Model Test Questions – NISM MFD Examination

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Chapter 1

1. ______________ is taken in to account by a fund manager, to create a portfolio for a particular scheme of a
mutual fund.
a) The Age and Income of the Investors
b) The Risk Profile of the Investor
c) Investment objective of the Scheme
d) All of the Choices

2. If you invest in the equity shares of gold mining company, then the share price of the company depends upon
____________.
a) Gold mining company efficiency
b) Gold reserves
c) Market price of gold
d) All of the Choices

3. Which amongst the following is the most illiquid asset?

a) Debentures
b) Real Estate
c) Shares
d) Gold

4. State True or False? The Unit Capital of Mutual Fund Scheme is calculated by multiplying the Face Value of the
share by Number of Units.
a) TRUE
b) FALSE

5. Which of the following instruments is termed as a short term Government Security?

a) Fixed Deposit
b) Certificate of Deposit
c) Call money
d) Treasury Bill

6. Which of the following is an advantage of investing in a mutual fund?

a) Portfolio Diversification
b) Portfolio Concentration
c) Portfolio Balancing
d) None of the above

7. Under which type of funds, investor expects funds to perform better than the benchmark?
a) Liquid Funds
b) Active Funds
c) Balanced Funds
d)Passive Funds
8. Investments in mutual funds for a period of less than 1 year is said to be _____________ in nature.
a) Long term c) Short Term
b) Medium term d) Ultra Short Term

9. In an Interval Scheme the minimum duration of an interval is ___________

a) 15 days c) 45 days
b) 30 days d) 60 days

10. In India, generally the face value of mutual fund units is ______.
a) Rs. 1 c) Rs. 100
b) Rs. 10 d) Decided by AMFI

11. Which of the following schemes units are compulsory to list on stock exchange.
a) ELSS Fund c) Arbitrage Fund
b) Gilt Fund d) Close ended Fund

12. Miss. Anjali wants to buy additional units of a mutual fund scheme, at what price she can buy?
a) The NFO price plus inflation rate
b) The same price as NFO
c) A price linked to the inflation index
d) A price that is linked to its NAV

13. State True or False? In an ELSS scheme, a fund manager buys more of illiquid investments?
a) TRUE b) FALSE

14. Gains of the scheme pertaining to market being quoted at higher prices are termed as which of the following?
a) Valuation Gains c) Real Gains
b) Realised Gains d) None of these

15. State True or False? Investments in Mutual Funds are subject to market risks and therefore they provide
guarantee of Capital Growth/ Protection.
a) TRUE b) FALSE

Chapter 1- Answers: 1) c, 2) d, 3) b, 4) a, 5) d, 6) a, 7) b, 8) c, 9) a, 10) b, 11) d, 12) d, 13) a, 14) a, 15) b

Chapter 2
1. The assets of a scheme are held by the __________.
a) KRA c) Fund Accountant
b) Registrar and Transfer Agent d) Custodian

2. Which of the following is true with respect to change in fundamental attributes of a scheme?
a) Can be changed only after giving a notice and exit option to unit holders
b) Can be changed by passing a special resolution by the Trustee and AMC Boards.
c) Can be changed by seeking approval of SEBI.
d) Cannot be changed during the life of the scheme.

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 3. _____________ executes the sale and purchase of mutual fund investments in the stock market.
a) Fund accountant c) Dealer
b) Custodian d) Registrar

4. State True or False? Investors are the beneficiaries in the case of a mutual fund trust, who invest is various
schemes.
a) TRUE c) FALSE

5. Which of the following is responsible for settlement of transactions of a scheme executed on the stock
exchanges?
a) AMC c) Clearing House
b) Stock exchanges d) Custodian

6. Which of the following is true about SEBI?

a) It regulates the Mutual Fund Industry in India b) It is a self-regulatory body
c) Mutual funds do not come under SEBI purview d) None of these

7. Which of the following is the function of the Sponsor?

a) It provides for safe custody of securities held by the mutual fund schemes
b) It looks after day to day functioning of the AMC
c) It makes application to SEBI for registration of a mutual fund
d) It is responsible for making sure the investments are made as per objectives set out by the Scheme

8. In India, Mutual funds are constituted as a trust.

a) TRUE c) FALSE

9. Which of the following constituents are not appointed by the Asset Management Company?
a) Custodian c) Banker
b) R&T Agent d) Distributor

