Amfi Quiz Modified Version1

7/31/2019 Amfi Quiz Modified Version1

1/301

Basics and Evolution of Mutual

Funds


2/301

2

A mutual fund is not

A company which manages an investmentportfolio

A portfolio of stocks, bonds and other securities

A pool of funds used to purchase securities onbehalf of investors

A collective investment vehicle


3/301

3

In India a mutual fund is constituted as

A) partnership firm

B) trust

c) company

D) government corporation


4/301

4

Mutual Funds can be defined as

A) a link between the saving public and the

capital markets

B) " an active participant in promoting good

corporate governance, investor protection"

C) a participant that has brought in liquidity into

the financial system

D) all of the above


5/301

5

" In USA, a mutual fund is constituted as"

A) trust

B) investment company

C) company

D) none of the above


6/301

6

UTI was the only capital market intermediary

A) 1964 to 1988.

B) 1963 to 1988.

C) 1964 to 1992.

D) None of the above


7/301

7

Unit holder of a MF owns

A) share in AMC

B) proportionate ownership

C) no ownership

D) none


8/301

8

Which was the first diversified equity

investment scheme in India?

A) SBI magnum

B) master share

C) MEP-91

D) mastergain92


9/301

9

Which of the following started the first non-

UTI mutual fund ?

A) financial institutions

B) co-operative societies

C) public sector banks

D) private sector banks


10/301

10

Which of the following has the largest

investor base?

A) ulip

B) mastershare of uti

C) us-64

D) sbi magnum


11/301

11

US-64 of UTI :

a) Is quoted in the stock market

b) Has fixed price of sale / repurchase

c) Its sale / repurchase price is declared by UTI

for a specific period

d) Its Price is determined by market forces


12/301

12

Which is the first Indian offshore fund?

a) India Growth Fund

b) India Fund

c) India Infrastructure Fund

d) None of the above


13/301

13

Which of the following is untrue

A) UTI was set up in 1963

B) UTI was formed by RBI

C) UTI was established by an act of parliament

D) UTI was not given a monopoly


14/301

14

A close ended mutual fund has a fixed

A) NAV

B) fund size

C) rate of return

D) number of distributors


15/301

15

Which of the following is not a Mutual Fund

characteristic?

a) Diversified portfolio

b) Careful research and monitoring of the market

c) Substantial capital

d) Expertise in stock market


16/301

16

Which of the following benefits are not available in aMutual Fund

A) diversification

B) tax efficiency

C) ability to construct the desiredportfolio

D) professional fund management


17/301

17

The following characteristic is not present in an openend fund

A) facility to the investor to buy or sell

back units to the fund

B) regular declaration of NAV

C) regular disclosure of portfolio

D) A fixed unit corpus for the life of the scheme


18/301

18

Index funds aim to :

A) beat all market indices

B) beat a specific market index

C) track a specified index subject to a

small tracking error

D) invest in well researched stock to beat the

popular indices


19/301

19

Which of the following statements isfalse

A) gilt funds have the least credit risk among various types

of funds

B) gilt funds nav will not fluctuate irrespective of interest

rate movements

C) gilt funds would not face the risk of defaulting unless the

government defaults on its payments

D) gilt funds are ideal for investors whose prime aim is

capital preservation with highest safety of principal amount.


20/301

20

How is UTI different from other MFs ?

A) Can borrow internally and abroad

B) Can hire, lease

C) Can underwrite

D) All of the above


21/301

21

UTIs Traditional Debt Strategy has been

A) Credit Selection.

B) Duration Management.

C) Buy and Hold.

D) Prepayment Prediction


22/301

22

The 1999 Union Government Budget helped

the Mutual fund industry by :

A) Regulating the practices of the MF industry

B) Approve the Code of Ethics suggested by AMFI

C) Exempting all mutual fund dividends from

income tax in the hands of investors



23/301

Mutual Funds

Conceptual Framework


24/301

24

A sponsor of a mutual fund may be compared to

A) a director in a company

B) a chief executive of a company

C) a promoter of a companyD) An equity shareholder in a company


25/301

25

The Indian Trust Act provides for the

following structure/s -

A) board of trustees, which will safeguard the

interests of the beneficiaries

B) trustee company, which will safeguard theinterests of the beneficiaries

C) both the above



26/301

26

Mutual funds in India can invest in -

A) transferable securities in the capital and money

markets

B) gold

C) real-estate

D) all of the above


27/301

27

As per SEBI guidelines, investments by all funds of an AMC inequity shares or equity related instruments of a singlecompany are restricted to

A) 25% of nav

B) 10% of nav

C) 5% of nav

D) no restriction from sebi

Th f ll i i i b ll d b


28/301

28

The following entities may be allowed by

funds to act as their agents

A) individual agents

B) banks

C) distribution companies

D) all of the above

If a unitholder does not agree to merger


29/301

29

If a unitholder does not agree to merger,

he/she

A) is allowed to exit only in ces

B) is allowed to exit only in oes

C) is allowed to exit in oes and ces

D) is allowed to exit only by sebi


30/301

30

A Trustee can be a Trustee of another mutual

fund if

A) sebi approval is obtained

B) he/she is an independent trustee in both mutual

funds

C) the sponsor has no objections

D) cannot be a trustee of another mutual fund

Th AMFI bj ti d t i l d th


31/301

31

The AMFI objectives does not include the

following

A) to improve standards of mutual fund industry

B) to regulate the stock markets along with sebi in

tandem

C) to create awareness about mutual funds

D) to emphasize on ethical and moral trade practices

If it h ld d t ith f t l f d /


32/301

32

If a unit holder does not agree with a merger of mutual fund /

AMC with another mutual fund / AMC then he/she can??

A) opt for withdrawal in open-end scheme

B) opt for withdrawal only when sebi allows so

C) opt for withdrawal in open-end or closed-end

scheme



33/301

33

The NAV of each scheme should be updated

on AMFI's website

A) every quarter

B) every month

C) every hour

D) every day


34/301

34

SEBI restricts mutual fund investments incompanies forming part of the same group as

the AMC. This is :

A) not true

B) in the interest of investor protection

C) applied only to some mutual funds, not all

D) not favorable to investors at all


35/301

35

What is the minimum stake that a sponsor needs to

hold in the Asset Management Company?

A) no stake required

B) 25%

C) 40%

D) 50%

Th i i b f t t h d t


36/301

36

The minimum number of trustees who need to

be independent persons is -

A) one-third

B) two-thirds

C) three-fourths

D) one-half

Which of the following is not a right of the trustee


37/301

37

Which of the following is not a right of the trustee

A) To appoint the AMC with prior approval of SEBI

B) approve each of the schemes floated by the AM

C) ask SEBI to audit AMC to ensure compliance

with regulations

D) take remedial action if they believe the conduct ofthe AMC is not in accordance with SEBI

regulations

Issuing and redeeming the units of a


38/301

38

Issuing and redeeming the units of a

mutual fund is the role of :

A) the custodian

B) the transfer agent

C) the trustees

D) the bankers


39/301

39

Which of the following statements is false?

A)a custodian may be an associate company of

the sponsors

B) a custodian is required to be registered with

sebi

C) a custodian handles securities in terms of

physical delivery and safe keeping

D) the custodian is appointed by the board of

trustees

Wh t d di l i f


40/301

40

What does disclosure norms in case of

Borrowing policy of the Mutual Fund Consist

of ?

