Professional Documents
Culture Documents
J u n 2 0 1 0 Page 1
Quick Wit – Chapter-wise
Chapter 1
Concept & Role of Mutual Fund
2. Open- ended schemes generally offer exit option to investors through a stock exchange.
A. True
B. False
1. SEBI regulates
A. Mutual Funds
B. Depositories
C. Registrar & Transfer Agents
D. All the above
4. Stock exchange brokers are permitted to distribute mutual funds without the requirement of passing the
certifying test
A. True
B. False
2. PAN Card is compulsory for all mutual fund investment above Rs. 50,000, including SIPs
A. True
B. False
1. Fundamental analysis is a evaluation of the strength of the company’s price –volume charts.
A. True
B. False
4. Loads & taxes may account for the difference between scheme returns & investor returns.
A. True
B. False
5. The most appropriate measure of returns for a scheme in existence for several years is.
A. Simple Return
B. Dividend Return
C. Annualised Return
D. CAGR
1. Equity markets are more predictable in the long term than the short.
A. True
B. False
4. Which of the following aspects of portfolio would investor in a debt scheme give most importance?
A. Sector selection
B. Stock selection
C. Weighted Average Maturity
D. Number of securities in portfolio
2. Gold Futures are superior to ETF Gold as a vehicle for life –long investment in gold.
A. True
B. False
5. An investor under the new pension scheme can choose which of the following asset classes?
A. Equities
B. Corporate debt
C. Government Securities
D. Any of the above
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Chapter 11
Helping Investors with Financial Planning
1. Today’s costs can be translated into future requirement of funds using the formula:
A. A = P * ( 1+ 1)n
B. A = P / ( 1+ 1)n
C. P = A n * ( 1 + I )
D. P = A n * ( 1 + I )
3. According to the Certified Financial Planner – Board of Standards ( USA ), the first stage
in financial planning is
A. Analyse & Evaluate Client’s Financial Status
B. Establish & Define the Client - Planner Relationship
C. Gather Client Data , Define Client Goals
D. Develop & Present Financial Planning Recommendations & / or Options
3. The asset allocation that is worked out for an investor based on risk profiling is called
A. Tactical Asset Allocation
B. Fixed Asset Allocation
C. Flexible Asset Allocation
D. Strategic Asset Allocation
5. How much equity would you suggest for a young well settled unmarried individual?
A. 100%
B. 80%
C. 60%
D. 40%
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Answers – Quick Wit
Chapter 1
Concept & Role of a Mutual Fund
1-c 2-b 3-b 4-b 5-a
Chapter 2
Fund Structure & Constituents
1-c 2-a 3-a 4-b 5-b
Chapter 3
Legal & Regulatory Environment
1-d 2-a 3-b 4-d 5-a
Chapter 4
Offer Document
1-c 2-a 3-b 4-c 5-b
Chapter 5
Fund Distribution & Channel Management Practices
1-d 2-a 3-a 4-b 5-a
Chapter 6
Accounting, Valuation & Taxation
1-b 2-b 3-a 4-a 5-b
Chapter 7
Investor Services
1-b 2-a 3-d 4-c 5-a
Chapter 8
Return, Risk and Performance of Funds
1-b 2-a 3-d 4-a 5-d 6-d
Chapter 9
Scheme Selection
1-a 2-b 3-d 4-c 5-b
Chapter 10
Selecting the Right Investment Products for Investors
1-a 2-b 3-a 4-c 5-d
Chapter 11
Helping Investors with Financial Planning
1-a 2-c 3-b 4-d 5-a
Chapter 12
Recommending Model Portfolios & Financial Plans
1-c 2-a 3-d 4-b 5-b
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Practice Tests
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AMFI Practice Test
Series A
2) Which of the following is true? Some close end funds sell at a discount to their NAV, because
a) Of high expense ratios
b) Investors expect that current NAV cannot be sustained by future potential
c) The repurchase price fixed by the fund is lower than the NAV
d) Of the inherent risk of closed end funds
3) If the exit load is 2% and the NAV is Rs. 10, then upon redemption of 1000 units, the investor will
receive
a) Rs. 12000
b) Rs. 8000
c) Rs. 9800
d) Rs. 10200
4) Which of the following Mutual Funds was not set up within the Phase 2:1987-1993?