10. AMC director are appointed with the permission of_________.

a) SEBI c) AMC
b) Trustees d) Sponsors

Chapter 2- Answers: 1) d, 2) a, 3) c, 4) a, 5) a, 6) a, 7) c, 8) a, 9) a, 10) b

Chapter 3
1. "To generate income by investing predominantly in a wide range of debt and money market securities" - This
is likely investment objective of which scheme?
a) Liquid Schemes c) Balanced Scheme
b) Diversified Equity Scheme d) Debt Scheme

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2. Which of the following distributors qualify for enhanced due diligence by the AMC?
a) Anil receives commission of Rs.53 Lakhs from XYZ mutual fund
b) Rishabh mobilises Rs.1.5 cr for a PQR mutual fund
c) Parag receives commission of over Rs.11 crore per annum across industry
d) All of the Above

3. Investors who has not transacted during the previous ____________ months is considered as dormant
investors
a) 3 c) 12
b) 6 d) 24

4. Which of the following information is a mandatory disclosure to unit holders as per AMFI code of ethics?
a) Unit Holders Investment Pattern
b) Portfolio Turnover
c) Transaction of Purchase and Sale of Securities
d) All of these

5. Anil got his redemption cheque after 15 working days from the AMC. What is the interest that AMC has to pay
to Anil?
a) 10% p.a. c) 15% p.a.
b) 12% p.a. d) 25% p.a.

6. A mutual fund is required to publish the NAV _____ in at least ______ daily newspapers having circulation all
over India.
a) Fortnightly, 4 c) Daily, 2
b) Weekly, 2 d) Weekly, 4

7. What does AGNI stand for? AMFI guidelines for new investors. State true or false?
a) AMFI guidelines for New Investors
b) AMFI Guidelines and Norms for Intermediaries
c) AMFI General and Non individual investor guidelines
d) None of the above

8. "To generate capital appreciation from a portfolio of predominantly equity related securities" is an investment
objective of a ____________
a) Income Fund c) Diversified Equity Fund
b) Liquid Fund d) Arbitrage Fund

9. Which of the following have different investment objectives?

a) Plans c) Schemes
b) Options d) Time Horizons

10. Open-ended schemes, except ELSS, have to re-open for ongoing sale/re-purchase within _____ business days
of allotment
a) 3 c) 10
b) 5 d) 12

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 11. The investor records are maintained by ______________.
a) The specific fund accountants c) The back office of AMFI
b) Registers and Transfer Agents d) The Fund Manager and his team

12. What is the penalty for breach of code of conduct as mandated by AGNI.
a) Rs.10 Lac c) Rs. 50 Lacs
b) Rs.1 Crore d) Registration can be cancelled

13. Debt- oriented, close- ended schemes need to disclose their portfolio in their website every month, by the
_______ working day of the succeeding month.
a) 3rd c) 12th
b) 10th d) 15th

Chapter 3- Answers: 1) d, 2) a, 3) b, 4) d, 5) c, 6) c, 7) b, 8) c, 9) c, 10) b, 11) b, 12) d, 13) a

Chapter 4

1. ______________ discloses the standard risk factors of a mutual fund scheme.

a) Scheme Information Document c) New Fund Offer (NFO)
b) Statement of Additional Information d) Key Information Memorandum (KIM)

2. The Statement of Additional Information (SAI) is approved by ____________.

a) SEBI c) Sponsors
b) Board of directors of AMC and Board of Trustees d) Unit holders

3. Arjun is looking to invest in a fund with long term horizon and high growth. Which of the following schemes
can he choose?
a) Liquid Funds c) Balanced Funds
b) Thematic Funds d) Equity Funds

4. A new purchase can be made in terms of which of the following?

a) Units or amount c) Amount only
b) Units only d) Any of these

5. Which of the following shows the performance of the scheme, portfolio etc.
a) Scheme Annual Report
b) Scheme Information Document
c) Statement of Additional Information
d) Key Information Memorandum (KIM)

6. Which of the following is not a part of the offer document does not contain ________.
a) Tax Impact c) AMC and Trustee detail
b) Expected returns d) Investment objectives

7. State True or False: The SAI is not a part of the offer document.
a) TRUE b) FALSE

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 8. Which of the following is required to accompany an Application form of a mutual fund?
a) KIM c) SAI
b) SID d) Addendum