A) circumstances under which borrowings will be

resorted to

B)regulatory limits on borrowings

C)expected sources of borrowing and possible

collateral used if any ,

D)all of the above

Whi h f th f ll i dditi l ti it


41/301

41

Which of the following additional activity can an

Asset Management Company undertake?

A) advisory services

B) financial consulting

C) both the above



42/301

LEGAL AND REGULATORYENVIRONMENT

i f f i i f


43/301

43

Which of the following is a self-regulatory

organization

A) SEBI

B) RBI

C) NATIONAL STOCK EXCHANGE

D) AMFI

The SEBI(Mutual Fund) Regulations came


44/301

44

The SEBI(Mutual Fund) Regulations came

into being in the year :

A) 1994

B) 1992

C) 1996

D) 1997


45/301

45

The organization responsible for a

comprehensive set of regulations for all

mutual funds in India is:A) RBI

B) SEBI

C) AMFI

D) SHCIL


46/301

46

Unit-holders have the right to inspect

A) Trust Deed

B) Investment Management Agreement

C) Memorandum and Articles of association of AMC

D) all the above


47/301


48/301

48

A mutual fund unit holder can sue

A) AMC

B) SPONSOR

C) TRUSTEES

D) ALL OF THE ABOVE

A close-ended scheme of a mutual


49/301

49

A close ended scheme of a mutualfund is not governed by

A) exchange rules of the stock exchange

where it is listed

B) listing agreement between the fundand the stock exchange

C) guidelines issued by the ministry of

commerceD) companies act provisions relating to

transactions in securities

A transfer in the management of a close ended


50/301

50

A transfer in the management of a close ended

scheme does not require the consent of

A) Unit holders with 75% voting rights

B) Sebi

C) Trustees

D) Amc

For a scheme to be able to change its fundamental


51/301

51

For a scheme to be able to change its fundamentalattributes it must obtain the consent of

A) 50% of unit-holders

B) 50% of trustees

C) 75% of unit-holders


Which of the following is not a unit-holders


52/301

52

c o t e o o g s ot a u t o de sright

a) Proportionate right in beneficial owner-

ship of a schemes assetsb) Obtain from the trustees information that

may have an adverse beaming on their

investmentc) Inspect major documents like trust deed,

AMC Agreement, Custodian Agreement,

etc.d) Be informed of any planned sale of scripts

held in the portfolio

In case of guarantee of an Assured Return who is


53/301

53

In case of guarantee of an Assured Return who is

responsible for meeting the shortfall in case the

return is not achieved :

A) The AMC

B) The fund manager

C) The trustees

D) The sponsor

Which of the following organisation should an


54/301

54

Which of the following organisation should an

investor approach in case of grievance against a

mutual fund ?

A) CONSUMER PROTECTION COURT

B) COMPANY LAW BOARD

C) AMFI

D) SEBI

Which of the following information does a fund need


55/301

55

Which of the following information does a fund need

not release to SEBI on a periodic basis?

A) copies of audited annual statements of accounts

for each scheme

B) copies of six-monthly un-audited accounts

C) reasons for sale/purchase of funds holdings

D) quarterly portfolio statement

Stock exchanges are regulated by which of the


56/301

56

g g y

following?

A) SELF REGULATED

B) SEBI

C) AMFI

D) RBI


57/301

57

Bank owned Mutual Funds are supervised by

A) SEBI

B) AMFI

C) RBI

D) BOTH A AND C

What % of investors must agree, to demand


58/301

58

g ,

that a scheme be wound up?

A) 75%

B) A simple majority

C) Only Trustees can wind up a scheme

D) 25%

Half-Yearly Portfolio Statement has to be


59/301

59

y

published or circulated to the Unit holders

within

A) 2 months from the close of each half-year

B) 1 month from the close of each half-year

C) 15 days from the close of each half-year



60/301

MUTUAL FUND ACCOUNTING

The expenses charged to a fund are calculated on


61/301

61

The expenses charged to a fund are calculated on

A) average weekly net assets

B) average monthly net assets

C) average quarterly net assets

D) year end net assets

Transaction costs include all expenses related


62/301

62

Transaction costs include all expenses related

to trading such as

A) Brokerage commissions paid

B) Stamp duty on transfers

C) Registrars and custodians fees

D) All of the above


63/301

63

The load charged to an investor in a mutual

fund is :

A) The entry fee

B) The expenses incurred by fund managers for

marketing a scheme

C) Cost of paper on which unit certificates are

printed

D) The fee the agent charges to the investor


64/301

64

What is mark to market?

a) Valuing investments at cost price

b)Valuing investments at market price

c)Valuing investments at cost or market price

whichever is lower

d)Valuing investments at cost or market pricewhichever is higher

E ti i d fi d


65/301

65

Expense ratio is defined as

A) Net investment income/net assets for the period

b) Total assets of fund/total investment

c) Ratio of total expenses to average net assets of the

fund

d) Ratio of total expenses to NAV of the fund

"L d i


66/301

66

"Load is

a) A charge borne by Fund

b) A charge borne by AMC

c) A charge borne by investor

d) A charge borne by Trustees

R i E i l d


67/301

67

Recurring Expenses include

a) Penalties and fines

b) Interest on delayed payment to unit holders

c) Depreciation on fixed assets

d) Marketing and selling expenses of a scheme

The rate of wealth tax on mutual fund units


68/301

68

The rate of wealth tax on mutual fund unitsis

a) 10%

b) 20%

c) 30%

d) MF units are exempt from wealth tax

A debt security will be categorized as a


69/301

69

thinly traded security if trading value

during 30 days prior to valuation date is

less than :

a) 10 crores

b) 15 crores

c) 20 crores

d) 5 crores

Which one of the following is not a


70/301

70

g

component of book value per share ?

A) Share capital

B) Secured loans

C) Reserves and Surplus

D) Outstanding Share Capital

A security having term to maturity less than


71/301

71

y g y

182 days to be valued on :

a) Last traded price

b) Amortised - purchase yield

c) Amortised - last traded yield

d) Amortised - straight line basis

I I d f d h l b


72/301

72

In Index funds the expenses are low because

a) The fund manager does not want a large trackingerror

b) The equity research expenses are not incurred

c) SEBI regulations stipulate lower expenses for index

fundsd) To complete against the actively managed funds


73/301


74/301

If a fund has Rs.110 Crores Corpus and 11 crores

i i A i


75/301

75

Units its NAV is

a) Rs.11

b) Rs. 9

c) Rs. 10

d) Rs. 10.75

A fund charges 2% entry load its NAV is Rs.15. An


76/301

76

A fund charges 2% entry load its NAV is Rs.15. An

investor invests Rs.15,000. How many units

will he/she get ?

a) 1,000

b) 980.39

c) 980

d) 1020.40

C l l ti


77/301

77

Calculations

The correct answer is B as :

Rs 15,000 / (15 + {2% of 15}) =

Rs 15,000 / (15 + 0.3) = 980.39

A f d h 1 5% it l d A i t h ld


78/301

78

A fund charges 1.5% exit load. An investor holds1000 units. The investor wants to redeem

today and the NAV is Rs.20.What amount will he/she get ?

a) 20,000

b) 20,300

c) 17,000

d) 19,700

C l l ti


79/301

79

Calculations

The correct answer is D as :

1000 x (20{1.5% of 20}) =

1000 x (200.3} = 19,700

An open-end fund was purchased when its NAV


80/301

80

An open end fund was purchased when its NAV

was Rs 20 . Sixteen months later, its NAV was Rs

22. The annualised NAV change is :

a) 8%

b) 7%c) 7.5%

d) 8.5%

Calculations


81/301

81

Calculations

The correct answer is c) as :

({[2/20] /16} x 12) x 100 = 7.5%

A closed-end equity fund has average weekly net


82/301

82

assets of Rs 200 crores. As per SEBI Regulations,

the AMC can charge the fund with investment

advisory fees upto:

a) Rs. 2.25 crores

b) Rs 2 crores

c) Rs 2.5 crores

d) Rs 3 crores

Calculations


83/301

83

Calculations

The correct answer is A because :

1.25 crores of 1st Rs.100 crores of net assets and 1% ofthe balance = Rs. 2.25 crores.