a) Canbank Mutual Fund
b) Kothari Pioneer Mutual Fund
c) SBI Mutual Fund
d) LIC Mutual Fund
9) Issuing additional fresh units and redeeming the existing units of a mutual fund scheme is the role of:
a) The custodian
b) The transfer agent
c) The trustees
d) The bankers
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10) The appointment of AMC for the Mutual Fund can be terminated by
a) Majority of Directors of the Trustee
b) 50% of the Unitholders
c) 45% of the Unitholders
d) 60% of the Unitholders
11) The Asset Management Company shall make investment decisions solely in the interest of
a) The Sponsor
b) The Trustee
c) The Unit Holders
d) Its Employees
13) Minimum number of independent directors on the board of asset management company is
a) 50%
b) 25%
c) 75%
d) Two-thirds
14) Under the Indian Trusts Act, the interests of the unit-holders is safeguarded by
a) A board of trustees
b) A trustee company
c) Either
d) Neither
16) Who needs to sign the trust deed with the trustee?
a) Asset Management Company
b) Sponsor
c) Custodian
d) All of the above
18) Whose consent is required to approve change in fundamental attributes of a closed end scheme?
a) 50% of the unit holders
b) 50% of the trustees
c) 75% of the unit-holders
d) None of the above
19) Which schedule of SEBI (Mutual Fund) regulations 1996 specifies the contents of the Trust Deed?
a) Eleventh Schedule
b) Eighth Schedule
c) First Schedule
d) Third Schedule
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20) In case of a dispute, against whom can the Unitholders initiate legal proceedings?
a) Trust
b) Trustee
c) AMC
d) None of the above
25) The Abridged Offer Document contains the address of the following:
a) The Trustees of the Mutual Fund
b) The Directors of the AMC
c) The Registrar and Transfer Agents
d) Options a & b
e) Options b & c
26) Validate the statement – The investor is not obliged to read the offer document before investing in units
of a scheme.
a) Completely true
b) Rarely true
c) Completely false
d) Partly false
30) Which of the following distribution channels is preferred by private mutual funds?
a) Individual distributor
b) Small distribution companies
c) Established distribution companies
d) The Internet
33) An NRI holds units in a mutual fund. What should he do with his holding if he takes up a foreign
citizenship?
a) He redeems
b) He continues
c) He transfers the unit to his mother, who resides in India
d) None of the above
36) According to SEBI’s code for mutual fund advertisement, for funds that have been in existence for
more than a year, annualized returns have to be furnished for
a) 1 yr, 3 yr, 5 yr. and since launch
b) 1 yr, 5 yr and since launch
c) 1 yr, 3 yr and since launch
d) 1 yr, 3 yr and 5 yr
37) An open-end fund with 10,000 units outstanding had the following items in its balance sheet:
Investment at market value Rs. 1,00,000
Current Assets Rs. 20,000
Current Liabilities Rs. 25,000
Calculate the fund’s NAV per unit.
