AMFI TRAINING QUESTIONS

1. A mutual fund is owned by

a) The Govt. of India b) SEBI c) AMFI d) All its investors

2." As per RBI guidelines, MMMF can invest in"

a) Corporate bonds
b) Equity shares
c) G-sec of maturity less than 1 year
d) None of the above

3. Minimum risk is associated with

a) Govt securities of 6 months b) Equities c) Bonds d) MMMF

4. A 55-year-old retiree is in stage

a) Accumulation Stage b) Growth Stage c) Income Stage d) Distribution Stage

5. In accordance with -------------- of SEBI (Mutual Funds) Regulations, 1996 all mutual funds are
required to publish their unaudited half-yearly.
a) Regulations 59 b) Regulations 45 c) Regulations 65 d) None of the above

6. Each Director of the AMC shall file the details of his transaction of dealing in securities with the
trustees on a --------- basis.
a) Quarterly b) monthly c) daily d) yearly

7. Mutual funds invest in ------------ listed / unlisted securities / units of venture capital funds
a) 10 % of NAV in equity shares
b) 5% of NAV in unlisted equity shares in case of open-ended schemes
c) 10% of NAV in case of close- ended Schemes
d) All of the above

8. Appointment of the AMC can be terminated by majority of the trustees or by -----------of the unit
holders of the scheme
a) 70% b) 75% c) 100% d) 25%

9. --------Days before the launch of the scheme all information in the offer document are to be updated.
a) 30 b) 60 c) 15 d) None of the above

10. As per Regulation 52(6), Debt Schemes expenses shall be lesser by -----
a) 1% b) 2% c) 0.25% d) 0.50%

11. Trading in securities based on information that is price sensitive is

a) Self dealing b) Front running c) Short sale d) None of the above

12. Valuation of non-traded equity shares is based on

a) Capitalisation of earnings
b) Book value of shares
c) Both the above
d) None of the above
13. Which among the following is not allowed to invest in Indian Mutual Fund?
a) NRI b) FII c) Indian National d) Foreign National

14. ------------ regulates Commission payable to Distributors

a) AMC b) Trustees c) AMFI d) SEBI e) Sponsor

15. The publication of the unaudited half-yearly results is to be printed in at least point font
a) 10 b) 5 c) 7 d) No such restriction e) None of the above

16. Dividend warrants are to be dispatched to the unit holders within ------ of dividend declaration.
a) 42 days b) 30 days c) 60 days d) 90 days

17. An asset is classified as non-performing if the interest /principal amount has not been received or
remained outstanding for ------ quarter from the day such income /installment has fallen due.
a) One b) Two c) Three d) Four

18. Which among these are assigned zero value to all illiquid securities?
a) 20% of total assets (from September 30,2001)
b) 15% of total assets (from September 30,2002)
c) Both are correct
d) Only A is correct
e) Only B is correct

19. ---------- is a self-regulatory organisation?

a) NSE b) SEBI c) RBI d) AMFI

20. Main role of any AMC is to

a) Manage investments on behalf of the fund
b) Keep a track of unit holders in the fund
c) Keep physical securities
d) All the above

21. Minimum stake a sponsor needs to hold in the Asset Management Company is
a) 20% b) No stake is needed c) 1% d) 25%

22. Minimum net worth that an AMC needs to have is

a) Rs: 10 Crore b) Rs: 50 Crore c) Rs: 100 Crore d) Rs: 5 Crore

23. Which of the following is applicable to the debt market in India?

a) The debt market is a wholesale market
b) Government securities are traded on a large scale
c) There are large players like banks, financial institutions, and mutual funds.
d) None of above
e) All of above

24. What is the measure of market risk?

a) Mean b) Standard Deviation c) Beta d) None of above
25. Re-Purchase price specified by SEBI is
a) Minimum 93% of NAV for open-end schemes
b) Minimum 95% of NAV for closed-end schemes
c) Both the above

26. An Offer document contains -----------

a) Open end or Closed end schemes
b) Registrars/Sponsor/Trustees Address
c) All of Above
d) None of above

27. Recurring Expenses include

a) Penalties and fines
b) Depreciation on Fixed Assets
c) Marketing and selling expensed of a scheme
d) Brokerage Commissions
e) Both c & d

28. The NAV of mutual fund

a) Is always constant
b) Fluctuates with market price movements
c) Keeps going up at a steady rate
d) Cannot go down at all

29. Offer document is required by Mutual Fund

a) As a SEBI requirement
b) As an investors requirement
c) As a AMC requirement
d) All of above

30. Which of the following is not true as per SEBI norms?

a) Unrated securities are not to be valued
b) Bonds are valued at YTM
c) Benchmarking for Valuation used
d) Equity shares are valued at closing price in the market on the valuation date

31. What are the pre-requisites to become a Sponsor Company in India?

a) Contribute 40% of the net worth of AMC
b) 5 year sound financial track record
c) Should have a turnover of 1000 crores
d) Both A & b
e) Both A, b, c

32. Which among the following is not part of the Investment team in an AMC?
a) Fund Manager b) Securities Broker c) Securities Dealer d) Research Analyst
33. ---------is appointed by the Board of Directors for safekeeping of physical securities or participating
in any clearing system on behalf of mutual funds
a) Custodian b) Banks c) Trustees d) AMC e) Depository

34. Can AMC market their schemes through their own Sales Officers
a) Possible at times b) False c) True

35. Consent of unit holders with at least ---- % voting rights is required during merger of two AMCs
a) 70 b) 75 c) 100 d) 50

36. The sponsor of a mutual fund may be compared to

a) Director in a company b) The CEO c) The promoter d) An equity holder

37. Which of the following along with Central Government holds substantial control over the
functioning of the UTI?
a) IDBI b) RBI c) SEBI d) AMFI

38. AMFI was incorporated in ------with the objective of representing mutual fund industry
a) 1996 b) 1992 c) 1995 d) 1993 e) None of above

39. Which of the following qualifies as a self-regulatory organization?

a) SEBI b) AMFI c) SBI d) None of above

40. Majority of --------------of unit holders of the scheme can terminate AMC
a) Trustees or 75%
b) SEBI or 75%
c) Trustees or 70%
d) AMFI or 70%
e) SEBI or 70%

41. What happens to bond prices when interest rates go up?

a) Bond prices rise
b) Bond prices fall
c) Bond prices neither rise nor fall
d) None of above

42. Treasury Bonds (T-Bonds) pay a higher interest rate than Treasury Bills (T-bills).
a) True b) False c) Never

(T-Bonds have 30 day maturity period where as T-bills have maturity period of less than a year)

43. What is a P/E ratio?

a) The ratio of the price of a stock divided by the stocks earnings per share
b) The ratio of the price of a bond divided by the coupon of the bond
c) The ratio of the price of a stock divided by the stocks yield

44. What is a dividend?

a) A bonus to employees
 b) A division of an international corporation
c) A payment of cash to stockholders
d) A cash payment distributed among creditors

45. Which among the following is considered the highest- risk category of funds?
a) Aggressive Growth Funds:
b) Growth Funds:
c) Growth and Income Funds:
d) Global Funds:
e) International Funds
f) All of above

46. What is default?

a) Failure to pay principal on a financial obligation
b) Failure to pay interest on a financial obligation
c) Failure to pay principal or interest on a financial obligation
d) None of above

47. What is a junk bond?

a) A strong bond that has a low default risk
b b) A weak bond that has a high default risk
c) None of above
d) Both A & B

48. Can a Passive fund be rebalanced?

a) Yes b) No c) Irrelevant Question

49. The complete Offer Document contains the address of the following
a) The Trustees of the Mutual fund
b) The Directors of the AMC
c) The Registrars and Transfer Agents
d) The Unit holders of the Mutual fund
e) Both a, b, c