An equity fund has Rs 1000 crores average weeklynet assets nder management the ma im m


84/301

84

net assets under management, the maximum

expenses it can charge to the fund is:

a) Rs. 25 croresb) Rs. 20.50 crores

c) Rs. 22.5 crores

d) Rs. 60 crores

Calculations


85/301

85

Calculations

The correct alternative is b) as :

{2.5% of Rs 100 crores}+{2.25% of Rs 300crores}+{2.0% of Rs 300 crores}+{1.75% of Rs 300crores} = Rs 20.50 crores

A debt fund has Rs 1500 crores average weekly net


86/301

86

assets under management, the maximum expenses

it can charge to the fund is:

a) Rs. 20.50 crores

b) Rs. 25.50 crores

c) Rs. 28.00 crores

d) Rs. 29.25 crores

An open-end scheme floated on load basis maycharge its initial issue expenses to the scheme


87/301

87

charge its initial issue expenses to the scheme

as follows:

a) Full amount on the first day

b) Amortise the expenses over the first 10 years

c) Amortise the expenses over the first 5 years

d) Amortise the expenses over the first 3 years

The value of non-traded securities is assessed

i hi h f h f ll i


88/301

88

in which of the following ways

A) A good faith basis

B) The last traded price

C) Evaluated by SEBI

D) Average share price of its competitors

Investment of up to Rs.10,000 in an equity linked

i h (ELSS) lifi f t b t f


89/301

89

savings scheme(ELSS) qualifies for tax rebate of

A) 20%

B) 15%

C) 25%

D) 10%

An investment of Rs.100,000 with Rs.10,000

in an equity linked savings scheme(ELSS) and


90/301

90

in an equity linked savings scheme(ELSS) and

the rest in an Infrastructure scheme would get

a tax rebate of :A) Rs. 25,000

B) Rs. 10,000

C) Rs.18,000

D) Rs.40,000

Calculations


91/301

91

Calculations

(20% of Rs.10,000) + (20% of Rs.80,000) = Rs.18,000

What is the rate of tax on Long Term Capital

G i i f MF it ?


92/301

92

Gains in case of MF units ?

A) 20% after indexation

B) 10% without indexation

C) Either A or B

D) Higher than A or B

A Mutual fund declares Re 1 as


93/301

93

distribution.The income in the hands of unit

holders is

a) taxable at 20%

b) not taxable in the hands of unitholders

c) Information is inadequate to assess tax

liability

d) Income tax will be assessed as per

unitholders liability

Which of the following is not true as per SEBI

?


94/301

94

norms?

a) unrated securities are not to be valued

b) Bonds are valued at YTM

c) Equity shares are valued at closing price in the

market on the valuation date

d) Benchmarking for Valuation used

The accounting policies of a fundshould be in accordance with


95/301

95

should be in accordance with

a) GAAP

b)SEBI regulations

c) ICAI Guidelines

d) American GAAP

Liabilities in the balance sheet of a mutual fund


96/301

96

are

a) In the form of long-term loans

b) Strictly short term in nature

c) Combination of long term and short term

d) Not allowed as per regulations

Investments made by a mutual fund onbehalf of investors are accounted as


97/301

97

behalf of investors are accounted as

Assets

Liabilities

Capital

None of the above


98/301

Measuring & Evaluating FundPerformance

An investor can assess his funds performance


99/301

99

to

a) The performance of another mutual fund

b)The performance of overall stock market

c) The performance of similar financial products andschemes available in the market

d) All of the above

An equity scheme is 90 days old. To compute

yield it can use


100/301

100

yield, it can use

a) Absolute returns

b) Simple annualized returns

c) Compounded annualized returns

d) All of the above

A unit of an open-ended fund waspurchased when its NAV was Rs 20 At


101/301

101

purchased when its NAV was Rs 20. Atyear end, its NAV was Rs 22. In the

interim period the dividend distributionwas Rs 4 per unit. The funds simple totalreturn was

a) 25%

b) 30%

c) 20%

d) 31%

Calculations


102/301

102

Calculations

b) is the correct answer because :

[(4+2)/20] x 100 = 30%

The maximum term to maturity of Money


103/301

103

The maximum term to maturity of Money

Market Instruments is

a) 1 year

b) 6 months

c) 3 months

d) 1 month

"D ration" refers to


104/301

104

"Duration" refers to

a) Change in valuation of debt and equity with respect to

change in interest rates

b) Change in valuation of debt securities with respect to

change in interest rates

c) Change in valuation of debt securities with respect to

change in BSE sensex

d) Term to maturity of any debt instruments

Dividend Yield of a Company is the ratio of :


105/301

105

p y

a) Dividend per share upon Face Value per share

b) Dividend per share upon Book Value per share

c) Dividend per share upon Market Price per share

d) Dividend per share upon replacement cost per

share

In the case of a rating downgrade, the yield


106/301

106

applicable to the instruments downgraded

would

a) Rise

b) Fall

c) Remain the same

d) The two are not related


107/301

Returns in terms of NAV growth should be


108/301

108

interpreted in light of

a)Investment objective of the fund

b) Current market conditions

c) Alternative investment returns

d) All of the above

Benefit of economies of scale is reaped by


109/301

109

Mutual Funds because of

a) portfolio diversification

b) reduction of risks

c) large volumes of tradesd) None of the above

The mobilization of funds by Mutual Fund

i d t i i th f


110/301

110

industry is in the range of

a) 5% to 6% of GDS

b) 2% to 4% of GDS

c) 7% to 10% of GDSd) 25% to 40% of GDS

The largest corpus of investable


111/301

111

funds in India is with

a) Bank-owned mutual funds

b) Private Sector mutual funds

c) UTI

d) Insurance Companies


112/301

Portfolio turnover rate of a fundmeasures the


113/301

113

measures the

a) Size of the fund's portfolio

b) Amount of buying and selling done

by the fundc) The average number of units sold by

the fund in one day


When comparing a fund's performance withthat of its peer group,the following cannot


114/301

114

p g p, gbe compared

a) Two debt funds with 5 year maturities

b) A broad-based equity fund with an IT

Sector Fundc) A bond fund with a bond

d) A government securities fund with a

government security

When comparing performance of two


115/301

115

When comparing performance of twofunds, the following need not be similar

a) Risk profiles

b) Investment objectives

c) Fund size

d) Fund managers

A person would prefer a bank deposit to a

mutual fund only when :