a) Rs. 9.5
b) Rs. 12
c) Rs. 10
d) Rs. 14.5
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38) A closed-end equity fund has average weekly net assets of Rs. 200 crores. As per SEBI Regulations,
the AMC can charge the fund with investment and advisory fee upto:
a) Rs. 2.25 crores
b) Rs. 2 crores
c) RS. 2.5 crores
d) Rs. 3 crores
39) An investor purchased units in a mutual fund in 1995 for Rs. 75000. He sold the units in 1998 for
Rs.125000. The cost inflation index for 1995 and 1998 are 281 (C) and 351(D) respectively. The capital
gains chargeable to tax are:
a) 64,957
b) 31,317
c) 50,000
d) 75,000
40) Income earned by a Mutual Fund registered with SEBI is exempt from Income-Tax as per section
a) 10(23D)
b) 10(33)
c) Total Income is taxable @ 33.2%
d) 88
41) Unit capital of a mutual fund scheme is Rs. 20 million; the market value of its investments is Rs. 55
million; The number of units is 1 million. The NAV is
a) Rs. 20
b) Rs. 75
c) Rs. 55
d) Not possible to say
45) Choose the correct Statement – Alternative Investment Plans offered by fund allows investors:
a) Freedom with respect to investing one time or at regular intervals
b) Making transfers to different schemes with the same fund family
c) Receiving income at specified intervals or accumulating distributions
d) All the above
46) The current market price of a 9%—coupon bond, when other bonds of similar maturities pay 11% will
be:
a) Above par
b) Below par
c) At par
d) Will be unrelated to other bonds
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47) Yield and Price of a bond move:
a) In opposite directions
b) Together in the same direction
c) In an unrelated fashion
d) In line with the inflation index
48) SEBI places a limit on a scheme’s investment in “investment grade rated” debt instruments of a single
issuer, because:
a) Even investment grade securities carry risks of default by borrower
b) A scheme must diversify its holdings and thus reduce portfolio risk
c) Investment Grade ratings cannot be solely relied upon
d) SEBI wants to leave some for investment in “non-investment grade” securities by the scheme
49) Technical Analysis tries to predict future movement of stock price by analyzing:
a) The financial workings of a Company
b) The stock price movements of a Company
c) Both of the above
d) None of the above
50) An investor purchased an open-end fund when its NAV was Rs. 20. 16 months later, its NAV stood at
Rs. 22. The percentage NAV change in the fund was:
a) 8%
b) 7%
c) 7.5%
d) 8.5%
51) A unit of open-end fund was purchased when its NAV was Rs. 20. At year-end its NAV was Rs. 22. In
the interim period, the fund made a distribution of Rs. 4 per unit when its NAV was Rs. 21. What was the
simple Total Return of the Fund?
a) 25%
b) 30%
c) 20%
d) 31%
53) Return can be annualized and compounded only if the Scheme has completed
a) 30 days
b) 12 months
c) 6 months
d) 24 months
54) An equity scheme is 90 days old. To compute its yield, it can use
a) Absolute return
b) Simple annualized return
c) Compounded annualized return
d) Any of these
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55) Financial Planning is
a) Investing funds to receive the highest rate of return possible
b) Resorting to tax planning to keep taxes as low as possible
c) Planning for retirement with the maximum income possible.
d) Process of solving financial problems and reaching financial goals.
56) Your client has won Rs. 1 crore in “Kaun Banega Crorepati”. What would your suggestion be?
a) Invest the entire amount without any delay in “old economy” stocks—since they are back in favour
b) Invest the entire amount immediately in an Equity Index Fund—since the index is at a historic low
c) Invest in very safe liquid investment options and take the time needed to work out a financial plan
d) Invest immediately in IT stocks, since their valuations are now considered to be attractively low
58) The strategy advisable for an investor to maximize 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
59) A criticism of rupee-cost averaging is
a) Investment is for the same amount at regular intervals
b) Over a period of time, average per share price will be more than guessing the 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
62) Direct investment in stock markets can be 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 run
66) 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 one with the highest risk —
1. A Balanced Fund,
2. A Stock Index Fund,
3. A Liquid (Money Market) Fund and
4. A Pharmaceuticals Sector Fund.
a) 1, 2, 3, 4
b) 1, 3, 4, 2
c) 3, 1, 2, 4
d) 2, 3, 1, 4
69) What type of portfolio asset mix would recommend to your 55 year old client who plans to retire at age
58? Choose a portfolio that is the closest match to the investor’s needs.
a) 40% in Equity Schemes and 60% in Balanced Funds.