9. ____________ is summary of SID and SAI

a) KIM c) PoA
b) Memorandum & Articles of Association d) SIP

10. Key Information Memorandum (KIM) does not include______.

a) The risks associated with the scheme
b) The functions of Trustees and AMC
c) The opening- closing dates of the NFO
d) Minimum investments required and the cutoff time

11. Which of the following is an important aspect of an OFFER DOCUMENT?

a) To inform the investors about the AMC's views on Stock Markets
b) To inform the investors on the performance of the scheme
c) To provide a comparison of the schemes
d) To inform the investors on the detailed information about the scheme

12. Which is the re-opening date for a scheme?

a) The next working day after the close of a NFO
b) The date when investors can go for a re-purchase
c) The date on which it lists on a Stock Exchange
d) The date on which NFO Opens

13. Portfolio disclosure of mutual fund schemes on their websites is mandatory by _______ of the succeeding
month.
a) 3rd day c) 10th day
b) 7th day d) 15th day

14. Which of the following is not a part of the SAI?

a) Investment objective
b) Condensed Financial Information
c) Plans and options
d) Scheme Portfolio

Chapter 4- Answers: 1) a, 2) b, 3) d, 4) c, 5) a, 6) b, 7) b, 8) a, 9) a, 10) b, 11) d, 12) b, 13) c, 14) b

Chapter 5
1. Which of the following is entitled to Commission?
a) Own investment of the Registered mutual fund agent
b) Business procured by a AMFI registered mutual fund agent
c) Business procured by stock brokers who deal in mutual funds through the exchange platform
d) None of these

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 2. State True or False? Advertisements regarding mutual fund schemes shall not contain statements which
directly or by implication or by omission may mislead the investor
a) TRUE b) FALSE

3. Mutual fund distributors are appointed by __________________.

a) The AMC c) The Trustees
b) SEBI d) The Custodian

4. Can mutual fund distributors receive commission on the investments they make for themselves in their own
name?
a) Yes they can c) Yes only of they disclose the same to the AMC
b) No they cannot d) None of these

5. State True or False? The commission structures are different for different schemes, even for the same AMC?
a) TRUE b) FALSE

6. With respect to ranking, all advertisements and sales literature containing mutual fund ranking must disclose
___________
a) The name of the Ranking Entity and the criteria on which the ranking is based
b) The number of AMC(s)/Mutual Funds in the category
c) The name of the category (e.g. income/growth)
d) All of the above

7. Which of the following is true with respect to trail commission?

a) Is paid only for high valued transactions c) Grows at a steady rate
b) Is linked to the NAV d) Is paid to the Corporate and Bank distributors only

8. While investing in a scheme, an investor has to pay a/an _________

a) Trail Commission c) Rebate
b) Upfront Commission d) Fund incentive

9. Which of the following options form the basis of appointment of a Mutual Fund distributor?
a) An agreement between the AMC and the Distributor
b) Approval from SEBI
c) Power of Attorney from the AMC
d) An agreement with AMFI
Chapter 5- Answers: 1) b, 2) a, 3) a, 4) b, 5) a, 6) d, 7) c, 8) c, 9) a
Chapter 6

1. Calculate the NAV for the following information - Value of Stock Rs.300 cr, Value of Money Market
Instruments - Rs.30 cr, Dividend Accrued but not Received - Rs.15 cr, Amount Receivable on Sale of Shares -
Rs.10 cr, Amount Payable on Purchase of Shares: Rs. 11 cr, Fees Payable - Rs. 1.5 cr and No of Outstanding Units :
4 cr.
a) 76.16 c) 81.87
b) 80.77 d) 79.17

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2. Liquid Schemes and Other Debt Schemes cannot charge management fees on the funds parked in short term
deposits of commercial banks.
a) TRUE b) FALSE

3. The current market value of the stocks of a mutual fund scheme portfolio is Rs.15 and the current liabilities
are 9 cr. The unit capital is Rs.12 cr and the face value per unit is Rs.12. What is the current NAV of this scheme?
a) Rs. 10 c) Rs. 9
b) Rs. 5 d) Rs. 6

4. STT is not applicable to _________

a) Equity Oriented Schemes c) Equity Shares
b) Debt Oriented Schemes d) Derivatives

