(1-mark questions)

1. An investor pays money to purchase units in a

mutual fund. After deducting the entry load,
remaining money is
a. Invested in a well-diversified portfolio of
securities as per the investment o!ective
. "aintained in a ank as fi#ed deposit
c. Invested in land, uilding, plant and machinery
required for the mutual fund
d. $sed to pay the management fee and other
recurring e#penses of the fund
%. &et Asset 'alue per unit means
a. ((ook value of assets ) liailities)*$nits
outstanding,
. $nit capital * $nits outstanding
c. &et assets dividend y Initial numer of units
d. ("arket value of assets ) +iailities)*$nits
outstanding
,. -hen you place deposit with a ank, u ecome
a. a orrower from the ank
. a lender to the ank
c. a shareholder of the ank
d. a unit holder in the ank
.. /uring new fund offer (&01) $nits of an open )
ended fund are purchased form
a. A (roker . 2he mutual 0und itself c. A
depository d. a 3tock 4#change
5. 1wnership of the mutual fund y the unit
holders is
a. (eneficial. . "utual and eneficial.
c. Individual d. "utual
6. /irectly investing in equity shares is etter then
investing in equity shares through a mutual fund
ecause of
a. 2ailor ) made portfolio . Asence of
/istriution e#pense
c. 7ontrol over costs d. All of the aove.
8. "utual fund schemes in India follow accounting
policies laid down y
a. 34(I . Institute of 7hartered Accounts of
India c. Indian 2rust Act 19:%. d.
Association of "utual 0unds in India
:. 2he value of funds net assets is ;s. 1<<<.
2here are 1<< units outstanding. "r. 3ingh owns
, units. 2he 'alue of his ownership is
a. ;s.,<< . ;s.,< c. ;s.,
d. &ot =ossile to calculate unless more
information is given
9. A person who purchase deentures issued y a
company is a lender to the company. An income
fund invests in deentures issued y a company.
A unit holder of this income fund.
a. Is a lender to the company . Is a share
holder in that company c. has no
relationship to that company d. Is a creditor to
that company.
1<. =rivate sector was permitted to enter the
mutual fund industry in India in the year
a. 199, . 196, c. 19:8 d. 1996
11. In India the first mutual fund was estalished>
a. efore 34(I regulation 1996.
. efore $2I was estalished in 196,.
c. after 34(I regulation 1996.
d. when pulic sector mutual funds were
estalished in 19:8.
11. 2he Assets under management in the
Indian mutual fund industry as at end of financial
year %<<.-%<<5 was close to.
a. ;s 15, cr. . ;s. 15,<cr c. ;s.15,<<cr.
d. ;s 15,,<<<cr
1, Identify the 71;;472 statements?
a. Investing in a mutual fund is likely to e less
risky compared to directly investing in the market.
. A mutual fund enales a small investor uild a
diversified portfolio
c. Investment in a mutual fund offers more
liquidity.
d. All are correct.
1. -hen you invest in an open-ended mutual
fund scheme, which of the following decisions is
*are not taken y you?
a. -hich share to uy and which share to sell?
. -hat prospective changes would e made to
the load structure?
c. At what &A' you should e#it?
d. 2he first two decisions.
15. 2he correct description of a
mutual fund is
a. It is a company
. it is a development financial institution
c. It is a financial intermediary
d. it is non-anking finance company
16. 2he irth place of mutual funds is.
a. $@ . Aapan c. 7anada d. $3A
18. Important development (s) that took
place in the Indian mutual fund industry 0eruary
%<<, was*were
a. ;epealing> of $2I Act . estalishment
of $2I"0
. 7reation of level playing field d. all of the
aove.
1:. /istriutors are required to aide y a
code of conduct as prescried y 34(I. 2his code
is ased on
a. AB&I . A"0I c. A;& d. A&"I
19. An open end fund
a. is open for one-time sale of fi#ed numer of
units
. offers repurchase facility su!ect to certain
ovious conditions
c. is always oliged to keep issuing new units at
all times
d. offers repurchase facility unconditionally at all
times
18. A gilt fend is a special type of fund that invests
a. in dated securities only
. in very high quality equity only
c. "ainly in very high quality corporate onds
d. mainly in high quality money market
instruments
1:. 2he period from %<<. onwards is known in the
Indian mutual funds industry as
a. =eriod of consolidation and growth .
4mergence of large and uniform industry
c. 4mergence of private funds d. entry of
pulic sector funds.