b) 40% in Equity Schemes and 60% in Debt Funds
c) 20% in Equity Schemes, 20% in Liquid Funds and 60% in Debt Funds
d) 100% in Monthly Income Statements
70) For which of the following funds 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
71) Which of the following Portfolios would you recommend to a recently retired Couple?
a) 35% in Conservative Equity Funds, 25% in moderately aggressive equity, 40% in money market
funds.
b) 30% in short term municipal funds, 35% long term municipal funds, 25% moderately aggressive
equity, 10% in emerging growth equity
c) 50% in aggressive equity fund, 25% in high Yield bond funds and growth and income funds, 25% in
conservative money market funds
d) Either 2 or 3
3. All expenses and income accrued upto the valuation date shall be considered for valuation. Some minor
expenses need not be so accrued, provided their affect on the NAV is not more than:
a. 2%
b. 1.5%
c. 0.5%
d. 1%
4. When a scheme with assured returns is being launched, which of the following need not be published in
the
offer document?
a. Means of fulfilling the guarantee
b. Information for all schemes launched by the fund in the past
c. Comparison with other mutual funds
d. Investment objective
5. NAV of a fund is 14, Exit Load is 1.5%. Calculate the price at which the investor will be able to
redeem 500 units.
7. NAV of a scheme is 20. Exit Load is 1.5%. What will be the price at which the investor will be able to
sell
units?
8. Which of the following would you suggest if your client suddenly wins Rs. 1 cr in a game show?
a. Invest the whole amount in equity directly
b. Invest half in equity mutual funds and the other half in debt mutual funds
c. Invest in a money market mutual fund till the time he decides on the use of the money
d. Spend, gift and invest as per his wish
12. If the NAV of an open-ended fund increased from Rs. 16 to Rs. 20 in 6 months, the absolute return is
a. 6.00%
b. 34.60%
c. 25.00%
d. 37.50%
13. A Mutual fund can benefit from economies of scale because of:
a. Indirect investment
b. Large volumes of trade
c. Portfolio diversification
d. Fund manager
14. The structure, which is required to be followed by mutual funds in India, is laid down by:
a. Finance ministry
b. SEBI
c. Fund Sponsor
d. AMFI
18.The most important factor to look for when investing in a corporate fixed deposit is the
a. Yield
b. Rate of interest
c. Credit rating of the deposit
d. None of the above
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19. Risk arising from a scheme’s investment objective/strategy and proposed asset allocation is
a. Not a risk at all
b. Common to all schemes
c. Specific to that scheme
d. Not applicable to debt funds
22. Which of the following is true about the fundamental attributes of a scheme?
a. Investment objectives of a scheme are not a fundamental attribute
b. These can be changed after informing investors and taking approval from SEBI and Trustees
c. OD need not be updated after change in fundamental attributes of a scheme
d. All are false
24. The NAV of an Open-ended scheme is 15. What can be the maximum entry load charged to the
investor?
a. 2.25% of 10
b. 2.25% of 15
c. 7% of 15 Nil
d. 7% of 10
30. Which of the following transaction cost are not quantified in the offer document?
a. Brokerage commission
b. Dealer spread
c. Custodian fee
d. Registrar fee
36. Systematic Withdrawal Plan allows investors to get back the principal amounts invested in addition to
the
income on investment
a. True
b. False
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37. UTI was set up by
a. SEBI
b. AMFI
c. A special Act
d. RBI
40. Market capitalisation of a company is calculated by multiplying the number of outstanding shares by
a. Rs.10
b. Face value of each share
c. Current market value of each share
d. Dividend yield
44. As a financial planner, which of the following would you suggest for a person who can take a moderate
risk?
a. Aggressive growth fund
b. Aggressive equity fund
c. Diversified equity fund
d. Sectoral fund
45. A growth fund manager would apply the following strategies:
a. Invest in those companies that would give more returns than the average returns in the industry.
b. Invest in companies having a large equity base.
c. Invest in companies coming out with new “Initial public offers’
d. All of the above
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46. An active style of portfolio management includes the following:
a. Application of ‘Systematic transfer plan’ in various schemes of a fund.
b. Undertake macroeconomic analysis to determine profitable investment trends.
c. Invest in companies with high market capitalization
d. All of the above.
