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Posted Date: 21 Dec 2008 Posted By: Nilesh Panchal Member Level: Platinum
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2008 Association of Mutual Funds in India (AMFI) AMFI Advisor Module AMFI AMFI Model Mock Sample Test K University Question paper
01.Standard risk factors are not
a. Market driven
b. Common to all schemes
c. Of relevance to novice investors
d. New to a regular investor
02.The risk of a scheme's NAV moving up or down on the basis of capital market movements is a standard risk factor
a. True
b. False
03.Past performance of a sponsor/AMC mutual fund is not indicative of the future performance of the scheme. This is
a. Not true
b. A standard risk factor for all schemes
c. A scheme-specific risk factor
d. Applicable only to gilt funds
04.Risk arising from a scheme's investment objective/strategy and proposed asset allocation is
a. Not present
b. Common to all schemes
c. Specific to that scheme
d. Not applicable to debt funds
05.In an assured returns scheme, it assurance is only for a limited period, it must be stated in the offer document that there is no guarantee for sustaining the assured return for the remaining duration of the scheme
a. True
b. False
06.If the AMC is managing a fund for the first time, this information can be found in
a. Newspapers
b. SEBI
c. AMFI Newsletter
d. Offer document
07.A compliance officer
a. Stands guarantee to the information contained in the offer document
b. Belongs to SEBI
c. Cannot certify that the AMC's legal and procedural obligations are fulfilled
d. Cannot be appointed by the AMC
08.The due diligence certificate that must be submitted to SEBI along with the draft offer document cannot be signed by
a. The managing director of the AMC
b. An executive director of the AMC
c. The compliance officer
d. Investor relations officer
09.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
10.In developed countries, an important Mutual Fund marketing channel is through
a. Insurance Companies
b. Banks
c. Non-Banking Finance Companies
d. Retail Distributors
11.Emerging or new channel for distributors/marketing or Mutual Fund in India is
a. Insurance Companies
b. Banks
c. Qualified Mutual Fund agents
d. Direct Sales agents of respective mutual funds
12.Mutual Funds often use their own employees to mobilise funds from
a. Retail investors
b. High Networth individuals/institutional investors
c. All investors
d. Foreign investors
13.Retail distribution channels are a critical element in the distribution of mutual funds in India
a. True
b. False
14."Sales Practices" cover the following areas
a. Desirable marketing practices
b. Agents responsibilities to the investor
c. Ethical code of conduct
d. All of the above
15.The following are not termed as "sales practices"
a. Agents commission
b. Before-and after-sales service to investors
c. Advertising of schemes
d. Stock broking
16.Sales practices are never mandated by regulators, but arise from convention only
a. True
b. False
17.Agents are compensated by mutual funds
a. Through salaries
b. Through commissions
c. Through an annual fee
d. Not in cash but in kind
18.In India the minimum or maximum commissions payable to distributors are not prescribed by law, but are decided using the fund's own discretion
a. True
b. False
19.Lowest commissions are paid on
a. Equity funds
b. Tax benefit schemes of mutual funds
c. Debt funds
d. Long-term investments in mutual funds
20.Excess distribution expenses are to be borne by the
a. AMC
b. Unit holders
c. SEBI
d. AMFI
21.To cover fund distribution expenses, open ended funds
a. Charge a fee from agents
b. Charge entry and exit loads from investors
c. Create a reserve
d. Sell investments
22.Trail commission means paying
a. No commission at all
b. The entire commission up-front
c. Part of the commission up-front and the balance in phases
d. The entire commission after five years
23.Sub-brokers serve as agents of the principal broker and a mutual fund is not answerable for their activities
a. True
b. False
24.In India, Mutual fund agent's rate and services are at present defined by
a. SEBI rules
b. Stock exchange bye-laws
c. AMFI rules
d. Convention
25.Along with the application, it is mandatory to distribute
a. Investment rebate
b. Offer document
c. Key information memorandum
d. None of the above
26.To sell funds effectively, an agent need not
a. Be fully aware of the important characteristics of the scheme
b. Know his/her client's risk profile
c. Give after sales service
d. Offer large investment rebates
27.For investors to correctly compare performance of different funds SEBI's advertising codes include
a. Uniform computation of yields
b. Uniform presentations of dividends
c. Identical time periods
d. All of the above
28.SEBI's advertising code mandate that all performance calculations in a fund's advertisement should be based
a. NAV
b. The NSE Fifty Index
c. The BSE Sensex
d. None of the above
29.An agent's appointment by a fund
a. Requires SEBI's approval
b. Is a lengthy and cumbersome process
c. Is mandatory preceded by an AMFI test
d. Does not require any approval
30.An investor does not have recourse to his agent in case of errors, problems or the quality of the investment
a. True
b. False
31.An agent can offer and sell a fund's units at
a. Any price he chooses
b. A price determined by competition among agents
c. A price based on demand for that fund's units
d. The public offering price currently in effect
32.All buy orders through an agent do not become valid till the fund accepts and confirms the orders
a. True
b. False
33.When an agent purchases, offers or sells units, ensuring compliance with applicable regulations is the responsibility of
