AMFI Model Test Paper The Concept and Role of Mutual Funds 1.

Which of the following is not a Mutual Fund characteristic? d. Diversified portfolio e. Careful research and monitoring of the market f. Substantial capital g. Expertise in stock market 2. Choose the advantage of Mutual Funds h. Small amount of investment i. Professional management j. Risk diversification k. All of the above 3. UTI was the only capital market intermediary for the period : l. 1964 to 1987 m. 1963 to 1988 n. 1964 to 1992 o. None of the above 4. Mutual Funds can be defined as p. a link between the saving public and the capital markets q. an active participant in promoting good corporate governance, investor protection r. a participant that has brought in liquidity into the financial system s. All of the above 5. The ownership of a Mutual Fund belongs to t. Board of Trustees u. Sponsor v. AMC w. Unit-holders 6. A Mutual Funds investments are guided by x. AMC y. Board of Trustees z. Investment objectives aa. Unit-holders 7. In USA, a mutual fund is constituted as bb. Trust cc. Investment company dd. Company ee. None of the above 8. In India, a mutual fund is constituted as ff. Trust gg. Investment company hh. Company ii. None of the above 9. An investor should not invest in Mutual Fund, if jj. his capital base is large and is able to monitor the stock market kk. he is able to carry out detailed investment research ll. Both of the above

mm.None of the above 10. The advantage to a Mutual fund investor is nn. The risk involved is diversified oo. The investor can hold the diversified portfolio even with small investment pp. Expertise in stock market is not required qq. All of the above 11. The term professional management indicates rr. investment management skills ss. research of available investment options tt. Both the above uu. None of the above 12. Benefit of economies of scale is reaped by Mutual Funds because of vv. portfolio diversification ww. reduction of risk largevolumesoftrades Noneoftheabove 13. Which of the following is not a disadvantage of investing through a Mutual Fund? xx. No control overcosts Liquidity and convenience tailor-madeportfolio Managing a portfoli of funds 14. The Mutual fund industry in India began in 1988 1964 1992 Noneoftheabove 15. Which of the following is untrue UTI was set up in 1963 UTI was formed by RBI UTI was established by an act of Parliament UTI was not given a monopoly. 16. Which one has a largest investor base? ULIP yy. Mastershare of UTI zz. US-64 aaa. SBI Magnum 17. Which is the first diversified equity investment scheme in India? bbb.SBI Magnum ccc. Master share ddd.MEP-91 eee. Mastergain92 18. Which is the first Indian offshore fund? fff. India Growth Fund ggg.India Fund hhh.India Infrastructure Fund iii. None of the above

19. The first non-UTI mutual fund is jjj. SBI MF kkk.LIC MF lll. Canbank MF mmm.Indian Bank MF 20. Private sector funds were granted permission to enter the Mutual Fund industry in : nnn.1992 ooo.1993 ppp.1988 qqq.1995 21. The organisation responsible for a comprehensive set of regulations for all mutual funds in India is: rrr. RBI sss. SEBI ttt. AMFI uuu.SHCIL 22. The 1999 Union Government Budget helped the Mutual fund industry by vvv. regulating the practices in MF industry www.exempting all mutual fund dividends from income tax in the hands of the investors. xxx.Approving the code of ethics suggested by AMFI yyy. None of the above 23. The mobilisation of funds by Mutual Fund industry is in the range of zzz. 5% to 6% of GDS aaaa.2% to 4% of GDS bbbb.7% to 10% of GDS cccc.25% to 40% of GDS 24. Which of the following is untrue as per recent studies? dddd.UTIs market share is increasing and private sectors market share is decreasing eeee.UTIs market share is decreasing and private sectors market share is increasing ffff. The size of Mutual fund industry is increasing rapidly gggg.The operations of Mutual fund industry are becoming complex day by day. 25. A load means hhhh.a sum paid to the investors. iiii. An expense charged to scheme/fund jjjj. Sales charges kkkk.None of the above 26. Mutual funds do not justify the need for paying commission to agents when the investors skip out of the scheme before a specified period. In India, this practice is adopted by llll. Agents voluntarily paying back the commission to the Mutual fund mmmm.Trail commission is not paid to the agents nnnn.None of the above oooo.The whole of commission is paid to the agents 27. US-64 scheme of UTI is pppp.traded on stock exchange qqqq.fixed price of sale and repurchase rrrr. traded through UTI as per the sales and repurchase price declared by UTI for a specified period. ssss.None of the above 28. The AMFI objectives does not include the following