47. What would be the maximum initial issue expenses charged from the investors, if the amount
mobilized
from a mutual fund NFO is Rs. 50 crore?
a. Rs. 5 crore
b. Rs. 2 crore
c. Rs. 3 crore
d. Rs. 1 crore
48. When interest rates for similar maturities bonds are 11.5%, bond with a 8% coupon rate will become:
a. More attractive
b. Less attractive
c. At par
d. The price is unrelated to the interest rates for similar securities.
51. What is Bogle’s suggestion regarding the ‘rule of thumb’ for asset allocation?
a. 50% equity and 50% debt
b. 60% equity and 40% debt
c. An investor’s allocation to debt should be equal to his age.
d. Investor should not do any re-balancing of his/her portfolio.
52. What should be the recommended portfolio for an investor who is risk averse in his transition phase?
a. Higher allocation to equity funds
b. Higher allocation to debt instruments
c. Investments only in equity
d. He should not invest anywhere
54. What is the proof that the investor has invested in mutual fund units?
a. The investors receive units commensurate with the investment made.
b. Investors get an account statement, showing their holdings and their price.
c. The receipt of money acts as the proof
d. None of the above
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55. What is the maximum time given to the Asset management company to give their reply after the
observations made by SEBI to a new fund scheme filed with it?
a. 2 months
b. 3 months
c. 4 months
d. 6 months
56. How would you convince a first-time investor who is risk-averse to invest in mutual funds in
comparison to a bank deposit?
a. Mutual funds is the right choice to grow your wealth at a fast pace
b. Mutual fund has the likelihood of giving more growth than the bank deposit as the investment is in a
diversified portfolio of securities.
c. Investment in Mutual fund doubles your money in 3 years.
d. All of the above
75. Which of the following Mutual Fund was setup after 1963 but before 1987?
a. SBI Mutual Fund
b. Can Bank Mutual Fund
c. LIC Mutual Fund
d. None of the above
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ANSWERS
Test B
Q1 A Q26 C Q51 C
Q2 A Q27 C Q52 B
Q3 D Q28 D Q53 C
Q4 D Q29 D Q54 B
Q5 6895 Q30 A Q55 D
Q6 D Q31 B Q56 B
Q7 19.7 Q32 C Q57 A
Q8 C Q33 D Q58 B
Q9 D Q34 B Q59 B
Q10 A Q35 B Q60 B
Q11 D Q36 A Q61 A
Q12 C Q37 C Q62 D
Q13 B Q38 D Q63 D
Q14 B Q39 B Q64 B
Q15 A Q40 C Q65 C
Q16 C Q41 B Q66 D
Q17 D Q42 D Q67 A
Q18 C Q43 D Q68 D
Q19 C Q44 C Q69 D
Q20 C Q45 A Q70 C
Q21 C Q46 B Q71 B
Q22 A Q47 C Q72 D
Q23 A Q48 B Q73 D
Q24 C Q49 B Q74 C
Q25 B Q50 D Q75 D
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AMFI Practice Test
Series C
2. Fund merger involving 2 or more schemes of different AMCs requires consent of unit holders with X%
voting rights. X is:
a. 50
b. 100
c. 51
d. 75
3. What makes mutual fund the single most important financial instrument as a financial planner?
a. Mutual Funds help in portfolio diversification and risk reduction
b. Mutual Funds help in doubling investment
c. Both the above
d. None of the above
5. A mutual fund launches a new scheme. 10 crore units are issued. An entry load of 2.25% of the face
value during the New Fund Offer period is mentioned in the Offer Document. Issue expenses are 8 cr.