a. The fund
b. The agent
c. AMFI
d. SEBI
34.The terms of appointment of a broker by a fund are
a. Laid down by SEBI
b. Laid down by AMFI
c. Not uniform to all funds
d. None of the above
35.The code of ethics for mutual funds published by AMFI
a. Is mandatory
b. Is in the form of recommended practices
c. Is unfavourable to investors
d. Does not cover distribution and selling practices
36.The AMFI code of ethics does not cover the following prescriptions
a. Adequate disclosures should be made to the investors
b. Funds should be managed in accordance with stated investment objectives
c. Conflict of interest should be avoided in dealings with directors or employees
d. Investors should approve each investment decision
37.Distribution and sales practices are only partly regulated by SEBI at present
a. True
b. False
38.Which of the following distribution channels is preferred by private mutual funds
a. Individual Agents
b. Small Distribution companies
c. Established distribution companies
d. The Internet
39.Which of the following sales practices is prescribed by regulation
a. AMFI Code of Ethics
b. SEBI Advertising
c. AMFI's Code for Agents
d. None of the above
40.In a mutual fund investor's subscriptions are accounted for as
a. Liabilities
b. Deposits
c. Unit capital
d. None of the above
41.Investments made by a mutual fund on behalf of investors are accounted as
a. Assets
b. Liabilities
c. Capital
d. None of the above
42.Liabilities in the balance sheet of a mutual fund are
a. In the form of long-term loans
b. Strictly short term in nature
c. Combination of long term and short term
d. Not allowed as per regulations
43.Net asset Value (NAV) of a mutual fund scheme is defined as the schemes
a. Assets minus liabilities
b. Assets per unit
c. Assets minus liabilities per unit
d. None of the above
44.The day on which NAV is calculated by a fund is known as
a. Computation date
b. Valuation date
c. Record date
d. Book closure date
45.A Fund's NAV is affected by
a. Purchase and sale of investment securities
b. Valuation of all investment securities held
c. Units sold or redeemed
d. All of the above
46.When computing NAV of fund SEBI requires accrual of major expenses to be accounted
a. Quarterly
b. Annually
c. On a day to day basis
d. When actually paid
47.If a fund calculates NAV daily, it will include all the transaction concluded up to
a. Last week
b. Last two days
c. Previous day
d. Today
48.For an open-ended fund, the repurchase price should not be lower than
a. NAV
b. 95% of NAV
c. 93% of NAV
d. 97% of NAV
49.For a close-ended fund, the repurchase price should not be lower than
a. NAV
b. 95% of NAV
c. 93% of NAV
d. 97% of NAV
50.For a scheme that has a load, the AMC can charge an investment management fee not exceeding
a. 1.50%
b. 2.00%
c. 1.25%
d. 0.50%
51.Initial expenses of launching schemes should not exceed
a. 15% of amount received
b. 10% of amount raised
c. 6% of amount raised
d. 5% of the amount raised
52.Which of the following expenses cannot be charged to the scheme
a. Audit fees
b. Costs related to investor communication
c. Winding costs for terminating the scheme
d. Penalties and fines for infraction of laws
53.Which of the following are not true for Equity Linked Savings Schemes ?
a. Investors can claim an income tax rebate
b. There is a lock-in period before investment can be withdrawn
c. There are not specific restrictions on investment objectives for the fund managers
d. These funds cannot invest in equity
54.Which of the following is not true for Index Funds
a. These funds invests in the shares that constitute a specific index
b. The investment in shares is in the same proportion as in the index
c. These funds take only the overall market risk
d. These funds are not diversified
55.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
d. Association of Mutual Funds of India (AMFI)
56.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
57.The AMC of a mutual fund cannot
a. Undertake advisory services or financial consulting
b. Cannot invest the funds in government paper
c. Act as a trustee of more than one mutual fund
d. Cannot invest the funds in securities
58.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
59.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
60.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
61.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
62.Distributors or agents
a. Can distribute several mutual funds simultaneously
b. Cannot appoint sub-agents or sub-brokers
c. Should be only individuals not companies or banks
d. Should not be an employee or associate of the AMC
63.A transfer in the management of a close-ended scheme does not require the consent of
a. Unit holders with 75% voting rights
b. SEBI
c. Trustees
d. AMC
64.The fund sponsor has to contribute
a. Nothing to the AMC
b. The total networth of the AMC
c. Atleast 40% of the AMC's networth
d. Exactly 50%
65.The sponsor of a mutual fund may be compared to
a. A director in a Company
b. The Chief Executive of a Company
c. Promoter of a Company
d. An equity shareholder in a Company
66.Issuing and redeeming units of a mutual fund is the role
a. The custodian
b. The transfer agent
c. The trustees
d. The bankers
67.The fund sponsors should have a sound financial track record of
a. 7 years
b. 12 months
c. 5 years
d. 3 years
68.The networth of an asset management company should be greater than
a. Rs.100 Crores
b. Can be decided by the Sponsor
c. Should be atleast Rs.10 Crores at all times
d. Should be greater than Rs.10 Crores
69.The AMC and directors are answerable to
a. Stock Exchanges
b. The Board of Trustees
c. Agents and distributors
d. Stock Brokers
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