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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 N University Question paper
1.In case of listed securities of group companies of the sponsor, mutual fund is not allowed to invest more than
a. 25% of its net assets
b. 10% of its net assets
c. At all
d. >5% of net assets
2.A mutual fund may transfer investments from one scheme to another
a. Not at all
b. At current market rates
c. At cost price
d. At a fixed premium over market rate
3.Interest Rate Risk for an Indian debt fund can be reduced by using
a. Futures
b. Options
c. Interest Rate Swaps
d. None of the above
4.The Interest Rate Forecasting Unit of a debt fund is generally manned by
a. Technicians
b. Statisticians
c. Economists & Econometricians
d. Accountants
5.AMC's need not maintain records in support of each investment decision
a. True
b. False
6.When interest rates for similar maturities bonds are 11% bond with a 9% coupon rate will sell
a. Above par
b. Below par
c. At par
d. At a price unrelated to the interest rates for similar securities
7.The most suitable measure for a fund's performance does not depend on the
a. Type of fund
b. Investment objective of the fund
c. Financial market conditions
d. Amount invested by investor
8.If the NAV of an open-ended fund was Rs.16 at the beginning of the year and Rs.22 after 13 months, the annualised change in NAV is
a. 6.0%
b. 34.6%
c. 40.6%
d. 37.5%
9.Change in NAV as a measure of fund performance is more suitable for
a. Growth funds
b. Income funds
c. Funds with withdrawal plans
d. None of the above
10.The difference between NAV change and total return as measures of fund performance is
a. None
b. Total return takes dividend into account while NAV change does not
c. Total return does not take NAV's into account
d. Total return does not take the time period into account
11.The most suitable measure of fund performance for all fund types is
a. NAV Change
b. Total Return
c. Total Return with reinvestment
d. None of the above
12.The expense ratio used for measuring fund performance is an indicator of
a. Product market condition
b. Growth in the economy
c. Prevalent market practices
d. The fund's efficiency
13.The Expense Ratio as a measure of a fund's performance is defined by a fund's
a. Total expenses and average net assets
b. Total expenses and total assets
c. Average expenses and average net assets
d. None of the above
14.While computing the Expense Ratio for a fund, brokerage commissions on the fund's transactions are not included in the fund expenses
a. True
b. False
15.The Expense Ratio is not of utmost importance in case of
a. Debt fund
b. Index fund
c. Equity fund
d. Bond fund
16.The expense Ratio is not affected by
a. Fund size
b. Average account size
c. Portfolio composition
d. Stock market conditions
17.The Income Ratio as a measure of a fund's performance is defined by the fund's
a. Total income and total assets
b. Net investment income and net assets
c. Total income and net assets
d. None of the above
18.The Income Ratio is more suitable for evaluating the performance of
a. Equity Funds
b. Growth Funds
c. Regular Income Funds
d. Index Funds
19.Portfolio turnover rate of a fund measure the
a. Size of the fund's portfolio
b. Amount of buying and selling done by the fund
c. The average number of units sold by the fund in one day
d. None of the above
20.A high turnover rate for a fund indicates
a. High transaction costs
b. Greater efficiency
c. High returns to the investor
d. A rising market
21.Turnover rates would be most relevant to analyse the performance of
a. Equity funds
b. Growth funds
c. Debt funds
d. Value funds
22.Transaction costs include
a. All expenses related to trading
b. All expenses charged to the fund
c. Distribution expenses
d. None of the above
23.Which of the following are not included in Transaction costs ?
a. Brokerage commissions
b. Stamp duty on transfers
c. Custodians fees
d. Agent commissions
24.Which of the following transaction costs are not quantified in the offer document
a. Brokerage commissions
b. Dealer spreads
c. Custodian's fees
d. Registrar's fees
25.The size of a fund has no bearing on its performance
a. True
b. False
26.As per SEBI, mutual funds can borrow for short term to the extent of
a. Total net assets
b. 50% of net assets
c. 25% of net assets
d. 20% of net assets
27.Which of the following is of no relevance in evaluating fund's performance
a. The performance of the stock market as a whole
b. The performance of other mutual funds
c. The returns given by other comparable financial products
d. The change in wholesale price index
28.The choice of an appropriate benchmark for evaluating a fund's performance depends on
a. The fund manager
b. The investment objective of the fund
c. SEBI
d. AMFI
29.An actively managed equity fund expects to
a. Be able to beat the benchmarks
b. Earn the same returns as the benchmark
c. Have no benchmarks
d. Underperform when compared with the benchmark
30.For evaluating Sector funds, the preferred benchmark would be the
a. BSE Sensex
b. S&P CNX Nifty
c. BSE 200
d. S&P CNX Sectoral Indices
31.To evaluate a close-ended debt-fund, a suitable benchmark would be
a. BSE Sensex
b. I-Sec's I-BEX
c. Interest on bank fixed deposits of similar maturity
d. S&P CNX Defty
32.When comparing performance of two funds, the following need not be similar
a. Risk profiles
b. Investment objectives
c. Fund size
d. Fund managers
33.Which of the following is false ?