tttt. to improve standards of mutual fund industry uuuu.to regulate the stock markets along with SEBI in tandem vvvv.to create awareness about mutual funds wwww.to emphasise on ethical and moral trade practices 29. Load means : xxxx.charge to scheme / fund yyyy.charge paid by investor zzzz.charge paid by AMC to SEBI aaaaa.none of the above 30. What is not an advantage in investing in Mutual Funds against Equity; bbbbb.Professional Management ccccc.Diversification of Risk ddddd.Reduction in cost eeeee.Tailor made portfolios 31. A fund is doing direct marketing , but they can take the help of fffff.Agents ggggg.NBFC hhhhh.Distributors company iiiii. All of the above 32. Investment Mananger is jjjjj. AMC kkkkk.Custodian lllll. Trustee mmmmm.Sponsor 33. Appointment of brokers : nnnnn.Trustees appoint brokers ooooo.AMC appoints brokers ppppp.Trustees ensure due diligence on the part of AMC for empanelment of brokers qqqqq.B and C above 34. which of the entities can give loans against securities rrrrr.UTI sssss.Banks ttttt. MF uuuuu.None of the above Chapter 2,3,4,5,6 &7 Offer Document and SEBI Regulations Offer document as per Trust deed is issued by: vvvvv.AMC wwwww.Sponsors xxxxx.Either of the above yyyyy.Trustees Investor has right to zzzzz.Access to information aaaaaa.Propotionate right in the beneficial ownership of the assets of the scheme bbbbbb.Inspect documents cccccc.All of the above

Initial expenses of an open-end schemes can be dddddd.amortised over 10 years of the scheme eeeeee.amortised over 5 years of the scheme ffffff.cannot be amortised gggggg.amortised over 3 years Which of the following does not constitute the fundamental attributes of a scheme hhhhhh.the scheme is income bearing iiiiii.Investment policy of the scheme jjjjjj.the names and addresses of the registrars and custodians kkkkkk.None of the above An application form is normally supplied with llllll.Offer document mmmmmm.Annual report nnnnnn.Due diligence certificate oooooo.Key information memorandum A mutual fund unitholder can sue pppppp.AMC qqqqqq.Sponsor rrrrrr.Trustees ssssss.All of the above A unitholder of assured returns fund, can sue in case the fund does not meet its obligation: tttttt.AMC uuuuuu.Sponsor vvvvvv.the person/entity whose name is specifically mentioned in the Offer document as guarantor to scheme. wwwwww.Cannot sue The investment and advisory fees for a fund with Rs.200 crores as average net assets is: xxxxxx.2.5 crores yyyyyy.2.25 crores zzzzzz.2 crores aaaaaaa.200 crores As per SEBI guidelines, a security traded on 21st July, Rs.22, 23rd July, Rs.25 and 25th July, Rs.28 would be valued on 28th July as: bbbbbbb.25 ccccccc.23 ddddddd.28 eeeeeee.22.5 As per SEBI guidelines, a security is to be treated as untraded when fffffff.security is never traded on stock exchange ggggggg.security is not traded for 30 days hhhhhhh.security is not traded for 60 days iiiiiii.None of the above Which of the following is true as per SEBI norms for debt investment? jjjjjjj.Investment of rated investment grade of a company should not exceed 15% of NAV

