Subject: Mutual Fund Management

Unit: 1

1) SEBI Stands for

a) Securities & Exchange Board Institute
b) Securities & Exchanges Board of India
c) Securities & Exchange Board of India
d) Securities & Exchanges Board of Institute

2) "The minimum number of members on the Board of trustees

is ................. ."
a) 2 b)6 c)4 d)10

3) Advantages of investing in mutual funds include all of the following

except.
a) Diversification of your investment.
b) Professional management.
c) Meeting specific investment goals.
d) There is virtually no risk of loss.

4) At least of trustees have to be independent.

a)2/3 b)5/6 c)1/2 d)3/4

5) SEBI (Mutual Fund – Regulations were enacted in the

year....................
a)2000 b)1994 c)1986 d)1996

6) Which of the following expenses is usually the highest for a mutual

fund?
a) Management fees
b) Administrative fees
c) 12b-1 fees
d) Referral fees

7) The industry association for mutual funds is called................ .

a) AMC
b) SEC
c) AMFI
d) SWP

8) "PPF account is to be held for a minimum of.......…..years."

a)20 b)5 c)15 d)10

9) Which of the following is not included in the prospectus?

a) Redemption fee
b) Expenses including management fees
c) Expenses including advertising and marketing fees
d) Advice on when to buy and sell

10) "Portfolio has to be disclosed to investor once in ............. months."

a) Two b)Six c)Five d)Ten

11) Private sector mutual funds were permitted in the year.......... .

a)1999 b)1993 c)1986 d) 2000

12) Mutual fund investors cannot control ...............of a fund.

a) Costs
b) Income
c) Payment
d) Dividend

13) The sponsor is the ........... of the mutual fund.

a) AMFI
b) Promoter
c) The agent
d) Trustee

14) "Trustees are appointed by ................. ."

a) Mutual funds
b) Insurance Companies
c) Financial Ministry
d) Sponsors

15) A close-ended mutual funds has a fixed:

a) NAV
b) Fund size
c) Rate of return
d) Number of distributors

16) The maximum load that a fund can charge is determined by the:
a) AMC
b) SEBI
c) AMFI
d) Distribution agents based on demand for the fund
17) The money market mutual funds are regulated by ............
a) RBI
b) SEBI
c) Trustee
d) AMC

18) Units from an open-ended mutual fund are bought.

a) On a stock exchange
b) From the fund itself
c) From AMFI
d) From a stock broker

19) The NAV of each scheme should be updated on AMFI’s website .

a) Every quarter
b) Every month
c) Every hour
d) Every day

20) Bank details have to be mandatorily provided to process ............ .

a) Capital
b) Insurance companies
c) Offer documents
d) Redemption

21) The custodian has the custody of the investments in a scheme and a
custodian is largely independent of....... .
a) Sponsors
b) AMCs
c) Trustees
d) Both (a) and (b)
22) Day to day operations of a mutual funds is handled by…………
a) Asset Management Company
b) Sponsor
c) Trustee
d) None of the above

23) The greatest potential for growth in capital is offered by…………..

a) Debt funds
b) Gilt funds
c) Growth funds
d) Balanced funds

24) Generally invest in................. .

a) Unlisted
b) Market-traded
c) Thinly traded
d) Privately placed

25) Mutual funds are allowed to borrow

a) Freely to meet their requirements
b) For investment purposes Only
c) to meet redemption demands
d) Not allowed at all

26) Investor’s rights under a scheme are

a) Uniform for all schemes of all funds
b) Not defined
c) Listed in the offer document
d) Available with stock exchange

27) The most important link between Mutual Fund and Investors is
a) Government
b) SEBI
c) Fund distributors
d) AMFI

28) As per AMFI figures, how many agents approximately, are there in
India selling Mutual Funds….
a)50000 b)100000 c)75000 d)150000

29) Which Mutual Fund has majority of the agents selling its Mutual
Fund units in India
a) LIC Mutual Fund
b) UTI Mutual Fund
c) SBI Mutual Fund
d) None of the above

30) Of the following fund types, the highest risk is associated with
a) Balanced Funds
b) Gilt Funds
c) Equity Growth Funds
d) Debt Funds

31) A Fixed Term Plan Series is……

a) An open-ended fund
b) A Close-ended fund
c) A fixed term bank deposit
d) A fixed term corporate bond

Unit: 2

1) Mutual funds that sell shares directly to investors and repurchase

shares investors want to sell are called ............. funds.
a) open-market
b) open-end
c) close-end
d) fair value

2) Which of the following stock funds would probably have the lowest
risk and return?
a) International funds
b) capital appreciation funds
c) Equity income funds
d) sector funds

3) Investing in one of which of the following funds will typically give

you the least diversification?
a) Growth funds
b) Capital appreciation funds
c) Equity income funds
d) sector funds
4) When the global financial forecast calls for recession in China and
Europe, you should consider investing in………
a) a global fund.
b) an international fund.
c) a domestic large cap fund.
d) a global bond fund.

