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Posted Date: 19 Dec 2008 Posted By: Nilesh Panchal Member Level: Diamond
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2008 Association of Mutual Funds in India (AMFI) AMFI Advisor Module AMFI AMFI Model Mock Test University Question paper
1. An equity fund with weekly average net assets of Rs. 1400 crore may change maximum ongoing expenses (excluding issue/redemption expenses) to the extent of
a. Rs. 35.00 crore
b. Rs. 26.75 crore
c. Rs. 27.50 crore
d. 19.75 crore
2. A close-end equity fund has average weekly net assets of Rs. 200 crores. As per the SEBI Regulation, the AMC can charge the fund with investment and advisory fees upto:
a. Rs. 2.25 crores
b. Rs. 2 crores
c. Rs. 2.5 crores
d. Rs. 3 crores
3. Which of the below is a short-term capital asset?
a. Unit of MF held for a period of not more than one year preceding the date of transfer
b. Unit of MF held for a period of less than one year preceding the date of transfer
c. Unit of MF held for a period of less than three years preceding the date of transfer
d. Unit of MF held for a period of not more than three years preceding the date of transfer
4. In a no load debt fund of corpus 200 Crores, what could be the maximum investment management charges?
a. 2 crore
b. 2.25 crore
c. 3.25 crore
d. 4.25 crore
e. 5.25 crore
5. Which of the following SEBI restrictions applies to a scheme’s investment in unlisted shares?
a. A closed-end scheme may invest a maximum of 10% of its NAV in unlisted shares
b. An Open-end scheme may invest a maximum of 5% of its NAV in unlisted shares
c. (1) & (2) above
d. None of these
6. An investor purchased units in an approved mutual fund on Juanuary’01 2006, for Rs. 4, 00,000.00. He sold the units on December 15, 2007 for Rs.6,00,000.00. Calculate the capital gains taxes paid by him without the benefit of indexation (ignore taxation).
a. Rs.20, 000.00
b. Rs.40, 000.00
c. Zero
d. Depends on the investor’s tax bracket
7. Entry load is used for meeting
a. Distribution Expenses
b. Marketing & Promotion
c. None of the above
d. Both
8. A systematic withdrawal plan is ideal for:
a. Investors with growth as the main investment objective
b. Investors who wish to benefit from market fluctuations
c. Investors who prefer a regular income stream
d. Investors who are not sure about themselves
9. Up to what extent unlisted equity shares can be held in an Equity fund?
a. 10% in Closed Ended fund
b. 5% in open ended fund
c. Both a and b
d. None of the above.
10. Calculate the current yield on a G.Sec with at par value of Rs. 1000, coupon of 11% and market price of Rs. 1010.
a. 11.20%
b. 10.89%
c. 11.21%
d. 12.20%
11. An index fund managers tries
a. To beat the market by superior stock selection
b. To beat the market by superior market timing
c. To beat the market by superior asset allocation
d. None of these
12. Cyclical stocks command,
a. Relatively lower P/E ratio, and have higher dividend payouts
b. Relatively higher P/E ratio, and have higher dividend payouts
c. Relatively higher P/E ratio, and have lower dividend payouts
d. Relatively lower P/E ratio, and have lower dividend payouts
13. A mutual fund is not allowed to invest in the sponsor company,
a. >25% of its net assets
b. >10% of its net assets
c. Not at all
d. >5% of net assets
14. Which of the following is applicable to the debt market in India?
a. The debt market is a wholesale market
b. There are large players like banks, financial institutions, mutual funds, etc
c. Government securities are traded on a large scale
d. All of the above
15. Current yield relates interest on a security to
a. Its current market price
b. Its face value
c. Its fair value
d. The current price of T-Bills
16. Which of the following measures are not taken by SEBI for protecting investors of mutual funds?
a. Mandating minimum levels of diversification for mutual funds
b. Ensuring that the funds are not used to favour a few companies
c. Tracking the securities that each fund has Invested in
d. Ensuring that the funds are invested in approved securities only
17. Portfolio characteristics of a fund can be judged by looking into Fund’s ……
a. Cash position
b. Concentration for checking its largest holdings
c. Portfolio turnover
d. All of these
18. Which benchmarks are used for evaluating fund performance?
a. Stock market indices such as S&P CNX Nifty, Sensex Etc.
