UNIT 23

The Concept and Role of Mutual Funds

1. What are offshore Mutual Funds?

C) Funds set-up to invest solely in international markets.

2. Mutual Fund is established in India as a

b. Trust.

3. Who appoints the Asset Management Company?

Sponsor.

4. Who determines the structure of the Mutual Funds in India?

a. SEBI regulations.

5. Of the following, who are eligible to invest in the Mutual Funds?

a. Non-Resident Indians.
b. Foreign Institutional Investors (FIIs) registered with SEBI.
c. Provident Fund.
d. Indian Trusts/Charitable Trusts.
e. All of the above.

UNIT 24
Fund Structure and Regulatory Environment
1. Who governs the Unit Trust of India?

c. UTI Act.

2. Who appoints the Asset Management Company of the Mutual Fund?

a. Sponsor.

3. According to SEBI (Mutual Fund) Regulation 1996, the sponsor

e. All of the above.

4. Which of the following is true according to SEBI’s investment guidelines for

Mutual Funds?

c. No fund can put more than 15 percent of its net assets in deposits of all
scheduled commercial banks put together.
5. What is the minimum percentage a sponsor should contribute from out of the net worth of the
investment managed?

d. 40%.

Offer Document and Sales Practices

1. For how many months is the Offer Document, which is issued to launch new
Schemes, valid from the date of receipt by the AMC?
d. 6 months.

2. According to the SEBI, what percent of net assets managed by Mutual Fund
Should not exceed the net investments of a Mutual Fund in ADRs or GDRs or
Foreign investment?

a. 10 percent.

3. How frequently can an investor have a right to receive a statement about the
investments a Mutual Fund holds?

e. 6 months.

4. Generally, which of the following investors are allowed to invest in a Mutual Fund?

d. All of the above.

5. Which of the following are not included in the distribution channel of Mutual Funds?

e. None of the above.

Measuring and Evaluating

Mutual Fund Performance

1. Tracking error is predominant in

d. Index funds.

2. For a given risk-free rate of return, the Treynor’s performance measure can be
Interpreted as the

a. intercept of the portfolio’s characteristic line.

3. Mr. Alok Pareek is a Mutual Fund manager with an investment firm. He is

considering inclusion of stock A in his portfolio. Which of the following can be
used as a measure of relative risk for stock A?

c. Beta of the stock.

4. The return on a Mutual Fund under Fund Return Grade is adjusted for

a. Dividend.
b. Bonus.

5. How is performance of Mutual Fund generally measured?

a. Sharpe Ratio.
b. Treynor Ratio.