Association of Mutual Funds in India (AMFI) 2008 AMFI Mutual Fund Basic Module Model Mock Test M - Question Paper
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b. False
34.Debt securities bought at a discount to their face value are generally
a. Interest bearing
b. Zero coupon bonds
c. Paying interest at a floating rate
d. None of the above
35.In India, a large part of debt securities pay interest on
a. A floating rate basis
b. A fixed rate plus a variable portion
c. A fixed rate
d. Zero coupon basis
36.The Indian debt market is largely wholesale in nature
a. True
b. False
37.In the wholesale debt market, the largest proportion of trading is seen in
a. Government Securities
b. Corporate Bonds
c. T -Bills
d. PSU Bonds
38.The largest proportion of trades done in the wholesale debt market is accounted by
a. Mutual funds
b. Foreign banks
c. Indian banks
d. Financial institutions
39.Certificates of Deposits (CD’s) are issued by
a. Regional Rural Banks
b. Corporates
c. Scheduled commercial banks
d. None of the above
40.Commercial Paper is issued by corporate bodies
a. To meet short-term working capital requirements
b. To finance the acquisition of long term capital assets
c. To retire long term debt
d. To pay dividend
41.Government securities are issued through the RBI
a. True
b. False
42.The yield on Treasury Bill (T-Bill) is determined by
a. The Government of India
b. Auction
c. The State Governments
d. Floating rate method
43.Which of the subsequent are not normally obtained in the portfolio of a debt fund
a. Long-dated Government Securities
b. Corporate debentures
c. Bonds issued by financial institutions
d. Certificates of deposit issued by banks
44.Which of the subsequent do not represent the amount an investor of a debt security will be paid upon maturity
a. Par value
b. Face value
c. Fair value
d. Redemption value
45.Coupon of a debt security refers to
a. A piece of paper attached to the certificate
b. The return on investor would earn
c. The amount rate of interest paid on par value of the bond
d. None of the above
46.Which of the subsequent do not apply to the term 'maturity' of a debt security ?
a. The date on which the certificates becomes old
b. The term of the bond
c. The date of redemption
d. The date on which the issuer has to repay the amount
47.Call or put provisions are used to replace the fixed maturity of debt securities
a. True
b. False
48.A call provision in debt problem allows the issuer to
a. Call out the names of the investors
b. Redeem the debt on maturity
c. Extend the tenure of the debt
d. Redeem the debt before maturity
49.A put provision in a debt problem allows
a. Investor to put away the certificates in safe deposit vaults
b. Investors to redeem debt prior to maturity
c. Issuers to redeem debt prior to maturity
d. Investors to extend the tenure of debt
50.Current yield relates interest on a security to
a. It’s current market price
b. Its face value
c. It’s fair value
d. The current price of T-Bills
51.To compare bonds with various coupon rates, maturities and prices, investors would use:
a. Current yield
b. Technical analysis
c. Yield to maturity
d. Fundamental analysis
52.When interest rates rise, bond prices
a. Also rise
b. Fall
c. Are not affected
d. Fluctuate either up or down
53.Yield curve is also known as
a. Curve of Interest
b. Term Structure of Interest Rates
c. Curve that yields
d. None of the above
54.An important indicator of expected patterns in interest rates is
a. The Economic Times
b. The Sensex
c. The Yield Curve
d. The Chief Minister's Speech
55.It may not be possible to reinvest interest received at the identical rate as principal. This is known as
a. Reinvestment risk
b. Inflation risk
c. Interest-rate risk
d. Call risk
56.A bond's rating shows its
a. Reinvestment risk
b. Default risk
c. Inflation risk
d. Interest-rate risk
57.If a bond cannot be sold at a price near its value, it means that investment in this bond has
a. High liquidity risk
b. High default risk
c. Low liquidity risk
d. Inflation risk
58.The additional yield needed to account for the risk of default by the borrower is known as
a. Yield plus
b. Yield spread
c. Yield extra
d. Yield premium
59.A high credit rating does not mean
a. High yield spread
b. High perceived safety
c. Low yield spread
d. Low risk premium
60.If 10-year government securities yields 10% and a 10 -Year fixed de posit in a company yields 12%,the yield spread is
a. 12%
b. 22%
c. 10%
d. 2%
61.The "duration" of an interest - bearing bond is
a. Longer than its maturity
b. Less than its maturity
c. Equal to its maturity
d. The quality of paper used for the certificate
62.A bond with a coupon of 9% when interest rates for similar maturities are 11% will sell
a. Above par
b. Below par
c. At par
d. At a price unrelated to the prevailing interest rate
63.Changes in foreign exchange rates have no bearing on interest rates
a. True
b. False
64.Inflation and interest rates are inversely proportional
a. True
b. False
65.Investment policies of a mutual fund are determined by
a. The fund manager
b. The AMC management
c. The marketing department based on what distributors want
d. The investors
66.Which of the subsequent measures are not taken by SEBI for protecting investors of mutual funds
a. Mandating minimum levels of diversification for mutual funds
b. Ensuring that the funds are not used to favour a few companies
c. Tracking the securities that every fund has invested in
d. Ensuring that the funds are invested in approved securities only
67.As per SEBI norms, a fund's investments, in the equity shares of any 1 company are restricted to
a. 25% of NAV
b. 10% of NAV
c. 50% of NAV
d. 100% of NAV
68.A mutual fund manager is not allowed to sell short when he expects a crash in the market
a. True
b. False
69.In a mutual fund, having many schemes, all securities bought can be held in a general account and transferred later to different schemes to attain certain profit or loss objectives
a. True
b. False
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