Class Test PDF

Class Test- 2
Year 1; Semester 1: Mutual Fund Agent

Total Marks: 131
Total Time: 1 Hour & 45 Minutes
Chapter No. 2,3,4,5 of NISM V-A Module
Instruction: Please encircle the correct Answer.
1. 1. The assets of the mutual fund are held by

A. AMC B. Trustees C. Custodian D. Registrar
2. Minimum networth requirement for AMC is
A. Rs 10 crore B. Rs 50 crore C. Rs 4 crore D. Rs 2 crore
3. AMC directors are appointed with the permission of Trustees
A. True B. False
4. Most investor service centres are offices of
A. Trustees C. Registrar C. Custodian D. Fund Accountant
5. Fund accounting activity of a scheme is to be compulsorily outsourced
A. True B. False
6. Which of the following constituents is responsible for executing the trades of the fund manager on
the stock exchange?
A. Brokers B. R & T agents C. Custodian D. Banker
7. In order to be appointed as a constituent of a mutual fund, it is compulsory to be:
A. Registered with SEBI B. Certified by AMFI
C. Listed by Ministry of Company Affairs D. Approved by RBI
8. A mutual fund has been set up by a bank who is the regulator of the sponsor of such a fund?
A. Ministry of Finance B. SEBI C. RBI D. AMFI
9. Which one of the following is NOT appointed by the AMC?
A. The custodian. B. The distributor C. The banker D. The R&T agent
10. Which of the following entities actually represents the mutual fund?
A. The trust B. The AMC C. The custodian D. The sponsor
11. If unit holders seek a change in AMC, they should get the support of investor holding__________.
A. 40% of the unit capital B. 25% of the unit capital
C. 75% of the unit capital D. 50% of the unit capital
12. According to the investment management agreement, what is the power the trustee holds with
respect to an AMC?
A. Trustee can change the staff of the AMC B. Trustee can deny fees to the AMC
C. Trustee can change the AMC for non-performance. D. Trustee can recapitalize the AMC.
13. A mutual fund is owned by
A. The Govt. of India B. SEBI C. All its investors D. AMFI
14. The structure, which is required to be followed by mutual funds in India, is laid down by
A. Financial Ministry B. Securities & Exchange Board of India (SEBI)
C. Fund Sponsor Association of Mutual Funds of India (AMFI) D. RBI
Prepared By: Rahul Ranjan, Certified Financial Planner 1

9891303734, 9350024013; rahulranjanmf@gmail.com, rahulranjan_79@yahoo.co.in
15. The Board of Trustees of a mutual fund:
A. Act as a protector of investor’s interests B. Directly manage the portfolio of securities
C. Do not have the right to dismiss the AMC D. Cannot supervise and direct the working of the AMC
16. The trust that manages a mutual fund is appointed by
A. The Finance Ministry B. RBI C. SEBI D. The sponsor of that mutual fund
17. The custodian of a mutual fund:
A. Is appointed for safekeeping of securities B. Need not be an entity independent of the sponsors
C. Not required to be registered with SEBI D. Does not give or receive deliveries of physical securities
18. Transfer Agents of a mutual fund are not responsible for
A. Issuing and redeeming units of the mutual fund B. Updating investor records
C. Preparing transfer documents D. Investing the funds in securities markets
19. The sponsor of a mutual fund may be compared to
A. director in a Company B. The Chief Executive of a Company
C. Promoter of a Company D. An equity shareholder in a Company
20. The sponsor should have a sound track record and reputation of fairness and integrity in all
business transactions. The requirements are:
A. Sponsor should be carrying on business in financial services for 5 years
B. Sponsor should have positive net worth (share capital plus reserves minus accumulated losses) for
each of those 5 years
C. Latest net worth should be more than the amount that the sponsor contributes to the capital of the
AMC
D. The sponsor should have earned profits, after providing for depreciation and interest, in three of the
previous five years, including the latest year.
E. All of the above
21. The role of an AMC is to act as
Promoter B. Investment Manager C. Distribution agent D. Regulator
22. The fund sponsor has to contribute
A. nothing to the AMC B. the total net worth of the MAC
C. at least 40% of the AMC’s net worth D. exactly 50%
23. The AMC and directors are answerable to
A. Stock Exchanges B. The Board of Trustees
C. Agents and distributors D.Stock Brokers
24. The minimum number of trustees who need to be independent persons is -
A One-third B. B One-half C. C Two-third D. Three-fourth
25. What is the minimum number of AMC directors who should be independent?
A. 10% B. B. 25% C. C. 50% D. D. 75%
26. Which of the following statements are not true
A. Accounts of the schemes need to be maintained independent of the accounts of the AMC.
B. The auditor appointed to audit the scheme accounts needs to be different from the auditor of the
AMC.
C. While the scheme auditor is appointed by the Trustees, the AMC auditor is appointed by the AMC.
D. All of the above
27. The appointment of RTA is done by the AMC. It is not compulsory to appoint a RTA. The AMC can
choose to handle this activity inhouse. All RTAs need to register with SEBI.
A. True B. False
28. The AMC’s expenses to pay salaries to employees is borne by:

