QUESTIONS

In which of the following options does an investor

receive the distribution in hand?

Identify the TRUE statements with respect to the risks

associated with short selling and stock lending.
1. There is counterparty risk and liquidity risk in short
selling.
2. There is no risk associated with stock lending as the
transaction is done through an approved intermediary

Which of the following is INCORRECT with respect to

advertisements of Mutual Funds by AMCs.

Tactical Asset Allocation decisions are based on which

of these factors?

From the below mentioned entities associated with a

mutual fund, who has to mandatorily contribute to the
corpus of the mutual fund?

The benchmark for a debt mutual fund scheme could be

chosen on the basis of Scheme Type and Scheme Size. -
State whether True or False?

An Addendum has to be issued for changes in

.

Which of these funds will generally have a higher fund

management cost?
Which of these information is not contained in the
Scheme Information Document (SID)?

Which one of these is an advantage of investing in

Mutual Funds?

Identify the FALSE statements with respect to

benchmarks for mutual fund schemes.
A. A Multi-Cap fund can have Nifty 500 index as its
benchmark
B. A Multi-Cap fund can have BSE Sensex as its
benchmark

The minimum number of investors that a mutual fund

scheme should have:

Identify the TRUE statements:

1. The Beta of a diversified stock index is greater than 1
2. An investment with a beta of 0.8 will move 8 percent
when markets move by 10%
3. Beta as a measure of risk is relevant only for equity
schemes.

Identify the TRUE statement with respect to Total

Expense Ratio (TER).

Identify the FALSE statement:

1. When an investor sells his mutual fund units, the re-
purchase is done by the mutual fund. Therefore the
investor does not have to bear a tax on the capital gains
2. When an investor invests in a debt mutual fund for
more than three years, the capital gains will be
considered as Long term capital gain
Diversified equity funds are less risky compared to
Thematic funds in terms of risk.

Ms. Apeksha invests Rs 2 crore in a Gilt scheme at 2

pm with a local cheque. What would be the applicable
NAV for allotment of units?

When does the market price of close-end mutual fund

scheme converge with the NAV price?

The Net Asset Value (NAV) of a segregated portfolio

has to be declared on a .

is not included in the fundamental attributes of a

mutual fund scheme.

What is the purpose of ‘credit enhancement’ in case of

securitised transaction?

When is the Scheme Information Document (SID)

updated?

Which of these is a Passive Fund?

A) Gold Sector Fund
B) Gold Mining Companies Fund
C) Gold Exchange Traded Fund
D) Gilt Funds

Which of these investors is/are exempted from

providing PAN details for investments in Mutual
Funds?
Which of these documents have to be updated once in
six months?

An investor chooses a mutual fund scheme based on

whether his / her matches with that of the
scheme.
Mutual funds have to follow the regulations of Reserve
Bank of India (RBI) for investments in
.

To become a mutual fund distributor in India, one has to

pass an exam which is conducted by
.

How often does a mutual fund disclose the information

on Total Expense Ratio charged to a mutual fund
scheme and where is this published?

In India, the Mutual funds are constituted as

.

Suresh see’s that his friends are investing in a finance

scheme which is promising very high returns (a pond
scheme). He also blindly invests in the same scheme.
Which bias is Suresh exhibiting?

Which is the first step that a mutual fund distributor

should take in building a mutual fund portfolio for his
investors?

is a proper benchmark for a balanced hybrid

scheme.

In which of these cases will the ‘lock-in’ in a retirement

fund be lower than the prescribed 5 years?
Long term capital gains is NOT taxed in which of these
funds?
A. Balanced Advantage Funds
B. Balanced Funds
C. Diversified Equity Funds
D. Both A and B
E. Only C
F. Only A
G. Capital gains from all types of mutual funds are
taxed subject to certain conditions

Which expenses can be charged by the AMC to a

mutual fund scheme?

Smita is a young investor and her parents advice her to

invest in fixed deposits of banks so that these funds can
be used for her retirement. If Smita follows her parents
advice, what risk does she face?

Mr. X has invested Rs. 2,00,000 in a 370 day FMP and

on maturity he received Rs. 2,15,832. What is the
capital gain in this transaction?

Mr. Shah gives a local cheque at 2.30 pm of Rs 30 lacs

for investment in an Equity Scheme.
Which will be the applicable NAV for allotment of units
to Mr. Shah?

For which of these documents is Time Stamping

mandatory?

Which of these investors will settle for lower returns as

he/she prefers low level of risks?