%%. 2he union udget 1999 is considered
important for the Indian mutual fund industry
ecause.
a. It made $2I at par with other mutual funds.
. It aolished the distinction etween short )
term capital gain and long ) term capital gain for
mutual fund unit holders.
c. It e#empted all mutual fund dividends from
income ta# in the hands of unit holders
d. It removed ta# on capital gains and
dividends in the hands of units holders
%,. 2he second mutual fund in the India was
estalished y
a. 3(I . 7anara (ank c. "organ
3tanley d. +I7
%.. -hich is 7orrect?
a. $2I"0 was estalished y an Act of
=arliament
. $2I"0 has voluntarily adopted 34(I
;egulations
c. $2I"0 launched $3 6.
d. $2I"0 was not the first mutual fund in
India
%5. A person who analyses shares ased on
finances and operations of the company is known
as
a. 7hartist . =ortfolio analyst c.
2echnical Analyst 7. 0undamental Analyst
%6. -hat is an C4quity -arrant C?
a. It is nothing ut an 4quity share of a
company
. It is a deit instrument that offers fi#ed
interest rate
c. It is an instrument that gives the holder the
right to purchase equity shares in a company at
fi#ed price in future
d. &one of the aove
%8. -hich of the following 34(I restrictions
applies to a schemeDs investment in unlisted
shares?
a. A 7lose)ended scheme may invest a
ma#imum of 1<E of its &A' in unlisted shares
. An open-end scheme may invest a
ma#imum of 5E of its &A' in unlisted shares
c. (a) and ()aove d. &one of
the aove
%:. Fow would you measure the performance of
an 4quity Inde# 0und?
a. 2here is no need to enchmark an equity
inde# fund
. (y comparing it with return on Bovernment
securities
c. (y 7omparing its performance with a
money market mutual fund
d. (y comparing its performance with the
Inde# it is designed to track
%9. In an open-ended fund &A' per unit is ;s.11
4ntry load is %E An Investor invests ;s.11< she
will get
a. less then 1< units . 1< units c. more than
1< units d. 11 units
,<. $nits from an open-ended mutual fund are
ought from
a. &34. A"0I c. 34(I d. Agencies
appointed y the A"7
,1. A ond with a coupon rate of 9E when current
coupons for onds of similar maturities are 11E
will sell>
a. At a price which is not related to interest
rates for similar maturities
. Aove face value 7. at face value
d. elow face value
,%. /istriutors need to aide y rules and good
conduct towards investors, (ecause
a. A"0I code of conduct requires them to do
so
. 2he A"7 they represent requires them to
do so
c. Bood conduct means good usiness for
them
d. 0or all of the aove reasons
,,. Insider trading means>
a. =ersonal trading transaction done y
anyone with knowledge of the fund decisions in
the concerned security
. =ersonal trading transaction done y an
insider of the A"7 *fund
c. =ersonal trading transaction done y
anyone associated with the fund
d. =ersonal trading transaction done without
prior approval of the A"7
,.. ;esponsiility to ensure ethical ehavior on
part of all mutual fund participants finally rests on
a. 0und 2rustees . 34(I c. A"0I,
d /istriutors
,5. 0und Fouse ratings y 7;I3I+, can e used
y distriutors
a. to know 7;I3I+Ds opinion on the fund
management practices and over all management
quality of an A"7 * fund house
. to know risk of default y the A"7 . 0und
house
c. to evaluate the performance of the
schemes managed y the A"7 * 0$&/ F1$34
d. to compare the performance of the
schemes managed y different fund houses
,6. Asset allocation of a portfolio should e re-
evaluated every time there is change in the
a. 0amily siGe and requirement . market
condition
c. Ao of the investor d. all of the
aove
,8. -hen would you review the financial plans of
your client?
a. -henever the investorDs personal
circumstances of financial goals change
. -henever stock market prices fall sharply
c. 3hortly efore the filling of the Income 2a#
returns of your client
d. 4ach year at the time of the presentation
of the Bovernment udget
,:. A five-year deep discount ound would?
a. =ay interest on a quarterly asis
. =ay interest on a yearly asis
c. (e redeemed on maturity at the face value
which is higher than the issue price with no
payments in etween
d. -ould offer yield ta# free income
,9. 3harpe and 2reynor rations are measures of
a. Average return . risk c. risk
ad!usted return d. eta of the portfolio
.<. Aaco recommend of the following risk
allocation for a low risk portfolio>
a. 5<E govt. 3ecurities fund H 5<E "oney
"arket funds
. 5<E govt. 3ecurities fund H 5<E Inde#
fund
c. 5<E govt. 3ecurities fund H 5<E
international funds
d. 5<E govt. 3ecurities fund H 5<E
aggressive growth funds
.1. -hich classification of mutual funds does not
e#its?