5) A mutual fund must distribute .............. to investors in the same year

as earned.
a) Dividends
b) profits
c) capital gains
d) Both (a) and (c) are correct.

6) Which of the following bond mutual funds has both the lowest default
risk and the lowest interest rate risk?
a) Short-term Treasury
b) Long-term Ginnie Mae
c) Long-term corporate
d) Short-term high yield
7) The susceptibility of a mutual fund's performance to general stock
market conditions is known as
a) interest rate risk.
b) market risk.
c) Exchange risk.
d) Corporate risk

8) A stock mutual fund's prospectus typically states that the fund is

subject to all of the following risks except
a) market risk.
b) general decline in the stock market.
c) substantial declines in individual stocks.
d) default risk.

9) An arrangement offered by some brokerage firms that enables

investors to diversify among various mutual funds and receive
summary statement information is called a
a) mutual fund firm.
b) mutual fund security.
c) mutual funds supermarket.
d) mutual fund family.

10) When you begin to save for retirement and general wealth building, it
is wise to invest in mutual funds because .
a) they provide instant diversification.
b) they are less expensive than brokers.
c) they generally do not decrease in value.
d) All of the above are correct.

11) If the fundamental attributes of a scheme have to be changed, unit

holders have a right to exit at ........... load.
a) zero
b) Lower
c) Higher
d) Average

12) If 3 investors hold units jointly, redemption proceeds are payable

to ........... .
a) Investors
b) first holder
c) Accumulation
d) Investment

13) Repurchase price cannot be less then ........... of sale Price.

a) 93%
b) 8.70%
c) 9.76%
d) 14%

14) Returns from small cap companies are fund to be ............ than returns
from large cap companies.
a) mid-cap fund
b) Greater
c) growth fund
d) returns

15) If intrest rates go down, price of bonds will go............ .

a) lower
b) bank deposit
c) fair value
d) Highest

16) If duration of a bone is 2 years and intrest rates fall by 50 basis points,
the price will go up by ............ %.
a)14%
b)2.50%
c)12%
d)1%

17) Investors in ............. stage prefer long term risky investments.

a) scheme specific
b) investors
c) accumulation
d) Interest

18) Compounding enables investors to earn .............. on interest.

a) income generation
b) equity income funds
c) capital conservation
d) Interest

19) Growth and risk are associated with ................. .

a) equity funds
b) investors
c) international funds
d) mid-cap funds

20) Even bond mutual fund with littel or no ........... have intrest rate risk.
a) market risk
b) exchange risk
c) corporate risk
d) default risk

21) The second type of Debt Fund is Gilt or .................. funds.

a) government of India
b) government security
c) corporate bonds
d) Maturity

22) SWP is a mirror image of .............. .

a) SWP
b) SIP
c) STP
d) NAV

23) Junior BeEs was launched by benchmark mutual fund on ............... .

a) Jul-03
b) Jul-04
c) Jul-05
d) 06-Mar-03

24) Mutual funds in India are permitted to invest in .................... .

a) Securities
b) Securities and Gold Securities
c) other than real estate
d) Securities, gold and real estate

25) Growth and risk are associated with ............... .

a) balanced fund
b) mutual fund
c) equity fund
d) global fund

26) ................... in equity markets is risky as there is a possibility of long

investment.
a) provident fund
b) Investment
c) income schemes
d) Guarantee

27) A kind of debt fund where the investment portfolio is closely aligned
to the maturity of the schemes.
a) monthly income plans
b) fixed maturity plans
c) capital protected schemes
d) arbitrage funds

28) The unit holders under a scheme may exchange their units for units of
the other schemes.
a) systematic withdrawal plan
b) switch facility
c) systematic transfer plan
d) unit- holder

29) Investment of these funds is mainly in equity stocks whose current

valuation does not reflect some underlying value proposition.
a) index fund
b) equity-income fund
c) growth fund
d) value fund

30) Money market funds make investment mainly in ................... term ,

liquid instruments.
a) very short term
b) low risk
c) short term
d) small term

31) ...................... invest mainly in specific sector stocks.