116/301

116

mutual fund only when :

A)The investor has no considerations for other

investment aspects other than safety

B) The returns on bank deposits are high

C) The yield on mutual funds are higher than bank

deposits


The responsibilities of a unit-holderdo not include :


117/301

117

a) Monitor his investments carefully

b) Being aware of information that

affects his investment in a major way

c) Carefully studying the offer document

d) Taking decisions about where the fund

managers should invest

The most important reason for an investorto prefer a bank deposit to a Mutual fund is


118/301

118

to prefer a bank deposit to a Mutual fund is

a) The credit worthiness of the bank

b) Because the bank does not invest in

securitiesc) That the bank offers a guarantee

d) All of the above


119/301

Investment Management

A Certificate of Deposit is issuedby


120/301

120

by

A) Government

B) Corporates

C) Banks

D) Trusts

Commercial Paper is issued by


121/301

121

A) Mutual funds

B) Banks

C) PSUs

D) Corporates

A Mutual Funds investments are guided by


122/301

122

A) AMC

B) Board of trustees

C) Investment objectives

D) Unit-Holders

Index funds fall under the category of :


123/301

123

A) Active fund management

B) Passive fund management

C) Either of the two


Which of the following debtinvestments need not be rated


124/301

124

a) Corporate bonds

b) Commercial paper

c) Company depositd) Debt fund

Yield curve is also known as


125/301

125

a) Curve of Interest

b) Term Structure of Interest Rates

c) Curve that yields


Which of the following is not true aboutpassive portfolio management ?


126/301

126

A) their objective is to offer a return that is equal to the

return on a selected market index

B) the choice of the sample of stocks is important

C) the fund manager does not have to keep fund

expenses as low as possible

D) the fund manager does not have to go through process

of stock selection

Which of the following is not a balanced fund ?


127/301

127

a) 90% equity 10% debt

b) 65% equity 35% debt

c) 35% equity 65% debt

d) 50% equity 50% debt

Maximum permissible investment by a mutual fund in money

market securities during the first 6 months from allotment of


128/301

128

units in an IPO is -

a) 100 per cent

b) 60 per cent

c) 50 per cent

d) Depends on whether it is an equity scheme or

a debt scheme

Which of the following is applicable to the

debt market in India ?


129/301

129

A) The debt market is a wholesale market

B) There are large players like banks, financial

institutions and mutual funds

C) Government securities are traded on a large scale

D) All of the above

Which of these issuers cannot issueCertificates of Deposit?


130/301

130

a) Scheduled Commercial Banks

b) NBFCs

c) Regional Rural Banks

d) Financial Institutions

Market Capitalization refers to :


131/301

131

a) Total turnover of a Company

b) Employee turnover in a Company

c) Total external debt outstanding of the Company

d) Total number of equity shares outstanding

multiplied by market price of shares

For debt schemes, SEBI restricts the investment

in rated investment grade debt instruments by a


132/301

132

in rated investment grade debt instruments by a

single issuer to

a) 25% of NAV

b) 15% of NAV

c) 10% of NAV

d) 5% of NAV

A bond with a coupon rate of 9% when

interest rates for similar maturities are 11%


133/301

133

interest rates for similar maturities are 11%

will sell

a) Above par

b) Below par

c) At par

d) At a price which is not related to interest rates for

similar maturities

At what rate is Tax deducted at source in Bank

Fixed Deposits in case of a Resident Indian ?


134/301

134

Fixed Deposits in case of a Resident Indian ?

a) 10

b) 10.2

c) 20.4

d) 30

Yield and price of a bond move


135/301

135

a) In opposite directions

b) Together in the same directions

c) In an unrelated fashion

d) In accordance with the inflation index

Treasury bills are issued by


136/301

136

a) A companys treasury departmentb) Nationalized banks

c) RBI on behalf of the Government

d) PSUs

How many PPF Accounts can a single person

open as per the prevailing laws ?


137/301

137

open as per the prevailing laws ?

a) 2

b) 3

c) 1

d) 4

A bond with face value Rs. 1000 and coupon rate of


138/301

138

A bond with face value Rs. 1000 and coupon rate of

10% is quoted in the market at Rs 1200. The current

yield on this bond is :

a) 10%

b) 8%

c) 8.33%

d) 30%

Calculations


139/301

139

The correct answer is c) as :

{10% x 1000 / 1200} = 8.33%

A mutual fund under all its schemes takentogether will not own more than ___% of listed

shares of companies in the same gro p as the


140/301

140

shares of companies in the same group as the

sponsora) 5%

b) 10%

c) 15%d) 25%

The most important factor to look for in caseof corporate fixed deposits is :


141/301

141

A) Credit rating of deposit and of the company

B) The yield

C) The rate of return



142/301

Can a mutual fund transfer investments from

one scheme to another


143/301

143

one scheme to another

a) Yes. Only with prior approval of SEBI

b) No

c) Yes. Only up to 10% of total investments

d) Yes. Provided the transfer is at the current marketrate

MFs can trade in derivatives subject to which

of these conditions


144/301

144

of these conditions

A) Only for hedging and portfolio balancing.

B) Must disclose to investors that they will be using

derivatives.

C) MFs can not trade in derivatives without special

permission

D) Both A and B

Value funds invest in :


145/301

145

A) Equity shares with high p/e ratio

B) Equity shares with low p/e ratio

C) Equity shares of companies which stand for value

based business practices



146/301

Equity Linked Savings Scheme has the

following feature


147/301

147

following feature

a) It entitles the unit holder for tax rebate

b) The investment is locked in for 3 years

c) A minimum stated level of investments is made inequity related instruments

d) All of the above

Which of the following is true as per SEBI

norms for debt investment?


148/301

148

norms for debt investment?

a) Investment of rated investment grade of a company

should not exceed 15% of NAV

b) In case of rated as well as unrated but below

investment grade, debt investment in a company

should not exceed 10% of NAV

d) For all companies investment not to exceed 25% of

NAV

d) All of the above

The additional yield required toaccount for the risk of default by the


149/301

149

borrower is known as

a) Yield plus

b) Yield spread

c) Yield extrad) Yield premium


150/301

Fund Distribution & Sales Practices

Mutual funds in India are open to investmentby all of the following except


151/301

151

A) FIIs registered with SEBI

B) Foreign citizens/entities

C) Non-Resident Indians (NRIs)

D) Overseas Corporate Bodies (OCBs)

Mutual fund having its own direct marketing canmarket the product through


152/301

152

A) BANKS & FIS

B) DISTRIBUTORSC) EMPLOYEES

D) ALL OF THE ABOVE.

Commissions are not paid to distributors for


153/301

153

a) Any out of pocket expenses incurred which

attracting investors

b) For bringing in the investors to the fund

c) To provide extra returns to the investors

d) all of the above.

Which of the following sales practices isprescribed by regulation ?


154/301

154

A) AMFI Code of Ethics

B) SEBI Advertising Code

C) AMFIs Code for Agents



155/301

An agent's appointment by a fund


156/301

156

a) Requires SEBI's approval

b) Is a lengthy and cumbersome

processc) Is mandatory preceded by an

AMFI test

d) Does not require any approval

An NRI holds Units in a Mutual Fund. What should he do

with his holding if he takes up a foreign citizenship?


