2% is applicable as per the Finance bill 200
1 w.e.f Marks 2
1-Apr-99
1-Apr-01
1-Apr-00
1-Jun-01
All of the above
None of the above
Q No : 48 An open-ended Equity Scheme has average weekly net assets of Rs. 55
0 crore. According to SEBI Regulations it can charge total expenses of -------
Marks 2
Rs. 11.750 crore
Rs. 10.875 crore
Rs. 12.000 crore
Rs. 12.250 crore
None of the above
Q No : 49 For a coupon bearing instrument, duration as compared to maturity i
s always Marks 2
higher
lower
same
not enough information
Q No : 50 The rate of interest paid on the par value of bonds to the investor
is known as Marks 2
warrant
coupon
price value
market value
Q No : 51 Which of the following statements are correct: Marks 2
MFs are allowed to borrow as per SEBI regulations
MFs are allowed to borrow to meet temporary liquidity requirements
In case of borrowing by MF, the duration should be more than six months
In case of borrowing by MF, the MF shall not borrow more than 20% of the net a
sset value of the scheme.
All of the above
Only 1,2 & 4 are correct
Q No : 52 Jacob's Program for Developing a model Portfolio includes Marks 2
Working with investors to develop Long Term Goals
Determining the asset allocation of the investment portfolio
Avoiding ad-hoc Investment advice or decisions
All the Above
Only 1&3
Only 1&2
Q No : 53 The Term Structure of Interest Rates (TSIR) is indicated by Marks
2
yield curve
duration
maturity
coupon
credit ratings
Q No : 54 For open-ended schemes, the policy with respect to illiquid assets
must be disclosed if Marks 2
the illiquid assets are likely to be more than 15% of the net assets
Q No : 55 The AMC must have a networth of atleast : Marks 2
1 crore
5 crores
10 crores
100 crores
Q No : 56 Who deals into the decision regarding the costs that arise in case
of Mutual Fund Borrowings ? Marks 2
AMC in consultation with Trustee
AMC in consultation with Sponsors
AMC in consultation with SEBI
AMC in consultation with Cusodian
All of the above
None of the above
Q No : 57 Index Fund in India which are prespecified by the Fund Manager has
to be Marks 2
Always the BSE Sensex
Always the Nifty
Can be any Prespecified Base Index
Neithe of the above
All of the above
Q No : 58 Equity Warrants differ from Stock Options in that : Marks 2
They are compulsorily converted into equity while options are not
They are issued by the company while stock options are not
They do not have a predetermined conversion price like options.
None of the above
Q No : 59 To meet redemption payments the Mutual Fund can : Marks 2
Borrow 10% of the net assets of the Scheme for 1 year
Borrow 15% of the net assets of the Scheme for 1.5 years
Borrow 20% of the net assets of the Scheme for 0.5 years
Borrow 5% of the net assets of the Scheme for 2 years
Q No : 60 Validate the statement - The investor is not obligated to read the
offer document before investing in units of a scheme Marks 2
Completely true
Rarely true
Completely false
Partly false
Selectively true
None of the above
Q No : 61 Who can act as a distributor /Broker on behalf of Asset Management
Company? Marks 2
Sponsor Company
Associate Company of Mutual Fund
Employee of the Mutual Fund
None of the above
Both 1 &2
All of the above
Q No : 62 How many PPF Accounts can a single person open as per the prevailin
g laws ? Marks 2
2
3
4
1
Q No : 63 Bogle's Simple Managed Portfolio suggests Marks 2
50% in diversified equity 'value' funds
10% in specialty funds
85% in a balanced 60/40 fund
100% in a Balanced 60/40 fund
15% in medium term Bond Fund
Both (3) & (5)
Q No : 64 Mutual Funds in India as a matter of corporate entity are Marks 2