A. Trustees, not sponsors B. Unit holders, not the AMC
C. AMC, not unit holders D. Distributors, not unit holders
29. SEBI regulates
A. Mutual Funds B. Depositories C. Registrar & Transfer Agents D. All the above

30. Investment objective defines the broad investment charter
A. True B. False
31. Statement of Account is to be sent to investors within ___ days of NFO closure
A. 3 B. 5 C. 7 D. 15
32. Within ___ days of dividend declaration, warrants will have to be sent to investors.
A. 7 B. 10 C. 15 D. 30
33. Unit holders can hold their units in demat form
A. True B. False
34. The amount of money remaining with a fund as unclaimed redemption is:
A. Managed by the fund until it is claimed B. Transferred to SEBI
C. Transferred to a trust immediately D. Managed by the fund for a specified period
35. If an investor redeems units from a fund, he is likely to receive an updated statement of account
within:
A. 30 days B. 15 days C. 10 days D. 7 days
36. AMFI has the powers with respect to registered ARN-holding distributors to:
A. All of the given options B. Impose penalties C. Issue notices D. Cancel registration
37. The AMFI code of conduct is:
A. Part of the SEBI Mutual fund regulation B. Implemented only by AMFI
C. Applicable only on voluntary basis D. Not approved by SEBI
38. Which of the following entities cannot be sued by the investor?
A. Trust B. Sponsor C. AMC D. Custodian
39. Documents available to investors for inspection do not include
A. Memorandum and Articles of Association of AMC
B. Trust Deed and Investment Management Agreement.
C. R & T agent agreement and Custodial Services Agreement
D. Reports based on which actual investments are made
40. The highest authority among the following is the
A. SEBI B. Company Law Board C. RBI D. Ministry of Finance
41. The entity that SEBI does not regulate is
A. Share registrars B. Mutual funds C. Stock exchanges D. Non-banking finance companies
42. Which of the following is a Self-Regulatory Organisation?
A. The Institute of Chartered Accountants of India (ICAI) B. SEBI C. AMFI D. RBI
43. A Self-Regulatory Organisation can regulate
A. All entities in the market B. Only it’s own members in a limited way
C. Its own members with total jurisdiction D. No entity at all
44. Only one of the following is required to pass the AMFI examination
A. trustees B. officers of SEBI working in the Mutual Fund department
C. employees in a call center dealing with mutual fund investors D. fund managers
45. The amount of authority enjoyed by a Self-regulatory Organisation is defined by
A. The apex regulatory authority B. Company law board C. It’s own members D. RBI
46. The role of AMFI in the mutual funds industry is not to
A. Promote the interests of the unit holders B. Set a Code of Ethics
C. Regulate mutual funds D. Increase public awareness of mutual funds in the county
47. Money Market securities are regulated by
A. RBI B. SEBI C. Ministry of Finance D. Scheduled commercial bank
48. What does AMFI stand for?
A. Association of Mutual Funds of India B. Associate Mutual Funds of India
C. Association of Mutual Funds in India D. Associate Mutual funds in India