A Certificate of Deposit issued by a bank will be for

.
A creditable benchmark of a mutual fund scheme should
be in sync with the .

Identify which of these statements is/are CORRECT?

A. Investors can be categorized on the basis of their age
and investors of same age should always have the same
asset allocation in their investment portfolios.
B. Only after considering the individual’s risk profile,
the asset allocation should be done between core
portfolio and satellite portfolio.

is a Passive Fund.

The main document which authorises a company to

invest in a particular Mutual Fund scheme is .

The transaction costs are low for investments in real

estate as compared to other financial assets. State
whether True or False?
Mr. Mehta is a stock market investor. The stock market
had crashed recently. Mr. Mehta pulls back all his
investment from the stock markets because he fears that
the markets will fall again. Which bias is Mr. Mehta
exhibiting?

Identify the true statement with respect tomeasuring

returns for Mutual Funds schemes.
A. Compounded Annual Growth Rate ‘CAGR’
technique has been prescribed by SEBI when dividend
is paid and compounding is to be considered
B. CAGR is the recognized standard for calculating
returns for investment horizon of greater than or equal
to 1 year
C. Simple Return can be calculated using the formula :
Sale Price - Cost Price / Cost Price
*100

Statement of Additional Information (SAI) has to be

regularly updated and the updation has to be done by the
end of 3 months every financial year - State whether
True or False?
OPTIONS
• Income Distribution cum capital withdrawal option
only
• Income distribution cum capital withdrawal
reinvestment plan only
• Income Distribution cum capital withdrawal option
and Income distribution cum capital withdrawal
reinvestment plan both
• Growth

• Only 1 is true
• Only 2 is true
• Both 1 and 2 are true

• The advertisements can use celebrities for

endorsements
• The advertisements can show past performance of the
scheme
• The advertisements can show the return numbers
• All of the above are incorrect

• Likely behaviour of the markets

• Age of the investor
• Income of the investor
• All of the above
• The Trustees
• The Custodians
• The Asset Management Company
• The Sponsors
• True
• False

• Fund Fact Sheet

• Half yearly results of the mutual fund
• Scheme Information Document (SID)
• Statement of Additional Information (SAI)
• Debt Fund
• Passive Equity Fund
• Active Equity Fund
• Equity Index Fund
• Names of securities in the scheme’s portfolio
• Investment objective of the scheme
• Risk factors of the scheme
• Portfolio features
• Economics of scale
• Portfolio customization
• Choice overload
• All of the above
• Only A is false
• Only B is false
• Both A and B are false
• None of the above

• 10 investors
• 20 investors
• 50 investors
• 100 investors
• Only 1 and 2 are true
• Only 2 and 3 are true
• Only 1 and 3 are true
• All 1, 2 and 3 are true

• Disclosure of TER is very critical as there is no

regulation capping it
• As the TER of mutual fund schemes is highly
regulated and therefore no disclosures are required
• SEBI has specific and strict regulations regarding the
cap for TER as well as the periodic disclosure of the
same
• None of the above

• Only 1 is false
• Only 2 is false
• Both 1 and 2 are false
• Duration
• Size
• Concentration
• Style
• Closing NAV of date of application
• Closing NAV of next business day
• Closing NAV of day immediately preceding the date
of application
• NAV of the business day on which the funds are
available for utilization

• During the New Fund Offer

• Before the New Fund Offer
• Toward maturity
• It never converges
• Daily basis after the credit event
• Weekly basis (on every Saturday) after the credit event
• Monthly basis after the credit event
• NAV need not be declared

• Exit loads
• Liquidity provisions such as listing, repurchase,
redemption
• Aggregate fees and expenses charged to the scheme
• Any safety net or guarantee provided

• Payment of higher coupon

• Generating capital gain
• Higher credit worthiness
• Every year
• Every month
• Every two years
• Every six months
• Both A and B
• Only D
• Only C
• All A, B, C and D

• Systemic investment plans, where annual investment

does not exceed Rs 50000
• Investors residing in the state of SiMixt
• Transactions undertaken on behalf of Central/State
government
• All of the above
• Mandatory portfolio disclosures
• Scheme Information Document
• Fund factsheet
• All of the above
• Investment period
• Investment objective
• Investment strategy
• Securities market
• Gold
• Money market
• Commodity market
• Securities and Exchange Board of India - SEBI
• National Stock Exchange - NSE NCFM
• National Institute of Securities Markets - NISM
• Association of Mutual Funds in India’s - AMFI
• Daily - on the mutual fund website
• Weekly - on the mutual fund website
• Once a month in the fund Factsheet
• Once a year when it makes the mandatory disclosures
to SEBI and AMFI

