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AMFI Work Book

AMFI Work Book

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03/18/2014

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1)
A mutual fund is not
a) A company that manages an
investment portfolio.
b) A portfolio of stocks, bonds and
other securities.
c) A pool of funds used to purchase
securities on behalf of investors
d) A collective investment vehicle.
2)

Which of the following is true? Some close end funds sell at a discount to their NAV, because

a)
Of high expense ratios
b)

Investors expect that current NAV cannot be sustained by future potential

c)
The repurchase price fixed by
the fund is lower than the NAV
d)
Of the inherent risk of closed
end funds.
3)

If the entry load is 2% and the NAV is Rs. 10, then the investor will have to pay for 1000 units

a)
Rs. 15000
b)
Rs. 8000
c)
Rs. 12000
d)
Rs. 10200
4)

Which of the following Mutual Funds was not set up within the Phase 2:1987-1993?

a)
Canbank Mutual Fund
b)
Kothari Pioneer Mutual Fund
c)
SBI Mutual Fund
d)
LIC Mutual Fund
5)
Which of the following is not a
benefit from a Mutual Fund?
a)
Investor has custody of
securities where fund invests.
b)
Investor is able to diversify risk
c)
Investor can save costs
d)

Investor can get professional management to manage his money.

6)
Which of the following has the
lowest risk?
a)
Liquid Fund (MMMF)
b)
Gilt Fund
c)
Diversified debt fund
d)
Diversified equity fund
7)
The
current
Mutual
Fund
Regulations
from
SEBI
was
introduced in
a)
1992
b)
1994
c)
1996
d)
1998
8)
The sponsor of a mutual fund may
be compared to:
a)
A director in a company
b)
The chief executive of a
company
c)
The promoter of a company
d)
An equity shareholder of a
company
9)

Issuing additional fresh units and redeeming the existing units of a mutual fund scheme is the role of:

a)
The custodian
b)
The transfer agent
c)
The trustees
d)
The bankers
10)
The appointment of AMC for the
Mutual Fund can be terminated by
a)
Majority of Directors of the
Trustee
b)
50% of the Unitholders
c)
45% of the Unitholders
d)
60% of the Unitholders
11)

The Asset Management Company shall make investment decisions solely in the interest of

a)
The sponsor
b)
The Trustee
c)
The Unit Holders
d)
Its Employees
12)
Mutual funds in India are set up as
a
a)
Company
b)
Trust
c)
Partnership
d)
Association of Person
13)

Minimum number of independent directors on the board of asset management company is

a)
50%
b)
25%
c)
75%
d)
Two-thirds
14)

Under the Indian Trusts Act, the interests of the unit-holders is safeguarded by

a)
A board of trustees
b)
A trustee company
c)
Either
d)
Neither
15)
The asset management company is
appointed by
a)
SEBI
b)
Unit holders
c)
Sponsors
d)
Trustee
16)
Who needs to sign the trust deed
with the trustee?
a)
Asset Management Company
b)
Sponsor
c)
Custodian
d)
All of the above
17)
Which of the following qualifies as
a self-regulatory organization?
a)
SEBI
b)
RBI
c)
National Stock Exchange
d)
AMFI
18)
Whose consent is required to
approve
a
change
in

the fundamental attributes of a closed end schemes?

a)
50% of the unit holders
b)
50% of the trustees
c)
75% of the unit-holders
d)
None of the above
19)

Which schedule of SEBI (Mutual Fund) regulations 1996 specifies the contents of the Trust Deed?

a)
Eleventh Schedule
b)
Eighth Schedule
c)
First Schedule
d)
Third Schedule
1
20)

In case of a dispute, against whom can the Unitholders initiate legal proceedings?

a)
Trust
b)
Trustee
c)
AMC
d)
None of the above
21)
Mutual Funds are regulated by
a)
RBI
b)
AMFI
c)
SEBI
d)
NSE
22)
The body to which investors may
address their complaints is
a)
SEBI
b)
RBI
c)
IRDA
d)
NSE
23)
The first-time investor would be
well-advised to refer to:
a)
Detailed Offer Document
b)
The
Key
Information
Memorandum only.
c)
Either of the above
d)
None of the above
24)
Which of the following is true of
the offer document?
a)
Investor
gets
all

the information to evaluate the performance of the proposed scheme

b)
Investor
gets

useful information to evaluate the performance of the AMC\u2019s past schemes

c)

Investor does not get any information on services he can expect from the fund.

d)

Investor will not be able to assess the risks of the proposed scheme based on the offer document

25)

The Abridged Offer Document contains the address of the following:

a)
The Trustees of the Mutual
Fund
b)
The Directors of the AMC
c)
The Registrar and Transfer
Agents
d)
Options a & b
e)
Options b & c
26)

Validate the statement \u2013 The investor is not obliged to read the offer document before investing in units of a scheme.

a)
Completely true
b)
Rarely true
c)
Completely false
d)
Partly false
27)
Offer documents have to be
updated within
a)
One year from the date of Issue
b)
Two years from the date of
issue
c)
Six months from the date of
issue
d)
None of these
28)
The front page of the offer
document contains
a)
Date of its publication
b)
Name and type of the fund
c)
Major objectives of the fund
d)
a&b
29)
To a prospective investor the
reliable
source
of
pertinent
information about a scheme is
a)
Financial Press
b)
Offer document
c)
AMFI Website
d)
Advice from the distributor
30)