b. Performance of other mutual funds
c. Return offered by other financial products or investment options open to the investor
d. All of these
19. A portfolio turnover of 200 percent implies that.........
a. On an average a security stays in the portfolio for 6 months
b. On an average a security stays in the portfolio for 12 months
c. On an average a security stays in the portfolio for 36 months
d. On an average a security stays in the portfolio for 48 months
20. A fund has a front –load of 1% and back-end load of 0.5%. The investor enters at NAV of Rs.10 and exits at NAV of Rs.12.The return of investment earned by him is...
a. 20%
b. 18.22%
c. 18.5%
d. None of these
21. How many scripts does Nifty constitute?
a. 40
b. 30
c. 100
d. None of the above
22. For evaluating sectoral funds, the preferred benchmark would be the
a. BSE Sensex
b. S&P CNX Nifty
c. BSE 200
d. S&P CNX Sectoral Indices
23. An investor can assess the performance of his mutual fund by comparing it with the performance of
a. Other mutual fund of the same type
b. The stock market
c. Other financial products
d. All of the above
24. When comparing a fund's performance with that of its peer group, the following cannot be compared
a. Two debt funds with 5 year maturities
b. A broad-based equity fund with an IT Sector Fund
c. A bond fund with a bond index
d. A government securities fund with a government security
25. CRISIL evaluates
a. Risk
b. Default possibility of the fund house
c. Performance of the different mutual funds
d. Performance of a particular fund
26. Fundamental qualities of a good financial planner are
a. Building trust with the client by understanding their needs
b. Good knowledge of all financial products and taxation related issues
c. Balanced, independent and ethical thinking
d. All of the above
e. None of the above
27. Financial Planning is
a. investing assets to receive the highest rate of return possible
b. is a process aimed at identifying financial needs of a client and planning investments that allows meeting future financial goals of the investor
c. keeping taxes as low as possible
d. planning to retire with the maximum income possible
28. The objective of the financial planning is to ensure
a. Right amount of money is available in the right hands at the right point in future to achieve an individual’s financial goals
b. That tax payable is as low as possible
c. One understands that technicalities of the financial market
d. One does not require the expertise of the financial advisers
29. Direct investment in stock markets can be a better option over investing through mutual funds if
a. The investor wants better returns than those offered by mutual funds
b. The investor has large capital, knowledge and resources for research
c. The investor has identified a bullish phase in the stock market
d. The investor wants to invest for the long term
30. As a financial planner, which of your following clients would you strongly advise to start investing for retirement?
a. 26 year old unmarried executive with 2 yrs experience in a job
b. 30 year old executive supporting a family of wife, child and mother
c. 30 year old executive with his wife working as well
d. 31-year-old unmarried son of a wealthy businessman.
31. How does a financial planner help his client?
a. By picking up cheque and application forms from the client
b. By identifying client needs, recommending the correct asset allocation and providing him service, that would help investors in making investments
c. By researching and identifying individual stocks or bonds for the client’s portfolio
d. By tracking the economy and government policies.
32. Financial planner’s income should be generally linked to:
a. Performance of the scheme he sells
b. Man-hours spent with the client
c. A fixed annual fee
d. None of the above
33. One of the following should not be recommended by a financial planner as a sound investment objective?
a. Saving for the client’s children’s education
b. Doubling the investment in 3 years
c. Purchase of a new car
d. Purchase of a new home
34. The power of compounding is best realized by investing in:
a. Income funds with dividend option
b. Equity funds with growth/reinvestment option
c. Balanced funds with dividend option
d. None of the above
35. Value averaging means
a. Keeping the target value of investment constant by investing the amount by which the investment value has gone down.