50. Section ---- of the Indian Contract Act, 1872 defines a fraud.
a) 17 b) 18 c) 19 d) 20

51. Scheme means a scheme of a mutual fund launched under Chapter ---
a) IV b) V c) VII d) VIII e) VI

52. Which among the following means any person who acting alone or in combination with another
body corporate establishes a mutual fund?
a) Unit holder b) Trustee c) Sponsor d) Relative e) None of above

53. The Sponsor should contribute at least ------to the net worth of the AMC.
a) 45 b) 50 c) 40 d) 35

54. Mutual fund shall pay before the ----- April each year a service fee as specified in the -------Schedule
for every financial year from the year following the year of registration.
a) 30th & 1st b) 15th & 3rd c) 30th & 2nd d) 15th & 1st e) 15th & 2nd
55. Can AMC or any of its officers or employees act as a trustee of any mutual fund?
a) Yes b) No c) Sometimes

56. The Trustees shall abide by the Code of Conduct as specified in the ------ Schedule
a) 1st b) 2nd c) 3rd d) 4th e) 5th

57. The Chairman of the AMC is not a trustee of any mutual fund
a) True b) False

58. Every AMC should maintain and preserve for a period of ----- its books of accounts, records, and
documents.
a) 5 years b) 10 years c) 12 years d) 8 years e) No such restriction

59. An Auditor is appointed by the ------

a) Unit holders b) AMC Director c) Trustees d) All of above e) None of above

60. Statement of Accounts are prepared with accounting policies and standards in accordance with the
------Schedule
a) 10th b) 8th c)7th d)5th e)9th

61. Certificate of registration is conferred as per Section -------of the SEBI Act, 1992.
a) 20 b) 21 c) 25 d) 30 e) None of above

62. As per Trust Deed minimum number of trustees shall be ------

a) 5 b) 4 c) 2 d) 3 e) 1

63. Which among the following cannot advertise a Mutual Fund?

a) Celebrity b) Unit holder c) Trustee d) AMC Sponsor

64. Advertisements for NAVs must indicate the --------------NAV of a scheme

a) Past b) Latest c) Past & latest d) None of above

65. A mutual fund scheme shall not invest more than -- of its NAV in unrated debt instruments
issued by a single issuer and the total investments in such investments shall not exceed --% of the NAV
of the scheme
a) 5% & 20% b) 5% & 25% c) 10% & 25% d) 10% & 20%

66. The initial expenses in respect of any scheme may not exceed --- of the funds raised under that
scheme.
a)10% b) 5% c) 6% d) 2%

67. No mutual fund scheme shall invest more than ---of its NAV in the equity shares or equity
related instruments of any company
a) 5% b) 10% c) 25% d) 15% e) None of above

68. A Mutual fund scheme shall not invest more than -- of its NAV in the unlisted equity shares or
equity related instruments in case of open-ended scheme and -- of its NAV in case of close ended
scheme.
a)5% & 10% b) 10% & 10% c) 5% & 15% d) 10% & 15% e) None of above
69. The securities shall be valued at the last quoted ----price on the stock exchange
a) Opening b) Closing

70. When a security is not traded on any stock exchange for a period of ---- prior to the valuation date,
the scrip is treated asnon- traded scrip
a)120 days b) 90 days c) 60 days d) 30 days

71. R-Squared factor of a fund measures

a)How much of a funds NAV movement is due to the market index movement
b)How a funds NAV movement relates to the market index movement
c)How much of fluctuating has occurred in a fund s NAV over a historical period
d)How many marks a Credit rating Agency accords to a fund

72. Longer the maturity of a portfolio the greater the risk it has from interest rate fluctuations
a)True b) False

73. An investor in need of a regular income should not select

a) A debt fund b) A bank deposit c) PPF d) An equity growth fund

74. Under Section--------of the Act the mutual fund is required to deduct TDS at the rate of ----- on any
long-term capital gains if the payee Unit holder is a non-resident
a) 190 & 20% b) 195& 15% c) 195 & 10% d) 190 & 10% e) 195 & 20%

75. Under Wealth Tax Act, Ownership of units is not considered as ---------
a)Income b) Expense c) Wealth d) All of above

76. ---------------------is preferred by private mutual funds?

a)W.W.W
b)Individual agents
c)Small distribution companies
d) Established distribution companies

77. Which among these give basic information about a fund that is already launched and whose
document is available?
a) Product Launch Advertisement
b) Tombstone Advertisement
c) Performance Advertisement
d) None of above

78. Income funds with --- or more of investments in debt instruments should always be compared
with a suitable index.
a) 40% b) 45% c) 60% d) 75%

79. --------------------- provide general information about AMC / Mutual Funds to the public.
a) Ranking Entity b) Time Periods c) Brochures d) None of above

80. All advertisement and sales literature containing an AMC / Mutual Funds ranking, must be
disclosed with respect to
a) The name of the category
 b) The number of AMC/ Mutual funds in the category
c) The name of the Ranking Entity
d) The publisher of the Ranking data
e) All of the above

81. Advertisements and sales literature must not use any rankings other than rankings based on
yield for a period of -------------------
a) Less than one year
b) More than one year
c) Less than two year
d) More than two year

82. ------------- advertisement uses performance figures in its advertisements or sales literature.
a) Tombstone b) Performance c) Product Launch d) All of above

83. The Liabilities of the Balance Sheet should be divided into the following groups
a) Loans, Reserves & Surplus, Unit Capital, Investments
b) Reserves & Surplus, Fixed Assets, Current Liabilities and Provisions, Investments
c) Investments, Deposits, Other Current Assets, Fixed Assets, Deferred Revenue Expenditure
d) Unit Capital, Loans, Reserves & Surplus, Current Liabilities and Provisions

84. Which among the following should sign the Balance Sheets and the Revenue Account?
a) Board Of Trustees
b) Scheme wise fund managers
c) Neither of above
d) Both a & b

85. The financial statements of the scheme should be approved at a meeting of --------------------
a) Board of Directors of AMC
b) Trustees
c) Board of Directors of Trustee Company (in case of trustee company)
d) Both a & b
e) Both a, b, c

86. Mutual fund can invest in the units of UTI or in the units of any other Mutual Fund Manager.
a) Yes b) No

87. The Board of Trustees of the Mutual Fund must meet at least ------- in the month to review the
operations of the Mutual Funds.
a) Once b) Twice c) Thrice d) Daily

88. Mutual Funds should submit-------------- reports to SEBI in the enclosed formats giving details of
their money market operations
a) Periodic b) Monthly c) Quarterly d) Fortnightly e) Yearly

89. Which among the following regulates the entry into call /notice money market, bill discounting
market and term money market etc?
a) SEBI b) AMFI c) AMC d) RBI e) FII
90. Offer document contains information relating to types of investments to be made during pre-
allotment stage and the accounting procedures to be adopted.
a) False b) True c) Sometimes

91. As per 2nd Schedule Service Fee is paid by Mutual Fund before the ----- each year
a) 30th April b) 15th April c) 31st December d) None of above

92. Providing for Childs Marriage or Education Expenses is an example of -----------------need

a) Investment b) Protection c) Both

93. Which are the benefits of a Mutual fund distributor who becomes a well-trained financial planner?
a) Ability to establish long- term relationships
b) Ability to build a profitable business
c) Both of above
d) Neither a nor b

94. The Financial Planning Process was first formalized by ------------------------

a) SEBI
b) AMFI
c) AMC
d) Certified Financial PlannerBoard of Standards (USA)

95. The basic principle of investing in Financial Planning is -------------------------

a) Lesser the risk, the Greater the reward
b) Lesser the risk, the Lesser the reward
c) Greater the risk, the Lesser the reward
d) Greater the risk, the Greater the reward