5. A mutual fund trust is exempt from tax. State true or false?

a) TRUE c) FALSE

6. The additional Total Income Ratio (TER) on account of inflows from beyond top 15 cities so charged shall be
clawed back in case the same is redeemed within a period of ______ from the date of investment.
a) 6 months c) 1 year
b) 9 months d) 2 years

7. An investor invests Rs.50000 in an Equity Fund. The Face Value of this scheme is Rs.12 and the NAV is Rs.15.
How many units will be allotted to him assuming there is no entry load?
a) 3333.33 c) 4166.67
b) 3000 d) 3147.87

8. Market price of stocks in a mutual fund scheme is Rs.150 cr, value of bonds is Rs.15 cr, value of money market
instruments is Rs.30 cr, dividend accrued but not received is Rs.5 cr and fees payable is Rs.10 cr. The number of
outstanding units is 85 lacs. What would be the NAV?
a) 2.11 c) 2.24
b) 223.52 d) 211.76

9. What is the dividend distribution tax on Equity Oriented Schemes?

a) 25% c) Nil
b) 20% d) 30%

10. NAV of liquid funds is to be calculated up to __decimals

a) 0 c) 3
b) 2 d) 4

11. As per the provisions of the Income Tax Act- Short term capital loss is to be set off against ____________.
a) Cannot be set off against any heads of income b) Short Term Capital Gain
c) Short Term Capital Gain or Long Term Capital Gain d) Long Term Capital Gain

12. A fund house charges ___________ to its investors.

a) Expenses to Manage a Fund c) Expenses one by the AMC
b) Expenses to launch a New Fund d) Expenses done by the Fund Manager

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 13. What is the rate of DDT on corporate for debt oriented funds?
a)15% c) 35%
b)30% d) 40%

14. The STT rate on sale of units of debt mutual funds is _________
a)0.01% c) 0.13%
b)0.1% d) 0%

15. An investor buys mutual fund units worth Rs.25 lacs. Will an investor attach wealth tax?
a) TRUE b) FALSE

16. The dividend received by a Mutual Fund investor will be taxed at a rate of __________
a) 5% c) 20%
b)10% d) Exempted

Chapter 6- Answers: 1) c, 2) a, 3) d, 4) b, 5) a, 6) c, 7) a, 8) b, 9) c, 10) d, 11) c, 12) a, 13) b, 14) d, 15) b, 16) d

Chapter 7

1. The process of converting demat units into physical form is called ___________.
a) KYC c) Dematerialization
b) ASBA d) Re-materialization

2. State True or False? Foreign investors can invest in equity schemes of MFs registered with SEBI after
completing KYC process
a) TRUE b) FALSE

3. What is the frequency for dispatch of Consolidated account statement (CAS) ?

a) As and when requested by the investor c) Weekly
b) Monthly d) Quarterly

4. For a company to invest in a particular mutual fund scheme, ___________ document authorises it.
a) The Articles of Association
b) The Memorandum of Association
c) Share Holder Resolution
d) Specific Board Resolution

5. Mr. Sinha gives a redemption request in a liquid fund scheme at 1 pm. What would be the applicable NAV for
this re-purchase?
a) Closing NAV of the same day
b) Closing NAV of the next working day
c) Closing NAV of the previous working day
d) Closing NAV of the day preceding the next business day

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6. Satish Verma invests Rs.10 Lakhs in a debt oriented Scheme and gives a local cheque at 2 pm. Which will be
the applicable NAV for allotment of units to Mr. Verma?
a) Closing NAV of the day on which the application was made
b) NAV of the business day on which funds are available for utilization before cut-off time of that day is
applicable
c) Next business day NAV
d) Closing NAV of the day immediately preceding the application day.

