Q I-

For a person to be qualified as a NRI, he must have stayed outside India for more than days in a previous financial year.
150
182
365
280

0 Un Attempted

CORRECTANSWER:

182

Explanation:
An individual is treated as resident in India if he stays in India for:

(a) 182 days or more during the relevant previous year; or

(b) 60 days or more (but less than 182 days) during the relevant previous year and for 365 days or more in the last 4 years.

Therefore, if a person stays outside India for more than 182 days, he will be treated as a NRI.
Q2. Which of the following is considered to be an investment objective?
Current income
Capital preservation
Capital appreciation
All of the above

0 Un Attempted

CORRECT ANSWER:

All of the above

Explanation:

Investors’ objectives are identified in relation to risk-return-liquidity. Investors may state their investment objectives in terms of desired return in absolute or relative sense. Generally, investors
invest for preservation of capital, regular income and capital appreciation.

The first step in the investment process is the development of ________ .

Financial statement
Statement of cash needs
Q 3.
Objective statement
Investment Policy statement

0 Un Attempted

CORRECTANSWER:

Investment Policy statement

Explanation:
Portfolio management process involves a set of integrated activities undertaken in a logical, orderly and consistent manner to create and maintain optimum portfolio.

The first step in the process of portfolio management is development of policy statement for the portfolio. It is a road map that identifies investors risk appetite and defines investment
objectives, goals and investment constraints.
Q4. _________ marked the beginning of PMS when SEBI issued SEBI (Portfolio Managers) Regulations.
January 1999
January 2010
January 1993
January 2020

0 Un Attempted

CORRECTANSWER:

January 1993

Explanation:

January 1993, marked the beginning of Portfolio Management Service when SEBI issued Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993. These were one of
the first few regulations issued by the regulators.

Except for the one that provides only the _________ , every portfolio manager shall appoint a custodian in respect of securities managed or administered by it.
advisory services
Non-discretionary services
Q 5.

discretionary services
None of the above

0 Un Attempted

CORRECT ANSWER: advisory services

Explanation:

Except for the portfolio manager who provides only the advisory services, every portfolio manager shall appoint a custodian in respect of securities managed or administered by it. Details of
custodian like its Name, Address, SEBI Registration No., Date of Appointment need to be furnished in the application for obtaining registration to the regulator.

Which of following entity is NOT eligible to invest into PMS?

Association of person
Partnership Firms
Proprietorship firms
None of the above

0 Un Attempted
Q 6.

CORRECTANSWER:

None of the above

Explanation:
All of the above can invest in PMS.

The following entities can invest in PMS: • Individuals • Non-resident Indians (as per the RBI guidelines) • Hindu Undivided Family • Proprietorship firms • Association of person • Partnership
Firms • Limited liability Partnership • Trust • Body Corporate

If there is an uncertainty with respect to the future payment, the investor would require return more than the nominal required rate of return. The additional
component is called ________.
Alpha
Risk free rate of return
Risk premium
Both Alpha and Risk free rate of return

0 Un Attempted
Q 7.

CORRECTANSWER:

Risk premium

Explanation:

The returns from most of the investment opportunities (apart from Government bonds) do not have certainty of the amount and the timing of cashflows. Further, the uncertainty of receiving the
future cashflows vary amongst investments. In such cases, investors would require compensation for the uncertainty associated with future cashflows.

This additional compensation over the nominal risk-free rate is called risk premium. If the investors perceive higher risk (more uncertainty with respect to the future payment), they would
demand higher risk premium.
Q 8.
Portfolio performance measure of “Information Ratio’’ ____________
calculates average differential return per unit of variability of differential return evaluates portfolio performance on the
basis of return per unit of risk adjusts portfolio risk to match benchmark risk
compares portfolio returns to expected returns under CAPM

0 Un Attempted

CORRECT ANSWER:

calculates average differential return per unit of variability of differential return

Explanation:

If one wish to determine whether or not an observed alpha is due to skill or chance, we can compute information (appraisal) ratio.

It calculates average differential return per unit of variability of differential return.

Q 9.

Arbitrage opportunities can exist between

Two futures prices
Spot and futures prices
Futures and options prices
All of the above 0 Un Attempted

CORRECT ANSWER:

All of the above

Explanation:

Arbitrage is the process to identify price differential in two markets and indulge in trades that reduce such differences in price and profit from it. Such arbitrage opportunities can exist between
the spot and future prices, between two future prices of different expiry, between futures and option prices etc.