96. Generally, income earned by any Mutual Fund registered with -------- is exempt from tax
a) AMC b) RBI c) SEBI d) FII

97. Income distributed to unit-holders by a close-ended or debt fund is liable to the following
a) Dividend Distribution Tax of 10%
b) Surcharge of 2%
c) Dividend Distribution Tax of 10% plus a surcharge of 2%
d) Tax of 12%

98. According to Section 88 of the Income Tax Act, investment upto to Rs -------- is eligible for tax
rebate of 20 % for Infrastructure mutual funds units.
a) 60000 b) 98000 c) 65000 d) 80000

99. Which of the following statement is correct for Tax law definition of Capital Gains ?
a) Sale Consideration (Cost of Improvements + Cost of transfer- Cost of Acquisition)
b) Sale Consideration (Cost of Acquisition + Cost of Improvements + Cost of transfer)
c) Sale Consideration + (Cost of Acquisition + Cost of Improvements + Cost of transfer)
d) None of above

100. Which among the following is the Cashing out Stage?

a) Transition Stage
b) Sudden Wealth Stage
 c) Reaping Stage
d) Accumulation Stage

101. Affluent investors can be classified into

a) Wealth-Creating
b) Wealth Persevering
c) Both a & b
d) None of above

102. Which among the following can be associated with Indira Vikas Patra?
a) Good returns
b) Tax Free Benefits
c) No record of identity of investors
d) Easily available

103. Which among the following can be termed as a limitation of Rupee Cost Averaging Method
a) No information regarding when to buy or sell a fund
b) Switch from losing to winning funds
c) Only a
d) Both a & b

104. As per John .C. Bogle, which among the following combinations is a Complex Managed
Portfolio?
a) 20% in diversified Equity Fund, 20 % in aggressive Growth fund, 10% in specialty funds,
30% in long-term bond funds, 20 % in short term bond fund
b) Single Index Fund with 60/40 equity/ bond holdings
c) 85% in a Balanced 60/40 Fund, 15% in medium term Bond Fund
d) 50% in Total Stock Market/Index Fund, 50 % in Total Bond Market Portfolio

105. What would you do to Maximise Investment Return in the long run?
a) Buy and Hold investments
b) Liquidate poorly performing investments
c) Liquidate good performing investments
d) Switch from poor to good performance

106. Which of the following can be perceived as a hedge against inflation or as a means of security in
bad times?
a) Shares b) Bonds c) Financial Assets d) Gold

107. Which among the following governing body supervises SEBI?

a) RBI b) AMC c) MOF d) ROC e) CLB

108. From the following, identify the Rights and Obligations of the Investors?
a) Beneficial Ownership
b) Right to Timely Service & Information
c) Right to Right to wind up a scheme
d) Right to Terminate the AMC
e) All of above

109. Characteristic(s) of RBI Relief Bonds?

 a) Tax free interest
b) Maturity period of 5-years
c) Free from Default
d) All of above

110. Instruments carrying longer than one-year maturities are generally called ---------
a) Money Market Securities
b) Government Securities
c) FI Bonds
d) Debt Securities

111. Which of the following is the best measure of Risk?

a) R-Squared b) Beta Coefficient c) Standard Deviation d) None of above

112. In what order you would list the following schemes. i.e: Least Risk to Highest Risk
(1) Balanced fund (2) Money Market Fund (3) Sector Fund (4) Index fund
a) 1234 b) 2134 c) 4321 d) 2143

113. Suggest a model portfolio for Young, Unmarried Professional?

a) 50% in Aggressive Equity Funds, 25% in High Yield Bond funds 25% in Conservative Money
Market
b) 25% in Aggressive Equity Funds, 25% in High Yield Bond funds 50% in Conservative Money
Market
c) 30 % in short-term Municipal Funds, 35% in long- term Municipal Funds, 25% in Moderately
Aggressive Equity for modest capital growth, 10% in Emerging Growth Equity
d) 50% in Aggressive Equity Funds, 50% in High Yield Bond funds

114. Application forms are available with

a) Newspaper
b) Memorandum containing key information
c) Newsletter
d) Offer Document

115. ----------------measures the amount of buying and selling of securities done by a fund.
a) Income Ratio b) Expense Ratio c) Turnover Rate d) None of above

116. Which among the following acts as the distributor of mutual funds shares to brokers / dealers and
the public?
a) Trustee b) Underwriter c) None of the above

117. Cost of Investments acquired or purchased should include--------------

a) Brokerage
b) Stamp Charges
c) Any other charge included in brokers bought note
d) All of above

118. Asset Management Companies may launch schemes either on a

a) Load Basis b) No-Load Basis
c) Mixed Basis d) All of Above
119. In close-ended scheme floated on a load basis the initial expenses shall be amortized on
------basis over the period of the scheme
a) Daily b) Weekly c) Five Years d) Fortnightly

120. In open-ended schemes floated on a load basis the initial expenses may be amortized over a
period not exceeding -------
a) Weekly b) Five Years c) Ten Years d) Daily

121. In the case of open-ended scheme when units are sold, the difference between the Sale Price
and the Face Value of the unit, if positive should be -------- to reserves and if negative is --------- to
reserve
a) Credited, Debited
b) Debited, Credited
c) Credited, Credited
d) Debited, Debited

122. In the case of an open-ended scheme, when units are sold an appropriate part of the sale proceeds
should be credited to ----------------
a) Capital A/c b) Equalization A/c c) Reserve A/c d) Revenue A/c

123. Underwriting Commission should be -----------------when there is no development on the scheme

a) Reduced from of Investment
b) Both a & c
c) Recognized as Revenue

124. Identify the Characteristics of Income Funds

a) Higher Return than a Bank Deposit
b) More Safe than a Bank Deposit
c) Invest money as Fixed Deposit or Recurring Deposit or Saving Deposit
d) Both a & c

125. If EPS is negative for Non-Traded / Thinly Traded Equity Securities, then value for that year
shall be taken as ----- for arriving at capitalized earning
a) One b) Two c) Zero d) Three

126. The Offer Document & the Memorandum shall be fully revised and updated at least once in------
a) Six Months b) One Year c) Five Years d) Two Years

127. A debt security (other than Government Securities) that has a trading volume of less than 15
crores for a period of thirty days prior to the valuation date shall be considered as a -------------------
a) Equity Related Security
b) Thinly Traded Debt Security
c) Government Security
d) None of above

128. Which among the following is US-64 of UTI?

a) Sale / Repurchase price declared by UTI for a specific period
b) Fixed price of sale / repurchase
c) Price is determined by market forces
d) Quoted in stock market
129. As per the guidelines laid down by RBI Money Market Mutual Funds can invest in
a) Corporate Bonds
b) Equity Shares
c) Government Securities of less than one year maturity
d) All of above

130. As per SEBI guidelines, a Security is to be treated as untraded when

a) Security is not traded for 30 days
b) Security is not traded for 60 days
c) Security is never traded on stock exchange
d) Security is traded for 30 days

131. Value Style Investors buy stocks that have

a) High Growth Rate
b) Low Interest Rate
c) High Interest Rate
d) Low Growth Rate
e) High Prices to Earnings
f) Low Prices to Earnings

132. ---- of the trustees shall be independent persons and shall not be associated with the sponsors or be
associated with them in any other manner.
a) 2/4th b) 1/3rd c) d) 2/3rd

133. In case of Corporate Fixed Deposit, the most important thing an investor must look for is--------
a) Credit Rating of Deposit b) Yield
c) Rate Of Interest d) All of above

134. AMC can directly approach the Investor with the help of--------------
a) Individual agents b) Banks c) Distribution Companies d) All of above

135. In India, a Mutual Fund is constituted as--------------

a) Investment company
b) Trust
c) AMC
d) Company
e) All of the above

136. ---------------is a Fund that stands ready to Buy and Sell units at any time
a) Open stock Fund
b) Open end Fund
c) Closed end Fund
d) None of above