a) large cap fund
b) sector fund
c) mid cap fund
d) small cap fund

Unit: 3

1) On the average, actively managed mutual funds have an expense ratio

of about
a)1.50%
b)2.50%
c)3%
d)5%

2) Which of the following is a stock mutual fund?

a) Ginnie Mae fund.
b) Growth fund.
c) Municipal securities fund.
d) Treasury securities fund.
3) ................funds are mutual funds that attempt to mirror the movement
of existing broad market indicators.
a) Internet
b) Stock
c) Index
d) Internation

4) High yield ( junk-bond funds focus on relatively risky bonds issued

by firms that are subject to …………..
a) Default risk
b) Interest rate risk
c) Exchange risk
d) Management risk

5) ................ mutual funds invest in both foreign bonds and U.S. bonds.
a) International bond
b) Index
c) Treasury bond
d) Global bond

6) The possibility that interest rates may rise an example of………

a) Political risk.
b) Exchange rate Risk.
c) Interest rate risk.
d) Liquidity risk

7) Treasury bond funds with short maturities have………..

a) High; Low
b) High; High
c) Limited; High
d) Low; limited

8) Long term Treasury bond are considered to be the “risk free” asset in
the global financial markets. However, long term Treasury bond
funds still bear significant................ risk.
a) Global Comparative
b) Financial
c) Interest rate
d) Deflation

9) If a scheme has 45Cr units issued and a FV of Rs.10 and NAV is at

11.13, unit capital (Rs. Cr) would be equal to…..
a)500.85
b)50.85
c)950.85
d)450

10) For a scheme to be defined as equity fund, it must have minimum

a)65% in Indian equities
65% in equities
51% Indian equities
35% in Indian equities

11) Expense Ratio............... .

a) [ I + ( E-B )] B
b) P * ( 1+ r ) ^ n )
c) Expense / Average weekly Net Assets
d) ( Refund ÷ sfund ) smarket

12) "Sponsor must hold at least % of the AMCs net worth."

a)42%
b)45%
c)40%
d)35%

13) AMC's net worth has to be at least

a)5 crore
b)10 Crore
c)15 crore
d)20 crore

14) The AMC and the trustees enter into an ..................... agreement.
a) AMC
b) DCA
c) Investment management
d) Yield sacrifice

15) Scheme take- overs do not result in merger of

a) DCA
b) AMCs
c) CLB
d) UTI Act

16) The Regulatory authority under the companies act is….

a) AMCs
b) DCA
c) UTI Act
d) CLB

17) The UTI is governed by………

a) UTI Act
b) CLB
c) DCA
d) AMCs

18) The offer documents of an open- ended fund is valid for….

a) years
b) 2 years
c) 3 year
d) 7 years

19) If equity markets move up, P/E ratios will move………

a) Up
b) Down
c) High
d) Low

20) Dividend are accounted for on ............. date.

a) Purchase
b) Interest
c) Ex- dividend
d) Price

21) Investments are accounted for on .................... date.

a) Equity
b) Debt
c) Sell
d) Trade

22) "A fund whose Initial issue expenses are borne by the AMC is called
fund."
a) No- load
b) Load
c) Treasury bond
d) Default risk

23) Initial issue expenses of open- ended funds is amortized over a period
not exceeding years.
a) 5%
b) 3%
c) 1%
d) 8%

24) An asset is non- performing if interest and/ or principal are due for
over .................. months.
a) Two
b) Five
c) one
d) Three

25) Valuation of debt instruments with less than 182 days to maturity is
done on .................. basis.
a) Failed
b) Lessened
c) Accrual
d) Faded

26) Illiquid securities should not exceed ..............of the net assets.
a)20%
b)25%
c)15%
d)30%

27) If a fund is assuming higher risk than the market index, it’s beta will
be ................…
a) Greater than 1
b) Less than 1
c) Greater than 2.5
d) Less than 2.5
28) Portfolio turnover is ................for liquid funds.
a) Low
b) High
c) Up
d) Down
29) Expense ratio is very important for .............…
a) Debt funds
b) Equity funds
c) Bond
d) Dividend

30) "According to Bogle an investigator's exposure to debt investment

should be equal to his ……………."
a) Trade
b) Rating
c) Age
d) Capital

31) Higher expense ratios lead to ................... .

a) Yield forfeit
b) Yield sacrifice
c) Yield run through
d) Yield outlay

Unit: 4

1) Closed end funds were usually trading at ...............to NAV.

a) Expenses.
b) Discount.
c) Income.
d) Gain.