The measure of performance which divides the portfolio’s risk premium by the portfolio’s beta is the ________ .
Jensen measure
Treynor measure
Sharpe measure
Fama measure

0 Un Attempted

CORRECT ANSWER:

Treynor measure

Explanation:

The Treynor measure adjusts excess return for systematic risk. It is computed by dividing a portfolio's excess return, by its beta.
As Treynor ratio indicates return per unit of systematic risk. Hence it is a useful measure of performance if an investor wishes to evaluate a portfolio in combination with other actively managed
portfolios.

What is/are the regulatory constraints for investors resident in India?

Access to information which is unavailable to the general public Investment in overseas markets
Both of the above
None of the above

0 Un Attempted

CORRECT ANSWER:

Both of the above

Explanation:
Regulatory constraints :

Generally individual investors do not have many regulatory constraints. But if there are any, they need to be followed. Regulations can also constraint the investment choices available to the
investors. For example, as per the Reserve Bank of India’s notification, Liberalised Remittance Scheme (LRS), an Indian resident individua can only invest up to 149 $250,000 overseas per
year.34 Indian resident individual investors cannot make investments greater than the amount specified by the regulator.

Another example is the sale or purchase of securities on the basis of information that is not publicly known. Usually people who have access to such information are insiders of the company
and they are prohibited from trading on the basis of insider information.

As per SEBI Regulations, what is the application amount of a QIB which will give them the status of Anchor Investor?
Rs. 10 lakhs
Rs. 1 crore
Rs. 5 crores
Rs. 10 crores

0 Un Attempted
Q 11.

CORRECTANSWER:

Rs. 10 crores

Explanation:

Anchor investor means a qualified institutional buyer who makes an application for a value of ten crore rupees or more in a public issue made through the book building process in accordance
with Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations.

Calculate the duration of a zero coupon bond which has a balance term to maturity of four years.
Two years
Four Years
Eight Years
Six Years

0 Un Attempted

CORRECTANSWER:

Four Years

Explanation:

Duration of a bond is a measure of the time taken to recover the initial investment in present value terms. In simplest form, duration refers to the payback period of a bond to break even, i.e.,
the time taken for a bond to repay its own purchase price.

Because zero coupon bonds make no coupon payments, a zero coupon bond's duration will be equal to its maturity.

What type of investment objective should be pursued by an investor during the Consolidation phase?
Tax Planning
Capital Preservation
Q 12.

Regular income
Capital Appreciation

0 Un Attempted

CORRECTANSWER:

Capital Preservation

Explanation:

The consolidation or mid-to-late-career phase of the typical life cycle is characterized by the period when income exceeds expenses. As a result, this stage is characterized by the
consolidation of investment portfolio.

At this time, while the time horizon to retirement is still relatively long (15 or 20 years), investors may start looking for capital preservation. High capital gain investments are balanced with
some lower-risk assets.

________ costs influence the Portfolio Rebalancing decisions.

Taxes and General Expenses
Bid Ask spreads and Taxes
Transaction costs and Taxes
Equity Research costs and Transaction costs

0 Un Attempted

CORRECTANSWER:
Transaction costs and Taxes
Q 13.
Explanation:

Portfolio rebalancing involves a simple trade-off: the cost of rebalancing versus the cost of not rebalancing. While deciding the frequency of rebalancing, the trade-off between the cost of doing
it and not doing it is to be arrived at.

There are two types of cost - transaction cost and tax cost. Transaction costs is the time and money costs like research cost, brokerage etc., for buying and selling securities.

With respect to a Bond, what is an Indenture?

An Indenture is a special kind of high value bond
An Indenture is a clause of indemnity in a bond
An Indenture is a legal agreement describing the features of a bond
An Indenture is the power of SEBI to write off the liability on a bond 0 Un Attempted

CORRECT ANSWER:

An Indenture is a legal agreement describing the features of a bond

Explanation:

An important document to understand the safety aspects of the bond is its Indenture. It is the legal agreement between the firm issuing the bond and the bondholders, providing the specific
terms of the debt agreement. All the features of the bond i.e. its par value, coupon rate, maturity period, periodicity of coupon payments, collateral for the bond, seniority of the payments will be
set forth in the indenture.
The threshold frequency of performance reporting required by the portfolio managers as per SEBI (Portfolio managers) regulations is ______
5 months
4 months
3 months
2 months

0 Un Attempted

CORRECTANSWER:

3 months
Q 14.
Explanation:

As per SEBI Portfolio Managers regulations - The portfolio manager shall furnish periodically a report to the client, as agreed in the contract, but not exceeding a period of three months and as
and when required by the client.