137. ----------------submit the portfolio of the scheme to SEBI.

a) Trustee b) Sponsor c) Depository d) Custodian e) AMC f) All of above

138. What is the Risk Profile of a fund having 20% exposure to Growth Fund?
a) Very Aggressive b) Moderate
 b) c) Low d) High

139. What is the Risk Profile of a fund having 10% exposure to Gold Funds?
a) Low b) Moderate
c) High d)Very Aggressive

140. An open-end fund was purchased when its NAV was Rs 40, 18 months later, its NAV stood at Rs
45. The percentage NAV change in the fund was:
a) 7.5% b) 8.33% c) 7% d) 8%

141. Which among the following are Fund Tracking Agencies in India?
a) Credence b) Value Research c) Both a & b d) None of above

142. UTIs Fund is based on ---------- Index

a) S & P CNX Nifty b) BSE SENSEX
c) Both a & b d) None of above

143. Yield and Price of a bond move

a) In similar directions
b) Unrelated Fashion
c) In line with the inflation index
d) None of above

144. The Current Market Price of an 11%-coupon bond, when other bonds of similar maturities pay
9% will be
a) Above Par b) Below Par c) At Par

145. Bank Certificate of Deposits has a maturity period of ------days to one year
a) 90 b) 30 c) 61 d) 91

146. -------------------------is incorporated for the purpose of managing a mutual fund

a) Trustee b) Trustee Company c) AMC d) All of above

147. How important is for Mutual Funds to disclosure Half-Yearly Results on their websites
a) Not needed b) Optional
c) Very Much Needed d) Can be ignored

148. As per Schedule 12 of SEBI, borrowings if any, above ------ of net assets of any scheme of a mutual
fund should be disclosed.
a) 5% b) 7% c) 15%
d) 10% e) None of above

149. Which among the following an investor should refer to if he/she is a first time investor
a) Key information Memorandum
b) Offer Document
c) Both a & b
d) None of above
150. Corporate Debentures are ------ in Liquidity
a) High b) Moderate c) Very High d) Low e) Very Low

151. Which among the following are low in Liquidity?

a) Life Insurance b) PPF c) Bank Deposit d) Equity e) All of above

152. Inspite of charging high management fees Mutual funds are able to keep the transactions cost
down because of ------
a) High Dividends b) Economies of Scale c) Maturity Period d) Flexibility

153. Direct investment in stock markets can be a better option over investing through mutual funds
If
a) The investor wants to invest for long term
b) There exits a bullish phase in stock market
c) The investor has large capital, knowledge and resources for research
d) The investor wants better returns than those offered by mutual funds

154. Volatility of an Equity Fund Portfolio comes from

a) The nature and kind of stocks in the portfolio
b) The number of stocks in or degree of diversification of the portfolio
c) Fund Mangers success at market timing
d) All of above

155. What happens when there is more number of sectors in a portfolio?

a) Less is the Portfolios Sector Risk
b) More is the Portfolios Sector Risk
c) Sector Risk remain the same
d) All of the above

156. Which among the following can be considered as simple way of checking funds risk level?
a) Stock Turnover Ratio
b) Debt Turnover Ratio
c) Price Earning Multiple
d) None of above

157. Which among the following a retired person would prefer

a) Greater Proportion of Equity Assets
b) Greater Proportion of Income Producing Assets
c) Lesser Proportion of Income Producing Assets
d) Lesser Proportion of Equity Assets

158. Liquidity needs are generally satisfied with

a) Money Market Mutual Funds
b) Equity Income Funds
c) Municipal Bond Funds
d) None of above

159. MR. Rakesh is a Salaried Executive who is planing to retire at 60 yrs of age; he should therefore
gradually transform from ----------- ---------- generating investments
 a) Income To Growth
b) Growth To Income
c) Equity Investments To Income and Cash Funds

160. A person whos Grandchildren are young, investing in Growth Funds are considered best due
to
a) They have capacity to provide current income
b) Higher Risk bearing capacity
c) Lot of time available for the investment to grow in value
d) Tax Benefits are available

161. Debt Funds are required to provide a --------------------

a) Distribution tax
b) Dividend Distribution Tax
c) Yield Sacrifice
d) Expense Performance

162. Type of Fund(s) wherein average maturity is an important factor for an investor
a) Debt Fund b) Balanced Fund c) Liquid Fund d) Both a & b

163. As per Second Schedule of SEBI (Mutual Fund Regulations, 1996) Filing Fees for Offer
Document is
a) Rs: 10,000 b) Rs: 15,000 c) Rs: 25,000 d) Rs: 50,000

164. As per Second Schedule of SEBI (Mutual Fund Regulations, 1996) Service Fees Payable by
Mutual Funds is
a) Rs: 2,00,000 b) Rs: 2,50,000 c) Rs: 1,50,000 d) Rs: 4,00,000

165. Custodian when appointed should carry out the custodial services within-----after his appointment
a) 30 days b) 7 days c) 15 days d) 30 days

166. NAV of the scheme(s) can go ------ depending upon the factor and forces affecting the securities
market
a) Up b) Down c) Up or Down d) Neither of any

167. Non-traded investments shall be valued in good faith in accordance with the norms specified in
--------Schedule
a) Fifth b) Sixth c) Ninth d) Seventh

168. An investment shall be regarded as non-performing if it has provided no returns in the form of
dividend or interest for more than ---- as at the end of the accounting year of the mutual fund.
a) One year b) Two Years c) Three Years d) Four Years

169. The investment and advisory fees for a fund with Rs.200 Crores as avg net asset is
a) 2.25 Crores b) 2 Crores c) 3 Crores d) 2.5 Crores

170. Private sector funds were granted permission to enter the Mutual Fund industry in:
a) 1993 b) 1994 c) 1995 d) 1996 e) 1992
171. SEBI guidelines for agents includes
a) Agents can sell products of a single mutual fund
b) Agents can sell products of mutual funds with whom he has entered into an agreement
c) Assets are undervalued
d) None of the above

172. Can an AMC contribute to Initial Capital?

a) No b) Yes c) Sometimes

173. Which among the following was the first diversified equity investment scheme in India?
a) SBI Magnum b) Master Share c) Mastergain92 d) None of above

174. Identify the features of Compounding mean

a) Longer the period, more is the power of compounding
b) More frequent the compounding, greater the growth of capital."
c) Both a & b
d) Longer the period, less is the power of compounding

175.In USA, Mutual Fund is represented as-------------------

a) Trust
b) Investment Company
c) Public Limited Company
d) Private Limited Company

176. Which is possible in case of Systematic Investment plan?

a) Allows investor to invest a fixed amount on a monthly basis
b) It inculcates a discipline of regular investment in the investor
c) Investor can change the amount
d) Both a & b

177. An elevated P/E in consideration to average market multiple could be of

a) Income Funds
b) Gilt Funds
c) Value Fund
d) Growth Fund
e) Balanced Fund
f) All of above

178. Market Risk is not diversifiable and Sector specific risk is not diversifiable.
a) Market Risk is diversifiable and Company specific Risk is not diversifiable.
b) Market Risk is not diversifiable and Sector specific risk is not diversifiable.
c) Market Risk is not diversifiable and Company specific Risk is diversifiable.
d) Company specific Risk is not diversifiable and Sector specific risk is not diversifiable.