Public Trusts
Company under Companies Act
Societies
Option 1 only
Option 1 & 2
Option 1, 2 & 3
Q No : 65 An Open-ended fund is purchased at an NAV of Rs 10 per unit. 24 mon
ths later it is sold at an NAV of Rs. 14 per Unit. The Fund.s Compounded Annuali
sed Return for the period is Marks 2
18.32%
20.00%
20.82%
21.46%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
---------
Test 4
Mock AMFI Exam
1) A very high proportion of investment in all types of equity funds is advisa
ble for investors
In distribution phase
In accumulation phase
In transition phase
Who are wealth preserving affluent individuals-1
2) A fund's investments at market value total Rs.700.00 Crores, total liabilit
ies stand at Rs.50.00 Lacs and the number of units outstanding is 28 Crores. Wha
t is the NAV
Rs.30.19
Rs.24.98
Rs.32.15
Rs.40.49 - 2
3) Liabilities in the balance sheet of a mutual fund are
In the form of long-term loans
Strictly short term in nature
Combination of long term and short term
Not allowed as per regulations 1
4) In India, Mutual fund agent's rate and services are at present defined by
SEBI rules
Stock exchange bye-laws
AMFI rules
Convention 1
5) If fresh litigation cases or adjudication proceedings are referred by SEBI
against the fund sponsors or a company associated with the sponsors, then the of
fer document needs to be revised
true
false 1
6) Who among the following are not Institutional Investors
Banks
Resident Individuals
Provident Funds
Non Banking Finance Companies 1
7) SEBI's advertising code mandate that all performance calculations in a fund

's advertisement should be based
NAV
The NSE Fifty Index
The BSE Sensex
None of the above 1
8) .Net asset Value (NAV) of a mutual fund scheme is defined as the schemes
Assets minus liabilities
Assets per unit
Assets minus liabilities per unit
None of the above 1
9) The rights of investors in a mutual fund scheme are laid down in
The Offer Document of that scheme
Quarterly Reports
Annual Reports
Marketing brochures 1
10) Dividend yield for a stock is
Dividend per share
None of the above 1
11) Assured return or guaranteed monthly income plans are essentially
Hybrid funds
Growth Funds
Debt/Income funds
Sector funds 1
12) The functions and responsibilities of the sponsor, AMC, trustees and custo
dian of the mutual fund are listed in
Offer document only
Key information memorandum
None of the above - 1
13) The performance of a fund is largely measured by the success of
The marketing function
The operations function
The portfolio market function
14) Which of the following is a fundamental attribute of a mutual fund scheme
The names and addresses of the registrars and custodians
The nature of the scheme being income bearing
The specified stocks in the scheme's portfolio
The name and address of the compliance officer chapter - 1
15) Mutual funds value their investments
At purchase price
At par
At book value - 1
16) The circumstances under which a scheme shall be wound up are to be describ
ed in the offer document at the time of the initial launch of the scheme itself
true
false - 1
17) For a close-ended fund, the repurchase price should not be lower than
95% of NAV
93% of NAV
97% of NAV -1
18) Information about trusteeship fees is included in the offer document but n
ot in the key information memorandum
true
false - 1
19) Shares of companies with large capital market capitalisation
Have greater growth potential
Are more liquid
Are not available
20) Procedure for redemption or repurchase need not
Be described in the offer document
Include how redemption or repurchase price of units would be determined
Include names of centers where redemption can be effected
Indicate the redemption or repurchase price as at the end of the current fiscal
year - 1
21) Technical analysis guides the decision on
Whether to buy or sell
The right time to buy or sell
Whether company's technical personnel are adequately qualified
22) Excess distribution expenses are to be borne by the
AMC
Unit holders
SEBI
AMFI -1
23) An equity fund's age and size are irrelevant when selecting a fund for inv
estment
True
False- 1
24) Bonds held in the portfolio of a mutual fund are valued at yield to maturi
ty
True
False - 1
25) Any pending cases or penalties levied on the sponsors of AMC should be dis
closed in the offer document
true
false - 1
26) Mutual fund units cannot be distributed by
Trustees of the fund The AMC Non-banking finance companies Banks De-Select 1
27) Sales practices are never mandated by regulators, but arise from conventio
n only
True
False - 1
28) The code of ethics for mutual funds published by AMFI