7. Which of the following document a charitable trust does not have to submit to invest in a mutual fund
scheme.
a) Memorandum and Articles of Association
b) Trust Deed
c) Board Resolution Authorizing the Investments
d) List of Authorized Signatories

8. Who can attest the copies of supporting documents in the KYC procedure?
a) Gazetted officer
b) Manager of a scheduled commercial bank.
c) Notary Public
d) All of the Above

9. Which of the following is true in case of ASBA?

a) It can be used for Subsequent purchases after NFO c) Can be used for switches
b) it can be used for NFO subscriptions d) It is not available for all mutual funds

10. An investor can invest a constant amount regularly through a ___________

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

11. Mr. Sarang gives a cheque of Rs.1.50 lacs to invest in an ELSS scheme at 2.00 pm at a Mutual Fund office. The
NAV of which day will be applicable to him?
a) NAV of the same day c) NAV of the day on which funds will be available
b) NAV of the next day d) None of these

12. In the growth option of a mutual fund

a) Dividend Distribution Tax is applicable
b) The change in NAV capture the scheme performance
c) Units rise or fall depending on the schemes performance
d) The NAV falls as and when dividend is declared

13. An institutional investor is required to submit ______ document, to invest in the mutual fund.
a) Bank Statements c) Approval letter from SEBI
b) Audited Accounts for the last 3 years d) Board Resolution

14. SEBI has mandated a unified KYC for the securities market through the _________ registered with SEBI
a) Depository Participants c) Custodians
b) KRA's d) Brokers

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 15. Mr. Rajiv holds mutual fund units jointly with his wife. Can he enjoy the nomination facility?
a) Yes, he can nominate b) No, he cannot nominate

16. In the dividend re-investment scheme, the NAV reduces once the dividend is paid out?
a) TRUE c) FALSE

17. Cut-off timing guidelines is/are not applicable for_______.

a) International Funds c) Applicable for all the funds
b) New Fund Offer (NFO) d) Both A and B

18. Mutual Funds are allowed to accept cash to the extent of ___________ per investor, per mutual fund, per
financial year.
a) Rs.10,000 c) Rs 50,000
b) Rs.20,000 d) No cash can be accepted

19. Mrs. Esha has made a list of documents to be submitted to complete the KYC process. Which one of
mentioned document is not required?
a) PAN Card c) Income Proof
b) Address Proof d) Identity proof
20. Ratna gives her equity fund investment application form to her distributor at 11.00 am. The form is
submitted at official point of acceptance at 1.30 am. What is the cut of time for this investment?
a) 10.30 AM c) 3.00 PM
b) 1.30 PM d) 2.00 PM

21. Mr. Kantilal gives a local cheque at 4.30 pm of Rs.10 lacs at a Mutual Fund office for investing in a Gilt Fund.
Of which day will the NAV be applicable to him?
a) NAV of the same day c) NAV of the day on which the funds will be available
b) NAV of the next business day d) None of these

Chapter 7- Answers: 1) d, 2) a, 3) b, 4) d, 5) a, 6) b, 7) a, 8) d, 9) b, 10) d, 11) a, 12) b, 13) d, 14) b, 15) a, 16) a,

17) d, 18) c, 19) c, 20) c, 21) c
Chapter 8

1. A mutual fund scheme gives a return of 12% and the beta of that scheme is 0.6. The risk free return is 8%.
What is the Treynor Ratio of the scheme?
a) 5% c) 6%
b)6.67% d) 8%

2. Performance of an index scheme can differ from the benchmark index due to Due ________ .
a) Market volatility c) Tracking error
b) Bull run d) Systematic risks

3. Ram purchases redeem units 650 days after buying them. Purchase NAV was Rs.15. Redemption NAV is
Rs.18.80. What is the compounded rate of return?
a)13.69% c) 14.70%
b)13.52% d) 15.88%

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4. The valuation of illiquid securities held by a mutual fund is done as per ______.
a) The last traded price of that security on BSE or NSE
b) Fair Valuation norms
c) The average price of bud and ask quotation
d) The lowest price calculated as per the above three methods

5. What would be the Sharpe ratio if the Returns earned were 10%, risk free return was 12%, and Standard
deviation was 0.5.
a) 4 c) 10
b) -4 d) 0.75

6. An index fund manager would seek to minimize the ________

a) Delta Error c) Tracking error
b) R Squared Factor d) Arbitrage between cash and future markets

7. An investor buys an equity mutual fund scheme at NAV Rs.18 on 15th April. On 15 September the NAV was
Rs.23.50. What is the simple return on the scheme in this period?
a) 23% c) 5.50%
b) 30.56% d) 23.40%

8. Tricolor Ltd. has a share capital of Rs.250 crores and accumulated reserves of Rs.70 crores. What will be the
book value of its share if it has issued a total of 10 crore shares?
a) Rs.40 c) Rs.32
b) Rs.3.57 d) Rs.320