157/301

157

A) he redeems

B) he continues

C) he transfers the units to his mother, who

resides in india


Securities Dealers have the following function


158/301

158

in an AMC:

A) take investment decisions

B) formulate investment proposalsC) execute trades on behalf of the fund


Excess distribution expenses are to beborne by the


159/301

159

y

A) AMC

B) unit holders

C) SEBID) AMFI

An agent can offer and sell a fund'sunits at


160/301

160

units at

A) Any price he/she chooses

B) A price determined by competition

among agents

C) A price based on demand for that

fund's units

D) The public offering price currently ineffect

AMFI code of ethics broadly covers thefollowing areas


161/301

161

a) management of the fund ought to be in the interest

of the unit-holders

b) high standards of service are expected from funds

c) both a and b

d) neither a nor b

A good agent will never sell on considerationof


162/301

162

a) Past record of the scheme

b) Comparative features of other MFs

c) assured rate of dividendd) None


163/301

The Offer Document

Offer document is issued by


164/301

164

A) AMC

B) Sponsor

C) Either of the above


Filing fees for Offer Document with SEBI is :


165/301

165

A) Rs. 25,000 per Offer Document

B) Rs. 25,000 per Scheme

C) Rs. 10,000 per Scheme

D) Rs. 10,000 per Offer Document

A Constant performance review can be madefrom all these except


166/301

166

A) NEWSPAPER

B) OFFER DOCUMENT

C) RESEARCH PAPER

D) NEWSLETTER

Which is not true about KIM


167/301

167

A) KIM is a concise format offer document

B) KIM is given by AMC

C) KIM shows the health of a fundD) none of the above

The following do not form a part of the investmentprocedure described in an offer document


168/301

168

A) various plans under the scheme (e.G.Dividend

reinvestment plan)

B) minimum initial (and subsequent) investmentC) details of who can invest

D) details of other competing mutual funds

The front page of an offer documentneed not cover


169/301

169

A) opening, closing and earliest closing

date of the offer

B) disclaimer clauseC) legal and regulator compliance

D) price of units

Key Information Memorandum is


170/301

170

A) An abridged version of the offer

document

B) The memorandum & articles ofassociation of the AMC

C) A sheet containing historical navs of

other fund schemesC) annual report of the AMC

An addendum giving details of material change inthe offer documents should be circulated to


171/301

171

A) DISTRIBUTORS/BROKERS

B) UNIT HOLDERS

C) SEBID) ALL OF THE ABOVE

A disclosure should be made in the offer document ifan AMC has invested more than the following

percentage of its net assets in group companies


172/301

172

percentage of its net assets in group companies

A) 50%

B) 40%

C) 25%

D) 10%

The prospectus of a close-endedfund is issued


173/301

173

A) Every year

B) Only once at the time of issue

C) Every quarterD) Every six months

Which of the following is not true for offerdocuments of open-ended schemes


174/301

174

A) It is first issued at the time the

scheme is launched

B) It is registered with SEBIC) It has to be revised periodically

D) It need not be revised at all

Which of the following information would not beavailable in mutual fund offer document


175/301

175

A) details of the sponsor and the amc

B) description of the scheme and the investment

objectiveC) historical statistics

D) statistics of funds of other amcs in the same class

of funds

An offer document needs to be published


176/301

176

A) at the time of launching the scheme

B) whenever there is any material change

C) offer document once published cannot be printed

subsequently


The following are not required to be disclosed in theabridged offer document


177/301

177

A) initial issue expenses

B) annual recurring expenses

C) transaction expenses



178/301


179/301

Investor Services


180/301

A Systematic Investment Plan is the best

example of


181/301

181

a) Rupee Cost Averaging

b) Value averaging

c) Buy & Hold


Most equity scheme Unit holders redeem their

units


182/301

182

a) Zero times per year

b) Five times per yearc) Twelve times per year

d) Nine times per year

To meet redemption payments the MutualFund can :


183/301

183

A) borrow 10% of the net assets of the scheme for 1

year

B) borrow 15% of the net assets of the scheme for 1.5years

C) borrow 20% of the net assets of the scheme for 0.5

years

D) borrow 5% of the net assets of the scheme for 2 years

Which is untrue regarding Loans against

Mutual Fund units?


184/301

184

A) Sebi regulation permits the mutual funds to giveloans against their units

B) Sebi regulation prohibits mutual funds themselves

from giving loan against units

C) Several banks lend to investors against mutual

fund units held by them

D) Banks are usually inclined to sanction higher

amount against unit holding in liquid schemes

A difference between AIPs and VAPs is


185/301

185

A) No difference

B) Only AIP offers Rupee cost averaging

C) Only VAP is contractually binding

D) Only AIP is contractually binding


186/301

An investor can ask for


187/301

187

a) Trust deed

b) Memorandum

c) Offer documentd) All

Which of the following is untrue ofan automatic reinvestment plan ?


188/301

188

a) The plan allows for automatic reinvestment

of all income and capital gains

b) Automatic reinvestment allows for

accumulation of additional units of the fundc) The major benefit of automatic reinvestment

is compounding

d) The benefit of automatic reinvestment is

often lost on account of the heavy load

charge on the reinvestment


189/301

Tax benefits from

investment in Mutual Funds

A fund acquires 100 shares in Company A for Rs 5000, it

buys another 150 shares in the same Company for Rs7000. Later it sells 50 shares for Rs 3500. What is the


190/301

190

gain/loss on the sale?

a) Rs. 1100

b) Rs. 1000

c) Rs. 1167d) Rs. 1500

Calculations

The correct answer is a) as because :


191/301

191

)

Average cost price of 1 share = 12,000/250 = Rs 48Sale price of 1 share = 3,500/50 = Rs 70

Hence, Total gain on sale = 22 x 50 =

Rs 1100

Tax law definition of Capital Gains is


192/301

192

A) Sale considerationCost of Acquisitions

B) Sale consideration + (Cost of Acquisitions + Cost

of Improvements)

C) Cost of transfer

D) Sale Consideration(Cost of Acquisition + Costof Improvements + Cost of transfer)


193/301

Calculations


194/301

194

The correct alternative is b) as :

125,000 (75,000*351/281) = 31,317

An investor purchased 5000 units of a mutual fundon June 15 , 1995 for Rs. 12.50. He sold them on

April 14 , 1999 for Rs. 45.75. What are the capital

gains chargeable to tax? ( Cost of Inflation Index for


195/301

195

1995-1996 was 281 and for 1999-2000 was 389)

A. Rs 142,250

B. Rs.142,350

C. Rs.142,450

D. Rs.142,550

An investor purchased 2000 units of a mutual fundon April 1 , 1992 for Rs 10.50. He sold them on

April2, 2000 for Rs. 26.75. What are the capital


f )


196/301

196

1992-1993 was 223 and for 2000-2001 was 406)

A. Rs. 15, 230

B. Rs. 15, 240

C. Rs. 15, 250

D. Rs. 15, 260

An investor purchased 5000 units of a mutual fundon May 6 , 1998 for Rs. 15.50. He sold them on

April15, 1999 for Rs. 25.75. What are the capital



197/301

197

1998-1999 was 351 and for 1999-2000 was 389)