kkkkkkk.In case of rated as well as unrated but below investment grade, debt investment in a company should not exceed 10% of NAV lllllll.In any single company investment not to exceed 25% of NAV mmmmmmm.All of the above As per RBI guidelines, MMMF can invest in nnnnnnn.Corporate bonds ooooooo.Equity shares ppppppp.G-sec of maturity less than 1 year qqqqqqq.None of the above Which of the following is not a criteria for sponsor? rrrrrrr.Networth to be more than capital investment sssssss.Sponsor should contribute 40% of the net assets ttttttt.Sponsor should ensure that 20% of the funds assets should be invested in sponsors company. Which of the following is applicable to the debt market in India? uuuuuuu.The debt market is a wholesale market vvvvvvv.There are large players like banks, financial institutions, mutual funds, etc wwwwwww.Government securities are traded on a large scale xxxxxxx.All of the above AMC can directly approach the investors as well as take the help of yyyyyyy.Individual agents zzzzzzz.Banks and NBFC aaaaaaaa.Distribution companies bbbbbbbb.All of the above SEBI guidelines for agents includes cccccccc.Agents can sell products of a single mutual fund dddddddd.Agents can sell products of mutual funds with whom he has entered into agreements. eeeeeeee.Agents could be only individuals ffffffff.No SEBI guidelines A distributor is appointed by gggggggg.Trustee hhhhhhhh.AMC iiiiiiii.Sponsor jjjjjjjj.All of the above As per SEBI guidelines, AMC is prohibited to undertake the following activity kkkkkkkk.to be a trustee of some other mutual fund llllllll.to provide advisory functions to pension and provident funds mmmmmmmm.to look after the schemes of other mutual funds A prospective investor, as per SEBI regulations can seek recourse to nnnnnnnn.sue the trustees oooooooo.sue the AMC pppppppp.cannot seek recourse qqqqqqqq.sue the SEBI As per SEBI guidelines, a Due diligence certificate is not : rrrrrrrr.signed by a Compliance Officer/ CEO/MD of the mutual fund ssssssss.all legal formalities of a scheme are completed tttttttt.attached to Annual report

uuuuuuuu.forms part of Offer document A mutual fund unit holder can seek redressal if his complaint is not entertained by the mutual fund vvvvvvvv.AMC wwwwwwww.Trustees xxxxxxxx.SEBI yyyyyyyy.RBI If a unitholder does not agree with a merger of mutual fund / AMC with another mutual fund / AMC then zzzzzzzz.he can opt for withdrawal in open-end scheme aaaaaaaaa.he can opt for withdrawal only when SEBI allows so bbbbbbbbb.he can opt for withdrawal in open-end or closed-end scheme ccccccccc.None of the above Which of the following is not true of Key Information Memorandum ddddddddd.It is an abridged version of offer document eeeeeeeee.It is not issued by AMC fffffffff.It is supplied with application form ggggggggg.It contains the terms of issue Which of the following is not true as per SEBI norms? hhhhhhhhh.unrated securities are not to be valued iiiiiiiii.Bonds are valued at YTM jjjjjjjjj.Equity shares are valued at closing price in the market on the valuation date kkkkkkkkk.None of the above The printing expenses of key information memorandum of an open end scheme can be lllllllll.amortised over 5 years of the scheme mmmmmmmmm.cannot be amortised nnnnnnnnn.amortised over 10 years of the scheme ooooooooo.None of the above A scheme transfers the securities to another scheme under same AMC. Which is incorrect : ppppppppp.The AMC can IST upto 4% the total value of holding in any inter-scheme transfer. qqqqqqqqq.The securities are sold at market value + 10% add. Charges The fund portfolio is submitted to SEBI by : rrrrrrrrr.AMC Directors sssssssss.Trustees ttttttttt.Fund Manager uuuuuuuuu.Sponsors The fundamental attributes have to be mentioned in the offer document . vvvvvvvvv.The scheme objective is clearly defined. wwwwwwwww.Any subsequent change will be approved / informed to unitholders. xxxxxxxxx.The nature of scheme is known. yyyyyyyyy.All of the above. Direct marketing involves all of the following except ; zzzzzzzzz.Advertisement in newspapers aaaaaaaaaa.Selling via employees bbbbbbbbbb.Using distribution company of sponsor. cccccccccc.Seminar presentation.