Identify the INCORRECT statement with respect to fees paid by the client to the portfolio manager.
The client does not have to pay fees for services which are outsourced by the portfolio manager
Each service type wise fee payable is agreed upon
Fee payable by the client is agreed upon in the initial agreement
Performance fee charged by Portfolio manager is completely negotiable

0 Un Attempted

CORRECTANSWER:

The client does not have to pay fees for services which are outsourced by the portfolio manager

Explanation:

Any charges payable for outsourced professional services like fund accounting, taxation, auditing, and any legal services, franking charges and notarizations, etc. incurred on behalf of the
client by the portfolio manager is payable by the client.

A PMS firm need not keep which of these records?

Balance sheet of the firm
Profit and Loss Account of the firm
Financial statements of companies in which the PMS has invested
Auditor’s report of the firm

0 Un Attempted

CORRECT ANSWER:

Financial statements of companies in which the PMS has invested

Q 15.
Explanation:

Every portfolio manager shall keep and maintain the following books of accounts, records and documents namely: -

(a) a copy of balance sheet at the end of each accounting period; (b) a copy of the profit and loss account for each accounting period; (c) a copy of the auditor’s report on the accounts for
each accounting period; (d) a statement of financial position and; (e) records in support of every investment transaction or recommendation which will indicate the data, facts and opinion
leading to the investment decision.

It need not keep records of financial statements of the companies in which it has invested.

An Appraisal Ratio makes use of Tracking error - State whether True or False?
True - as a denominator
True - as a numerator
False - Appraisal Ratio does not use Tracking error

0 Un Attempted

CORRECTANSWER:

True - as a denominator

Explanation:

In an Appraisal Ratio, the numerator represents the fund manager’s ability to use his skill and information to generate a portfolio return that differs from the benchmark.

The denominator measures the amount of residual (unsystematic) risk that the investor incurred in pursuit of those excess returns. The numerator is often referred to as the active return on
the portfolio whereas denominator is referred to as the active risk. The point to be noted is that active risk is nothing but tracking error of the portfolio.

A net amount of Rs 25,000 has to be paid as interest to an investor. The TDS (Tax Deducted at Source) is 10%. Calculate how much should be set aside for the
payment of interest?
Rs. 27500
Rs. 22500
Rs. 27777.77
Q 16.

Rs. 28444.44

0 Un Attempted

CORRECTANSWER:

Rs. 27777.77

Explanation:
The formula to get Net from Gross after tax is -

Net = Gross - (Gross X Tax)

[Let Gross = G]

[Tax is 10% = 10/100= 0.1}

Net amount is Rs 25000

25000 = G - (G x 0.1)

25000 = G-0.1 G

[1G-0.1G = .9G]

25000 = .9G

G = 25000/.9 = 27777.77

______ cannot be an objective for investment.

Capital Rationing
Capital Appreciation
Capital Preservation
Current Income
Q 17.

0 Un Attempted

CORRECTANSWER:

Capital Rationing

Explanation:

People invest to achieve goals. Investment objectives can be defined as investors’ goals expressed in terms of risk, return and liquidity preferences.

The return objective may be simplified as follows:

1. Capital Preservation means minimizing or avoiding the chances of erosion in the principal amount of investment.

2. Capital Appreciation is an appropriate investment objective for those who want their portfolio value to grow over a period of time and are prepared to take risks.

3. Current Income is an investment objective pursued when investor wants her portfolio to generate income at regular interval by way of dividend, interest, rental income rather than
appreciation in the value of the portfolio.

Fundamental Analysis is the process of determining ________ for the stock.

Intrinsic value
Face value
Market value
Book value

0 Un Attempted

CORRECT ANSWER:

Intrinsic value
Q 18.
Explanation:
Fundamental analysis is the process of determining intrinsic value for the stock. These values depend on underlying economic factors such as future earnings or cash flows, interest rates, and
risk variables. By examining these factors, intrinsic value of the stock is determined.