A. Rs. 51, 250

B. Rs. 52, 250

C. Rs. 53, 350

D. Rs. 54, 450


198/301

An investor purchased 1000 units of a mutual fundon April 15 , 1996 for Rs. 13.75. He sold them on

April 25 , 1999 for Rs. 32.75. What are the capital

gains chargeable to tax? What is the amount of

capital gains tax that he will pay ? ( Cost of Inflation


199/301

199

capital gains tax that he will pay ? ( Cost of Inflation

Index for 1996-1997 was 305 and for 1999-2000 was389)

A. 19000 and 1995

B. 15210 and 3194

C. 18250 and 1995

D. 18250 and 3194

An investor purchased 1000 units of a mutual fund

on April 10 , 1998 for Rs 23.50. He sold them on

June 14, 2000 for Rs.34.50. What are the capital

gains chargeable to tax? (Cost of Inflation Index for


200/301

200

gains chargeable to tax? (Cost of Inflation Index for

1998-99 was 351 and for 2000-01 was 406)

A. Rs.7100

B. Rs.7200

C. Rs.7300

D. Rs.7400

An investor purchased purchased 5000 units of amutual fund on September 20, 1998 for Rs 14.50. He

sold them on April 1 , 2000 for Rs 28.65. What are

the Capital gains gains chargeable to tax? What is

the amount of capital gains tax that he will pay? (


201/301

201

the amount of capital gains tax that he will pay? (

Cost of Inflation Index for 1998-99 was 351 and for2000-01 was 406)

A. Rs. 70750 and 7428.75

B. Rs. 59400 and 12484

C. Rs. 59500 and 12484

D. Rs. 59500 and 12474


202/301

Financial Planning

What is Financial Planning?


203/301

203

Identifying the varying needs for money.

Planning ones saving and investment in amanner the enables one to achieve the pre-

specified goal.

Both of the above.

None of the above.

Who is a professional financial planner?

Understands the universe of investment options.


204/301

204

Well informed on the risk and return attributes ofinvestment options.

Advises investors in financial planning andenables them to choose the right option suitingtheir risk profile.

All of the above

What are the attributes of a good financialplanner?

Sound understanding of the universe of


205/301

205

Sound understanding of the universe of

investment products, their risk and returnattributes, past performance, and the behaviourof portfolios of asset classes.

Good grounding in tax planning and estateplanning.

Ability to convert life-cycles of investors intoneeds and preferences for financial products.

All of the above.


206/301

What are the steps involved in FinancialPlanning?

Establish and define the relationship with the client.


207/301

207

p

Define clients goal.

Understand ability to save and need for cash flows.

Understand the risk tolerance of clients.

Understand the tax liability and requirements of clients.

Create asset allocation path.

Review and rebalancing.

Important responsibilities of investors in thefinancial planning exercise?

Should set measurable financial goals.


208/301

208

Should understand the impact of financial decisions on their

cash flows and their income.

Should be willing to revise and re-balance their portfolios with

changing market conditions, performance and their changing

needs.

Investors benefit immensely by starting early and being

systematic and disciplined in their approach.

What is wealth cycle classification of investors?

INVESTMENT PREFERENCESFINANCIAL NEEDSSTAGE


209/301

209

Wealth preservation.Preference for low risk products

Medium to long termSudden wealthsurge

Low liquidity needs. Ability totake risk and invest for the longterm

Long term investment ofinheritance

Inter-generationaltransfer

Liquid and medium terminvestments. Preference forincome and debt products

Higher liquidity requirementsReaping stage

Liquid and medium terminvestments. Lower riskappetite

Near term needs for funds aspre-specified needs draw closer

Transition stage

Growth options and long termproducts. High risk appetite

Investing for long term identifiedfinancial goals

Accumulation stage


210/301

The basis of genuine investmentadvice should be


211/301

211

a) The current market situation

b) The agent commissions paid by

different funds

c) Financial planning to suit the

investor's situation

d) Planning to complete the agent'sannual targets

What are the other investment instrumentsissued by govt, available to retail investors?

Public Provident Fund (PPF)


212/301

212

Public Provident Fund (PPF).

RBI Relief Bonds.

Other government schemes.

- Indira Vikas Patra

- Kisan Vikas Patra

- Post office saving

Public Provident Fund ( PPF ):

15 year deposit product offered through banks.


213/301

213

Interest fixed by government and is paid onmonthly balances.

Minimum investment of Rs. 100 per year has to bemade. Maximum investment has been recently

capped at Rs. 60,000 per year. Tax benefits under section 88 of the IT Act are

available.

- 20% tax rebate on investment made up to Rs.

60,000, is available for investors with taxableincome of upto Rs. 1.5 lakh per annum.

Contd: ( PPF )

Investors with taxable income above Rs.1.5 lakh


214/301

214

and below Rs. 5 lakh, can invest upto Rs.60,000and avail a tax rebate of 10%.

No tax rebate are allowed for investors with

taxable income above Rs.5 lakhs.

Both interest receipts and withdrawal of principalare exempt from tax.

Limited liquidity is available. Investors can draw

upto 50% of their 4th year balances, from the 7th

year onwards.

RBI Relief Bonds :

Issued by banks on behalf of the RBI, these bonds


215/301

215

y

are borrowing of the central government.

Interest is fixed by the government and is paid

semi-annually.

Interest income is fully exempt from tax.

Transferable by endorsement and delivery.

Other Government Schemes :

Indira Vikas Patra & Kisan Vikas Patra :

- Instruments with fixed interest issued by central


216/301

216

- Instruments with fixed interest issued by centralgovernment, and sold by post office.

- Interest is taxable.

- Investor identity is protected and investment in cash ispossible.

Post office saving and Recurring deposits :

- Both are government guaranteed deposits, with fixedrate of interest.

- Not transferable.

- Attractive for their safety and cash investmentoptions.


217/301

What are the financial planning strategies thatcan be recommended to investors?

Rupee cost averaging.


218/301

218

p g g

Value averaging.

Jacobs rebalancing strategy.

Grahams 50:50 portfolio re-balancing.

What is Bogles strategic asset allocation?

Older investors in the distribution phase:


219/301

219

- 50% equity : 50% debt

Younger investors in the distribution phase:


Older investors in the accumulation phase:


Younger investors in the accumulation phase:


The steps in developing a model portfolio for aninvestor?

Develop long term goals.


220/301

220

Determine asset allocation.

Determine sector distribution.

Select specific fund managers and their schemes.

Model portfolios recommended for investorsaccording to their life cycle stages:

Young unmarried professionals :

50% in aggressive equity funds


221/301

221

50% in aggressive equity funds.

25% in high yield bond funds, growth and incomefunds.

25% in conservative money market funds.

Young couple with 2 incomes and 2 children:

10% in money market funds.

30% in aggressive equity funds.

25% in high yield bond funds and long term growth funds.

35% in municipal bond funds.

Contd:

Older couple single Income : 30% in short term municipal funds


222/301

222

30% in short term municipal funds

35% in long term municipal funds

25% in moderately aggressive equity

10% emerging growth equity

Recently retired couple : 35% in conservative equity funds for capital preservation /

income

25% in moderately aggressive equity for modest capitalgrowth

40% in money market funds

What is the recommended portfolio for investorsin accumulation phase?