a. =ension fund or provident fund . 7losed )
end or open ) end
c. +oad fund or no load fund c. Active
fund or passive fund
.%. $nit capital is found in the
a. +iaility side of schemeDs alance sheet
. asset side of the alance sheet
c. ;evenue account
d. equaliGation account
.,. A sponsor of a mutual fund
a. can act as the distriutor of the mutual
fund
. cannot act as the distriutor of the mutual
fund
c. can act as the trustee of the mutual fund
d. can act as the custodian of the mutual fund
... 2o create investor awareness aout mutual
funds, a ooklet titled C"aking "utual 0und -ork
for you ) 2he Investors BuideI was pulished y
a. 34(I . A"0I c. $nit 2rust of India d.
Investor 4ducation and =rotection fund
.5. /istriutors will find the information on
performance of a scheme as compared to its
enchmark in the
a. @ey information "emorandum . 1ffer
/ocument
c. 0und Advertisements d. all of the
aove
.6. 34(I guidelines on personal investment and
trading apply to
a. A"7 employees and fund trustees .
only A"7 employees
c. 1nly fund trusteeDs d. anyone
concerned with the funds
.8. 2he C+oadI charged to an investor in a mutual
fund goes to meet the
a. 3elling and distriution e#penses .
e#penses of A"0I
c. =rinting stationery and posting e#penses d.
marketing and sales promotion e#penses
.:. -hich of the following statements is an
adequate description of reality?
a. -hen compared to gilt funds, securities in
det funds have higher risk of default
. Browth and risk are associated with equity
funds
c. /et fund have higher &A' fluctuation
when compared to money markets funds
d. All these statements descrie reality
adequately
% "arks Juestions
.9. -hich of the following is true?
a. A fund sponsor can contriute to the initial
corpus of the trust
. A fund sponsor can contriute to the
capital of the A"7
c. A fund sponsor can invest in his own
fundDs schemes
d. All of the aove
5<. A unit holder purchased %<< units of a mutual
fund at &A' of ;s.1%, each. 2here was no entry
load. 2he fund purchased securities worth
;s.%.<< using this money. After one year the fund
had %<,<<< units. 2he value of unit holders
holding in that mutual fund would e
a. ;s.%.<< . 1E of the value of fundDs
portfolio at the time
c. 1E of the net assets of the fund at that time
d. cannot say with the given data
51. -hich of the following is &12 a characteristic
of mutual fund
a. =ooling of investments . market
risk
c. $niform unit holder rights d. safety of principal
5%. -hich of the following is incorrect?
a. A value fund tries to seek out
fundamentally sound companies whose shares
are currently overpriced in the market
. A alanced fund hold assets more or less
in equal proportions etween det *money market
securities and equities
c. A growth fund would invest in the equity
shares of companies whose earning are e#pected
to rise at an aove average rate
d. A fund that invests only in A34A&
countries is an e#ample of specialty fund
5,. 2he annualiGed value of contingent deferred
sales charge would
a. Increase if the investor stays with the fund
longer
. ;emain content regardless of how long the
investor stays with the fund
c. /ecrease if the investor stays with the fund
longer
d. &one of the aove.
5.. -hich is * are the characteristic(s) of fi#ed
term plans noticed in the Indian mutual fund
industry?
a. 7lose ) ended . "aturity shorter than one
year
c. &ot listed on stock e#change d. all of these
55. 4ach unit holder of a mutual fund is
a. a creditor to that mutual fund . a
detor to that mutual fund
c. a trustee of that mutual fund d. part
owner of the assets of that mutual fund
56. "utual funds offer the advance of portfolio
diversification. 2his is est e#pressed y the
statement.
a. do not put all eggs in one asket . one ird in
hand is etter than two in the ush
c. -hat goes up must come down d. risk and
return always goes hand in hand
58. 0und A invests in shares of companies in
India. 0und ( invests in shares of companies in
India and $3A. -e can say that
a. /efinitely A is more diversified than (
. /efinitely A and ( are well-diversified
c. -e need more information to identify
which of them is etter diversified
d. /efinitely ( is more diversified than A
5:. 'alue averaging means>
a. Investing the same amount of funds regularly
. Investing in one lump sum amount
c. @eeping the target value of investment
constant y investing the amount y which the
investment value has gone down
d. &one of the aove
59. A fund has to (eta of greater than 1. this
means.
a. 2he fund is more volatile than the market
. the fund is as volatile as the market.
c. 2he fund is less volatile than the market
d. none of the aove.