179. For which of the following instruments, credit rating is desirable."

a) Treasury bills issued by the Government of India
b) Debentures issued by the private corporate sector
c) Insurance policies issued by the LIC
d) Medium term dated securities issued by the Government of India
180 How many scripts does NIFTY have
a) 40 b) 100 c) 500 d) None of the above e) 30

181. Bond Fund distributes 20 Crores as dividend. What is the Taxable note on Mutual Fund
a) 10% + 10% b) 20% + 20% c) 20% + 10% d) Income is not taxable

182. Investor can sue if it is

a) Any specific person who guarantees it
b) Mentioned in the offer document
c) Both a & b
d) Cannot Sue

183. In case of assur`ed schemes which information is not required to be given along with the offer
document
a) Means of meeting the guarantee
b) All past schemes with their returns
c) Comparison to other funds/MF
d) Disclosure about the investment objective

184. A Mutual Fund can borrow

a) 20% of NAV b) For Six Months c) To meet temporary liquidity d) All above

185. Which of the following is not related with Infrastructure fund

a) Tax Benefit b) Fixed Rate of Return c) Capital Appreciation d) Traded in Stock Market

186. How is Unit Trust of India different from other Mutual Funds?
a) They can borrow internally and abroad
b) They can hire lease
c) Underwriting
d) All of the above

187. What is the current yield of a bond, whose coupon rate is 8% and market price, is Rs 122?
a) 6.57% b) 5% c)6.59% d) 5.67%

188. A fund invested 20 million. Total market value is 55 million, unit holder is 1 million. NAV is
a) Rs. 20 b) Rs.55 c) Rs.50 d) None

189. In case of corporate 'Fixed Deposit', the most important thing an investor must look for is
a) Yield b) Rate of Interest c) Credit rating of deposit d) None

190. Due diligence certificate is

a) Signed by CEO / MD / Corporate
b) Attached to Annual Report
c) Part of Offer Document
d) All of above
e) Incorrect Question

191. What all can be associated with an Equity linked saving scheme
a) Tax rebate b) 3 yrs Lock in period c) Minimum investment in equity is fixed d) All of above
192. The 1999 Union Government Budget helped the Mutual Fund industry by
a) Regulating the practices in Mutual Fund Industry
b) Exempting all mutual funds dividends from income tax in the hands of the investors
c) Approving the code of ethics suggested by AMFI
d) All of above

193. Trail commission is justified in case of

a) Deferring the commission
b) When an investor cancels his application for investment
c) Agent can voluntarily return the commission for the cancelled application
d) None of the above

194. Ex-mark of 100% could be for a Fund

a) Growth Fund b) Aggressive growth fund c) Index Fund d) Sector Fund e) Balanced Fund

195. Which among the following can be termed as a value fund?

a) Monthly Income Fund
b) Equity Income Fund
c) Templeton Fund
d) None of above

196. Which of the following is a criteria for sponsor

a) Net worth to be more than unit capital
b) 40% net worth should be of sponsor
c) Sponsor should invest 30% of assets
d) None of the above.

197. The Debt Fund in India is

a) On wholesale basis
b) Large players like FII and Banks
c) G-Sec are traded in large scale
d) All of the above

198. Which among the following statement(s) are true

a) Load Fund is better than No Load Fund
b) Load increases NAV
c) Load guarantees higher return
d) None of the above

199. AMC can directly approach the investor as well as with the help of
a) Individual agents
b) Banks and NBFC
c) Distribution Companies
d) All of the above
e) The question is incorrect

200. As per SEBI regulations derivatives trading will be done for ------------
a) Hedging
b) Portfolio Balancing
c) Both a & b
201. Characteristics of SWP are
a) A prospective investor can seek recourse to
b) Sue the investment of the earlier fund
c) Sue the AMC/Trustee
d) Cannot seek recourse
e) Incorrect Question

202. Health of a Fund is known from

a) Offer document
b) Annual / Half-yearly report
c) End of the Term
d) Can be ascertained from NAV

203. If a unit holder does not agree to merger

a) He is allowed to exit only in CES
b) He is allowed to exit only in OES
c) He is allowed to exit in OES and CES
d) He is allowed to exit only by SEBI
e) None of the above

204. Which is not true about KIM

a) KIM is a concise format offer document
b) KIM is not given by AMC
c) KIM shows the health of fund
d) None of the above

205. An investor can assess his funds performance by

a) Performance of another MF
b) Performance of Stock Market
c) Performance of other financial product
d) All of the above

206. What will be the current market price of a 10% coupon bond when other bonds of similar
maturities pay 13%
a) Above par
b) Below par
c) At Par

207. Bank sponsored MF are controlled by

a) RBI b) SEBI c) RBI & SEBI d) None

208. A Mutual Funds can borrow

a) 20% of NAV b) For 6 months c) To meet temporary liquidity d) All above

209. In case of assured schemes which information is not required to be given in offer document
a) Means of meeting the guarantee
b) All past schemes with their returns
c) Comparison to other funds / MF
d) Disclosure about the investment objective
210. KIM is available at
a) AMC office b) Authorised banks c) Both a & b d) None

211. All Mutual Fund AMC and Corporate Trustees are companies registered under the ----------
a) Department of Company Affairs
b) Company Law Board
c) Companies Act, 1956
d) All of above

212. What is the correct order of decision

1. Asset Allocation 2. Selection of Fund 3. Features of scheme
a) 1,2,3 b) 1,3,2 c) 2,3,1 d) Any other

213. Rs.300 becomes Rs.600 in 8 years. Rate of return is

a) 10% b) 12.5% c) Data insufficient d) None of the above

214. As per the SEBI regulations, a mutual fund shareholder can change his/her AMC.
a) Yes b) No c) Never

215. If its liquidity that a mutual fund share holder looking for, then which among these he/she should
not be looking for?
a) Open-end Scheme b) Close-end Scheme

216. As per the regulations of SEBI, mutual funds should provide investor with at least ------exit
route at any given point in time.
a) Two b) None c) Three d) One

217. ---------------are open for sale or redemption during pre-determined intervals at NAV-related
prices.
a) Income Fund b) Interval funds c) Growth Funds d) Index Funds e) None of above

218. ------------------funds are what corporate and individual investors need to park their surplus funds
for short periods.
a) Money Market Funds b) Income Funds c) Interval Funds d) Growth funds e) Sector Funds

219. Which among the following replicate the returns of the specific index?
a) Income Funds b) Sector Funds c) Index Funds d) Balanced Funds e) All of above

220. When a Shareholder sells shares of a fund, he will realize either a taxable-------
a) Gain b) Loss c) Both a & b d) None of above

221. Mutual Fund is not a trust that pools the savings of investors who share a common financial goal.
a) True b) False c) Sometimes

222. Which among the following describes broadly the working of a mutual fund?
a) Securities, Returns, Fund Manager, Investors
b) Securities, Fund Manager, Investors, Returns
c) Investors, Returns, Securities, Fund Manager
d) Investors, Fund Manager, Securities, Returns
223. Because the fund stands ready to redeem units at any time, units in an open-end funds are always
worth there
a) Net Asset Value b) Asset Revenue c) Par value d) Selling price

224. Best way to determine if the client is in wealth creating or wealth preserving mode is by
a) Asking series of questions
b) Make trade offs between higher returns with possibility of loss
c) More nominal returns but with a lower probability of loss
d) By analyzing responses
e) All of above
f) Both a & b

225. Benefits of Financial Planning are

a) Help in form of financial planner
b) Peace of mind and happiness to investors
c) Provide advise on achieving financial needs
d) All of above
e) Only a & c

226. ----------------------is an useful approach to Financial Planning

a) Life Cycle Guide b) Wealth Cycle c) Income Cycle d) Only a & b

227. ------------------groups all investors irrespective of their financial condition

a) Wealth Cycle Approach
b) Life Cycle Approach
c) Income Cycle Approach
d) None of above

228. Which among the following is/are comprehensive & relevant approach to Financial Planning
a) Income Cycle b) Wealth Cycle c) Life Cycle

229. ------------------------ is a specific & separate asset investment strategy evolved to meet each
individual goal
a) Sudden Wealth Stage
b) Goal Oriented Investing
c) Reaping Stage
d) Transition Stage
e) Investment Strategy