Is mandatory
Is unfavourable to investors
Does not cover distribution and selling practices - 1
29) Retired investor should
Not draw down on their capital
Not invest in securities, which bear risk of capital erosion
Continue holding a major portion of their holding in equity growth funds
Never invest in equity -1
30) A trail commission is justified when
An investor cancels his investment
The investor redeems his investment in a very short time
An agent invests his own money, not that of a client
And agent sells many mutual funds - 1
31) Initial issue expenses are charged to a scheme in the first year itself
True
False -1
32) Risk arising from a scheme's investment objective/strategy and proposed as

set allocation is
Not present
Common to all schemes
Specific to that scheme
Not applicable to debt funds - 1
33) A steady holding of investments in an equity fund's portfolio indicates
Both the above
34) A close-ended has average weekly net assets of Rs.200 crore. As per SEBI r
egulations, the AMC can charge the fund with investment and advisory fee upto:
Rs.2.25 Crores
Rs.2.00 Crores
Rs.2.50 Crores
Rs.3.00 Crores - 1
35) An investor buys one unit of a fund at a NAV of Rs.20.00 He receives a Div
idend of Rs.3.00 when the NAV is Rs.21.00 The unit is redeemed at an NAV of Rs.2
2.00 Total return is
25.71%
Rs.27.51
21.27%
Rs.21.75 -2
36) A value manager does not look for
Stocks that are currently undervalued in the market
Stocks whose worth will be recognised by the market in the long term
High current yield
Long term capital appreciation - 1
37) Which of the following statements about UTI in untrue
It was set up in 1963
It was formed by RBI
It was established by an act of parliament
It was not given a monopoly status - 1
38) Which of the following is not true for offer documents of open-ended schem
es
It has to be revised periodically
It need not be revised at all -1
39) Which of the following is the first step in financial planning
Asset allocation
Selection of fund
Studying the features of a scheme
40) Investments made by a mutual fund on behalf of investors are accounted as
Assets
Liabilities
Capital
None of the above -1
41) Mutual funds are allowed to borrow
Freely to meet their requirements
For investment purposes
Only to meet redemption demands
Not allowed at all -1
42) Investors who follow the fixed allocation approach
Maintain balance in their portfolio by liquidating a part of the position in the
class, which has gi
Are not disciplined Increase their equity position when equity prices tend to cl
imb
None of the above -1
43) Asset allocation is
Keeping certificates of the physical securities in proper places
Allocating the available money to all the securities available
Allocating the right proportion of funds to equity, debt and money market securi
ties
44) .A high portfolio turnover for a fund indicates
That the fund is active
Higher transaction cost
Both of the above
45) The accounting policies of a fund should be in accordance with
GAAP
SEBI regulations
ICAI Guidelines
American GAAP - 1
46) The best equity fund, relative to others, would have
Higher ex marks, lower beta and higher gross dividend yield
Higher ex marks, higher beta and higher gross dividend yield
Lower ex marks, lower beta and lower gross dividend yield
Lower ex marks, higher beta and higher gross dividend yield - 1
47) MFs generally invest in securities which are:
Unlisted
Market-traded
Thinly traded
Privately placed - 1
48) Market capitalisation of a company is calculated by multiplying the number
of outstanding shares by
R.10
Face value of each share
Current market value of each share
Dividend yield -1
49) For assured return schemes, information about the guarantor's net worth wh
ich justifies the guarantor's ability to meet any shortfalls in the returns assu
red under the scheme can be found in
The offer document
Both (a)and(b)
50) A mutual fund's investments are guided by the
AMC
Board of trustees
Investment objectives - 1
51) The Offer document for a scheme remains valid even if
The AMC is reconstituted
Entry or exit load are changed
The scheme's NAV changes
New plans are added to existing schemes - 1
52) An equity fund can be said to be concentrated when
When it invests in two or three stocks
When it invests in many companies of the same sector
When top ten holdings account for more that 25% net assets invested -1
53) A debt fund's age and size are not important when selecting a fund for inv
estment
True
False -1
54) Investor does not have the right to receive any interest from an AMC if hi
s redemption proceeds are not despatched within 10 working days
True
False- 1
55) NRI s are eligible to invest in Mutual Funds
true
false- 1
56) From whom can a unit-holder seek redressal if his complaint is not enterta
ined by the mutual fund
AMC
Board of trustees
SEBI
RBI - 1
57) In case of a fund merger or take-over
High court approval may not be necessary
SEBI approval is a must
All unit holders must be informed
All of the above -1
58) A high portfolio turnover for a fund indicates
That the fund is active
Higher transaction cost
Both of the above
59) Investor's rights under a scheme are

