1) A mutual fund is not

a) A company that manages an 10) The appointment of AMC for the

investment portfolio. Mutual Fund can be terminated by
b) A portfolio of stocks, bonds and a) Majority of Directors of the
other securities. Trustee
c) A pool of funds used to purchase b) 50% of the Unitholders
securities on behalf of investors c) 45% of the Unitholders
d) A collective investment vehicle. d) 60% of the Unitholders
2) Which of the following is true? 11) The Asset Management Company
Some close end funds sell at a shall make investment decisions
discount to their NAV, because solely in the interest of
a) Of high expense ratios a) The sponsor
b) Investors expect that current b) The Trustee
NAV cannot be sustained by c) The Unit Holders
future potential d) Its Employees
c) The repurchase price fixed by
12) Mutual funds in India are set up as
the fund is lower than the NAV
a
d) Of the inherent risk of closed
a) Company
end funds.
b) Trust
3) If the entry load is 2% and the NAV c) Partnership
is Rs. 10, then the investor will d) Association of Person
have to pay for 1000 units
13) Minimum number of independent
a) Rs. 15000
directors on the board of asset
b) Rs. 8000
management company is
c) Rs. 12000
a) 50%
d) Rs. 10200
b) 25%
4) Which of the following Mutual c) 75%
Funds was not set up within the d) Two-thirds
Phase 2:1987-1993?
14) Under the Indian Trusts Act, the
a) Canbank Mutual Fund
interests of the unit-holders is
b) Kothari Pioneer Mutual Fund
safeguarded by
c) SBI Mutual Fund
a) A board of trustees
d) LIC Mutual Fund
b) A trustee company
5) Which of the following is not a c) Either
benefit from a Mutual Fund? d) Neither
a) Investor has custody of
15) The asset management company is
securities where fund invests.
appointed by
b) Investor is able to diversify risk
a) SEBI
c) Investor can save costs
b) Unit holders
d) Investor can get professional
c) Sponsors
management to manage his
d) Trustee
money.
16) Who needs to sign the trust deed
6) Which of the following has the
with the trustee?
lowest risk?
a) Asset Management Company
a) Liquid Fund (MMMF)
b) Sponsor
b) Gilt Fund
c) Custodian
c) Diversified debt fund
d) All of the above
d) Diversified equity fund
7) The current Mutual Fund 17) Which of the following qualifies as
Regulations from SEBI was a self-regulatory organization?
introduced in a) SEBI
a) 1992 b) RBI
b) 1994 c) National Stock Exchange
c) 1996 d) AMFI
d) 1998 18) Whose consent is required to
8) The sponsor of a mutual fund may approve a change in the
be compared to: fundamental attributes of a closed
a) A director in a company end schemes?
b) The chief executive of a a) 50% of the unit holders
company b) 50% of the trustees
c) The promoter of a company c) 75% of the unit-holders
d) An equity shareholder of a d) None of the above
company 19) Which schedule of SEBI (Mutual
9) Issuing additional fresh units and Fund) regulations 1996 specifies
redeeming the existing units of a the contents of the Trust Deed?
mutual fund scheme is the role of: a) Eleventh Schedule
a) The custodian b) Eighth Schedule
b) The transfer agent c) First Schedule
c) The trustees d) Third Schedule
d) The bankers

1
20) In case of a dispute, against whom a) Date of its publication
can the Unitholders initiate legal b) Name and type of the fund
proceedings? c) Major objectives of the fund
a) Trust d) a&b
b) Trustee
29) To a prospective investor the
c) AMC
reliable source of pertinent
d) None of the above
information about a scheme is
21) Mutual Funds are regulated by a) Financial Press
a) RBI b) Offer document
b) AMFI c) AMFI Website
c) SEBI d) Advice from the distributor
d) NSE
30) Which of the following distribution
22) The body to which investors may channels is preferred by private
address their complaints is mutual funds?
a) SEBI a) Individual distributor
b) RBI b) Small distribution companies
c) IRDA c) Established distribution
d) NSE companies
23) The first-time investor would be d) The Internet
well-advised to refer to: 31) Which of the following sales
a) Detailed Offer Document practices is prescribed by
b) The Key Information regulation?
Memorandum only. a) AMFI Code of Ethics
c) Either of the above b) SEBI Advertising Code
d) None of the above c) AMFI’s code for agents
24) Which of the following is true of d) None of the above
the offer document? 32) Risk factors may not be mentioned
a) Investor gets all the in
information to evaluate the a) Product launch advertisement
performance of the proposed b) Tombstone advertisement
scheme c) Performance advertisement
b) Investor gets useful d) All of the above
information to evaluate the advertisements
performance of the AMC’s
past schemes 33) An NRI holds units in a mutual fund.
c) Investor does not get any What should he do with his holding
information on services he can if he takes up a foreign citizenship?
expect from the fund. a) He redeems
d) Investor will not be able to b) He continues
assess the risks of the proposed c) He transfers the unit to his
scheme based on the offer mother, who resides in India
document d) None of the above