230. Foremost constraints of Financial Planning are

a) Problems in Financial Planning products
b) Time
c) Risk
d) Insufficient investible resources
e) All of above

231. Which of the following can upset Financial Planning?

a) Forced early retirement from job
b) Early death
 c) Divorce
d) Marital Break-up
e) Both a & b
f) All of above

232. ----------------------is not useful to understand benefits of Financial Planning

a) Life Cycle Model b) Wealth Cycle Guide c) Both a & b d) None of above

233. Which among the following stages are considered to be dependent

a) Childhood Stage b) Pre-retirement Stage c) Young Married Stage d) All of above

234. Which stage changes the financial situation of any young couple?
a) Childhood Stage
b) Young Married Stage
c) Young Unmarried Stage
d) Young Married with Children Stage
e) Both d & a
f) None of above

235. In which stage parents Financial Planning would be changing from Protection need to
Investment need.
a) Childhood Stage
b) Post Family Stage
c) Young Married Stage
d) Retirement Stage
e) Married with older Children Stage

236. Why does investing consideration have paramount value to people who are married and are
having old children?
a) Couple may be raising loans
b) Couple may have raised loans
c) Plans have to be made to service loans & replay capital
d) Pension provision to provide an income at later stage
e) All of above
f) Only b & c

237. Need for Financial Planning take place rarely in an individuals life
a) False b) True

238. Retirement Stage precedes Post-Family Stage.

a) True b) False

239. Which among the following is associated with an individual at all stage?
a) Expense b) Expense & Income c) Income d) None of above

240. In financial planning, priority and ability change with each stage of the life cycle.
a) False b) True

241. Financial Planning is not

a) Investing funds to receive highest rate of return
 b) Planning for retirement with maximum income payable
c) Tax Planning to keep taxes as low as possible
d) All of above

242. -----------------is first step in Financial Planning process and a basic tool for translation of financial
plan into action
a) Asset Allocation Stage
b) Selecting the right investment products for investors
c) Comparison of investments products
d) Helping investors understand risks in fund investing

243. Trustees shall----------review all transactions carried out between Mutual Funds, AMC and its
Associates
a) Daily b) Quarterly c) Monthly d) Yearly

244. Under Sec.88 of Income tax, how much exemption:

SEBI approved Mutual Fund: 60,000/-
Infrastructure: 10,000/-
Equity linked savings: 20,000/-
a) 16,000/- b) 4,000/- c) 14,000/- d) 6,000/-

245. Cost of investing is most important in a :

a) Balanced Fund b) Bond Fund c) Growth Fund d) Equity Fund

246. A scheme transfers the securities to another scheme under same AMC. Which is incorrect?
a) The AMC holds 4% in the total inter-scheme transfers.
b) The securities are sold at market value + 10% add. Charges
c) Both a & b

247. When is the value of stock not unlocked?

a) When PSU is privatised
b) When corporate restructuring of company
c) When there is a bull run in the market.
d) When buy-back of shares takes place

248. For choosing an appropriate benchmark the following are required, except
a) The portfolio composition and size.
b) Historical data of Fund performance
c) Investment objective
d) Nature of investments
e) None of above

249. Comparison of Direct Equity and Mutual Fund Investment, which is true.
a) A large capital required in MF as compared to direct investing.
b) Diversification is possible in Direct Equity as compared to MF.
c) Transaction costs with fund wipe out the profits as compared to equity.
d) The investment objective is possible through MF investing as against Direct Equity investment.

250. What do u mean by the term Load

a) Charge to scheme / fund
 b) Charge paid to investor
c) Charge paid by AMC to SEBI
d) Recovery amount from investor

251. Loads can be primarily classified into ---------

a) Front-end/resale load b) Back-end/repurchase load c) Both a & b d) Only a

252. When does a Fund recover load expenses?

a) When Investor buys Scheme b) During Re-purchase c) Either a or b d) Neither a nor b

253. ----------------- is a measure of scattering of the values about the average (mean) value.
a) Standard Deviation b) Beta c) Ex-marks d) Beta Coefficient

254. There is no minimum initial investment while investing in a mutual fund?

a) No b) Yes

255. Which fund would a person wanting low risk (risk averse) and high yields choose?
a) Div.yield 15%, Beta - 1.5, ex-marks-90
b) Div.yield 10%, Beta -1, ex-marks-70
c) Div.yield 11%, Beta -0.9, ex-marks-80
d) Div.yield 12%, Beta -1.2, ex-marks-80

256. Mainstream diversified debt funds is most affected by:

a) Reinvestment risk b) Liquidity risk c) Interest rate risk d) Default risk

257. If yield falls, the Fund Manager will do all except;

a) Sells short maturity stocks and buy long maturity stocks.
b) See that the funds average duration become longer than the market average duration.
c) Sell long duration stocks and buy short duration stocks.
d) Sells low coupon stocks and buy high coupon stocks.

258. The Fixed Asset Allocation is all of these except:

a) Liquidation of a part of the higher asset class & reinvesting in the asset class with lower return.
b) A conservative approach to portfolio management
c) A disciplined approach lets him book profits in rising markets and increase holdings in falling
markets.
d) Taking advantage of market fluctuations.

259. Which among the following was responsible for the poor resource mobilisation by mutual funds in
1998/99.
a) MOF b) SEB c) UTI d) None of above

260. During 1999-2000, resource mobilisation by Indian corporate through Euro issues by way of
------- registered a significant increase
a) FCCB b) GDR c) ADR d) All of above

261. Buy-back of shares allows the GOI to --------- the targeted amount
a) Raise b) Reduce c) Both a & b d) Any of above
262. Offer for Buy back of shares is given to -------shareholders
a) Few b) None c) Selected d) All

263. Buy back of shares is possible only to ----------PSUs

a) Cash - starved b) Cash rich c) All of above

264. Fund Management is a ---------- process in which agency problems could surface at many levels
a) Simple b) Complex c) An y one of above d) None of above

265. ---------- funds invest in equities in one or more foreign countries

a) Offshore Funds b) Equity Funds c) Sector Funds d) Specialty Funds

266. There is a -------- relationship between risk & reward

a) Direct b)Inverse c) Both d) Any one

267. Allocation of investments depends on ----------------& ----------------

a) Income & expense
251 b) Age & income
252 c) Tolerance for risk & expected time frame
253 d) Tolerance for risk & income

268. Evaluating------------- needs is part of personal financial planning

a) Insurance b) Finance c) Stock d) Only a & b

269. A comprehensive financial plan must

a) review your net worth ,goals ,objectives, investments etc
b) address your entire financial picture
c) plan for implementing goals
d) All of above

270. The following are included in the financial planning process:

a) Cash flow & Tax management
b) Estate Planning & management
c) Risk planning & management
d) Investment & retirement planning
e) All of above

271. The reason people fail to plan is

a) they are too young
b) they are too old
c) they dont have the expertise to plan well
d) they procrastinate

272. All of the following investments are examples of "debt" investments EXCEPT:
a) Corporate Bonds b) Gold c) Certificate of Deposit d) Fixed annuity

273. If Bond A had a lower rating than Bond B, the yield on Bond A would be
a) Higher b) Lower c) The same
274. Ability to convert an investment into cash without losing any of the principal is:
a) Equity b) Liquidity c)Marketability d) Current Yield

275. If Mr. Ambani, who is in the 28% tax bracket, invested in a Certificate of Deposit which, were
paying 6% interest, his after-tax Yield would be?
a) 4.32% b) 4.23% c) 26.32% d) None of the above
{After-tax Yield = Current Yield (1 Tax Rate)}

276. Generally ------------the rating ------- the yield on the bond

a) Higher, Lower b) Lower, Lower c)Higher, Higher d) Lower, Higher

277. Generally -----------the term of the bond higher is the yield.

a) Longer b) Shorter c) None of the above d) Insufficient data
278. Which among the following are fixed -income investments
a) Commercial Paper b) Certificate of Deposit c) Savings A/c d) All of the above
279. Stocks of high quality with long stable record of earnings and dividends are called as
a) Growth Stocks b) Income Stocks c) Blue Chip Stocks d) Speculative Stocks
280. Can stocks be categorised by market capitalisation or size?
a) Yes b) No c) At times
281. Which of the following types of accounts are available from financial institutions?
a) Demand Deposits b) Time Deposits c) Money Market Accounts d) All of above
282. Which of the following do not determine how much you earn on your investment funds?

a) The amount of tie the money is left on deposit

b) The rate of interest being paid
c) The method of interest calculation
d) Whether the banking institution is a federal or a state-charted bank
e) The initial investment and any subsequent deposits
283. The amount to which today's investment will grow over a given period of time at a specific rate of
interest is known as:
a) Current Value b)Future Value c)Compound Value d)Simple Value
284. The first step in budgeting is to:
a) Target any areas in your spending which needs to be changed.
b) Record historical information concerning your income and expenses.
c) Project your income and expenses for the next year.
d) Decide how much each month you can devote to savings.

