| Q 1. | From the below mentioned entities associated with a mutual fund, who has to mandatorily contribute to the corpus of the mutual fund?
The Trustees
The Custodians
The Asset Management Company
The Sponsors
 CORRECT ANSWER  WRONG ANSWER
CORRECT ANSWER:The Sponsors Explanation:
The mutual fund trust is created by one or more Sponsors, who are the main persons behind the mutual fund business.
The sponsor is the promoter of the mutual fund. The sponsor brings in capital and creates a mutual fund trust and sets up the AMC.
The sponsor makes an application for registration of the mutual fund and contributes at least 40% of the net worth of the AMC. In other words, every MF needs a sponsor before it can commence operations.
|
| Q 2. | 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
Only A is correct
Only B is correct
Both A and B are correct
Both A and B are incorrect
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:Both A and B are correct Explanation:
Mutual funds provide investors the facility to register multiple bank accounts to facilitate receiving the redemption, dividends and any other pay outs from the fund.
An individual investor can register up to five bank accounts and a non-individual investor, ten. |
| Q 3. | Can an investor change his mutual fund distributor?
Yes, but a permission from AMFI and SEBI is needed for the same
Yes, but the investor has to give a written request to the fund house
Yes, but an upfront fees have to be paid to the existing distributor to cover up his loss of income
No, a change of distributor is not permitted by SEBI
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:Yes, but the investor has to give a written request to the fund house Explanation:
Investors can choose to change their distributor or opt for direct investing. This needs to be done through a written request by the investor to the AMC.
In such cases, AMCs will need to comply, without insisting on any kind of ‘No Objection Certificate’ from the existing distributor.
|
| Q 4. | _______ will help the investors understand the suitability of a mutual fund scheme to them.
Product Label
Standard Deviation / Beta
Tracking Error
Alpha of the scheme
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:Product Label Explanation:
The risk levels in different categories of mutual fund schemes can be understood with the help of product labelling of Mutual Funds.
SEBI had introduced product labelling of mutual funds to address the issue of mis-selling and to provide investors an easy understanding of the kind of product/scheme they are investing in and its suitability to them.
All the mutual funds were required to ‘Label’ their schemes on the parameters such as - Nature of scheme, Investment objective, Level of risk depicted by colour code boxes etc.
|
| Q 5. | 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 ______ .
Suspended for 1 year
Suspended for 3 years
With held
Cancelled
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:Cancelled Explanation:
In the event of breach of the Code of Conduct by an intermediary, the following sequence of steps is initiated by AMFI:
• Write to the intermediary and ask for an explanation within 3 weeks.
• In case explanation is not received within 3 weeks, or is not satisfactory, AMFI will issue a warning letter indicating that any subsequent violation will result in cancellation of AMFI registration.
• If there is a proved second violation by the intermediary, the registration will be cancelled, and intimation sent to all AMCs.
|
| Q 6. | Mr. Sachin wants to initiate a Systematic Investment Plan (SIP) in a mutual fund scheme. Which of the following statement is correct?
A SIP can be done only in an existing folio
A SIP can be used to initiate a fresh purchase of mutual funds
A SIP cannot be done in an New Fund Offer (NFO)
A SIP can be done in a Close-end fund
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:A SIP can be used to initiate a fresh purchase of mutual funds Explanation:
An SIP can be used to initiate a fresh purchase in a scheme and open a folio.
It can be used to make additional purchases in an existing folio. An SIP can also be initiated during a New Fund Offer (NFO).
A Close-end fund does not have SIP facility.
|
| Q 7. | A top performing scheme within a category _______ .
Is the best choice for an investor to invest his funds
May or may not be the top performer in the next years to come
usually remains the top performer for a long period of time
usually be the worst performer in the next years to come
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:May or may not be the top performer in the next years to come Explanation:
As experience has shown time and again, the top performers during one period may not necessarily remain as a top performer forever or near the other top performers. In such a case, simply buying into a scheme due to good returns in the recent past may not be a wise approach.
The mutual fund advertisements use the disclaimer: “Past performance may or may not be sustained in future”.
|
| Q 8. | 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?
Rs. 15
Rs. 10
Rs. 11.50
Rs. 13
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:Rs. 13 Explanation:
The formula for calculating NAV is: (Total Assets minus Liabilities other than to Unitholders) / No. of outstanding Units
Total assets minus liabilities = 15 cr - 2 cr = Rs 13 cr
Number of outstanding units = Unit Capital / Face value = 10 cr / 10 = 1 crore outstanding units
NAV = 13 cr / 1 cr = Rs. 13
|
| Q 9. | Identify the category of mutual fund scheme in which the Net Asset Value (NAV) has to be declared for up to 4 decimal points ?
Index funds
Large cap funds
Small cap funds
Hybrid funds
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:Index funds Explanation:
NAV is to be calculated upto 4 decimal places in the case of Index funds, Liquid funds and other Debt funds.
(NAV for equity and balanced funds is to be calculated upto at least 2 decimal places)
|
| Q 10. | Which distributor will be covered under the due diligence process of the Asset Management Company as mandated by SEBI?
A distributor who has presence in more than 10 locations
A distributor who has AUM of over Rs. 100 crores from non-institutional investors
A distributor who has received commission of over Rs 25 lakhs from one mutual fund
All of the above
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:A distributor who has AUM of over Rs. 100 crores from non-institutional investors Explanation:
SEBI has mandated AMCs to put in place a due diligence process to regulate distributors who qualify any one of the following criteria:
- Multiple point presence (More than 20 locations)
- AUM raised over Rs. 100 crores across the industry in the non-institutional category butincluding high net worth individuals (HNIs)
- The commission received of over Rs. 1 Crore p.a. across industry
- The commission received of over Rs. 50 Lakhs from a single mutual fund
|