25) The Abridged Offer Document 34) MF Regulations prescribe

contains the address of the a) The minimum commission of
following: the distributor
a) The Trustees of the Mutual b) The maximum commission of
Fund the distributor
b) The Directors of the AMC c) The minimum as well as the
c) The Registrar and Transfer maximum commission of the
Agents distributor
d) Options a & b d) Neither the minimum nor the
e) Options b & c maximum commission to the
distributor
26) Validate the statement – The
investor is not obliged to read the 35) Which of the most appropriate
offer document before investing in position under MF Regulations?
units of a scheme. a) Buyer beware
a) Completely true b) Buyer is always right
b) Rarely true c) Seller is always right
c) Completely false d) Seller is guilty unless proved
d) Partly false right
27) Offer documents have to be 36) According to SEBI’s code for mutual
updated within fund advertisement, for funds that
a) One year from the date of Issue have been in existence for more
b) Two years from the date of than a year, annualized returns
issue have to be furnished for
c) Six months from the date of a) 1 yr, 3 yr, 5 yr. and since
issue launch
d) None of these b) 1 yr, 5 yr and since launch
c) 1 yr, 3 yr and since launch
28) The front page of the offer d) 1 yr, 3 yr and 5 yr
document contains

2
 37) An open-end fund with 10,000 units a) Requirement of minimum
outstanding had the following items account balance after
in its balance sheet: withdrawal
Investment at market value Rs. 1,00,000 b) Specification of a minimum
Current Assets Rs. 20,000 amount for which check can be
Current Liabilities Rs. 25,000 issued
Calculate the fund’s NAV per unit. c) Limit on the number of checks
a) Rs. 9.5 that are allowed to be issued in
b) Rs. 12 a month
c) Rs. 10 d) Both 1 and 2 above
d) Rs. 14.5
44) Which of the following is true of
([1,00,000 + 20,000 — 25,0000]/10,000)
Systematic Withdrawal Plan (SWP)?
38) A closed-end equity fund has a) It allows investors to make
average weekly net assets of Rs. Systematic withdrawal from his
200 crores. As per SEBI Regulations, fund
the AMC can charge the fund with b) It is suitable for investors
investment and advisory fee upto: seeking regular income
a) Rs. 2.25 crores c) SWP is similar to Monthly
b) Rs. 2 crores Income Plan
c) RS. 2.5 crores d) Only 1 & 2
d) Rs. 3 crores
45) Choose the correct Statement –
(1.25% of 1st Rs. 100 crores of net assets
Alternative Investment Plans
and 1% of the balance)
offered by fund allows investors:
39) An investor purchased units in a a) Freedom with respect to
mutual fund in 1995 for Rs. 75000. investing one time or at regular
He sold the units in 1998 for Rs. intervals
125000. The cost inflation index for b) Making transfers to different
1995 and 1998 are 281 (C) and schemes with the same fund
351(D) respectively. The capital family
gains chargeable to tax are: c) Receiving income at specified
a) 64,957 intervals or accumulating
b) 31,317 distributions
c) 50,000 d) All the above
d) 75,000
46) The current market price of a 9%—
[1,25,000—(75000*351/281)]
coupon bond, when other bonds of
40) Income earned by a Mutual Fund similar maturities pay 11% will be:
registered with SEBI is exempt from a) Above par
Income-Tax as per section b) Below par
a) 10(23D) c) At par
b) 10(33) d) will be unrelated to other
c) Total Income is taxable @ bonds
33.2%
47) Yield and Price of a bond move:
d) 88
a) In opposite directions
41) Unit capital of a mutual fund b) Together in the same direction
scheme is Rs. 20 million; The c) In an unrelated fashion
market value of its investments is d) In line with the inflation index
Rs. 55 million; The number of units
48) SEBI places a limit on a scheme’s
is 1 million. The NAV is
investment in “investment grade
a) Rs. 20
rated” debt instruments of a single
b) Rs. 75
issuer, because:
c) Rs. 55
a) Even investment grade
d) Not possible to say
securities carry risks of default
42) Which of the following is untrue of by borrower
the Automatic Reinvestment Plan? b) A scheme must diversify its
a) The plan allows for automatic holdings and thus reduce
reinvestment of all income and portfolio risk
capital gains. c) Investment Grade ratings
b) Automatic reinvestment allows cannot be solely relied upon
for the accumulation of d) SEBI wants to leave some for
additional units of the fund investment in “non-investment
c) The major benefit of automatic grade” securities by the
reinvestment is the scheme
compounding of returns 49) Technical Analysis tries to predict
d) The benefit of automatic future movement of stock price by
reinvestment is often lost, if analyzing:
reinvestment is subject to a a) The financial workings of a
heavy load Company
43) Constraints imposed by most funds b) The stock price movements of
on check-writing include: a Company
c) Both of the above
d) None of the above