9. State True or False? If the interest rate rises, then the bonds with short term maturity will benefit more?
a) TRUE
b) FALSE

10. ____________ is a measure of market risk?

a) Beta c) Treynor
b) Alpha d) None of these

11. In Liquid funds, simple annualized return method is used to show the returns because ______.
a) It’s a simpler way to calculate and investors understand it easily
b) The investment made is fixed for 30-90-180 days
c) The return is calculated over smaller time horizons
d) The amount invested is usually small

12. A portfolio whose beta is less than 1 indicates ____________

a) It is Very risky compared to the market c) It is Less risky than the market
b) It is Some what risky than the market d) It is Equally risky as the market

13. Mutual Funds can borrow _____________.

a) For long term investment purposes c) To meet redemption requests or dividend payments
b) Are not allowed to borrow at all d) Freely as per their investment objectives

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 14. After deciding the model portfolio, _________ is used for finalizing the schemes of Equity and Debt.
a) PE Ratio c) EPS
b) Sharpe Ratio d) Expense Ratio

15. Absolute Return = ____________

a) (Cost Price-Sales Price) / Sales Price c) (Sales Price - Cost Price) / Cost Price
b) (Sales Price / Cost Price) -1 d) 1- (Cost Price / Sales Price)

16. Asset allocation means _____________

a) Distribution of Funds between Fund Managers in a Mutual Fund
b) Distribution of Funds between various persons after the death of a person
c) Distribution of Funds between various asset classes in a portfolio
d) Distribution of Funds between beneficiaries of an AMC

17. The _____________ strategy of maintains a constant ratio of asset allocation.

a) Dynamic Asset Allocation c) Flexible Asset Allocation
b) Fixed Asset Allocation d) SIP

Chapter 8- Answers: 1) b, 2) c, 3) b, 4) b, 5) b, 6) c, 7) b, 8) c, 9) a, 10) a, 11) c, 12) c, 13) c, 14) b, 15) c, 16) c, 17) b

Chapter 9

1. Which amongst the following has the highest to lowest risk sequence?
a) Capital Protection Oriented Funds - Monthly Income Plans - Balanced Funds (Flexible Allocation)
b) Monthly Income Plans - Balanced Funds (Fixed Allocation) - Balanced Funds (Flexible Allocation)
c) Capital Protection Oriented Funds - Balanced Funds (Flexible Allocation) - Monthly Income Plans
d) Balanced Funds (Flexible Allocation) - Monthly Income Plans - Capital Protection Oriented Funds

2. When marker correct, the __________ funds can decline much more than ______ funds
a) Value Funds, Growth Funds c) Index Funds, Sectoral Funds
b) Growth Funds, Value Funds d) None of these

3. In MIP scheme, is the monthly income assured? True or False?

a) Monthly income is assured c) It is a balanced scheme
b) It is a Debt oriented scheme with allocation to equities d) It offers income at a specific rate

4. While investing in _______, an investor must consider fund age as an important criteria.
a) Liquid Funds c) Government securities
b) Equity Schemes d) None of these

5. ___________ schemes offers the advantages of both equity and debt asset classes in a single scheme.
a) Thematic schemes c) Balanced Schemes
b) Gilt Schemes d) Liquid Funds

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 6. A flexible asset allocation scheme is an example of _____________ investment strategy.
a) Active c) Top-down
b) Passive d) Bottom-up

7. An active fund manager takes higher cost for fund management and higher risk.
a) FALSE b) TRUE

8. Which of the following statement is not true with respect to arbitrage funds
a) Arbitrage Funds have Basis Risks
b) Arbitrage Funds invest in Equity Markets
c) Arbitrage Funds invest in both Spot and Future Market
d) Arbitrage Funds are more riskier than Sectoral Funds

9. A Mutual Fund scheme gave an annualized return of 10.75% and the annualized Standard Deviation of the
fund is 2.48. The current risk free return is 8%. Calculate the Sharpe Ratio
a) 0.63 c) 0.48
b) 1.11 d) 0.35

10. A ____________ charges the highest fee for managing the fund
a) Active Funds c) Index Funds
b) Passive Funds d) None of these