How much of this would be borne by the scheme?
a. 6 cr
b. 3.75 cr
c. 2.25 cr
d. 8 cr
6. Which of the following is true?
a. KIM is abridged offer document
b. OD is abridged shareholder agreement
c. KIM is abridged Investment Management Agreement
d. OD is abridged KIM
7. What is the portfolio recommended for Young Married Single Income Family with 2 School-going Kids
a. 35% - Diversified Equity Fund, 15% - Sector Funds, 15% - Gold ETF, 15% - Diversified Debt &
20% - Liquid Fund
b. 35% - Diversified Equity Fund, 10% - Sector Funds, 15% - Gold ETF, 30% - Diversified Debt &
10% - Liquid Fund
c. 50% - Diversified Equity Fund, 20% - Sector Funds, 10% - Gold ETF, 10% - Diversified Debt &
10% - Liquid Fund
d. 15% - Diversified Equity Fund, 10% - Sector Funds, 30% - Gold ETF, 30% - Diversified Debt &
15% - Liquid Fund
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8. Role of the custodian is:
a. Managing the fund’s distribution channel
b. Making investments on behalf of the Fund Managers
c. Handling payment of investments with bankers
d. Safe keeping of securities or participating in the clearing system on behalf of the mutual fund
9. A person enters a fund at NAV of 22. 18 months later the NAV is 24. The annualized percent change in
NAV is:
a. 9%
b. 5.56%
c. 9.09%
d. 6.06%
11. In the offer document “unit & offer” describes the nature and significant attributes of the units under
offer. Which of the following is not covered under this:
a. Minimum amount to be raised
b. Period under which refund should be carried out
c. Circumstances under which refund may take place
d. Maximum target amount to be raised
13. Only one of the following is required to pass the AMFI examination:
a. Trustees
b. Officers of SEBI working in the Mutual Fund department
c. Employees in a call center dealing with mutual fund investors
d. Fund managers
14. An investor claims that the PPF is a superior instrument to Mutual Funds. An argument to defend
investment in a Mutual Fund over PPF is:
a. Mutual Fund will surely yield a better return than PPF
b. A mutual fund offers the potential for higher income and capital appreciation
c. The capital investment is safer in a Mutual Fund
d. A Mutual Fund investment is less volatile
15. An NRI wishes to invest in a Mutual Fund. Which of the following is true?
a. He cannot apply has he will be paying in Foreign Currency
b. Need not take individual permission as RBI has granted general permission in this regard
c. The investor has to apply to RBI seeking permission as he will be paying in foreign currency
d. Cannot apply as it is open to Indian residents only
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16. The cut-off time for redemption request kept by an AMC is 3:00 pm. An application for redemption
received at 3:01pm
a. Redemption will be based on next day NAV but no exit load will be charged
b. Redemption will be based on next day NAV
c. Applicant will be asked to resubmit the request 10 am the next day
d. The same day NAV will apply since the gap is less than 30 minutes from cut-off time
18. Where would you place a 53 years old executive planning to retire at age 60?
a. Sudden wealth stage
b. Reaping stage
c. Accumulation stage
d. Transition stage
19. The OD should indicate the management of the fund. The management doesn’t include:
a. Name of trustees
b. Name of the Fund Manager
c. Business experience of the key personnel of the AMC
d. Registration number of the custodian
21. OD must contain information about unit holder transaction expenses. Which of the following is not an
item under this?