Uniform for all schemes of all funds
Not defined
Listed in the offer document
Available with stock exchanges - 1
60) . Units of a money market mutual fund can be issued to
Individuals
Banks
Trusts
All of the above - 1
61) Between the past performance of the fund and its suitability for an invest
or, past performance is more important
True
False - 1
62) The offer document issued by mutual funds does not serve the purpose of
Announcing the scheme
Inviting the the investors
Giving the fund manager's investment outlook for the next quarter - 1
63) If a specialty offshore fund has consistently given very good performance,
it can be considered for investment by a retiree
True
False - 1
64) The 1999 union government budget helped the mutual fund industry by
Regulating the industry practices
Exempting all mutual fund dividends in the hands of investors from income tax
Approving the code of ethics formulated by AMFI
Doing away with all regulations for mutual funds - 1
65) Most eligible investors of Mutual Funds can broadly be grouped into either
individual or institutional investors
True
False - 1
66) Contingent deferred sales charge (CDSC)
Is higher for investors who stay invested in the scheme longer
Is lower for investors who stay invested in the scheme longer
Is the same for all investors irrespective of how long they stay invested
Is not allowed to be charged to mutual fund investors in India - 1
67) The offer document
Contains the terms of issue
Gives no information relevant for making an investment decision
Is not the operating document describing the scheme
Cannot be called a reference document - 1
68) A close-ended has average weekly net assets of Rs.200 crore. As per SEBI r
egulations, the AMC can charge the fund with investment and advisory fee upto
Rs.2.25 Crores
Rs.2.00 Crores
Rs.2.50 Crores
Rs.3.00 Crores - 2
69) Investor does not have the right to receive any interest from an AMC if hi
s redemption proceeds are not despatched within 10 working days
true
false - 1
70) Debt securities bought at a discount to their face value are generally
Interest bearing
Zero coupon bonds
Paying interest at a floating rate
71) A fund's declared NAV does not include loads
True
False - 1
72) Are Overseas Corporate Bodies allowed to invest in Mutual Funds

no
yes
If Ministry of Finance approves
If AMFI approves - 1
73) A fund that charges a load is better than a no-load fund
true
false - 1
74) Income distributed to unit-holders by a debt fund is liable to dividend di
stribution tax
true
false - 1
75) The load amount charged to a scheme over a period of time is called
Entry load
Exit load
Deferred load
No-load - 1
76) UTI was the only mutual fund for the period
1984 to 1988
1963 to 1988
1964 to 1992
77) The steps involved in the selection of an equity fund for investment are
Sector selection, asset classification, and selection of fund managers and schem
es
Sector selection, selection of fund managers and schemes, asset classification
Asset classification, sector selection, selection of fund managers and schemes
Selection of fund managers and schemes, sector selection, asset classification
- 1
78) A money market mutual fund is most likely to invest in
Corporate bonds
Equity shares
Government securities with maturity less than 1 year
79) The most important source of information for a prospective investor is
Offer document
Economic Times
AMFI Newsletter - 1
80) For older investors who want to transfer their wealth
No financial planning is required
The right investment strategy depends upon who the beneficiaries are
The right investment strategy depends upon the state of the stock market
All the funds can be invested in aggressive equity funds - 1
81) If a charitable trust approaches a distributor with an application for inv
estment in a mutual fund the distributor should
Reject the application outright - 1
82) Documents available to investors for inspection do not include

Memorandum and Articles of Association of AMC
Consent of auditors and legal advisors
Investment management reports
Reports based on which actual investments are made - 1
83) If a unit-holder does not agree to the merger of his fund with another, he
has no exit option
true
false- 1
84) When selling a mutual fund, a good agent would never
Describe the past performance of the scheme
Compare the fund with other mutual funds
Assure a rate of return
Compare the fund with other financial products - 1
85) A debt fund distributes 10% dividend. How much tax does the investor have
to pay on this dividend?
10%
12%
20%
None - 2
86) A prospective investor
Has the same status as a unit-holder of a fund
Can sue the AMC / trustee
Has no legal recourse
87) SEBI regulations for mutual funds were formulated in
1992
1993
1995
1996 - 1
88) Equity derivative instruments are
Shares
Bonds
Contracts
NOTES - 1
89) A mutual fund's investments are guided by the
AMC
Board of trustees
Investment objectives
Unit holders - 1
90) Tax treatment of investments does not
Form a section in the offer document
Describe the tax elements applicable to investors who invest in the fund
Form a section in the key information memorandum
Offer tax advice to investors - 1
91) A fund manager managing an index fund
Has to keep fund expenses low
Does not have to research stocks
Does not have to balance his portfolio
92) In India, a large part of debt securities pay interest on