• Limited Company
• Non-Government Organisation
• Self Regulatory Organisations
• Trusts
• Herd mentality
• Loss Aversion
• Confidence bias
• Anchoring
• He should list the best performing funds for the
investor to select
• He should set the financial goals of the investor
• He should invest the amount in a liquid fund and set a
Systematic Transfer Plan in good equity funds
• He should list good equity funds with the lowest
expense ratio for the investor to select

• CRISIL Hybrid 75+25 , Conservative Index

• CRISIL Hybrid 25+75 , Aggressive Index
• CRISIL Hybrid 50+50 , Moderate Index
• When the retirement age is earlier than 5 years from
the date of investment
• When the age of the investor at the time of making
initial investment is not less than 50 years
• When the targeted corpus isachieved before 5 years
• All of the above
• A. Balanced Advantage Funds
• B. Balanced Funds
• C. Diversified Equity Funds
• D. Both A and B
• E. Only C
• F. Only A
• G. Capital gains from all types of mutual funds are
taxed subject to certain conditions

• Expenses which are incurred to manage the fund

• Expenses which are incurred to launch the fund
• Expenses which are incurred by the AMC
• Expenses which are incurred by the investors in
buying the fund

• She has to select the correct bank which is financially

strong
• There is a high risk of default in her portfolio
• There is a risk of low returns
• There is no risk as fixed deposits are quiet safe

• Rs. 7916
• Rs. 13750
• Rs. 15832
• Insufficient Data
• NAV of the business day on which the funds are
available for utilisation
• Closing NAV of the next business day
• Closing NAV of any immediately preceding the date
of application
• Same day NAV if received before cut off time.

• Payment instrument only

• Application form only
• Transaction slip for buying additional units
• Both for Application form / transaction slip and
payment instrument

• A Moderate Investor
• A Conservative Investor
• An Aggressive Investor
• An Adventurous Investor
• 3 days to 2 Years
• 7 days to 1 Year
• 45 days
• 3 years
• Investment strategy of the scheme
• Asset allocation pattern of the scheme
• Investment objective of the scheme
• All of the above
• Only statement A is correct
• Only statement B is correct
• Both statements A and B are correct
• None of the above

• Gold Sector Fund

• Gold Exchange Traded Fund (ETF)
• ELSS Fund
• Gilt Fund
• The Articles of Association
• The Memorandum of Association
• Share holder Resolution
• Specific Board Resolution
• True
• False

• Recency Bias
• Overconfidence Bias
• Confirmation Bias
• Herd mentality

• Only A and B are correct

Only A and C are correct
• Only B and C are correct
• All A, B and C are correct

• True
• False
ANSWER CHAPTER

Income distribution cum capital withdrawal reinvestment

plan only 9

Only 1 is true 10

The advertisements can use celebrities for endorsements 4

Likely behaviour of the markets 1

The Sponsors 3

0 11

Scheme Information Document (SID) 5

Active Equity Fund 2

Names of securities in the scheme’s portfolio 5

Economics of scale 2

Only B is false 11

20 investors 5

Only 2 and 3 are true 10

SEBI has specific and strict regulations regarding the cap

for TER as well as the periodic disclosure of the same 5

Both 1 and 2 are false 8

Concentration 12

NAV of the business day on which the funds are available

for utilization 9

Towards Maturity 2

Daily basis after the credit event 7

Exit Loads 5

Higher credit worthiness 10

Every six months 5

Only C 2

All of the above 9

Scheme Information Document 5

Investment Objective 2

Money Market 4

National Institute of Securities Markets - NISM 6

Daily - on the mutual fund website 5

Trusts 3

Herd mentality 1

He should set the financial goals of the investor 1

CRISIL Hybrid 50+50 , Moderate Index 11

When the retirement age is earlier than 5 years from the

date of investment 5
Capital gains from all types of mutual funds are taxed
subject to certain conditions 8

Expenses which are incurred to manage the fund 7

There is a risk of low returns 1

Rs. 15832 8

NAV of the business day on which the funds are

available for utilisation 9

Both for Application form / transaction slip and payment

instrument 9

A Conservative Investor 1

7 days to 1 Year 10
All of the above 11

Only statement B is correct 12

Gold Exchange Traded Fund (ETF) 2

Specific Board Resolution 9

0 1

Recency Bias 1

All A, B and C are correct 10

1 5