49. Scheme-wise Annual Report, or an abridged summary has to be mailed to all unit-holders within 6
months of the close of the financial year.
A. True B. False
50. Interest payable to investors, in case redemption proceeds are not received by the investor within
51. Investors have a right to receive a copy of
A. Annual financial statement B. offer document C. Key information Memorandum D. All of the above
52. _______ % of investors need to vote to wind up the scheme or terminate the AMC
A. 75% B. 51% C. 50% D. 100%
53. Why can’t the investors sue the trust?
A. they are part of the trust & not a separate entity B. Investors bear the risk while investing in mutual funds
C. They can sue the trust D. Any trust cannot be sued.
54. Which of these is not an investor obligation?
A. Investing in mutual funds B. submission of the Pan card is mandatory
C. It is the investors duty to read the offer document D. None of the above
55. SEBI’s current regulations for mutual funds came into force in
A. 1997 B. 1964 C. 1993 D. 1996
56. Anyone who is aggrieved by a ruling of SEBI, can file an appeal with the Securities Appellate
Tribunal.
A. True B. False
57. The objectives of AMFI are as follows:
A. To define and maintain high professional and ethical standards in all areas of operation of mutual fund
industry.
B. To develop a cadre of well trained Agent distributors and to implement a programme of training and
certification for all intermediaries and others engaged in the industry.
C. To undertake nationwide investor awareness programme so as to promote proper understanding of the
concept and working of mutual funds.
D. All of the above
58. In the event of breach of the Code of Conduct by an intermediary, the first sequence by AMFI will be:
A. Write to the intermediary (enclosing copies of the complaint and other documentary evidence) and ask for an
explanation within 3 weeks.
B. Give Warning C. Cancel Registration. D. None of the above.
59. The investment objective of a diversified equity scheme might read as follows:
A. “To generate capital appreciation from a portfolio of predominantly equity related securities”
B. “To generate income by investing predominantly in a wide range of debt and money market
securities”
C. “To achieve growth by investing in equity and equity related investments, balanced with income
generation by investing in debt and money market instruments”
D. None of the above.
60. The investment objective of a diversified debt scheme might read as follows:
securities”

61. The investment objective of a balanced scheme might read as follows:
securities”
62. When a scheme’s name implies investment in a particular kind of security or sector, it should have a
policy that provides for investing at least 65% of its corpus in that security or sector, in normal times.
A. True B. False
63. Which of the following statements are correct:
A. Schemes, other than ELSS, need to allot units or refund moneys within 5 business days of closure
of the NFO.
B. Open-ended schemes, other than ELSS, have to re-open for ongoing sale / re-purchase within 5
business days of allotment.
C. Statement of accounts are to be sent to investors ,In the case of NFO - within 5 business days of
closure of the NFO and In the case of post-NFO investment – within 10 working days of the
investment
D. All of the above.
64. NAV and re-purchase price are to be updated in the website of AMFI and the mutual fund
A. In the case of Fund of Funds, by 10 am the following day
B. In the case of other schemes, by 9 pm the same day
C. Both the above statements are correct. D. Only B is correct.
65. In the event of delays in dispatching dividend warrants or redemption / repurchase cheques, the
AMC has to pay the unit-holder, interest at the rate of 15% p.a. This expense has to be borne by the AMC
i.e. it cannot be charged to the scheme.
A. True B. False
66. In the case of unit-holding in demat form, the demat statement given by the Depository Participant
would be treated as compliance with the requirement of Statement of Account.
A. True B. False
67. Which of the following is true with respect to Unclaimed Amount
A. The mutual fund has to deploy unclaimed dividend and redemption amounts in the money market. AMC
can recover investment management and advisory fees on management of these unclaimed amounts,
at a maximum rate of 0.50% p.a.
B. If the investor claims the money within 3 years, then payment is based on prevailing NAV i.e. after
adding the income earned on the unclaimed money
C. If the investor claims the money after 3 years, then payment is based on the NAV at the end of 3 years
D. All of the above
68. If some sponsors wish to move out of the business, they need to bring in some other sponsor,
acceptable to SEBI, before they can exit. The new sponsor would need to put in place the entire
framework of Trustees, AMC etc. Therefore, unlike the occasional experience of ‘vanishing companies’
in shares, mutual funds cannot vanish.
A. True B. False
69. A fund of fund derives its NAV from other funds. Therefore it can publish it NAV by __________.
A. 8 am of the next day B. 9 pm of the same day C. 8 pm of the same day D. 10 am of the next day
70. Which of the following is NOT required to be disclosed to the investors in a mutual fund?
A. Annual report of the AMC B. NAV of the schemes
C. Portfolio of the Scheme D. Annual report of the scheme
71. NFOs other than ELSS can be open for a maximum of:
72. Legally, SAI is part of the SID
A. True B. False

