Mutual Fund Mock Test FAQs

…………….are shared out of the profits that the company generates from its business operations

Options:

A. Dividends | B. Revenue | C. Margin | D. None of the above

Any reduction in interest rates will …………. the value of the instrument and vice versa.

Options:

A. Increase | B. Decrease | C. Remain constant

……………… funds are open for investors to enter or exit at any time.

Options:

A. Open ended | B. Closed ended | C. Interval

Company A has 1 crore shares and current market price of the this stock is Rs.200/ what is the market cap of company A?

Options:

A. 200 crore | B. 2 crores | C. 20 crores | D. None of the above

Banking sector fund is example of what kind of sectoral fund. True or false?

Options:

A. True | B. False

Investment in debt instruments having maturity of 1 day are ….

Options:

A. Overnight fund | B. Liquid fund | C. Short Duration fund | D. All the above

A Mutual Fund scheme gives a return of 10 % and the beta of that scheme is 0.5. The risk free return is 7.5%. What is the Treynor Ratio of this scheme ?

Options:

A. 3% | B. 5% | C. 7.5% | D. 10%

Identify the true statement(s) - A) Individuals can register upto five bank accounts with a mutual fund B) A Non-Individual can register upto ten bank accounts with a mutual fund.

Options:

A. Only A is correct | B. Only B is correct | C. Both A and B are correct | D. Both A and B are incorrect

From the below mentioned entities associated with a mutual fund, who has to mandatorily contribute to the corpus of the mutual fund?

Options:

A. The Trustees | B. The Custodians | C. The Asset Management Company | D. The Sponsors

The market value of a mutual fund scheme's portfolio is Rs. 15 crores. Its current liabilities are Rs. 2 crore. The unit capital is Rs. 10 crore and face value per unit is Rs 10. Calculate the NAV per unit?

Options:

A. Rs. 15 | B. Rs. 10 | C. Rs. 11.50 | D. Rs. 13

A top performing scheme within a category __________

Options:

A. Is the best choice for an investor to invest his funds | B. May or may not be the top performer in the next years to come | C. Usually remains the top performer for a long period of time | D. Usually be the worst performer in the next years to come

Mr. Sachin wants to initiate a Systematic Investment Plan (SIP) in a mutual fund scheme. Which of the following statement is correct?

Options:

A. A SIP can be done only in an existing folio | B. A SIP can be used to initiate a fresh purchase of mutual funds | C. A SIP cannot be done in a New Fund Offer (NFO) | D. A SIP can be done in a Close-end fund

_____ will help the investors understand the suitability of a mutual fund scheme to them.

Options:

A. Product Label | B. Standard Deviation / Beta | C. Tracking Error | D. Alpha of the scheme

Identify the document which authorizes a company to invest in a specific mutual fund?

Options:

A. Resolution passed in the shareholders meeting | B. Specific Board resolution | C. As per the Companies Act, a company can invest in any mutual fund scheme as long it is beneficial to the interest of the shareholders, without any special authorization | D. As per the Companies Act, a company cannot invest in mutual funds

According to the AMFI's code of conduct for mutual fund intermediaries, if a second violation against the intermediary is proved, their registration will be _________.

Options:

A. Suspended for 1 year | B. Suspended for 3 years | C. With held | D. Cancelled

Can an investor change his mutual fund distributor?

Options:

A. Yes, but a permission from AMFI and SEBI is needed for the same | B. Yes, but the investor has to give a written request to the fund house | C. Yes, but an upfront fees have to be paid to the existing distributor to cover up his loss of income | D. No, a change of distributor is not permitted by SEBI

At what price are the bonus units issued to the unitholder?

Options:

A. The price is decided by the AMC in consultation with the trustees | B. The bonus units are allotted free of cost | C. At the prevailing NAV | D. At the prevailing NAV divided by the bonus ratio

Which of the following statements is True?

Options:

A. Hindu Undivided Families (HUFs) are not allowed to invest in mutual fund schemes | B. Minors cannot invest in mutual fund schemes | C. Foreign investors can invest in Indian mutual fund schemes, provided they have completed the Know-Your-Client (KYC) formalities

Whose KYC needs to be completed in case of an application by a minor?

Options:

A. The minor | B. The guardian | C. Any family member of the minor | D. No KYC is required in case of applications by minors

How many (maximum) bank accounts can a resident individual investor register with a mutual fund folio?

Options:

A. 1 | B. 2 | C. 3 | D. 5

Investors have the right to specify up to ___nominees for their mutual fund investment folios.

Options:

A. Zero | B. One | C. Two | D. Three

Which of the following statements is ‘True’ with respect to celebrity endorsement for mutual funds?

Options:

A. SEBI has permitted celebrity endorsement at the industry level for the purpose of increasing the awareness of mutual funds | B. SEBI has permitted celebrity endorsements for the promotion of individual mutual fund schemes | C. Celebrities can endorse only NFOs | D. Celebrities can endorse only ongoing mutual fund schemes

How are distributors mainly compensated by mutual funds?

Options:

A. Commissions | B. salaries | C. Portfolio profit | D. Annual fees

Which of the following is true regarding the risk-return profile of mutual fund schemes?

Options:

A. Moving from liquid funds to debt funds, investment risk increases | B. Moving from liquid funds to equity funds, potential return increases | C. Both a and b | D. Neither a nor b

What term is used to describe the Net Asset Value (NAV) of the scheme after the dividend is paid out (Remember the NAV would have dropped to the extent of the dividend paid)?