a. Repurchase load
b. Initial issue expenses
c. Max sales load
d. Switchover load
23. The total net assets of a fund scheme increased from 100 cr to 120 cr. Of this, 5 cr was unrealized gain.
The number of units is 10 cr. The maximum dividend per unit the scheme can declare is:
a. Rs 2
b. Rs 1.50
c. Rs. 0.50
d. Rs. 1
24. Fund manager with investment philosophy of growth investing, looks for:
a. Companies with above average profits and growth in earnings
b. Companies with large equity base
c. Companies which are likely to go for public issue
d. All of the above
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25. “Making mutual funds work for you – the investor’s guide” was published by:
a. SEBI
b. AMFI
c. UTI
d. Investor Education and Protection Fund
26. An Investor invested in the UTI Money market Mutual Fund. To see the relevant financial statements,
she should read:
a. Financial statement of the schemes managed by UTI trustee
b. Annual report of AMFI
c. Annual report of SEBI
d. Financial statement of the UTI AMC
27. As per investment company institute, AMFI equivalent in the US, corporate bond funds have higher
risk
than:
a. Money Market funds
b. Index funds
c. Aggressive funds
d. Growth funds
28. MF can invest in unlisted securities within SEBI approved limits, including:
a. Unlisted company’s shares
b. Units of venture capital funds
c. Both the above
d. None of the above
29. A grandfather wants to make an investment for a newborn grandson. Which is the most suitable
investment?
a. Index funds
b. Income funds
c. Money market funds
d. Gilt funds
30. The ratio which divides risk premium by Standard Deviation is:
a. Sharpe Ratio
b. Treynor Ratio
c. Bogle Ratio
d. Jensen Ratio
31. The following is not required on the cover page of the OD?
a. Date on which approved by trustees
b. Earliest closing date for New Fund Offer
c. Date the NFO closes
d. Date the NFO opens
32. The NAV of a fund is 35. Exit Load is 0.50%. How many units should Ms Monica redeem to withdraw
Rs.
50,000/-?
33. NAV of a fund is 48. Exit Load is 1%. Calculate the price at which the investor will be able to purchase
2000
units.
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34. 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
35. The valuation norm for non-investment grade, performing assets is done:
a. On YTM basis using the Crisil valuation methodology
b. On YTM basis with 25% discount
c. At 25% discount to face value
d. At face value
40. 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
41. If the NAV of an open-ended fund was Rs. 16 at the beginning of the year and Rs.22 after 13 months,
the annualized change in NAV is
a. 6.0%
b. 34.6%
c. 40.6%
d. 37.5%
42. 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
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43. 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 bond index
d. A government securities fund with a government security
49. Direct investment in stock market can be a better option than investing through mutual funds if the
investor
a. Wants better returns than those offered by mutual funds
b. Has large capital, knowledge and resource for research
c. Has identified a bullish phase in the stock market
d. Wants to invest for the long term
57. Equity Linked Savings Scheme does not have which of the following features?
a. It entitles the unit holder to tax benefits
b. The investment is locked in for 3 years
c. A minimum stated level of investments is made in equity and equity related instruments
d. None of the above
60. SEBI does not require the following to be included in the offer document issued by a mutual fund
a. Details of the Sponsor and the AMC
b. Description of the Scheme & investment objective/strategy
c. Investors’ Rights and Services
d. Performance of other mutual funds
61. Mutual funds do not justify the need for paying commission to agents when the investors skip out of
the
scheme before a specified period. In India this practice is adopted by
a. Agents voluntarily paying back the commission to the Mutual fund
b. Trail commission is not paid to the agents
c. None of the above
d. The whole of commission is paid to the agents
63. 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. Each investment decision should be approved by investors
65. A Debt fund distributes 10% dividend. How much tax does the investor have to pay on this dividend?
a. 10%
b. 12%
c. 20%
d. None
67. As per SEBI, mutual funds can borrow for short term to the extend of
a. Total net assets
b. 50% of net assets
c. 25% of net assets
d. 20% of net assets
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68. 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
70. A fund’s investments at market value total Rs. 700 crores, Total liabilities stand at Rs. 50 lacs and the
number of units outstanding is 28 Crores. What is the NAV?
a. Rs. 30.19
b. Rs. 24.98
c. Rs. 32.15
d. Rs. 40.49
71. For valuation of traded securities, which of the following is not true?
a. The security is valued at the last quoted price
b. The security is valued on the basis of earnings capitalization
c. Making to market is applied
d. If the security has not been traded on valuation date, the trading price on any previous date may be
used, provided that date is not more than 30 days prior to valuation date.