285. --------------Statement shows your financial condition as of a certain date.

a) Cash Flow b) Budget c) Credit application d) Financial e) Liquidity

286. All of the following are true statements concerning an auto lease EXCEPT:
a) A lease never requires a down payment.
 b) Mileage during the lease is limited to a specific amount.
c) Additional fees may apply if you terminate the lease early
d) The leasing company retains ownership of the vehicle
287. The type of mortgage in which interest rate changes during the life of the loan is called a:
a) Fixed Rate Loan
b) Balloon Mortgage Growing
c) Equity Mortgage
d) Adjustable Rate Mortgage
e) Reverse Mortgage
288. All of the following investments are examples of "Debt" investments EXCEPT:
a) Corporate Bonds b) Gold c) Certificates of deposit d) Fixed annuity
289. The investment risk that deals with the upward or downward movement of the value of the
investment, based on the changes in the financial market is known as
a) Risk of principal b) Market Risk c) Purchase Power Risk d) Interest Rate Risk
290. ---------refers to the ability to convert an investment into cash without losing any of the principal
a) Marketability b) Equity c) Liquidity d) Current Yield
291. Generally, if Bond A had a lower rating than Bond B, the yield on Bond A would be:
a) Higher b) Lower c) The Same
292. All of the following are advantages to the purchase of common stock EXCEPT:
a) It can provide an income stream.
b) There is good marketability.
c) There can be tax advantages for long-term purchases.
d) The issuing company guarantees the return.
293. One of the disadvantages associated with the purchase of real estate as an investment is:
a) Financial leverage may be used.
b) Certain tax deductions may be available.
c) It can create a hedge against inflation
d) There is a lack of liquidity
294. The return on a mutual fund comes from:
a) Dividend income
b) Capital gains distributions
c) Increase in share value above purchase price
d) All of the above
*295. The commission structure in a mutual fund that features a Deferred Sales Charge is
a)"A" shares b)"B" shares c)"C" shares d)All of the above
296. Stocks whose movement tends to follow the business cycle of the economy as a whole are called:
a) Large Cap stocks b) Cyclical stocks c)Growth stocks d)Speculative stocks e)Blue Chip stocks
297. Which of the following is NOT a disadvantage of investing via common stock?
a) There is no guarantee of return, either through dividends or capital gain.
b) The timing of purchases and sales will significantly effect investment return.
c) The entire investment is subject to risk on principal.
d) Common stocks can generally be purchased with a small initial investment.

298. Which of the following statements concerning people in retirement years is (are) correct?
(1) A large percent of monthly income is spent on living expenses.
(2) As inflation rises, purchasing power increases.
a) Only 1 b) Only 2 c)Both (1) and (2) d)Neither (1) nor (2)

299. Which of the following statements concerning inflation is (are) correct?

(1) Inflation affects the rupee amount of a person's assets available at retirement.
(2) Some retirement plans adjust benefits to take inflation into consideration.
a) Only 1 b) Only 2 c)Both 1 & 2 d)Neither 1 nor 2
300. You should base your retirement income objectives in terms of---------------------
a) After-taxes, adjusted for assumed inflation
b) Before-taxes, adjusted for assumed inflation
c) Before-taxes, in current rupees
d) After-taxes, in current rupees
e) After-taxes, in current rupees, discounted for future expected inflation

301. To calculate the amount to be saved annually to meet retirement objectives, all the following
assumptions must be made EXCEPT:
a) Annual before-tax returns on investments
b) Annual after-tax returns on investments
c) Annual inflation rate
d) Difference in ages between spouses
e) Desired number of years to enjoy one's retirement, or one's life expectancy following retirement

302. To determine one's assets available at retirement, all the following are included, EXCEPT:
a) Cash on hand and cash in a checking account
b) IRA accounts
c) Vested retirement plan benefits from a pension plan
d) Money market and other mutual funds
e) Stocks and bonds

303. To calculate the future value of income-producing investments in the retirement planning
calculations, the most correct interest factor to use is the:
a) Before-tax percentage return.
b) After-tax return.
c) Expected rate of inflation.
d) Modified interest rate.

304. Which of the following personal objectives is Least important in the retirement planning
process?
a) Maximizing personal tax benefits
b) Maximizing personal retirement benefits
c) Providing estate liquidity
d) Achieving a stated personal retirement income objective

305. Following statements concerning retirement planning objectives are correct EXCEPT:
a) You may have conflicting objectives.
b) You may have altruistic objectives.
c) Your objectives should be ranked in order of priority.
d) Your personal objectives should not affect the type of plan selected.
e) Some objectives can be achieved only at the expense of other objectives.

306. Why is liquidity an important consideration while selecting a pension plan investment?
 a) It provides a source of funds to pay plan expenses and benefits.
b) Liquid investments provide a high rate of return.
c) Liquid investments are growth-oriented, which is desirable in pension plans.
d) The liquidity of investments keeps plan expenses at a minimum.
307. An Investment manager must consider which of the following types of investment risks?
a) Market risk b) Safety of principal c) Specific risk d) None of the above
308. The duration of a bond is a function of its
a) Current price b) Time to maturity c)Yield to maturity d) Coupon rate e) All of above
309. Which among the following best describes the investment characteristics of a high quality long-term
municipal fund?
a) High inflation risk, Low default risk
b) Low inflation risk, High market risk
c) Low inflation risk, Low default risk
d) High inflation risk, high market risk

310. A client provides a current personal balance sheet to the financial planner during the initial
data gathering phase of the financial planning process. This financial statement will enable the
financial planner to gain an understanding of all of the following except the
a) Diversification of the client's assets.
b) Size of the client's net cash flow.
c) Clients liquidity position.
d) Clients use of debt.