73. Offer documents of mutual fund schemes are approved by SEBI
A. True B. False
74. Application form is attached to
A. SID B. SAI C. KIM D. None of the above
75. KIM has to be updated every 6 months
A. True B. False
76. If a scheme has a lock-in period, such information can be found in:
A. KYC B. SID C. SAI D. MIN
77. When a fund launches a new scheme, it first takes the approval of
A. AMFI B. SAT C. Trustees & BOD of the AMC. D. Sponsors
78. Which of the following is NOT found in an offer document?
A. Existing schemes of the fund B. Key personnel of the fund
C. Fees and expenses of the scheme D. Features of competing funds
79. The NAV of a fund is Rs. 40. The exit liad is 1%. What is the re-purchase price per unit?
A. Rs. 39.40 B. Rs. 40.40 C. Rs. 39.60 D. Rs. 40
80. The component that is common between offer documents of two schemes of the same mutual fund
is:
A. MIN B. SAI C. KIM D. SID
81. A mutual fund scheme was launched on October 15, 2010. When is the SID due for the first regular
update?
A. January-12 B. March-12 C. March-11 D. January-11
82. Which one of the following can change, without changing the fundamental attribute of the fund?
A. Asset allocation B. Fund manager C. Lock-in period D. Investment Objective.
83. Investors need to note that their investment is governed by the principle of caveat emptor i.e. let the
buyer beware. An investor is presumed to have read the Offer Document, even if he has not actually
read it.
A. True B. False
84. Which of the following statements are correct?
A. If a scheme is launched in the first 6 months of the financial year (say, April 2010), then the first update
of the SID is due within 3 months of the end of the financial year (i.e. by June 2011).
B. If a scheme is launched in the second 6 months of the financial year (say, October 2010), then the first
update of the SID is due within 3 months of the end of the next financial year (i.e. by June 2012).
C. After First updation, SID is to be updated every year.
85. Which of the following statements are true regarding Update of SAI
A. Regular update is to be done by the end of 3 months of every financial year.
B. Material changes have to be updated on an ongoing basis and uploaded on the websites of the mutual
fund and AMFI.
C. Both the above statements are correct D. None of the above statements are correct.
86. KIM is essentially a summary of the SID and SAI. It is more easily and widely distributed in the
market. As per SEBI regulations, every application form is to be accompanied by the KIM.
A. True B. False
87. KIM is updated
A. At least once a year. B. after every 3 years C. at the end of every 4 years D. Never
88. The Scheme/Plan shall have a minimum of 20 investors and no single investor shall account for
more than 25% of the corpus of the Scheme/Plan(s).
A. True B. False
89. Which employee(s) of the AMC should sign the Due Diligence Certificate?
A. Compliance Officer B. Chief Executive Officer
C. Managing Director, Whole time Director & Executive Director D. All of the above

