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Posted Date: 13 Oct 2008 Posted By: Nilesh Panchal Member Level: Diamond
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2007 Association of Mutual Funds in India (AMFI) AMFI Advisor Module AMFI AMFI Examination University Question paper
1. An investor in a closed-end mutual fund can get money back before maturity by selling units
(1-Mark)
Back to the fund
To a special trust at NAV
On a stock exchange where the fund is listed
To the agent through which he/she subscribed to the units of the fund
2. A closed-end mutual fund has a fixed
(1-Mark)
NAV
Tenure
Rate of return
Number of distributors
3. A mutual fund is owned by
(1-Mark)
The Govt of India
SEBI
All its investors
AMFI
4. Who is the primary guardian of unit holders funds?
(1-Mark)
The AMC
The Sponsor
The Trustees
The Custodians
5. The limit on maximum entry or exit load that a fund can charge is determined by the
(1-Mark)
AMC
SEBI
AMFI
Distribution agents based on demand for the fund
6. Which of the following is not true for Equity Linked Savings Schemes?
(2-Mark)
Investors can claim an income tax benefit
There is a lock-in period before investment can be withdrawn
There are not specific restrictions on investment objectives for the fund managers
These funds cannot invest in shares of listed companies
7. The fund sponsors should have a sound financial track record of
(1-Mark)
7 years
12 months
5 years
3 years
8. The agreement between the Trustees and the AMC is known as
(2-Mark)
Trust Deed
Investment Management Agreement
Agreement to manage Portfolio
AMC appointment letter
9. A closed-end scheme of a mutual fund is not governed by
(1-Mark)
Exchange Rules of the stock exchange where it is listed
Listing Agreement between the fund and the stock exchange
Guidelines issued by the Ministry of Commerce
Provisions of Companies Act, 1956 relating to transactions in securities
10. After dividend declaration, unit-holders are entitled to receive dividend within a period of
(1-Mark)
One week
30-days
42-days
Six weeks
11. The Board of Trustees of the UTI does not have nominees from
(1-Mark)
RBI
LIC
IDBI
The Bombay Stock Exchange (BSE)
12. The "Capital" of a scheme does not include
(1-Mark)
Unit capital
Reserves
Borrowing
Net worth of the AMC
13. The most important source of information for a prospective investor in mutual fund is
(1-Mark)
Offer document
Annual Report of the AMC
Economic Times
AMFI Newsletter
14. The offer document issued by mutual funds does not serve the purpose of
(1-Mark)
Announcing the launch of the scheme
Giving detailed information about the scheme
Explaining the risk factors of the scheme
Giving the fund manager's investment outlook for the next quarter
15. The offer document for a scheme remains valid even if
(2-Mark)
The AMC is reconstituted
Entry or exit loads are changed
The scheme's NAV changes
New plans are added to existing schemes
16. Standard risk reactors are the ones
(2-Mark)
Which are uniformly applicable for any mutual fund scheme
Different for different schemes
Which are made by a "standards" committee
None of the above
17. The prospectus or offer document containing the details of a new scheme is first registered with the
(2-Mark)
AMFI
SEBI
Bombay Stock Exchange
Ministry of Finance
18. A scheme's policy on dividends and distribution
(2-Mark)
Is decided by the fund manager as per the market outlook
Can be changed to suit the requirements of the AMC
Need not be consistent
Should be disclosed at the time of initial launch
19. The following need not be covered in a Key Information Memorandum
(2-Mark)
Risk Factors
Opening and earliest closing date of the initial offer
Disclaimer clause
Functions and responsibilities of the sponsor, trustees, AMC and Custodian responsibilities
20. The following are not termed as "sales practices"
(1-Mark)
Agents commission
Before-and after-sales service to investors
Advertising of schemes
Stock broking
21. Which of the following sales practices is prescribed by regulation
(1-Mark)
AMFI Code of Ethics
SEBI Advertising
AMFI's Code for Agents
None of the above
22. Which of the following document, a Mutual Fund distributor needs to refer to find out eligible category of investors in a particular Mutual Fund Scheme
(1-Mark)
SEBI Regulations Manual
AMFI booklet
Offer document
RBI Guidelines
23. Which of the following is not true
(2-Mark)
Companies can invest in mutual fund schemes
Registered societies can invest in mutual fund schemes
NRI can not invest in mutual fund
HUF can invest in mutual fund
24. Listed equity shares are to be valued at
(1-Mark)
The average price of the share in NSE
The lowest price of the day in BSE
Cost price or current market price whichever is lower
The last traded price in the stock exchange where the security is principally traded
25. As per SEBI (Mutual Fund) Regulations ,1996 an asset shall be classified as NPA if
(1-Mark)
Interest warrant bounces twice
The issuer refuses to repay interest
If the interest/installment becomes overdue for a period of 180 days
If the interest/installment becomes overdue for a period of one quarter
26. For a open-end fund, the repurchase price should not be lower than
(2-Mark)
NAV
95% of NAV
93% of NAV
97% of NAV
27. For a no-load fund , the AMC can change an investment management fee not exceeding
(2-Mark)
3.50%
4.00%
2.25%
0.50%
28. A funds NAV is affected by
(2-Mark)
Purchase and sale of investment securities
Valuation of all investment securities held
Accrual of income or expense
All of the above
29. If an investor switches from one scheme to another scheme within the same mutual fund
(1-Mark)