The disclosures regarding the load to be disclosed in offer document for open ended scheme dddddddddd.Estimated load spread over 5 years including contingent deferred sales charge. eeeeeeeeee.Details of initial issue expenses for scheme and other schemes launched during the last fiscal by the AMC. ffffffffff.Estimated annual recurring expenses as a percent of average weekly net assets. gggggggggg.All of the above. Initial issue expense limit is : hhhhhhhhhh.6% iiiiiiiiii.3% jjjjjjjjjj.4% kkkkkkkkkk.5% Fundamental attributes to be changed ; llllllllll.75% of unitholders consent for closed-ended schemes and informing unitholders of open-ended schemes mmmmmmmmmm.Approval of SEBI nnnnnnnnnn.Approval of trustees oooooooooo.All of the above KIM is also available at pppppppppp.Agents qqqqqqqqqq.Banks rrrrrrrrrr.Distribution Agencies ssssssssss.All of the above Which of the following qualifies as a SRO tttttttttt.SEBI uuuuuuuuuu.RBI vvvvvvvvvv.BSE wwwwwwwwww.AMFI Unitholders expected a good return in past scheme but the expectations were not met. He can; xxxxxxxxxx.sue the AMC yyyyyyyyyy.sue the Trustee zzzzzzzzzz.sue the Trust aaaaaaaaaaa.None of the above. Beneficial owner means : bbbbbbbbbbb.owns part of Trust ccccccccccc.own the company ddddddddddd.owns units eeeeeeeeeee.none of the above Custodian is fffffffffff.handling mere securities in terms of physical delivery and eventual safekeeping ggggggggggg.holding financial dealings by holding its bank account hhhhhhhhhhh.issuing and redeeming units of a mutual fund iiiiiiiiiii.all of the above Standard risk factors jjjjjjjjjjj.Past performance of sponsor/AMC/MF is not indicative of the future performance of the Trust

kkkkkkkkkkk.Risk arising from non-diversification lllllllllll.Assured return scheme, if assurance until maturity it must be stated mmmmmmmmmmm.All of the above Which is not a fundamental attribute nnnnnnnnnnn.Name / address of registrar ooooooooooo.It is an income scheme ppppppppppp.The scheme is for 10 years qqqqqqqqqqq.65% on debt security. Associate transaction can be performed by giving the following disclosures. rrrrrrrrrrr.Policy for investing sssssssssss.If invest more than 25% of its net assets ttttttttttt.Business given to associate broker and distributors uuuuuuuuuuu.All of the above Who can invest in MF except vvvvvvvvvvv.Banks wwwwwwwwwww.NRI xxxxxxxxxxx.FIIs yyyyyyyyyyy.Foreign citizens Non traded securities as per SEBI, when a security is not traded on any Stock Exchanges zzzzzzzzzzz.60 days prior to valuation date aaaaaaaaaaaa.30 days prior to valuation date bbbbbbbbbbbb.Marked to market cccccccccccc.None of the above. As per SEBI, which is untrue in respect of non traded securities dddddddddddd.Call money at cost + accrual eeeeeeeeeeee.Non traded instruments will be valued at cost plus interest accrued ffffffffffff.Untraded need not be valued gggggggggggg.All of the above Amortisation of initial issue expenses of closed-ended funds hhhhhhhhhhhh.Weekly iiiiiiiiiiii.Monthly jjjjjjjjjjjj.Yearly kkkkkkkkkkkk.End of the period Investment is treated NPA llllllllllll.if no returns are provided by way of interest for more than 2 years mmmmmmmmmmmm.if no returns are provided by way of interest for more than 18 months nnnnnnnnnnnn.if no returns are provided by way of interest for more than 1 years oooooooooooo.all of the above A mutual fund shall not invest pppppppppppp.more than 5% of its NAV in the unlisted equity related instruments in case of OES qqqqqqqqqqqq.more than 10% of its NAV in the unlisted equity related instruments in case of CES rrrrrrrrrrrr.more than 10% of its NAV in equity related instruments of any company ssssssssssss.all of the above