Options:

A. Ex-Dividend NAV | B. Cum-Dividend NAV | C. Lower NAV | D. Dividend NAV

Which among the following investment avenues does not offer income on a regular basis?

Options:

A. Real estate | B. Physical Gold | C. Stocks | D. Debentures

With which agency are the mutual fund distributors registered?

Options:

A. Securities and Exchange Board of India | B. Fund Accounting Team | C. Depositories | D. Association of Mutual Funds in India

Which of the following is an advantage of mutual funds?

Options:

A. Customized portfolio | B. Convenience to buy stocks and bonds directly from the mutual fund | C. Economies of scale

When the interest rate in the economy increases, the price of existing bonds.

Options:

A. Increases | B. Fluctuate | C. Decreases

Which of the following cannot be considered for the purpose of selecting a scheme’s benchmark?

Options:

A. Mutual fund scheme’s investment objective | B. Investment strategy of the MF scheme | C. Scheme’s asset allocation pattern | D. Scheme’s past returns

Mutual funds are allowed to charge differential exit loads based on the amount of investment.

Options:

A. True | B. False

Which among the following is not a statutory document?

Options:

A. Fund factsheet | B. Statement of Additional Information | C. Scheme Information Document | D. Key Information Memorandum

Investors have bought 20 crore units of a mutual fund scheme at Rs. 10 each. The scheme has thus mobilized 20 crore units X Rs. 10 per unit i.e., Rs 200 crore. An amount of Rs. 140 crore is invested in equities. The balance amount of Rs. 60 crore, mobilized from investors, was placed in bank deposits. Interest and dividend receivable (accrued but yet not received) by the scheme is Rs. 8 crore, scheme expenses payable (accrued but not paid yet) is Rs. 4 crore. Calculate the scheme’s NAV per unit.

Options:

A. Rs. 20.40 | B. Rs. 10.20 | C. Rs. 20.00 | D. Rs. 10.00

Which of the following is a measure of fluctuation in periodic returns in an equity mutual fund scheme?

Options:

A. Variance | B. Sharpe ratio | C. Modified duration | D. Jensen’s Alpha

Which of these funds will generally have a higher fund management cost?

Options:

A. Debt Fund | B. Passive Equity Fund | C. Active Equity Fund | D. Equity Index Fund

The indices based on Government securities will be an appropriate benchmark for which type of funds?

Options:

A. Credit Risk Funds | B. Gilt Funds | C. Money Market Funds | D. Liquid Funds

A person wants to create a synthetic index. Guide him as to in which of these categories the weightage of equity index would be the lowest?

Options:

A. Super aggressive hybrid fund | B. Aggressive hybrid fund | C. Balanced hybrid fund | D. Conservative hybrid fund

Mr. Mehta is a stock market investor. The stock market crashed recently. Mr. Mehta pulls back all his investments from the stock markets because he fears that the markets will fall again. Which bias is Mr. Mehta exhibiting?

Options:

A. Recency Bias | B. Overconfidence Bias | C. Confirmation Bias | D. Herd mentality

The minimum number of investors that a mutual fund scheme should have:

Options:

A. 10 investors | B. 20 investors | C. 50 investors | D. 100 investors

Calculate the Treynor Ratio from the following data - Return from a mutual fund scheme is 7.5%. The beta is 0.62. The risk-free rate of return is 6%.

Options:

A. 11.60 | B. 4.77 | C. 3.08 | D. 2.42

Diversified equity funds are less risky compared to Thematic funds in terms of ________ risk.

Options:

A. Duration | B. Size | C. Concentration | D. Style

Smita is a young investor and her parents advise her to invest in fixed deposits of banks so that these funds can be used for her retirement. If Smita follows her parents' advice, what risk does she face?

Options:

A. She has to select the correct bank which is financially strong | B. There is a high risk of default in her portfolio | C. There is a risk of low returns | D. There is no risk as fixed deposits are quite safe

The sponsor of a mutual fund must contribute a minimum of _____ of the net worth of the AMC.

Options:

A. 25% | B. 40% | C. 50% | D. 66%

By investing in mutual funds, an investor uses the services of a _____.

Options:

A. Professional actuary | B. Professional insurance agent | C. Professional investment manager | D. Professional tax planner

What is the most appropriate measure for evaluating how closely an index fund tracks its benchmark?

Options:

A. Total Expense Ratio (TER) | B. Assets Under Management (AUM) | C. Tracking error | D. Treynor ratio

As per common disclosure, investments in mutual funds are subject to market risks, and therefore _________.

Options:

A. Will provide insurance | B. Will not guarantee returns or capital protection | C. Will provide guarantee of returns | D. Will guarantee capital protection in the long run

The ARN is allotted to mutual fund distributors by _________ .

Options:

A. SEBI | B. NISM | C. AMC | D. AMFI

When does an investor in mutual funds have to provide information under the Foreign Account Tax Compliance Act (FATCA)?

Options:

A. When the investment is made through a foreign bank account | B. When the investor's folio was an NRI account before the change | C. When the investor's place of birth is other than India | D. When the investor is a resident of USA or UK only

In India, the Mutual funds are constituted as _________ .

Options:

A. Limited Company | B. Non-Government Organisation | C. Self Regulatory Organisations | D. Trusts