90. In case of change in Fundamental Attributes in a Scheme of a Mutual Fund
A. An advertisement is given in one English daily newspaper having nationwide Circulation
B. Apart from above it should be published in a newspaper in the language of the region where the
Head Office of the Mutual Fund is situated
C. The unitholders are given an option for a period of 30 days to exit at the prevailing Net Asset Value
without any exit load.
91. In offer documents which of the following fees and expenses are to be disclosed that will be charged
to the scheme
A. New Fund Offer (NFO) Expenses B. Annual Scheme Recurring Expenses
C. Load Structure D. All of the above.
92. A due diligence certificate does not certify that
A. The draft offer document forwarded to SEBI is in accordance with SEBI regulations
B. All legal requirements connected with launching of the scheme have been complied with
C. Disclosures made in the offer document are true, fair and adequate
D. The AMC guarantees a good performance
93. The following is not required on the cover page of the OD
A. Date on which approved by trustees B. Earliest closing date for New Fund Offer
C. Date the NFO closes C. Date the NFO opens
94. The front page of an offer document need not cover
A. Opening, closing and earliest closing date of the offer B. Disclaimer clause
C. Legal and regulatory compliance D. Price of units
95. The OD should indicate the management of the fund. The management doesn’t include
A. name of trustees B. name of the Fund Manager
C. business experience of the key personnel of the AMC D. registration number of the custodian
96. The first time investor should be well advised to refer to the –
A. Offer document B. Key information memorandum C. Trust deed D. AMFI guidelines
97. What features figure on the cover page of the offer document?
A. Name of Mutual fund B. Name of the scheme C. Glossary of defined terms D. Both (A) & (B)
98. Does name of the scheme indicate its quality or prospects?
A. Yes B. No
99. the offer document contains condensed financial information of all schemes launched in the last
A. 3 years B. 5 years C. 7 years D. 9 years
100. Who prescribes the format for KIM?
A. AMC B. AMFI C. SEBI D. Ministry of finance
101. Which of the following is not part of KIM?
A. Name of Fund Manager & trustee company
B. Expenses with regard to load & recurring expenses.
C. Investor grievance contact D. Address of trustees & directors
102. Is it mandatory of an AMC to disclose ___________ in the KIM?
A. Investment objective
B. Performance of schemes in terms of compounded annualized returns over 1, 3, 5 year period. Along
with the benchmark returns.
C. Plans & options D. All of the above
103. Institutional distributors build reach through
A. Employees B. Agents C. Sub-brokers D. Any of the above
104. The maximum initial commission that an AMC can pay to distributors is:
A. Nil B. 0.05% C. 1% D. 2%
105. The distributor can charge a fee from the investor.
A. True B. False