3
50) An investor purchased an open-end b) Invest the entire amount
fund when its NAV was Rs. 20. 16 immediately in an Equity Index
months later, its NAV stood at Rs. Fund—since the index is at a
22. The percentage NAV change in historic low
the fund was: c) Invest in very safe liquid
a) 8% investment options and take
b) 7% the time needed to work out
c) 7.5% a financial plan
d) 8.5% d) Invest immediately in IT stocks,
since their valuations are now
({[22—20]/20}/16)*12} *100 = 7.5%
considered to be attractively
51) A unit of open-end fund was low
purchased when its NAV was Rs. 20.
57) Which one of the following
At year-end its NAV was Rs. 22. In
portfolio is most risky?
the interim period, the fund made
a) 75% Equity — 25% debt
a distribution of Rs. 4 per unit
b) 40% Equity — 60% debt
when its NAV was Rs. 21. What was
c) 60% Equity — 40% debt
the simple Total Return of the
d) 80% Equity — 20% debt
Fund?
a) 25% 58) The strategy advisable for an
b) 30% investor to maximize investment
c) 20% return in the long run is:
d) 31% a) Buy and hold on to investments
({4+[22-20]}/20)*100 = 30%) for a long time
b) Liquidate poorly performing
52) Which of the following is false?
investments from time to time
a) ROI is a measure similar to
c) Liquidate good performing
Total Return with reinvestment
investments from time to time
of distributions
d) Switch from poor performers
b) Total Return with reinvestment
to good performers
of distributions assumes
reinvestment at NAV on the 59) A criticism of rupee-cost averaging
distribution date is
c) As a measure of performance, a) Investment is for the same
Total Return with reinvestment amount at regular intervals
of distributions seeks to b) Over a period of time, average
overcome the shortcomings of per share price will be more
simple Total Return than guessing the highs and
d) Because of its simplicity, lows
simple Total Return is c) It does not tell you when to
preferred in practice to Total buy, sell or switch from one
Return with reinvestment of scheme to another
distribution d) Rupee cost averaging has no
53) Return can be annualized and serious shortcomings
compounded only if the Scheme has
60) If you maintain a flexible ratio of
completed
asset allocation, would you
a) 30 days
a) Rebalance the Debt/Equity
b) 12 months
allocation periodically?
c) 6 months
b) Rebalance the Debt/Equity
d) 24 months
allocation very frequently?
54) An equity scheme is 90 days old. To c) Generally avoid portfolio
compute its yield, it can use rebalancing?
a) absolute return d) Keep fixed percentages of
b) simple annualized return equity and debt investments at
c) compounded annualized return all times?
d) any of these
61) SIP is best example of
55) Financial Planning is a) Rupee Cost Averaging
a) Investing funds to receive the b) Value Averaging
highest rate of return possible c) Buy & Hold
b) Resorting to tax planning to d) None of the above
keep taxes as low as possible
62) Direct investment in stock markets
c) Planning for retirement with
can be better option over investing
the maximum income possible.
through mutual funds if:
d) Process of solving financial a) The investor wants better
problems and reaching returns than those offered by
financial goals. mutual funds
56) Your client has won Rs. 1 crore in b) The investor has large capital,
“Karun Banega Crorepati”. What knowledge and resources for
would your suggestion be? research
a) Invest the entire amount c) The investor has identified a
without any delay in “old bullish phase in the stock
economy” stocks—since they market
are back in favour