Investor should buy the stock if its market price is below intrinsic value and do not buy, or sell, if the market price is above the intrinsic value.

What is the Cash Management team of a mutual fund responsible for?

Fund accounting
Taxation compliance
Its the interface between banks and fund management team
AMC finances 0 Un Attempted

CORRECTANSWER:

Its the interface between banks and fund management team

Explanation:

Cash management team works as an interface between the banks and the fund management team-they ensure that money received in the bank when investors purchase units are passed on
to the fund managers for further investment in securities and the investors get the redemption proceeds when they submit the redemption request.

When an individual faces shortfall of money, his/her immediate effective response is to ______ .
Reduce his/her expenses
Borrow
Increase his/her income
Invest

0 Un Attempted

CORRECTANSWER:

Borrow
Q 19.
Explanation:

People earn money and spend money. They pass through various phases in their life cycle. During some phases, they earn more money than they spend. In other phases, they earn less than
they spend.

Therefore, sometimes they have to borrow money to meet the shortfall.

The _____ has the power to appoint an auditor to conduct annual audits of records of their transactions with a PMS firm.
Compliance Officer
RBI
Client
SEBI

0 UnAttempted

CORRECTANSWER:

Client

Explanation:

The client may appoint a chartered accountant to audit the books and accounts of the portfolio manager relating to his transactions and the portfolio manager shall co-operate with such
chartered accountant in course of the audit.

Mr. Avinash is a portfolio manager and is planning to sell securities but he is not sure about the ownership or existence of the securities. Should he go ahead with
the deal?
Yes, he can go ahead with thedealbecause it is for the company to prove the security’s authenticity
Yes, he can go ahead with thedealbecause his intentions are good
Yes, he can go ahead with thedeal because by the time of the completion of the transaction he will have clarity
No; he cannot go ahead with the deal because it will be deemed a fraudulent transaction as per SEBI’s Prevention of fraudulent practices

0 Un Attempted
Q 20.

CORRECT ANSWER:

No: he cannot go ahead with the deal because it will be deemed a fraudulent transaction as per SEBI’s Prevention of fraudulent practices

Explanation:

Selling securities for which the ownership is not proved will be considered as a fraudulent activity.

Market experts are predicting a high volatility period for the next 2-3 years to come. Investors in which of following phases should be alert and consider
rebalancing?
Accumulating and Consolidation phases
Consolidation and Spending phases
Gifting and Consolidation phases
Gifting and Accumulating phases

0 Un Attempted

CORRECT ANSWER:

Consolidation and Spending phases

Explanation:
Consolidation Phase : The consolidation or mid-to-late-career stage of the typical life cycle is characterized by the period when income exceeds expenses. As a result, this stage is
characterized by the consolidation of investment portfolio

Spending Phase : This is the period when living expenses are covered not from earned income but from accumulated assets such as investments and retirement corpus. Because of the
heavy reliance on investments in this phase and the unlikelihood of going back to work, the focus is on stability in investment portfolio

So in these two phases, it is important to preserve the capital and not invest in volatile investments.
Q 21.

Mr. Mistry has been granted a certificate as a registered Portfolio Manager by SEBI. What can lead to cancellation I suspension of his registration with SEBI in the
next 12 months?
The principal officer of Mr. Mistry has acquired a CFA charter only recently
Mr. Mistry has a net worth of Rs. 5 crore
The Compliance Officer of Mr. Mistry has been recently charged for an economic offence

0 Un Attempted

CORRECTANSWER:

The Compliance Officer of Mr. Mistry has been recently charged for an economic offence

Explanation:
As per SEBI rules - 'The applicant, its director or partner, principal officer, compliance officer or the employee should not at any time been convicted for any offence involving moral turpitude or
has been found guilty of any economic offence'

Beta is used to measure_______

Unsystematic risk
Systematic risk
Total risk
All types of stock market risks

0 Un Attempted

CORRECTANSWER:

Systematic risk
Q 22.
Explanation:

Systematic risk is defined as risk due to common risk factors, like interest rates, exchange rates, commodities prices. It is linked to supply and demand in various marketplaces. All
investments get affected by these common risk factors directly or indirectly. Systematic risks cannot be diversified away, though it can be hedged.

Systematic risk is measured by Beta. Beta relates the return of a stock or a portfolio to the return on market index. It reflects the sensitivity of the fund’s return to fluctuations in the market
index.