106. Stock exchange brokers are permitted to distribute mutual funds without the requirement of
passing the certifying test
A. True B. False
107. Trail commissions are linked to valuation of portfolio in the market
A. True B. False
108. Which of the following cannot be a appointed as a distributor of a mutual fund?
A. Individuals B. AMC employees C. Banks D. Sponsor
109. What is the maximum number of AMCs with whom a mutual fund distributor can be empanelled?
A. 5 B. 20 C. There is no maximum limit D. 10
110. The primary objective of creating a mutual fund trading platform on a stock exchange is to
A. increase the cost of distribution B. increase the number of products
C. increase the reach of mutual fund products C. increase the number of investors
111. Trail commission is paid on the basis of:
A. Original invested amount. B. Minimum value of the invested amount
C. Face value of the invested amount C. Market value of the invested amount
112. Risk factors needs not be carried in which of the following advertisements?
A. Tombstone advertisements B. Awards advertisement
C. NFO advertisement D. Advertisement of existing products
113. An agent's appointment by a fund
A. Requires SEBI's approval B. Is a lengthy and cumbersome process
C. Is mandatorily preceded by an AMFI test D. Does not require any approval
114. Can a distributor have people (sub brokers) working under him?
A. Yes B. No C. With prior SEBI permission D. Only if the AMC permits
115. To become an ARN holder, what are the basic criteria?
A. Should be a graduate B. Should have at least passed his 12th standard exam
C. Should have a sound knowledge of the market D. Should have passed the mandatory NISM exam
116. Name the types of commission paid to distributors
A. Upfront commission B. Trail commission C. Business enhancing commission D.Both (A) &(B)
117. In which type of fund, should annualized returns be shown even if the fund is less than one year?
A. Equity B. Debt C. Exchange traded fund D. Liquid funds
118. Annualized yield must be shown
A. 1 – 2 – 3 years & since inception B. 1 – 3 – 5 years & since inception
C. 1 – 2 – 5 years & since inception D. Only absolute yield must be shown to investors
119. Who appoints the distributors?
A. AMFI B. SEBI C. AMC D. All three
120. The following is not a AMFI recommendation regarding practices for effective selling of mutual
funds by
A. agents should be fully aware of important characteristics of schemes they are selling
B. agents need not know their clients well
C. agents must understand clients needs D. None of the above
121. MF regulations specifically
A. Prescribe a minimum commission rate for agents B. Prescribe a maximum commission rate for agents
C. Prescribe both minimum and maximum commission rate for agents
D. None of the above
122. Under KYD requirements, Bio-metric process consists of taking the impression of the index finger
of the right hand of the ARN holder. This will be done at the POS at the time submission of documents.
A. True B. False
123. Typically, AMCs structure their relationship with distributors as Principal to Principal. Therefore,
the AMC it is not bound by the acts of the distributor, or the distributor’s agents or sub-brokers.
A. True B. False

124. Every person who is into selling of mutual funds should be familiar with the
A. AMFI Code of Ethics (ACE) B. B.AMFI’s Guidelines & Norms for Intermediaries (AGNI).
C. Both the above D. None of the above
125. If a distributor invests his own funds in a mutual fund, which of the following it true?
A. He can invest but only in a joint name B. He cannot invest his own funds
B. He cannot earn commission on his investments D. He cannot invest as a individual
126. The distributors have to disclose all the commissions (in the form of trail commission or any other
mode) payable to them for the different competing schemes of various mutual funds from amongst
which the scheme is being recommended to the investor.
A. True B. False
127. The practice of rebating i.e., sharing part of the commission earned with the investors, is banned.
A. True B. False
128. The following information is prohibited from tombstone advertisements:
A. Declaration of NAV and performance of the scheme.
B. Promise of any returns except in case of assured returns schemes.
C. Comparisons and usage of ranking given by a third party. D. All of the above
129. The dividends declared or paid shall also be mentioned in Rupees per unit along with the face value
of each unit of that scheme and the prevailing NAV at the time of declaration of the dividend.
A. True B. False
130. Only compounded annualized yield shall be advertised, calculated using the prescribed procedure,
if the scheme has been in existence for more than 1 year. All performance calculations shall be based
only on NAV and payouts to the unit holders.
A. True B. False
131. In case of Money Market schemes or cash and liquid plans, wherein investors have very short
investment horizon, the performance can be advertised by simple annualisation of yields if a
performance figure is available for at least 7 days, 15 days and 30 days provided it does not reflect an
unrealistic or misleading picture of the performance or future performance of the scheme.
A. True B. False


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Class Test- 2

Year 1; Semester 1: Mutual Fund Agent

Instruction: Please encircle the correct Answer.

1. 1. The assets of the mutual fund are held by

Prepared By: Rahul Ranjan, Certified Financial Planner 1

28. The AMC’s expenses to pay salaries to employees is borne by:

Prepared By: Rahul Ranjan, Certified Financial Planner 2

Prepared By: Rahul Ranjan, Certified Financial Planner 3

Prepared By: Rahul Ranjan, Certified Financial Planner 4

Prepared By: Rahul Ranjan, Certified Financial Planner 5

Prepared By: Rahul Ranjan, Certified Financial Planner 6

Prepared By: Rahul Ranjan, Certified Financial Planner 7

Prepared By: Rahul Ranjan, Certified Financial Planner 8

Prepared By: Rahul Ranjan, Certified Financial Planner 9

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