4
 d) The investor wants to invest d) 100% in Monthly Income
for the long run Statements
63) An investor in need of regular 70) For which of the following funds
income should not select: would you consider “average
a) A bank deposit maturity” as an important factor in
b) A debt fund selecting the right one for the
c) An equity growth fund investor?
d) PPF a) A Debt Fund
b) A Balanced Fund
64) Which of the following has the
c) A Money Market or Liquid Fund
highest level of liquidity?
d) Both ‘a’ and ‘b’ above
a) Equity
b) PPF 71) Which of the following Portfolios
c) Company fixed deposits would you recommend to a
d) Mutual Funds recently retired Couple?
65) Which of the following should not a) 35% in Conservative Equity
be viewed primarily as an Funds, 25% in moderately
investment option? aggressive equity, 40% in
a) Mutual Funds money market funds.
b) Equity shares b) 30% in short term municipal
c) Life Insurance funds, 35% long term municipal
d) None of the above funds, 25% moderately
aggressive equity, 10% in
66) An investor asks you in what order emerging growth equity
he should list the following c) 50% in aggressive equity fund,
schemes, going from the scheme 25% in high Yield bond funds
with the least risk to the one with and growth and income funds,
the one with the highest risk — 1. A 25% in conservative money
Balanced Fund, 2. A Stock Index market funds
Fund, 3. A Liquid (Money Market) d) Either 2 or 3
Fund and 4. A Pharmaceuticals
Sector Fund. 72) AMFI Code of Conduct for
a) 1, 2, 3, 4 Intermediaries
b) 1, 3, 4, 2 a) prohibits mutual fund
c) 3, 1, 2, 4 distributors from accepting
d) 2, 3, 1, 4 commissions from an investor
who renew his investment in a
67) Ex-Marks (or R-Squared factors) of scheme
a fund measures b) prohibits them from rebating
a) How much of a fund’s NAV the commission back to such
movement is due to the investors
market index movement c) encourages them to refrain
b) How a fund’s NAV movement from rebating the commissions
relates to the market index to such investors, but does not
movement prohibit
c) How much of a fluctuation has d) prohibits them from rebating
occurred in a fund’s NAV over a the commissions back to all
historical period investors
d) How many marks a Credit 73) Mutual funds in India are required
rating Agency accords to a fund by SEBI to
a) prohibit their employees
68) Which is better investment option from personal trading in
whilst selecting an equity fund? secondary markets
a) Ex Marks – 75%, Beta – 0.9, b) allow all employees to
Gross Dividend Yield – 8% trade freely in secondary
b) Either a or c markets without
c) Ex Marks – 80%, Beta – 0.9, restrictions
Gross Dividend Yield – 8% c) to establish a code of
d) Ex Marks – 90%, Beta – 0.8, conduct and allow
Gross Dividend Yield – 9% employees to do personal
69) What type of portfolio asset mix trading that conforms to
would recommend to your 55 year SEBI guidelines
old client who plans to retire at age d) allow employees to carry
58? Choose a portfolio that is the on personal trading as long
closest match to the investor’s as they abide by SEBI
needs. guidelines
a) 40% in Equity Schemes and 60%
in Balanced Funds.
b) 40% in Equity Schemes and 60%
in Debt Funds
c) 20% in Equity Schemes, 20%
in Liquid Funds and 60% in
Debt Funds