2) The investment management fee for net asset above Rs.100 crore
is..................
a)3%
b) ½%
c)1%
d) 2%
3) The amount by Which a closed-end fund's share price in the
secondary market is below the fund’s NAV is called the……….
a) market value.
b) premium.
c) discount.
d) par value.

4) If a mutual fund's NAV is 50 and its expanse ratio is 2%, what are the
total expenses per share?
a)2
b)6
c)5
d)1

5) Investors in high tax brackets will normally achieve higher

performance by selecting mutual fund that generate…………
a) long-term dividends.
b) long-term capital gains.
c) long-term stock dividends.
d) short-term capital gains.

6) In short-term capital gain tax, tax on funds is calculated as per income

tax slab of the individual, which are:
a)5% on the amount of gain.
b)20% on the amount of gain.
c) 30% on the amount of gain.
d) d)All of the above.

7) A long-term capital gains tax of 10% is applicable to equity mutual

funds for return exceeding
a) Rs 1 Lakh.
b) 5 Lakh.
c) 3 Lakh.
d) None.

8) On which rate is the balanced mutual funds taxed according to the

budget 2018:
a)5% without indexation
b)10% without indexation
c)20% after indexation
d)15% without indexation

9) For taxation purpose funds with allocation in equity are classified as

equity funds.
a)40% or more
b)60% or more
c)65% or more
d)75% or less

10) ......................is a tax that is imposed by the government on

companies based on dividend paid to a company’s investors.
a) dividend distribution tax
b) return on investment
c) tax goods and services tax
d) corporate tax

11) The price per share for a ...............mutual fund can differ from the
fund’s NAV per share.
a) Open-end
b) NAV
c) closed-end
d) Tax

12) Change in the which method dose not account for dividend.
a) taxation
b) equity
c) NAV
d) Dividend

13) Debt component is valued on same basis as:

a) Equity
b) debt instrument
c) Government security
d) Instrument

14) ....................are valued on the basis of 'market to market'.

a) Government security
b) financial institutions
c) trading securities
d) Valuation

15) In entire process of valuation the concept of what is very important?

a) valuation month
b) valuation day
c) valuation year
d) valuation date

16) Entry load is primarily levied to cover up selling

and .................expenses of the scheme.
a) buying
b) distribution
c) funds
d) Expenses

17) Entry load are also known as;

a) front load
b) exit load
c) modified load
d) close load
18) Long term capital gains without indexation are taxable at:
a) 10% + Surcharge
b) 15% + Surcharge
c) 20% + surcharge
d) 30% + surcharge

19) Full form of DDT:

a) Different distribution tax
b) Distribution dividend tax
c) Dividend distribution tax
d) Duties distribution tax

20) What is income tax act are long term capital gains on shares or
securities as mutual fund?
a) 1999
b) 1961
c) 2000
d) 1998

21) Meaning of ELSS:

a) Equity linked savings schemes
b) Equity insurance savings schemes
c) Earn income savings schemes
d) Equity linked schemes savings

22) Some mutual fund have much ................... expenses or expenses

ratios then others.
a) Lowest
b) higher
c) NAV
d) Closed

23) .................. and income funds contain both growth stock and stocks
that pay high dividends.
a) Growth
b) Balance growth
c) Market price
d) NAV
24) An ................... is a document that provides financial information
about a mutual fund, including expenses and past performance.
a) annual report
b) Prospectus
c) Financial statement
d) Balance sheet

25) mutual funds that sell shares directly to investors and repurchase
shares investors want to sell are called ................... funds.
a) open- market
b) Open-end
c) Closed-end
d) Fair value

26) On the average, actively managed mutual funds have an expense ratio
of about
a) 1.50%
b) 2.50%
c) 3%
d) 5%

27) Which of the following is a stock mutual fund?

a) Ginnie mae fund
b) Growth fund
c) Municipal securities fund
d) Treasury securities fund

28) Wealth tax act:

a) 1999
b) 1957
c) 1997
d) 1958

29) STT means:- ………

a) securities transactions tax
b) Section translation tax
c) Sector transaction tax
d) Source transaction tax

30) .................... mutual funds invest in both foreign bonds and U.S
bonds.
a) International bond.
b) Index.
c) Treasury bond.
d) Global bond.

31) The most familiar type of value of professionals involved in valuation

process in,……
a) investment value
b) Tax status
c) Equity
d) Ownership

32) The scheme term exit load as contingent deferred sales charge, to be
treated as;………
a) modified exit load.
b) Entry load.
c) Front load.
d) Asset mix.