223/301

223

Diversified Equity : Sector and balanced funds 65 80%

Income and gilt funds :

15 30%

Liquid funds and bank deposits :

5%

What is the recommended portfolio for investorsin distribution phase?


224/301

224

Diversified Equity and balanced funds: 15 30%

Income funds :

65 80%

Cash funds :

5%

What are the steps in selection of anequity fund?

Classify into broad categories that signify their risk and

return characteristics.


225/301

225

Classify the funds on the basis of their fund manager

style.

Evaluate the performance of the scheme.

Understand the structural characteristics of the scheme:

Size of the fund

Fund age

Portfolio managers experience

Costs of investing

Understand the portfolio characteristics of the scheme.

What are the steps in selection of a bondfund?

Fund age and size.


226/301

226

Relative yield.

Costs.

Quality of the portfolio.

Average maturity.

What are the steps in selection of amoney market fund?

Lower expense ratios


227/301

227

Lower expense ratios.

Higher credit quality of the portfolio

Yield

An open ended mutual fund is one that has


228/301

228

a) an option to invest in any kind of security

b) units available for sale and repurchase at all times

c) an upper limit on its NAV

d) a fixed fund size

"Because the fund stands ready to redeemunits at any time, units in an open-end fund

are always worth their"


229/301

229

a) Net Asset Value

b) Asset Revenue.

c) Selling price

d) Par value.

A mutual funds balance sheet on the liabilityside has


230/301

230

a) Single class of capital

b) Two classes of capital

c) Debt and equity

d) Only debt

A 55 year old retired person with 25% equityand moderate risk appetite should be advised

to invest in:


231/301

231

a) Balance fund

b) Value fund

c) Diversified equity fund

d) Growth fund

A 55 year old retiree is in stage


232/301

232

a) Accumulation stage

b) Growth stage

c) Distribution stage

d) Income stage

Which one of the following statement is false?


233/301

233

a) Beta of 1 means the fund moves along with the

market.

b) Higher beta portfolios gives higher return in bull

market and higher loss in the bear market.

c) Lower beta portfolio gives lower returns in the bull

market and lower loss in the bear market

d) Higher beta portfolios gives lower return in bullmarket and lower loss in the bear market

A Fixed Term Plan Series is


234/301

234

a) An open-ended fund

b) A close-ended fund

c) A fixed term bank deposit

d) A fixed term corporate bond

A value manager does not look for


235/301

235

a) Stocks that are currently undervaluedin the market

b) Stocks whose worth will be recognized

by the market in the long term

c) High current yield

d) Long term capital appreciation


236/301


237/301

Continuous tracking of the companies inwhich a mutual fund has invested in equities

is done by


238/301

238

a) Continuous tracking systems

b) Equity analysts

c) Trustees

d) Security dealers


239/301

An actively managed equity fundexpects to


240/301

240

a) Be able to beat the benchmarks

b) Earn the same returns as the

benchmark

c) Have no benchmarks

d) Under perform when compared

with the benchmark

An investor approaches you to build his

portfolio.How will you build it?


241/301

241

a) Selection of sector, selection of fund managers and

schemes, classification of assets"

b) " Classification of assets, Selection of sector, selection

of fund managers and schemes"c) " Selection of fund managers and schemes, Selection

of sector, Classification of assets"

d) " Selection of sector, classification of assets, selectionof fund managers and schemes"


242/301


243/301


244/301

" When interest rates rise, a Debt fund"


245/301

245

a) increases in value

b) decreases in value

c) is not affected by interest rate


Which of the following is not acharacteristic of company fixed

deposits

) h h f


246/301

246

a) A higher rate of interest

b) Higher risk

c) Unfavorable effect of tax

d) Very high liquidity

If an investor failed to claim hisredemption proceeds within 3 years,

he can claim the proceeds at

) P


247/301

247

a) Par

b) Prevailing NAV

c) The NAV on the date he has applied

for redemption

d) 15% below the prevailing NAV

Which of the following is notconsidered for technical analysis

) Hi t i l d t th ' h


248/301

248

a) Historical data on the company's shareprice

b) The company shares trading volume

c) Current market sentiment

d) The companys regulatory

environment

A put provision in a debt issueallows

) I t t t th tifi t i


249/301

249

a) Investor to put away the certificates insafe deposit vaults

b) Investors to redeem debt prior to

maturity

c) Issuers to redeem debt prior to

maturity

d) Investors to extend the tenure of debt

To compare bonds with different coupon

rates, maturities and prices, investors

would use:

) C t i ld


250/301

250

a) Current yield

b) Technical analysis

c) Yield to maturityd) Fundamental analysis

A high P/E multiple in comparison to averagemarket multiple could be of a

) V l f d


251/301

251

a) Value fundb) Growth fund

c) Balanced fund

d) Equity diversified fund

"For which of the following instruments iscredit rating desirable?"

) T bill i d b th G t f I di


252/301

252

a) Treasury bills issued by the Government of India

b) Medium term dated securities issued by the

Government of India

c) Insurance policies issued by the LIC

d) Debentures issued by the private corporate sector

A credit selection debt strategy is defined asthe following:


253/301

253

A) Buying high yielding debt securities that give

adequate returns on the overall portfolio.

B) Altering average duration of bonds depending onmarket predictions.

C) Buy/Sell in anticipation of change in credit rating


According to Bogle, the strategic allocationfor older investors in accumulation phase

should ideally be


254/301

254

a) 50/50

b) 60/40

c) 70/30

d) 80/20

Quantitative Analysis may use :


255/301

255

a) Share price data

b) Mathematical modelsc) Financial performance data

d) All of the above


256/301

Selecting the Right InvestmentProducts for Investors

Factors to be considered while investing in anequity fund are


257/301

257

a) Past Returns

b) Portfolio Managers experience

c) Cost of investing

d) All of the above


258/301


259/301

What is the risk measure of a debt fund ?

A) Duration Weighted average maturity of debt


260/301

260

A) Duration = Weighted average maturity of debt

instruments

B) Duration= Longer and shorter maturity / 2

C) Duration= Weighted average of credit rating

D) Duration = Weighted average beta of the debtfunds

A high portfolio turnover means :

A) The fund is very active in the market


261/301

261

A) The fund is very active in the market

B) Transaction costs are high

C) A high risk is involved as per the investmentobjectives

D) All of the above

A longer maturity has the following impacton its price risk in case of interest rate

fluctuation


262/301

262

a) Risk increases with longer maturity

b) Risk decreases with longer maturity

c) Price risk depends solely on credit rating of theissuer


What is the measure of market risk?

a) Mean


263/301

263

a) Mean

b) Beta

c) Standard Deviation

d) Alpha


264/301

The following investments are not affected by

price risk in case of interest rate movement

a) Company debentures


265/301

265

a) Company debenturesb) Institutional bonds

c) Mutual funds

d) Floating rate bonds

Ex-Marks (or R-Squared factor) of a fund

measures :

A) How much of a funds NAV movement is due to


266/301

266

A) How much of a fund s NAV movement is due tothe market index movement

B) How a funds NAV movement relates to the

market index movement

C) How much of a fluctuation has occurred in a

funds NAV over a historical period

D) How many marks a Credit rating agency accords

to a fund

Ex-marks with 100 % could be for the

following fund:

a) Growth fund


267/301

267

a) Growth fund

b) Index fund

c) Value fund

d) Balanced fund

Past performance of a sponsor/AMCmutual fund is not indicative of the future

performance of the scheme. This is

a) Not true


268/301

268

a) Not true

b) A standard risk factor for all

schemes

c) A scheme-specific risk factor

d) Applicable only to gilt funds

There is no contractual guarantee forrepayment of principal or interest to an

investor

a) Bank deposit


269/301

269

a) Bank deposit

b) Debt fund

c) Secured debentures

d) All of the above

Equity price risks are

a) Company specific


270/301

270

a) Company specific

b) At Market level

c) Sector specific

d) All of the above

It may not be possible to reinvest interestreceived at the same rate as principal. This is

known as

a) Reinvestment risk


271/301

271

a) Reinvestment risk

b) Inflation risk

c)

Interest-rate riskd) Call risk


272/301

Which of these credit ratings signifies

"Highest Safety"?