______ are the beneficiaries of a Mutual Fund trust.

Unit holders
Sponsors
Trustees
Asset Management Company (AMC) 0 Un Attempted

CORRECTANSWER:

Unit holders

Explanation:
Every trust has beneficiaries. The beneficiaries, in the case of a mutual fund trust, are the investors (unit holders) who invest in various schemes of the mutual fund.
Q 23.

Ms. Shobha has invested Rs 10 lakhs in USA when the USD/INR rate was Rs. 74.25 per USD. After about six months, the USD/INR rate has changed to Rs. 71.25 per
USD. In this scenario, the new INR value of the investment - A. Will depend on the change in the value of investment in USA and its value in US Dollars B. Will
surely decrease as INR has appreciated
Only A
Only B
Both A and B
Neither A nor B

0 Un Attempted

CORRECTANSWER:

Only A

Explanation:

The INR value of the investment depends on two factors -

1. The USD/INR exchange rate

2. The appreciation/depreciation in the value of the security / asset invested

Normally, if the Rupee appreciates against Dollar (Rs 74.25 to Rs 71.25 as in the above question) the value of investments will decrease in Rupee terms. But if the value of the security has
increased in the US, then the exchange rate loss will be recovered by the price rise.
Q 24.

Identify the TRUE statement with respect to ’Returns'.

The Money Weighted rate of return is equivalent to Annualized Holding period return
The Time Weighted rate of return is equivalent to Geometric Mean
Both of the above
None of the above

0 Un Attempted

CORRECTANSWER:

The Time Weighted rate of return is equivalent to Geometric Mean

Explanation:
The Time weighted rate of return (TWRR) is the same as geometric return.

The money-weighted rate of return (MWRR) is a measure of the performance of an investment. The MWRR is calculated by finding the rate of return that will set the present values (PV) of all
cash flows equal to the value of the initial investment.

The MWRR is equivalent to the Internal Rate of Return (IRR). MWRR can be compared with the TWR, which removes the effects of cash in- and outflows.

Identify which provision of portfolio managers regulations is not applicable for eligible fund managers?
Submissions of required declarations to provide services to eligible investment funds
Compliance under section 9A of the income Tax Act
Q 25.

Disclosure requirements towards eligible investment funds

Audit of overseas fund

0 Un Attempted

CORRECT ANSWER:

Audit of overseas fund

Explanation:

SEBI has identified certain provisions of the PMS Regulations which would not be applicable to Eligible Fund Managers pertaining to their activities as fund manager to Eligible Investment
Funds and one of them is - 'Audit of overseas fund'.

Identify the true statement(s) - A. While evaluating a scheme, the expenses ratio is more significant for debt mutual fund schemes than equity mutual fund
schemes. B. While investing in a short term debt mutual fund, one must verify the credit quality of the portfolio
Only A
Only B
Both A and B
Neither A nor B

0 Un Attempted
Q 26.

CORRECTANSWER:

Both A and B

Explanation:
1. Debt funds usually give a limited return depending on the interest rates etc. Equity funds tend to give a higher return. So a high expense ratio in a debt fund will have a much bigger impact
on the returns of the debt fund.

2. One must check the credit quality of the portfolio while investing in any debt fund - be it long term or short term.

A Portfolio Manager believes that the equity market is over priced and can correct shortly. What action should he take ?
He should adopt a wait and watch strategy
Rebalancing should be done depending on the investor psychology
Assign more weight to equity till the time market corrects
Reduce weight in equity before the market corrects 0 Un Attempted

CORRECTANSWER:

Reduce weight in equity before the market corrects

Q 27.

Explanation:

When market conditions favour one asset class over other, the portfolio manager may temporarily shift money from one asset class to another to exploit discrepancy in market with a view to
earn returns.

So, if a portfolio manager believes that the stock market is overvalued and is up for a correction, then he may reduce the proportion of the portfolio that is allocated to equities and increase the
proportion allocated to debt.

Ms. Kavita is a PMS Distributor. Her client wants some explanations on the way the performance projections are made. What should she do?
Ms. Kavita should inform the clients that in real life, the projections never come true and hence they can be ignored
Ms. Kavita should express her inability to explain as it is a complex subject
Ms. Kavita should refer the client to the Portfolio Manager
Ms. Kavita is expected to explain and should take all efforts to explain it 0 Un Attempted

CORRECTANSWER:

Ms. Kavita is expected to explain and should take all efforts to explain it

Explanation:

As per SEBI Code of conduct for PMS Distributors - The PMS Distributor should provide full and latest information about investment approaches and also highlight the assumptions made in
performance calculations, risk assessments, performance projections etc., if any, for such investment approaches.
Q 28.