A floating rate basis
A fixed rate plus a variable portion
A fixed rate
Zero coupon basis - 1
93) In which type of schemes should an unmarried professional will invest
90% n equity funds having a higher p/e ratio than the market
All the money in a balanced fund - 1
94) As a part of borrowing policy, the following need not be disclosed in an o
ffer document
Purpose and circumstances of borrowing
Regulatory limits on borrowing
Potential risk to AMC and unit-holders
Names of lenders - 1
95) Unit holder's right to information does not include
Obtaining from the trustees any information having an adverse effect on their in
vestments
Inspecting major documents of a fund
Receiving of a copy of the annual financial statements of that fund
Approving investment decisions of the fund - 1
96) UTI was the only mutual fund for the period
1984 to 1988
1963 to 1988
1964 to 1992
97) All debt fund investors are exposed to risk of principal loss
True
False - 1
98) If an investor failed to claim his redemption proceeds within 3 years, he
can claim the proceeds at
Par
Prevailing NAV
The on the date he has applied for redemption
15% below the prevailing NAV - 1
99) The following do not form a part of the investment procedure described in
an offer document
Various plans under the scheme (e.g.dividend reinvestment plan)
Minimum initial (and subsequent) investment
Details of who can invest
Details of other competing mutual funds - 1
100) The NAV of each scheme should be updated on AMFI's website
Every quarter
Every month
Every Day
Every hour - 1

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AMFI Tests

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HSBC

2. A closed-end mutual fund has a fixed

3. A mutual fund is owned by

4. Who is the primary guardian of unit holders funds?

7. The fund sponsors should have a sound financial track record of

8. The agreement between the Trustees and the AMC is known as

9. A closed-end scheme of a mutual fund is not governed by

10. After dividend declaration, unit-holders are entitled to receive dividend w

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

Annual Report of the AMC

15. The offer document for a scheme remains valid even if

Entry or exit loads are changed

16. Standard risk reactors are the ones

18. A scheme's policy on dividends and distribution

Should be disclosed at the time of initial launch

19. The following need not be covered in a Key Information Memorandum

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

21. Which of the following sales practices is prescribed by regulation

23. Which of the following is not true

24. Listed equity shares are to be valued at

28. A funds NAV is affected by

30. Which of the following is untrue of an automatic reinvestment plan?

31. A passive fund manager

32. Coupon of a debt security refers to

33. Certificates of Deposits (CDs) are issued by

34. Value stocks

Are currently under valued

35. Mutual funds are allowed to lend

36. An owner of preference shares is given which of the following rights

Voting rights and unlimited dividend income

39. Yield curve is also known as

None of the above

41. Transaction costs include

None of the above

42. The Expense Ratio is of least importance in which of the following

43. Turnover rates would be most relevant to analyze the performance of

44. Portfolio turnover rate refers to

45. The rule of 72 is used to

46. If there is an entry load in a scheme, the investors return

48. When selling a mutual fund, a good agent would never

49. Which of the following is not a characteristic of company fixed deposits

50. Which of the following represent indirect investments?

Investment in bank deposit

52. The constraint on financial planning due to insufficient resources can be r

53. Structural characterization of an equity fund include

54. Listing of shares at a stock exchange ensures

55. Mutual fund investors should be advised to expect

Only realistic wealth accumulation goals

57. A retired person generally needs a greater proportion

All of the above

60. The best equity fund, relative to others, would have

62. If a charitable trust approaches a distributor for investment in a mutual f

Reject the application outright

63. Beta of an equity fund measures its

67. A steady holding of investments in an equity fund's portfolio indicates

Both the above

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

3. Which of the following is not false about a mutual fund?

4. Which of the following investment is not made by debt funds

5. Which of the following is not true for a mutual fund

7. The fund sponsors should have a sound financial track record of

8. The Board of Trustees of a mutual fund

Directly manage the portfolio of securities