No load will be charged
Only entry load will be charged in the new scheme
Only exit load will be charged in the old scheme
Depends on AMC and varies between different AMC
30. Which of the following is untrue of an automatic reinvestment plan?
(2-Mark)
The plan allows for automatic reinvestment of all income and capital gains
Automatic reinvestment allows for accumulation of additional units of the fund
The major benefit of automatic reinvestment is compounding
Its benefit is often lost on account of the heavy load charge on the reinvestment
31. A passive fund manager
(1-Mark)
Researches stocks extensively
Does not buy and sell stocks often
Does not have to go through the process of stock selection
Does not have to track stocks
32. Coupon of a debt security refers to
(1-Mark)
A piece of paper attached to the certificate
The return-on investor would earn
The rate of interest paid on par value of the bond
None of the above
33. Certificates of Deposits (CDs) are issued by
(1-Mark)
Regional Rural Banks
Corporates
Scheduled commercial banks
None of the above
34. Value stocks
(1-Mark)
Have high current dividend yield
Yield high growth in earnings
Are currently under valued
None of the above
35. Mutual funds are allowed to lend
(1-Mark)
Loans
Securities
Physical assets
None of the above
36. An owner of preference shares is given which of the following rights
(1-Mark)
Voting rights
Fixed dividend income from post-tax profits
Voting rights and unlimited dividend income
No guaranteed rights
37. When interest rates for similar maturities' bonds are 11%, bond with a 9% coupon rate will sell
(2-Mark)
Above par
Below par
At par
At a price unrelated to the interest rates for similar securities
38. To compare bonds with different coupon rates, maturities and prices, investors would use
(2-Mark)
Current yield
Technical analysis
Yield to maturity
Fundamental analyis
39. Yield curve is also known as
(2-Mark)
Curve of Interest
Term Structure of Interest Rates
Curve that yields
None of the above
40. As per SEBI norms, a fund's investments, in the equity shares of any one company are restricted to
(2-Mark)
25% of Net Assets
10% of Net Assets
50% of Net Assets
100% of Net Assets
41. Transaction costs include
(1-Mark)
All expenses related to purchase and sale of securities
All expenses charged to the fund
Distribution expenses
None of the above
42. The Expense Ratio is of least importance in which of the following
(1-Mark)
Debt fund
Index fund
Equity fund
Liquid fund
43. Turnover rates would be most relevant to analyze the performance of
(1-Mark)
Equity funds
Index funds
Debt funds
Value funds
44. Portfolio turnover rate refers to
(2-Mark)
Ratio of sales to the net assets of the fund
Ratio of purchases to the net assets of the fund
Ratio of sales or purchases( which ever is lower) to net assets of the fund
Ratio of sales or purchases( which ever is higher) to net assets of the fund
45. The rule of 72 is used to
(2-Mark)
Calculate entry load of a scheme
Calculate the period in which an investment will double at a given rate of return
Calculate the rate at which money will grow to double in a given period
both b and c
46. If there is an entry load in a scheme, the investors return
(2-Mark)
Will increase to the extent of load
Will not change because there will not be any exit load
Will reduce to the extent of load
None of the above
47. As per SEBI, mutual funds can borrow for short term to the extent of
(2-Mark)
Total net assets
50% of net assets
25% of net assets
20% of net assets
48. When selling a mutual fund, a good agent would never
(1-Mark)
Describe the past performance of the scheme
Compare the fund with other mutual funds
Assure a rate of return
Compare the fund with other financial products
49. Which of the following is not a characteristic of company fixed deposits
(1-Mark)