273/301

273

a) A

b) AA+c) AAA

d) AA

Equity Warrants differ from Stock Options inthat :

a) They are compulsorily converted into equity while


274/301

274

a) They are compulsorily converted into equity while

options are not

b) They are issued by the company while stock

options are not

c) They do not have a predetermined conversion

price like options.


MMMF is most likely to invest in :

A) Corporate bonds


275/301

275

B) Equity shares

C) Rated instruments

D) G-Sec of less than 1 years maturity

Which of the following are not Speciality

Funds?


276/301

276

a) Sectoral Funds

b) Corporate Bond Fund

c) Gilt Fund

d) Income Fund

An equity fund that aims to capture the most

actively traded stocks invests in


277/301

277

a) small cap stocks

b) large cap stocks

c) technology stocks

d) all of the above

Historically, benchmarking of Funds in Indiawas done by comparing

Historically, benchmarking of Funds in Indiawas done by comparing


278/301

278

a) Bank Interest Rates in India

b) US Interest Rates

c) Either of the two

d) Neither of the two

The steps involved in selection of Equity fund

are

a) " Selection of sector, selection of fund managers

and schemes classification of assets"


279/301

279

and schemes, classification of assets

b) " Classification of assets, Selection of sector,

selection of fund managers and schemes"

c) " Selection of fund managers and schemes,

Selection of sector, Classification of assets"

d) " Selection of sector, classification of assets,

selection of fund managers and schemes"

"In which of the following markets, can

individuals not participate directly?"

a) Call money market


280/301

280

a) Call money market

b) Badla market at the BSE

c) Equity market at the NSE

d) Debt market at the NSE

Which of the following is not true forIndex Funds

a) These funds invests in the shares that


281/301

281

a) These funds invests in the shares thatconstitute a specific index

b) The investment in shares is in the

same proportion as in the indexc) These funds take only the overall

market risk

d) These funds are not diversified

Indira Vikas Patra is an investmentproduct popular with

a) Rural investors


282/301

282

a) Rural investorsb) Investors in high tax bracket

c) Urban investors

d) Risk taking investors

The tenure of an Indira Vikas Patrais

a) 7 years


283/301

283

) 7 yearsb) 6 years

c) 5 years

d) 3 years

e amoun an nsurance company

would pay to the nominee if apolicyholder died is known as the

a) Premium


284/301

284

) Premiumb) Sum assured

c) Face value

d) Real value

Which of the following is generallytrue for a growth stock

a) Steady capital appreciation and steadydi id d i ld


285/301

285

Steady capital appreciation and steadydividends yields

b) High capital appreciation and high

dividend yieldsc) High capital appreciation but low

dividend yields

d) Steady capital appreciation but highdividend yields

The biggest disadvantage ofinvestment in real estate is

a) Less potential for capital


286/301

286

) Less potential for capitalappreciation

b) High purchase price

c) Depreciation in value as time

passes

d) Value gets eroded due to inflation

A Fund that stands ready to buy and sell units

at any time is a :

a) Closed-end fund


287/301

287

)

b) Open stock fund

c) Mutual closed fund

d) Open -end fund.

Which of the following is not a common

classification group for stocks?

A) Cyclical stocks


288/301

288

y

B) Recovery stocks

C) Growth stocks

D) Value stocks

The difference between ordinary and

preference shares is

A) Preference shares dont pay any dividend


289/301

289

p y y

B) Preference shares entitle the holder to fixed

dividends subject to availability of profits after

tax

C) Only ordinary shares entitle the holder to voting

rights

D) Both B and C

An Investor in a close-ended mutual fund canget his/her money back by selling his/her units

a) back to the fund


290/301

290

)

b) to a special trust at NAV

c) on a stock exchange where the fund is listed

d) to the agent through which he/she subscribed to

the units of the fund

Government Securities typically pay interest


291/301

291

a) Annually

b) Quarterly

c) Do not pay interest

d) Semi-annually

Money market instruments do not cover :

a) Commercial paper & Certificate of Deposit

b) Call & Notice money


292/301

292

) y

c) Treasury Bills

d) Government Securities having 10 year

maturity

Debentures differ from fixed deposits in respectof

a) Interest rates

b) Security


293/301

293

b) Security

c) Liquidity

d) End use of funds

Which of the following are important criteria forcomparison of fund performance ?

a) Portfolio composition


294/301

294

) p

b) Maturity profile

c) Fund size

d) All the above

A 25 year old MBA has joined as ManagementTrainee in HLL. He approaches you for advice

on investing his monthly savings. Theinvestments are long term in nature What


295/301

295

g y ginvestments are long term in nature. Whatasset allocation would your suggest?

a) 100% investment in equity schemes

b) Investment in bank and company deposits

c) 70/30 allocation between equity and debtschemes

d) 100% investment in debt schemes

Two funds A & B have identicalreturns history. Fund A has a higherstandard deviation than fund B.Which fund is suitable for a riskaverse investor?


296/301

296

averse investor?

a) Fund Ab) Fund B

c) The above information has no relevance to the riskmeasure of funds

d) Since the data is only for the past period, once cannotdraw conclusion based on it

Which is a better investment option whilst

selecting an equity fund?


297/301

297

a) Ex Marks- 80%, Beta- 0.9, Gross Dividend Yield- 8%

b) Ex Marks- 90%, Beta- 0.8, Gross Dividend Yield- 9%

c) Ex Marks- 75%, Beta- 0.9, Gross Dividend Yield- 8%

d) Either 1 or 3

There are 2 equity funds A & B with beta co-efficient of0.70 & 1.30 resp. A risk averse investor seeks youradvice on the choice between these 2 funds. Whichwould you suggest:


298/301

298

a) Fund A

b) Fund B

c) 50:50 allocation between the 2 funds


Which of the following Fixed Deposit can berecommended to investor ?


299/301

299

a) Company giving highest returns without Rating

b) Company giving moderate returns with highest

Ratings

c) Company paying maximum brokerage

d) Well Known companies FD

For which of the following funds would you

consider average maturity as an important

factor in selecting the right one for the

investor ?

A) A D bt F d


300/301

300

A) A Debt Fund

B) A Balanced Fund

C) A Money Market or Liquid Fund

D) Both A and C

An investor in need of regular income should

not select :

A)A bank deposit


301/301

B) A debt fund

C) An equity growth fund

Amfi Quiz Modified Version1

Documents

Transcript of Amfi Quiz Modified Version1