Which of the following distribution channels is preferred by private mutual funds?

a)
Individual distributor
b)
Small distribution companies
c)
Established
distribution
companies
d)
The Internet
31)
Which of the following sales
practices
is
prescribed
by
regulation?
a)
AMFI Code of Ethics
b)
SEBI Advertising Code
c)
AMFI\u2019s code for agents
d)
None of the above
32)
Risk factors may not be mentioned
in
a)
Product launch advertisement
b)
Tombstone advertisement
c)
Performance advertisement
d)
All of the above
advertisements
33)

An NRI holds units in a mutual fund. What should he do with his holding if he takes up a foreign citizenship?

a)
He redeems
b)
He continues
c)
He transfers the unit to his
mother, who resides in India
d)
None of the above
34)
MF Regulations prescribe
a)
The minimum commission of
the distributor
b)
The maximum commission of
the distributor
c)

The minimum as well as the maximum commission of the distributor

d)

Neither the minimum nor the maximum commission to the distributor

35)
Which of the most appropriate
position under MF Regulations?
a)
Buyer beware
b)
Buyer is always right
c)
Seller is always right
d)
Seller is guilty unless proved
right
36)

According to SEBI\u2019s code for mutual fund advertisement, for funds that have been in existence for more than a year, annualized returns have to be furnished for

a)
1 yr, 3 yr, 5 yr. and since
launch
b)
1 yr, 5 yr and since launch
c)
1 yr, 3 yr and since launch
d)
1 yr, 3 yr and 5 yr
2
37)

An open-end fund with 10,000 units outstanding had the following items in its balance sheet:

Investment at market value
Rs. 1,00,000
Current Assets
Rs. 20,000
Current Liabilities
Rs. 25,000
Calculate the fund\u2019s NAV per unit.
a)
Rs. 9.5
b)
Rs. 12
c)
Rs. 10
d)
Rs. 14.5
([1,00,000 + 20,000 \u2014 25,0000]/10,000)
38)

A closed-end equity fund has average weekly net assets of Rs. 200 crores. As per SEBI Regulations, the AMC can charge the fund with investment and advisory fee upto:

a)
Rs. 2.25 crores
b)
Rs. 2 crores
c)
RS. 2.5 crores
d)

Rs. 3 crores
(1.25% of 1st Rs. 100 crores of net assets
and 1% of the balance)

39)

An investor purchased units in a mutual fund in 1995 for Rs. 75000. He sold the units in 1998 for Rs. 125000. The cost inflation index for 1995 and 1998 are 281 (C) and 351(D) respectively. The capital gains chargeable to tax are:

a)
64,957
b)
31,317
c)
50,000
d)
75,000
[1,25,000\u2014(75000*351/281)]
40)

Income earned by a Mutual Fund registered with SEBI is exempt from Income-Tax as per section

a)
10(23D)
b)
10(33)
c)
Total Income is taxable @
33.2%
d)
88
41)

Unit capital of a mutual fund scheme is Rs. 20 million; The market value of its investments is Rs. 55 million; The number of units is 1 million. The NAV is

a)
Rs. 20
b)
Rs. 75
c)
Rs. 55
d)
Not possible to say
42)
Which of the following is untrue of
the Automatic Reinvestment Plan?
a)

The plan allows for automatic reinvestment of all income and capital gains.

b)
Automatic reinvestment allows
for
the
accumulation
of
additional units of the fund
c)
The major benefit of automatic
reinvestment
is
the
compounding of returns
d)

The benefit of automatic reinvestment is often lost, if reinvestment is subject to a heavy load

43)
Constraints imposed by most funds
on check-writing include:
a)
Requirement
of
minimum
account
balance
after
withdrawal
b)

Specification of a minimum amount for which check can be issued

c)

Limit on the number of checks that are allowed to be issued in a month

d)
Both 1 and 2 above
44)
Which of the following is true of
Systematic Withdrawal Plan (SWP)?
a)

It allows investors to make Systematic withdrawal from his fund

b)
It is suitable for investors
seeking regular income
c)
SWP is similar to Monthly
Income Plan
d)
Only 1 & 2
45)
Choose the correct Statement \u2013
Alternative
Investment
Plans
offered by fund allows investors:
a)

Freedom with respect to investing one time or at regular intervals

b)

Making transfers to different schemes with the same fund family

c)
Receiving income at specified
intervals
or
accumulating
distributions
d)
All the above
46)

The current market price of a 9%\u2014 coupon bond, when other bonds of similar maturities pay 11% will be:

a)
Above par
b)
Below par
c)
At par
d)
will be unrelated to other
bonds
47)
Yield and Price of a bond move:
a)
In opposite directions
b)
Together in the same direction
c)
In an unrelated fashion
d)
In line with the inflation index
48)

SEBI places a limit on a scheme\u2019s investment in \u201cinvestment grade rated\u201d debt instruments of a single issuer, because:

a)
Even
investment

grade securities carry risks of default by borrower

b)

A scheme must diversify its holdings and thus reduce portfolio risk

c)
Investment
Grade
ratings
cannot be solely relied upon
d)

SEBI wants to leave some for investment in \u201cnon-investment grade\u201d securities

by the
scheme
49)

Technical Analysis tries to predict future movement of stock price by analyzing:

a)
The financial workings of a
Company
b)
The stock price movements of
a Company
c)
Both of the above
d)
None of the above
3

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