Chapter 9- Answers: 1) d, 2) b, 3) b, 4) b, 5) c, 6) a, 7) b, 8) d, 9) b, 10) a

Chapter 10

1. Which of the following schemes mainly invests in corporate bonds?

a) ELSS c) Index Funds
b) Income Funds d) REITS

2. Asset class G of National Pension System (NPS) stands for which of the following?
a) Equity c) Government Securities
b) Debt Securities except government securities d) All of these

3. Asset class E of the National Pension System (NPS) can invest in Government Debt Securities. State True or
False?
a) TRUE c) FALSE

4. If you are looking for a low risk investment with income generation, which of the following is a wise
investment choice?
a) Equity c) Bank Deposits
b) Insurance d) Property

5. Asset Class C of National Pension System (NPS) can invest in _______________.

a) Cash c) Debt Securities other than Government Securities
b) Equities d) Government securities

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 6. Which of the following is true with respect to Gold Future Contracts?
a) can be bought through Mutual Funds
b) are not standardized products
c) are traded on the Commodity Exchanges
d) None of the above

7. Tier II account of the National Pension System is called the______.

a) Savings Account
b) Pension Account
c) Financial Account
d) NPS Account

Chapter 10- Answers: 1) b, 2) c, 3) b, 4) c, 5) c, 6) c, 7) a

Chapter 11

1. Which of the following factors determine the size e of equity portfolio of an young unmarried investor?
a) Liquidity Needs c) Income Levels
b) Lifestyle d) All of these

2. ___________ provides hedge against inflation has a long term investment perspective
a) Blue-chip Equity Shares c) Real Estate
b) Gold d) Government Bonds

3. Money Back Policy is an ideal investment option for an investor who cannot pay regular insurance premium.
True or False?
a) TRUE c) FALSE

4. Which of the following statement is not an example of transition phase.

a) Purchase of house c) Children's higher education
b) Looking for a better job d) Foreign travel

5. Which of the following stages needs regular money?

a) Distribution c) Accumulation
b) Transition d) Inter-Generational Transfer

6. Equity investments through SIP is advisable in which of the following phases?

a) Inter-Generational Transfer Phase
b) Accumulation Phase
c) Transition Phase
d) Reaping / Distribution Phase

7. State True or False: Successful Financial planning involves time commitment by the investor as well as the
financial planner.
a) TRUE c) FALSE

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 8. Higher the capital base, _________ the risk appetite
a) Higher
b) Lower
c) Capital base has no effect on risk appetite
d) No change

9. If a portfolio consists of Gilt Funds and Diversified Debt Funds then it belongs to __________.
a) Employee with small children
b) Old couple with no family support
c) Young married with no children
d) None of the above

Chapter 11- Answers: 1) d, 2) b, 3) b, 4) c, 5) a, 6) b, 7) a, 8) a, 9) b

Chapter 12

1. Which is the right sequence to make the right investment decision?

a) Selection of scheme - risk profiling - making a model portfolio
b) Risk Profiling - Making a model portfolio - selection of scheme
c) Making a model portfolio - risk profiling - selection of scheme
d) Selection of scheme - Making a model portfolio - risk profiling

2. The factor which an investor will consider the least while selecting the asset allocation is __________.
a) Recession c) Bonus issued by one of the MF schemes
b) Change in interest rates d) Changes in prices of equity shares

3. _____________ is the process of determining the ability of an investor to bear losses from various
investments.
a) Diversification c) Portfolio Churning
b) Asset Allocation d) Risk Profiling

4. Risk taking capacity increases as the number of earning members ___________

a) Decreases c) Becomes Zero
b) Increases d) None of these

5. Risk Appetite is influenced by which financial factors?

a) Capital Base c) Both A and B
b) Regularity of Income d) None of these

6. Mr. Sujit needs to construct a model portfolio for his client- which amongst the following factors will he
consider?
a) Client Employment Status c) The Size of Portfolio
b) Clients Risk Profile d) All of these

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 7. Being an advisor, which class of people would u advise an investment of more than 70% of the funds in debt
funds?
a) A 33 year old well employed with one son
b) A 45 year old Executive Manager of a company who has 2 children
c) Elderly couple with no children
d) Young man working with Glaxo

8. State True or False? Tactical Asset Allocation is considered to be a risky strategy?

a) TRUE
b) FALSE

Chapter 12 Answers: 1) b, 2) c, 3) d, 4) b, 5) c, 6) d, 7) c, 8) a

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