b. Investing the same amount of funds regularly
c. Investing in one lump sum amount
d. None of these
36. A criticism of rupee-cost averaging is
a. Investment is for the same amount at regular intervals
b. Over a period of time, the average purchase price will work out lower than if one tries to guess the market highs and lows
c. It does not tell you when to buy, sell or switch from one scheme to another
d. Rupee cost averaging has no serious shortcomings
37. Which of the following strategies is an example of the combined approach of Rupee Cost and Value Averaging?
a. When the investor sets a target value for his investments in an Equity fund
b. When the investor invests a fixed sum each month in a Liquid Fund
c. When the investor invests regularly in a Liquid Fund
d. When the investor invests regularly in a Liquid Fund , sets a target for an Equity Fund, then invests more in Equity Fund if its value declines and books profits when its value exceeds the target value
38. If you maintain a flexible ratio of asset allocation, would you
a. Rebalance the Debt/Equity allocation periodically?
b. Rebalance the Debt/Equity allocation very frequently?
c. Generally avoid portfolio rebalancing?
d. Keep fixed percentages of equity and debt investments at all times?
39. Which of the following is the best investment option for the purpose of getting the maximum benefits of compounding?
a. 12% interest paid yearly
b. 6% interest paid every 6 months
c. 3% interest paid every quarter
d. 1% interest paid monthly
40. Asset allocation of a portfolio should be re-evaluated every time there is change in the...
a. Family size and requirement
b. Job of the investor
c. Dramatic change in the market condition
d. All of these
41. The biggest disadvantage of investment in real estate is
a. Less potential for capital appreciation
b. High purchase risk
c. Depreciation in value as time passes
d. Value gets eroded due to inflation
42. Many investors prefer Bank deposits because.
a. Bank deposits offer higher return other investment option
b. They are considered safe and liquid.
c. Bank deposits offer higher capital appreciation
d. Bank deposits offer better tax rebates schemes
43. Market risk can be effectively managed by:
a. Investing with a short term horizon
b. Investing in debt funds
c. Investing in high price shares
d. Investing regularly with a long term perspective to smoothen out the effects of volatility in market price
44. A small investor can build a diversified portfolio by
a. Buying one share each of all listed companies
b. Investing in a mutual fund
c. Borrowing enough money to buy shares of well-managed companies
d. None of the above
45. The difference between debenture and bond is:
a. 1.Bonds are issued by corporations and debentures are issued by PSUs
b. Bonds are unsecured and debentures are secured.
c. Bonds are backed by loans and debentures are backed by assets
d. None of the above.
46. An income fund scheme invests in debenture of a company. What is the relationship of MF investor with that company?
a. Debenture holder
b. Shareholders
c. Creditors
d. No relationship
47. If beta is higher than 1, the fund is:
a. Less volatile than market
b. More volatile than market
c. Equally volatile than market
d. No relation
48. Volatility in a mutual fund portfolio is caused by ………
a. Investment in blue chip stocks
b. Idle cash lying with the fund
c. Investment in high rated bonds
d. None of these
49. Which is a better investment option while selecting an equity fund?
a. Ex Marks -75%, Beta – 0.9, Gross Dividend Yield 8%
b. Either 1 or 3
c. Ex Marks – 80%, Beta- 0.9, Gross Dividend Yield – 8%
d. Ex Marks – 90%, Beta- 0.8, Gross Dividend Yield – 9%
50. An investor asks you in what order he should list the following schemes, going from the scheme with the least risk to the one with the highest risk – 1. Balanced Fund, 2. A Stock Index Fund, 3. A Liquid Fund, 4. An IT Sector Fund.
a. 1,2,3,4
b. 1,3,4,2
c. 3,1,2,4
d. 2,3,1,4
51. As per Jacob’s recommendation low risk fund portfolio is likely to have.
a. 50% invested in Government Securities Funds and 50% invested in Money Market funds
b. An equal split between Government Securities Funds, Growth Funds and Index Funds
c. Equal investments in Aggressive Growth Funds, Value Funds, Sector Funds and Debt Fund
d. A mix of Balanced and Growth
52. For which of the following would you consider “ average maturity” as an important factor in selecting the right one for the investor?