311. Which one of the following products is designed to provide both growth and income?
a) Fixed premium annuity
b) Non-participating mortgage real estate investment trusts
c) Aggressive growth mutual fund
d) Convertible bond

312. Company ABC is currently trading at Rs: 35 and pays a dividend of Rs: 2.30. Analysts project a
dividend growth rate of 4%. Your client Ravi requires a rate of 9% to meet his stated goal. Ravi wants
to know if he should purchase stock in Company ABC.
a) Yes, the stock is undervalued.
b) No, the stock is overvalued.
c) No, the required rate is higher than the projected growth rate.
d) Yes, the required rate is higher than the expected rate.
e) No, the required rate is lower than the expected rate.
f) Both a, c, d

313. Which of the following would result in the largest increase in the price of a diversified common
stock mutual fund?
a) Unexpected inflation
b) Expected dividend increases
c) Unexpected corporate earnings growth
d) Expected increase in the prime interest rate

314. While analyzing the position of a portfolio in terms of risk/return on the Capital market line,
superior performance exists, if the fund's position is ----------the Capital market line, inferior
performance exists if the fund's position is -----------the CML, and equilibrium position exists if it
is--------- the Capital market line.
 a) Above; on; below
b) Above; below; on
c) Below; on; above
d) Below; above; on
e) On, above; below

315. Which one of the following best describes a debenture?

a) A long-term corporate promissory note
b) An investment in the debt of another corporate party
c) A long-term corporate debt obligation with a claim against securities rather than against physical assets
d) A corporate debt obligation that allows the holder to repurchase the security at specified dates before maturity
e) Unsecured corporate debt

316. Which combination of the following statements about investment risk is correct?
1) Beta is a measure of systematic, non-diversifiable risk.
2) Rational investors will form portfolios and eliminate systematic risk.
3) Rational investors will form portfolios and eliminate unsystematic risk.
4) Systematic risk is the relevant risk for a well-diversified portfolio.
5) Beta captures all the risk inherent in an individual security.

a) Only 1 b) Only 2 c) Both a & c d) Both a , c , d e) None of above

317. Arrange the following financial planning functions into the logical order in which a professional
financial planner performs these functions.
(1) Interview clients and identify preliminary goals
(2) Monitor financial plans
(3) Prepare financial plan
(4) Implement financial strategies, plans, and products
(5) Collect, analyze and evaluate client data
a) 1,3,5,4,2 b) 5,1,3,2,4 c)1,5,4,3,2 d)1,5,3,4,2 e)1,4,5 3, 2

318. The Standard Deviation of the returns of a portfolio of securities will be ____________ the weighted average
of the Standard Deviation of returns of the individual component securities.
a) Equal to b) Greater than c) Less than d) Less than or equal to e) Less than, equal to, or greater than

319. According to fundamental analysis, which phrase best defines the intrinsic value of a share of common
stock?
a) The par value of the common stock
b) The book value of the common stock
c) The liquidating value of the firm on a per share basis
d) The stock's current price in an inefficient market
e) The discounted value of all future dividends

320. The party to a trust who creates the trust is called the-----
a) Grantor b)Executor c)Trustee d)Beneficiary

321. Historically investors have used -------as benchmarks to judge the performance of debt funds.
a) Interest Rates b) Bank Deposits c) Bank Deposit Interest Rates

322. Benchmark for -----------is clear & pre-specified by the fund manager in advance
a) Debt Funds b) Index Funds c)Balanced Funds d) Income Funds

323. Unit Trust of Indias Index fund is based on ------------- index

 a) S&P PCNX Nifty b) BSE Sensex c) None of above

324. --------measures the percentage change in a Bonds price with a Change in yield
a) Duration b)Term to maturity c)Both of above

325. Future contracts are contracts for

a) Delivery b) Performance c) Differentiation d) Difference e) None of these

326. Forwards contracts are contacts for

a) Delivery b)Difference c) Performance d) Differentiation e)None of these

327. Gilt futures is an example of

a) Blue chip equity futures
b) Gold futures
c) Sovereign Debt futures
d) Corporate bond futures
e) None of the above

328. Usually one would sell Bond Futures if one expects

a) Yields to fall b) Prices to rise c) Yields to rise d) Equity prices to fall e) None of the above

329. In Futures terminology, fair value refers to

a) The intrinsic value of the future
b) The spot price plus the cost of carry
c) The market value of the future
d) The convergence of the spot price and the futures price
e) None of the above

330. In Futures terminology, Premium refers to

a) The cost of the future
b) The futures price above spot price
c) The futures price above fair value
d) The futures price above exercise value
e) None of the above

331. Equity Index futures are used for

a) Speculation
b) Asset Allocation
c) Anticipate Cash Flows
d) Hedging
e) All of the above

332. In Options terminology Premium refers to

a) The cost of the option
b) The cost of the option over its intrinsic value
c) The cost of the option of in the-money-calls
d) None of the above
e) All of the above
333. The buyer of a call option is usually someone who expects
a) The price of the underlying asset to increase from spot
b) The price of the underlying asset to decrease from spot
c) The price of the underlying asset to fluctuate only a little from spot
d) The price of the underlying to fluctuate substantially from spot
e) None of the above

334. Investors in-------------stage prefer long term risky investments

335.Investors who value safety the most choose ------------- over mutual funds

336. PPF account is to be held for a minimum of -------years

337.Expense ratio is very important for -----------

338.Rupee cost averaging means investing ----------amount periodically

339.A better performing equity fund will have -------ex marks, --------beta and ---gross dividend yield

340. Higher expense ratios lead to ------

341.Portfolio turnover is ----- for liquid funds

342.Sharpe-ratio measures return per unit of --- defined by --------

343.The benchmark for a balanced fund is -------and ------combined in the same proportion as ------ of
the fund.

344.If a fund is assuming higher risk than the market index, its beta will be--------

345. Mutual funds should disclose their returns for ---, ---and ---years

346. Illiquid securities should not exceed -----% of the net assets.

347. Valuation of debt instruments with less than 182 days to maturity is done on-------basis

348.An equity share is considered illiquid if it is not traded for over ------days

349.An asset is non-performing if interest and /or principal is due for over-----months

350. If a single unit holder holds more than -----% of net assets, the numbers of such unit holders
and their percentage holding in the net asserts, have to be disclosed.

351.Portfolio has to be disclosed to investor once in -----months

352.Annual report has to be disclosed to investor once in ---- months

353.Mutual funds cannot pay dividend out of --------. Such amounts are accounted for in the
-------account.

354. A fund whose initial issue expense is borne by the AMC is called------fund and the AMC
receives -----fee on such funds.

355. Dividend has to be accounted for on---------date

356. Investments are accounted for on --------date

357. Investments are to be valued at -------cost for determining profit or loss on sale of securities.

358. Net asset computation cannot be impacted by errors in computation arising due to accounting for
accrued income, by more than ----

359.Investments in sponsor companies cannot exceed ------% of net assets.

360. Inter-scheme transfers have to be made at -----price

361. Mutual funds cannot borrow up to ----% of net assets for a period not exceeding-------

362. Limit on a fund investing in another fund is -----

363.If-yield curve is sloping up, long term rates are --------than short-term rates.

364. If credit rating of a bond moves from AAA to AA, its yield will ------and price will-----

365. If interest rates have gone down current yield will be ---------than coupon rate,

366. If equity markets move down, dividend yield will move -----

367. The offer document for an open ended fund is valid for ---------years

368. The sponsors financial history for ---------years is to be provided in the offer document.

369. If a scheme invests in unlisted shares, it has to state this as a ----------risk factor.

370.If units are held by three investors jointly, redemption proceeds are payable to -----

371. Long term capital gains without indexation are taxable at --------------------

372. Listed mutual funds have to abide the ----------------of the stock exchanges

373. The AMC and the trustees enter into an -----------agreement

374. The unit holders are ---------owners and the Trust is the -----------owner of the mutual funds assets.

375. ------------------is appointed before all other constituents

376. If two ------merge, the ----------- stake is altered.

377. The schemes are formulated by------- and approved by ----------

378. Private sector mutual funds were permitted in the year

379.Mutual funds can invest only in --------securities.

380.Closed end funds were usually trading at -------to NAV

381. What is the price of a bond, whose face value is Rs. 100, coupon 10%, maturity in 3 years, if the
YTM is 14%?

382. The NAV of a fund on June 30th, 2001 was Rs 16.45. Six months later, the NAV had grown to Rs.
17.985. Using the percentage change in NAV method, calculate the annualised return.

383. A mutual fund incurs Rs. 9 Crore as initial issue expense for mobilising Rs. 60 Crore. How will this
expense be treated in the books of the fund?

384. The weekly average net assets of a no-load fund are Rs. 650 Crores. As per SEBI regulations, what
is the maximum amount that can be charged towards investment management fees to the fund?