72. 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
74. 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
Q2. Suggested portfolio for a couple in their 60s with no family support
a. 35% diversified equity, 15% gold ETF, 15% Gilt, 15% Diversified Debt and 20% Liquid
b. 50% diversified equity, 20% gold ETF, 10% Gilt, 15% Diversified Debt and 5% Liquid
c. 15% diversified equity, 10% gold ETF, 30% Gilt, 30% Diversified Debt and 15% Liquid
d. 35% diversified equity, 10% Sector, 15% gold ETF, 30% Diversified Debt and 10% Liquid
Q4. Who among the following is not allowed to invest in MFs in India?
a. Non Resident India
b. Foreign nationals
c. Other Mutual Funds registered in India
d. Religious and charitable trusts
Q6. Which of the following are permissible investments for mutual funds in India?
a. International equity
b. Commodities
c. Real estate
d. Only b and c
Q10. “To generate income by investing predominantly in a wide range of debt and money market
securities” is
an example of a scheme’s:
a. Investment objective
b. Investment policy
c. Investment strategy
d. Investment regulation
Q18. The following is not prescribed as part of 6-step financial planning process prescribed by FPSB,
USA:
a. Analyze and evaluate client’s financial status
b. Help clients segregate active and passive income
c. Develop and present financial planning considerations and/or options
d. Implement the financial planning recommendations
Q28. Where can one find info about list of eligible investors?
a. KIM
b. ‘Who can invest’ section of the OD
c. ‘Investor Rights’ in OD
d. SAI
Q30. “Because all swans you have seen are white, it does not mean that black swans do not exist” suggests
a. Black swan population is decreasing rapidly
b. Ignorance is bliss
c. Abnormal events may be rare but bring unknown and large amount of risk
d. The devil you know is better than the devil you don’t
Q38. Which of the following is not true about open (or close) ended schemes?
a. Entry and exit permitted at any time
b. No fixed maturity
c. Unit capital changes
d. Investors can buy units from the stock exchange
Q39. Which of the following is not a scheme selection principle for equity schemes?
a. Time horizon
b. Fund size
c. Portfolio turnover
d. Market capitalization of stocks
e. None of the above
Q42. Which of the following is not a factor for benchmark selection in an equity fund?
a. Scheme type
b. Choice of investment universe
c. Choice of portfolio concentration
d. Underlying exposure
e. None of the above
Q48. Which of the following cannot be a basis for filing legal proceedings against an MF scheme?
a. Change in fundamental attributes
b. Lack of awareness about disclosures in OD because it is a lengthy document
c. Inaccurate disclosure in OD
d. None of the above
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Q49. Which of the following is not an advantage of mutual fund investing?
a. Diversification
b. Assurance of returns
c. Economies of scale
d. Professional management
Q51. Which of the following is not a part of profitability metric calculation of a mutual fund?
a. Valuation gains and losses
b. Scheme expenses
c. Dividend income
d. None of the above
Q52. NAV is impacted only when actual sale and purchase of securities is effective.
a. True b. False
Q53. What is the maximum permissible recurring expense limit for index schemes?
a. 2.25%
b. 2.50%
c. 0.75%
d. 1.50%
Q59. Modified Duration is a better measure of interest rate sensitivity than Weighted Average Maturity.
a. True
b. False.
Q66. What is the prescribed cut-off in case of sale for other than liquid schemes more than 1 cr
a. Closing NAV of the next business day
b. Closing NAV of date the application is received
c. Closing NAV of the day the funds are available for utilization
d. Closing NAV of the day preceding the next business day
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Q67. Which of the following true for set-off of capital gains?
a. ST Capital losses can be set off against LT capital gains
b. ST Capital losses can be set off against ST capital gains
c. LT Capital losses can be set off against LT capital gains
d. All are true