Identify the TRUE statement with respect to Investment Policy statement.

Investment policy statement is a document which needs periodic updates as per the investors requirements
Investment policy statement is an offer document prepared by the portfolio manager to attract and guide the investors
Investment policy statement is a blank form provided by SEBI which needs to be filled up by the investors
All of the above 0 Un Attempted

CORRECTANSWER:

Investment policy statement is a document which needs periodic updates as per the investors requirements

Explanation:

Development of Investment Policy Statement (IPS) is the key step in the process of portfolio management. IPS is the road map that guides the investment process. Either investors or their
advisors draft the IPS specifying their investment objectives, goals, constraints, preferences and risks they are willing to take.

All investment decision are based on IPS considering investors’ goal and objectives, risk appetite etc.. Since investors requirement’s change over a period time, IPS also needs to be updated
and revised periodically.

Which section of Companies Act 2013 defines a body corporate ?

Section 2 (14)
Section 1 (12)
Section 7 (11)
Section 2 (11)
Q 29.

0 Un Attempted

CORRECTANSWER:

Section 2 (11)

Explanation:
The Companies Act has provided an extensive definition of the term body corporate. The term "body corporate" is defined in Section 2(11) of the Companies Act, 2013.
Q 30.

Mr. Amit has a grievance with the portfolio manager and he submits the same on 1st September. The portfolio manager has to redress this grievance before

1 st November of the same year 1st October of the same year

1 st December of the same year 16th September of the same year

0 Un Attempted

CORRECTANSWER:

1st October of the same year

Explanation:

As per SEBI Act - The portfolio manager shall take adequate steps for redressal of grievances of the investors within one month of the date of the receipt of the complaint and keep SEBI
informed about the number, nature and other particulars of the complaints received.

Which of these contracts have an inherent risk of default as the parties to the transaction may fail to pay the agreed amount or deliver the commodity on maturity
of the contract?
A Futures Contract
A Forward Contract
An Options Contract
Q 31.

All of the above 0 Un Attempted

CORRECT ANSWER:

A Forward Contract

Explanation:
Forward contract is an agreement made directly between two parties to buy or sell an asset on a specific date in the future, at the terms decided today. A party to the contract may default on
his obligation if there is incentive to default.

For eg. A and B enter into a bilateral agreement, where A will purchase 100 kg of rice at Rs.20 per kg from B after 6 months. After 6 months, if price of rice is Rs.30 in the market then B may
forego his obligation to deliver 100 kg of rice at Rs.20 to A. Similarly, if price of rice falls to Rs.15 then A may purchase from the market at a lower price, instead of honouring the contract.

With respect to equity markets, what does Impact Cost mean?

Percentage price movement caused by a particular order size
Liquidity risk measure
Risk in illiquid stocks
All of the above

0 Un Attempted
Q 32.

CORRECTANSWER:

All of the above

Explanation:

Liquidity risk is measured by impact cost. The impact cost is the percentage price movement caused by a particular order size (let’s say an order size of Rs.1 lakh) from the average of the
best bid and offer price in the order book snapshot.

The impact cost is calculated for both—the buy and the sell side. Less liquid stocks are more thinly traded, and a single large trade can move their prices considerably. Such stocks have high
impact costs. A lower market impact implies the stock is more liquid.

The investment objective of Mr. Sundar is to have a regular income. He approaches a PMS firm for this purpose. Among the given four choices, which will be the
preferred choice of the portfolio manager?
New IPO's
Dividend paying equity shares
Zero coupon bonds
Small and Mid cap equity shares

0 Un Attempted
Q 33.

CORRECTANSWER:

Dividend paying equity shares

Explanation:

If regular income is the investment objective, funds will be invested in asset classes generating periodical income like dividend paying stocks, interest paying bond or/and rent paying realty.