A higher rate of interest
Higher risk
Unfavorable effect of tax
Very high liquidity
50. Which of the following represent indirect investments?
(1-Mark)
Investment in a mutual fund
Investment in shares
Investment in bank deposit
Investment in post office schemes
51. The most important reason for an investor to prefer a bank deposit to a mutual fund is
(1-Mark)
The creditworthiness of the bank
Because the bank does not invest in securities
That the bank offers a guarantee
All of the above
52. The constraint on financial planning due to insufficient resources can be remedied to some extent by
(1-Mark)
Decreasing the standard of living
Disciplining children
Disciplined monthly budgeting
None of the above
53. Structural characterization of an equity fund include
(1-Mark)
Costs of investing
The specific securities in which the fund has invested
The number of employees of the AMC
All of the above
54. Listing of shares at a stock exchange ensures
(1-Mark)
Guaranteed returns
Long term capital appreciation
Low risk
High liquidity
55. Mutual fund investors should be advised to expect
(1-Mark)
Low post tax returns
Dramatic results
Better returns than every other available option
Only realistic wealth accumulation goals
56. Once a financial advisor works out ideal Asset Allocation, it can be used for all his investors
(1-Mark)
True
False
-
-
57. A retired person generally needs a greater proportion
(1-Mark)
Debt funds
Equity funds
Money Market funds
All of the above
58. A fund with a high beta coefficient gives greater returns in a rising market, and is more risky in a falling market
(1-Mark)
True
False
-
-
59. In which type of schemes should an unmarried professional working in HLL invest
(2-Mark)
Scheme investing 80% in debt securities
50% in equity funds and 50% in income funds
At least 75% in equity funds having a higher P/E Ratio than the market
All the money in a balanced fund
60. The best equity fund, relative to others, would have
(2-Mark)
Higher Ex Marks, lower Beta and higher Gross Dividend Yield
Higher Ex Marks, higher Beta and higher Gross Dividend Yield
Lower Ex Marks, lower Beta and lower Gross Dividend Yield
Lower Ex Marks, higher Beta and higher Gross Dividend Yield
61. An investor wishes to switch between a money market mutual fund and an equity fund. What would you advise him?
(2-Mark)
It would be better to stick to one type of fund, the one that meets his investment objective.
He should keep switching parts of his investment from the equity fund to the money market fund as the market rises and switch back to the equity fund when the market falls
He should switch from the money market fund to the equity fund in a rising market and switch back to money market fund when the market falls
none of the above
62. If a charitable trust approaches a distributor for investment in a mutual fund, the distributor should
(2-Mark)
Accept the application without wasting time
Reject the application outright
Refer to the offer document
Accept the application as a direct application
63. Beta of an equity fund measures its
(2-Mark)
Performance
Risk
Both the above
None of the above
64. The basis of genuine investment advice should be
(2-Mark)
The current market situation
The agent commissions paid by different funds
Financial planning to suit the investor's needs
Planning to complete the agent's annual targets
65. One of your friends who has invested in a mutual fund is about to get Australian citizenship. What would you advise?
(2-Mark)
He should transfer the investment to his relative
He should get RBI approval for continuing
He can continue to hold as PIO are allowed to invest in mutual funds in India
He should immediately redeem his investment since foreign citizens are not eligible investors
66. As per Bogle, asset allocation for older investors in accumulation phase should be
(2-Mark)
30% equity ; 70% debt
40% equity ; 60% debt
50% equity ; 50% debt
70% equity ; 30% debt
67. A steady holding of investments in an equity fund's portfolio indicates
(2-Mark)
Long-term orientation
Lower transaction costs
Both the above
None of the above
68. An investor should not invest in a mutual fund if
(2-Mark)
He expects a customized portfolio
He is able to carry out detailed investment research and monitor the stock market
Both the above
None of the above
69. Which of the following is not true about the buy and hold strategy
(2-Mark)
It is preferred by a many investors
It does not involve rebalancing
It is very beneficial as investors may exit from poor performers and invest in better ones
All of the above
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