a. ROI is a measure similar to total Return with Reinvestment of distribution
b. Total Return with Reinvestment of distributions assumes reinvestment at NAV on the distribution date
c. As a measure of performance, Total Return with Reinvestment of distribution seeks to overcome the shortcomings of simple Total Return
d. Because of its simplicity, simple total return is preferred in practice to total return with Reinvestment of distribution
34.The basis of genuine investment advice should be
a. The current market situation
b. The agent commissions paid by different funds
c. Financial planning to suit the investor's situation
d. Planning to complete the agent's annual targets
35.Financial goals do not include
a. Buying a home
b. Winning a sports gold medal
c. Planning for retirement
d. Saving for child's education
36.Financial planning allows a person
a. To become a billionaire
b. To achieve financial goals through proper management of finances
c. To invest in foreign countries
d. None of the above
37.Financial plans do not alter in any way the amount of tax an investor pays as the tax is on his income
a. True
b. False
38.Which of the following works with an investor on his overall financial situation
a. Tax Advisor
b. Financial Planner
c. Insurance Agency
d. Financial Advisor
39.A Financial planner takes responsibility for the financial well being of his/her clients
a. True
b. False
40.Financial planners and their clients should focus on
a. Allocating funds to asset classes (e.g.debt,equity etc.)
b. Allocating funds to individual securities
c. Tracking stocks, which they feel have potential
d. None of the above
41.Within an asset class, which individual security to invest in should be decided by
a. The financial planner
b. The investor himself
c. A professional fund manager
d. An objective advisor
42.Financial Planning comprises
a. Defining a client's profile and goals
b. Recommending appropriate asset allocation
c. Monitoring financial planning recommendations
d. All of the above
43.Financial planning is relevant only for high networth individuals
a. True
b. False
44.Financial planning does work for older clients
a. True
b. False
45.Financial planning is primarily tax planning
a. True
b. False
46.In financial planning, all responsibility ends with the financial planner and the client has no responsibilities
a. True
b. False
47.The constraint on financial planning due to insufficient investable resources can be remedied to some extent by
a. Decreasing the standard of living
b. Disciplining children
c. Disciplined monthly budgeting
d. None of the above
48.In the growth option offered by mutual funds, the number of units held by an investor increases because of
a. Growth in net asset value i.e. Capital appreciation
b. Reinvestment of dividend, which is, like compounding
c. Interest received on the fund's assets
d. None of the above
49.To maximise returns on investment, once an investor buys into a fund, he/she should hold on to it no matter what happens
a. True
b. False
50.If an investor keeps investing a fixed amount at regular intervals, the average cost of his purchases will always be less than if he makes investment at irregular periods
a. True
b. False
51.Which of the following lets an investor book profits in rising market and increase holdings in a falling market
a. Fixed Rates of Asset Allocation
b. Flexible Ratio of Asset Allocation
c. Investment without any asset allocation plan
d. Buy and hold Strategy
52.A Flexible Ratio of Asset Allocation means
a. Continuously changing the ratio of various assets in the portfolio
b. Not doing any re-balancing and letting the profits run
c. Active switching
d. None of the above
53.The strategy advisable for an investor to maximise investment return in the long run is
a. Buy and hold on to investments for a long time
b. Liquidate poorly performing investments from time to time
c. Liquidate good performing investments from time to time
d. Switch from poor performers to good performers
54.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 higher 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
55.In India, individual investors do not have direct access to
a. Capital market instruments
b. Real estate
c. Bullion
d. Money market instruments
56.Which of the following entities can give loans against securities
a. UTI
b. Banks
c. Mutual Funds
d. None of the above
57.Which of the following investment products do not give guarantee for return or capital
a. Bank deposits
b. Public Provident Fund (PPF)
c. National Savings Certificates (NSC)
d. Units of a mutual fund
58.The biggest advantage of investment in gold is
a. High returns
b. High appreciation in value
c. Low Purchase price
d. Hedge against inflation
59.The biggest disadvantage of investment in real estate is
a. Less potential for capital appreciation
b. High purchase price
c. Depreciation in value as time passes
d. Value gets eroded due to inflation
60.Which of the following is not an advantage of bank deposits ?
a. Liquidity
b. High perceived safety
c. Low entry price
d. High yield after tax
61.Listing of shares at a stock exchange ensures
a. Guaranteed returns
b. Long term capital appreciation
c. Low risk
d. High liquidity
62.The rate of interest paid by a company on debentures issued by it depends on
a. The stock market situation
b. SEBI guidelines
c. The company's credit rating
d. The amount of money being raised
63.Which of the following is not a characteristic of company fixed deposits
a. A higher rate of interest
b. Higher risk
c. Unfavourable effect of tax
d. Very high liquidity
64.Which of the following is untrue for Public Provident Fund Schemes
a. The interest is tax-free
b. Post-tax returns are attractive
c. Liquidity is rather low
d. None of the above
65.Indira Vikas Patra is an investment product popular with
a. Rural investors
b. Investors in high tax bracket
c. Urban investors
d. Risk taking investors
66.Finance Acts of 2000 and 2001 have reduced tax-free interest on Public Provident Fund to
a. 12%
b. 9.5%
c. 9%
d. 11%
67.Most individuals invest in life insurance policies for
a. Risk protection
b. Tax benefits
c. Easy liquidity
d. High returns
68.Annual contribution to Public Provident Fund should be
a. Rs.10000.00
b. Between 100 and Rs.60000
c. Between Rs.600 and Rs.1000
d. None of the above
69.The current yield (2000-01) on Indira Vikas Patra works out to
a. 10.5%
b. 11%
c. 10%
d. 9%
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