(If the investment objective is capital appreciation, then investments need to be high return investments (like equity). If capital preservation is the primary investment objective, asset allocation
will be tilted towards safe bonds and debt securities)

An unlisted company is inviting subscription of securities from a select group of persons. This issue is neither a public issue nor a rights issue. Such an issue is
called as a _____ .
Private Placement
Private Equity
Preferential Issue
Convertible Debenture Issue

0 Un Attempted
Q 34.

CORRECTANSWER:

Private Placement

Explanation:

When an issuer makes an issue of securities to a select group of persons and which is neither a rights issue nor a public issue, it is called private placement. This is primarily a wholesale
issue of securities to institutional investors. It could be in the form of a Qualified Institutional Placement (QIP) or a preferential allotment.

Which of these is NOT considered by SEBI to decide the eligibility of a person as per the Declaration of Fit and Proper person ?
Integrity in character
Financial solvency
Conviction orders
Office of profit held

0 Un Attempted

CORRECTANSWER:

Office of profit held

Q 35.

Explanation:

For the purpose of determining as to whether an applicant or the intermediary is a fit and proper person’ the Board may take account of any consideration as it deems fit, including but not
limited to the following criteria in relation to the applicant or the intermediary, the principal officer and the key management persons by whatever name called -

(a) integrity, reputation and character; (b) absence of convictions and restraint orders; (c) competence including financial solvency and networth; (d) absence of categorization as a wilful
defaulter.

Office of profit held is not a criteria.

As per SEBI’s Regulations on Fee and Charges, what is the ‘High-Watermark’ for a PMS scheme? A. High Watermark is the highest value of portfolio account has
reached B. High Watermark is the threshold of portfolio value beyond which the performance based fees can be charged by the portfolio manager
Only A
Only B
Both A and B
Neither A nor B 0 Un Attempted

CORRECTANSWER:

Both A and B
Q 36.

Explanation:

High Water Mark is the highest value that the portfolio/account has reached. The portfolio manager charges performance based fee only on increase in portfolio value in excess of the
previously achieved high water mark.

Identify the additional documents which have to be collected for KYC of Non-Resident investors. A. Certified true copy of birth certificate B. Certified true copy of
the Overseas address C. Certified true copy of passport
Only A and B
Only B and C
Only A and C
AIIA, Band C 0 Un Attempted

CORRECTANSWER:

Only B and C

Explanation:

NRIs have to be KYC compliant in order to make investments in India. The following is the additional documentation, apart from proof of identity, proof of address and PAN card, for NRIs and
PIOs:
Q 37.

• Certified True Copy of Passport • Certified True Copy of the Overseas address • Permanent address • A certified true copy of the PIO Card (for PIOs) • In case of Merchant Navy NRIs,
Mariner’s declaration or certified copy of CDC (Continuous Discharge Certificate) is to be submitted.
Q 38.
Investment in antiques is an example of ______
Intangible Investment
Alternate Investment
Securities form of Investment
Real Investment

0 Un Attempted

CORRECT ANSWER:

Alternate Investment

Explanation:
Collectibles like paintings, art, antiques etc. are an alternative investment.
Q 39.
Identify the FALSE statement. Dealing in securities shall be deemed to be a manipulative or fraudulent if it involves ______ .
Entering into a trade in securities without the intention of performing it
Selling or pledging of securities in physical or dematerialized form
Inducing a person for dealing in securities for artificially inflating or depressing the prices in securities
Inducing any person to subscribe to an issue of shares

0 Un Attempted

CORRECTANSWER:

Selling or pledging of securities in physical or dematerialized form

Explanation:
As per SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 :

Dealing in securities shall be deemed to be a manipulative, fraudulent or an unfair trade practice if it involves

1. inducing any person to subscribe to an issue of the securities for fraudulently securing the minimum subscription to such issue of securities

2. inducing any person for dealing in any securities for artificially inflating, depressing, maintaining or causing fluctuation in the price of securities

3. entering into a transaction in securities without intention of performing it or without intention of change of ownership of such security
Q 40.
Risks due to sector specific/company specific factors is referred as ________
Systematic risks
Unsystematic risks
Speculative risks
Total risks

0 Un Attempted

CORRECTANSWER:

Unsystematic risks

Explanation:

Risks due to sector specific/company specific factors is referred as Unsystematic risks. These risks can be diversified away

Systematic risk is defined as risk due to common risk factors, like interest rates, exchange rates, commodities prices. It is linked to supply and demand in various marketplaces. All
investments get affected by these common risk factors directly or indirectly. Systematic risks cannot be diversified away, though it can be hedged.