6<. 0or a small investor in India, which of the
following is e#pected to have a higher level of
liquidly?
a. 4quity shares in an unlisted company
. /eenture issued y a company
c. $nit of an open-ended "0
d. ;eal estate.
61. In a mutual fund, the &A' per unit is 1%. 2otal
numer of units is 1<<. 2otal assets of this fund
would e
a. less than ;s 1%<<
. e#actly ;s 1%<<.
c. more than ;s 1%<<
d. cannot say anything without additional
information.
6%. A close ended mutual fund has a fi#ed
a. market value of assets under management .
net asset value per unit.
c. unit capital and numer of units
d. numer of units.
6,. An open end scheme can change its
fundamental attriutes.
a y otaining the consent of 85E of unit-
holders at least
16. y allowing unit-holders to e#it
the scheme after si# months without any e#it load
18. y informing each unit-holder
individually of the proposed change and y
allowing units holders to e#it the scheme
without any e#it load.
. After otaining prior approval from 34(I
6.. If an investor failed to claim the
redemption proceeds after , years of due date he
has right to receive an amount equal to>
a. =revailing &A'
. 0ace value of the unit
c. due date &A' plus interest K 15E p.a.
d. &A' at the end of three years after the due
date.
65. ;ight to timely service includes.
a. the right to otain information from the
trustees that may have adverse earing
on their investments.
. ;ight to nominate a person in whom all the
eneficial ownership rights in the units
will vest in the event of death
c. ;ight to receive dividend warrants in ,< days
from the date of declaration
d. ;ight to receive a copy of the annual financial
statement of the fund.
66. Lield curve is a graph that shows.
a. yields of various equities of various firm.
. Lield from mutual funds.
c. Lields of various onds of various maturities
using one set of onds such as B 3ecs
d. &one of the aove.
68. A unit of an open-end fund was
purchased when is &A' was ;s .<*-At year end,
its &A' was ;s ... 2he percentage annualiGed
change in &A' I3.
a. 1%E . 1<Ec. %5.<<E d. 15.<<E
6:. As per 34(I ("utual 0und) ;egulation, who
acts as the protector of unit-holderDs interest ?
a. 2rustees . 34(I
c. "inistry of 0inance d. 7ompliance officer

6:. A no load ond scheme of a mutual
fund has weekly average net assets of ;s.%<<
crores it can charge ma#imum investment
management fee of
a. ;s. . 7r . %.5 7r c. % cr d. 5 cr

69. $nits of mutual fund are short term
capital assets if
a. 2hey are held for not more then twelve months
proceeding the date of transfer.
. 2hey are held for less than twelve months
proceeding the date of transfer.
c.2hey are held for not more than three years
proceeding the date of transfer.
d.2hey are held for less than three years
proceeding the date of transfer.
8<. An investor has opted for a 3ystematic
2ransfer =lan. 2his means.
a. he can transfer on a periodic asis a specified
amount from one scheme to another
. he is required to invest a fi#ed sum periodically
c. the investment would provide the enefit of
rupee cost averaging
d. Fe can transfer on a periodic asis a specified
amount from the scheme to his ank account
81. -hich of the following is &12 required
to appear on the cover page of the offer
document?
a. /ate new fund offer opens
. /ate new fund offer closes
c. 4arliest closing date (if any) for the new fund
offer
d. /ate on which approved y trustees.
8%. A mutual fund launched a new scheme. It
issued 1< crores units. 2he offer document
mentioned entry load of %.%5E of face value.
/uring the &ew 0und 1ffer period issue e#penses
were ;s : crores. Fow much of this is orne out
of entry load?
a. ;s. %.%5 crore . ;s. 6 crore
c. ;s : crore d. ;s ,.85 crore
8,. A mutual fund launched a new scheme. It
issued 1< crores units. 2he offer document
mentioned entry load of %.%5E of face value.
/uring the new fund offer period issue e#penses
were ;s.: crores. If initial issue e#pense is
amortiGed over 5 years period, what would e the
opening &A' per unit if management fees and
other recurring e#penses are Mero? Assume that
there is no reflection in value of underlying assets.
a. 9.999: . 1<.<<<<
c. 9..<<< d. 9.885