A mutual fund shall not invest tttttttttttt.more than 15% of its NAV in rated debt instruments issued by a single issuer uuuuuuuuuuuu.more than 10% of its NAV in un-rated debt instruments issued by a single issuer vvvvvvvvvvvv.total investment in un-rated debt instruments shall not exceed 25% of the NAV wwwwwwwwwwww.all of the above Contigent deffered sales charges should not exceed xxxxxxxxxxxx.4% of the redemption proceeds in the first year yyyyyyyyyyyy.3% of the redemption proceeds in the second year zzzzzzzzzzzz.2% of the redemption proceeds in the third year aaaaaaaaaaaaa.1% of the redemption proceeds in the fourth year bbbbbbbbbbbbb.all of the above A scheme can be wound up if ccccccccccccc.If 75 % of unitholder pass a resolution ddddddddddddd.after repaying the amount due to the unitholder eeeeeeeeeeeee.Disclosing reasons of winding up in two daily news papers having circulation all over India and a vernacular newspaper circulating at the place where mutual fund is formed. fffffffffffff.All of the above Dividend received by the fund should be recognised ggggggggggggg.on the date of declaration hhhhhhhhhhhhh.on the date of receipt iiiiiiiiiiiii.on the date of share is quoted on ex-dividend basis jjjjjjjjjjjjj.none of the above Identify the recurring expenses: kkkkkkkkkkkkk.brokerage and transactions cost lllllllllllll.marketing and selling expenses mmmmmmmmmmmmm.registrar fees nnnnnnnnnnnnn.all of the above Purchase and sale of investment should be: ooooooooooooo.recognised on the trade date ppppppppppppp.on the settlement date qqqqqqqqqqqqq.either of the a) and b ) rrrrrrrrrrrrr.none of the above

Chapter 8 & 9. Investment Management and Measuring & Evaluating Mutual Fund Performance.

Net Asset Value is sssssssssssss.The value of each share or unit. ttttttttttttt.The value of the total assets of the fund divided by total number of outstanding units uuuuuuuuuuuuu.The value of investors part ownership in the fund

vvvvvvvvvvvvv.All of the above If the value of total assets of a fund is 12000 and the fund has issued 900 units, the NAV of the unit is: wwwwwwwwwwwww.13.33 xxxxxxxxxxxxx.13.00 yyyyyyyyyyyyy.14.00 zzzzzzzzzzzzz.13.35 If the NAV per unit is 14.55 and the outstanding units of a fund are 1365 then the total assets of the fund are aaaaaaaaaaaaaa.20000 bbbbbbbbbbbbbb.19860.75 cccccccccccccc.19861 dddddddddddddd.1986.75 An amount of Rs.300 becomes Rs.600 in 8 years. The annualised rate of return is: eeeeeeeeeeeeee.12.5% ffffffffffffff.9% gggggggggggggg.Insufficient data hhhhhhhhhhhhhh.100% A closed-end scheme is quoted at discount to NAV in the stock exchange when iiiiiiiiiiiiii.the markets are bearish jjjjjjjjjjjjjj.the investor perceives the inability of the fund to maintain the NAV kkkkkkkkkkkkkk.Assets are undervalued llllllllllllll.None of the above An asset of Rs.75000 bought in 1995 was sold in 1998 for Rs.125000. The inflationary index in 1995 and 1998 are 251 and 361 respectively. The sum liable for tax is: mmmmmmmmmmmmmm.Insufficient data nnnnnnnnnnnnnn.Rs 50000/oooooooooooooo.Rs 17131/pppppppppppppp.Rs 125000/When interest rate rises, Debt fund qqqqqqqqqqqqqq.increases in value rrrrrrrrrrrrrr.decreases in value ssssssssssssss.is not affected by interest rate tttttttttttttt.None of the above A high P/E multiple of a fund in comparison to average market multiple could be of uuuuuuuuuuuuuu.Value fund vvvvvvvvvvvvvv.Growth fund wwwwwwwwwwwwww.Balanced fund xxxxxxxxxxxxxx.Equity diversified fund