a. A debt fund
b. A balanced fund
c. A money market or liquid fund
d. Both a and b above
53. Which of the following is recommended by Jacob for a Low Risk portfolio?
a. 50 % Growth and Income fund + 50% Money Market fund
b. 50% Growth funds + 50% index fund
c. 50% Government Securities fund + 50% Money Market fund
d. 50% Sector Funds + 50 % Money Market fund
54. Which of the following is not a specialty fund?
a. Sector fund
b. Mid cap /small cap fund
c. Foreign securities fund
d. Gilt fund
55. The emergence of Private Funds in Indian Mutual Fund industry came in which Phase of Mutual Funds history?
a. Phase 2 during the period 1987 to 1993
b. Phase 3 during the period 1993 to 1996
c. Phase 4 during the period 1996 to 1999
d. Phase 5 during the period 1999 to 2004
56. Which of the following is incorrect?
a. An equity fund would invest in ordinary shares, preference shares and warrants
b. A bond fund would mainly buy debt instruments
c. An index fund is indexed to inflation index
d. A sector fund invests in the shares of companies in a particular industry
57. Mutual fund pay commission to their agents:
a. As an incentive for having brought in an investor
b. As compensation for his before and after sales service to the investor
c. To off set any direct expenses that they may incur on sale of units
d. All of the above
58. Board of Trustees appoint Custodians for...
a. Making payment to bankers on behalf of the fund
b. Selling units of a mutual fund
c. Safekeeping of physical securities of the mutual fund or participating in any clearing system.
d. None of these
59. By What name is the Phase of year 2004 onwards of mutual fund industry known?
a. Growth and SEBI Regulation
b. Emergence of Large & uniform industry
c. Emergence of Private funds
d. Consolidation & growth
60. Which of the following can be a true statement?
a. NAV of debt instruments fluctuates more that liquid
b. Gilt securities are less riskier that other debt securities
c. Equity is more risky
d. All of the above
61. Who is responsible for the redressal and handling of investor complaints?
a. Fund Trustees
b. The AMC
c. Registrar
d. SEBI
62. Who is responsible for filing details of the fund’s portfolio with SEBI?
a. Registrar of the fund
b. Fund trustee
c. Custodian
d. The Fund manager
63. For a person to qualify as a sponsor, he must
a. Contribute at least 40% of the AMC’s net worth
b. Should be carrying on business in financial services for at least 5 years prior to registration
c. Should have a sound financial track record
d. All of the above
e. None of the above
64. Board of Trustees appoint Custodians for
a. Making payment to bankers on behalf of the fund
b. Selling units of a mutual fund
c. Safe keeping of physical securities of the mutual fund or participating in any clearing system
d. None of the above
65. Who is the primary guardian of unit holders' funds/assets
a. The AMC
b. The Trustees
c. The Registrars
d. The custodians
66. The fundamental attributes can be changed in an open-ended scheme by following methods
a. Informing all unit holders individually and offering them exit without any load
b. Voting of 75% of the unit holders.
c. Paper Advertisement in daily newspaper
d. Both 1 and 3.
67. Bank owned Mutual Funds are supervised by
a. SEBI
b. RBI
c. Jointly by SEBI & RBI
d. AMFI
68.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 country
69. Which of the following is an example of Merger of two AMCs?
a. Birla and Alliance
b. Zurich and HDFC
c. Apple and Birla
d. HB And Taurus.
70. Which of the following is an example of Scheme Take over?
a. Birla and Alliance
b. Zurich and HDFC
c. Apple and Birla
d. HB And Taurus.
71. Which of the following is an example of AMC Take over?
a. Birla and Alliance
b. Apple and Birla
c. HB And Taurus.
d. None of the above.
72. One of the following is NOT required to be disclosed in the offer document. Which one?
a. Details of Sponsor/Trustees
b. Investors rights and services
c. Performance of the other Mutual Funds
d. Description of the scheme and investment objective
73. A Charitable Trust wants to invest in Mutual Funds. What would you do?
a. Accept the application from with the cheque
b. Refuse to accept the application
c. Refer to the Offer document of the scheme to confirm that a charitable trust is allowed to invest
d. Accept the application form, without the cheque, and forward it for final acceptance by the fund / AMC
74. The investor cannot plead ignorance of procedures while investing in a mutual fund because
a. Mutual fund is a risky investment
b. The law does not permit the investor to sue the trust
c. While applying the investors signs an agreement stating they have read and understood the terms and conditions
d. An investor is expected to be careful while investing
e. Mutual fund is based upon trust
75. Along with the application, it is mandatory to distribute
a. Offer document
b. Key information memorandum
c. Prospectus
d. None of the above
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