A Mutual fund declares Re 1 as distribution. The income in the hands of unit holders is yyyyyyyyyyyyyy.taxable at 20% zzzzzzzzzzzzzz.not taxable in the hands of unitholders aaaaaaaaaaaaaaa.Information is inadequate to assess tax liability bbbbbbbbbbbbbbb.Income tax will be assessed as per unitholders liability

Why an investor should prefer investing in mutual funds to investing in equities ccccccccccccccc.the investors objectives will be mostly met by mutual fund ddddddddddddddd. the investor can diversify his portfolio eeeeeeeeeeeeeee. professional management is not required fffffffffffffff. reduced transaction costs are wiped out by management fees What is true of the following? a. A load increases value of NAV b. A load is paid towards initial expenses c. None of the above Compounding of investment is best explained by ggggggggggggggg.Balanced fund hhhhhhhhhhhhhhh.Growth fund iiiiiiiiiiiiiii.Value fund jjjjjjjjjjjjjjj.Equity fund An investor can assess his funds performance to kkkkkkkkkkkkkkk.The performance of another mutual fund lllllllllllllll.The performance of overall stock market mmmmmmmmmmmmmmm.The performance of similar financial products and schemes available in the market nnnnnnnnnnnnnnn.All of the above When is the value of stock not unlocked. ooooooooooooooo.None of the below ppppppppppppppp.when buy-back of shares takes place qqqqqqqqqqqqqqq.when corporate restructuring of company rrrrrrrrrrrrrrr.when there is a bull run in the market. For choosing an appropriate benchmark. The following are required except sssssssssssssss.The portfolio composition and size. ttttttttttttttt.Investment objective uuuuuuuuuuuuuuu.Historical data of Fund performance vvvvvvvvvvvvvvv.Nature of investments Comparison of Direct Equity and Mutual Fund Investment, which is true. wwwwwwwwwwwwwww.A large capital required in MF as compared to direct investing. xxxxxxxxxxxxxxx.Diversification is possible in Direct Equity as compared to MF. yyyyyyyyyyyyyyy.Transaction costs with fund wipe out the profits as compared to equity. zzzzzzzzzzzzzzz.The investment objective is possible through MF investing as against Direct Equity investment. Mainstream diversified debt funds is most affected by : aaaaaaaaaaaaaaaa.Reinvestment risk bbbbbbbbbbbbbbbb.Liquidity risk cccccccccccccccc.Interest rate risk dddddddddddddddd.Default risk If yield falls, the Fund Manager will do all except; eeeeeeeeeeeeeeee.Sell short maturity stocks and buy long maturity papers. ffffffffffffffff.See that the funds average duration become longer than the market average duration.

gggggggggggggggg.Sell long duration stocks and buy short duration stocks. hhhhhhhhhhhhhhhh.Sell low coupon stocks and buy high coupon stocks. An investor purchased units in Mutual Fund in 1995 for Rs.75000/-. He sold the units in 1998 for Rs.125000/- Cost of inflation in 1995 271 and in 1998-371 What is the captial gains. iiiiiiiiiiiiiiii.22324.72 jjjjjjjjjjjjjjjj.19487.52 kkkkkkkkkkkkkkkk.70215.63 llllllllllllllll.None A bond with a coupon of 9% when interest rates for similar maturities are 11% will sell at mmmmmmmmmmmmmmmm.Above par nnnnnnnnnnnnnnnn.Below par oooooooooooooooo.At par pppppppppppppppp.At a price which is not related to interest rates for similar maturities