Association of Mutual Funds in India (AMFI) 2008 AMFI Mutual Fund Basic Module Model Mock Test - Question Paper

55. A high proportion of investment in income funds is needed by
a. Accumulating investors
b. Affluent investors
c. Investors in the inter-generational transfer phase
d. Investors in the distribution phase

56. Mutual fund can benefit from economics of scale because of
a. Portfolio diversification
b. Risk reduction
c. Large quantity of trades
d. None of the above




57. Equity Linked Savings Scheme does not have which of the subsequent features?
a. It entitles the unit holder to tax benefits
b. The investment is locked in for three years
c. A minimum said level of investments is made in equity and equity related instruments
d. None of the above

58. The Custodian of a mutual fund:
a. Is appointed for safekeeping of securities
b. Need not be an entity independent of the sponsors
c. Not needed to be receive deliveries with SEBI
d. Does not provide or receive deliveries of physical securities

59. As per SEBI guidelines, a due diligence certificate is not
a. Signed by a Compliance Officer of the mutual fund
b. A certificate that all legal formalities of a scheme are completed
c. Attached to Annual report
d. A part of offer document

60. SEBI does not require the subsequent 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

62. Distributors or agents
a. Can distribute several mutual funds simultaneously
b. Cannot appoint sub-agents or sub-brokers
c. Should be only individuals not companies or banks
d. Should not be an employee or associate of the AMC

63. The AMFI code of ethics does not cover the subsequent prescriptions
a. Adequate disclosures should be made to the investors
b. Funds should be managed in accordance with said investment objectives
c. Conflict of interest should be avoided in dealings with directors or employees
d. Each investment decision should be approved by investors

64. Contingent Deferred Sales Charge (CDSC)
a. Is higher for investors who stay invested in the scheme longer
b. Is lower for investors who stay invested in the scheme longer
c. Is the identical for all investors irrespective of how long they stay invested
d. Is not allowed to be charged to mutual fund investors in India.





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

66. A value manger does not look for
a. Stocks that are currently undervalued in the market
b. Stocks whose worth will be recognized by the market in the long term
c. High current yield
d. Long term capital appreciation

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

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

69. Liabilities in the balance of a mutual fund are
a. In the form of long-term loans
b. Strictly short term in Nature
c. Combination of long term and short term
d. Not allowed as per regulations

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 evaluation of traded securities, which of the subsequent 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 evaluation date, the trading price on any previous date may be used, given that date is not more than 30 days prior to evaluation 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



73. The Expense Ratio as a measure of a fund’s performance is described as
a. Total expenses and avg. net assets
b. Total expenses and total asset
c. Average expenses and avg. net assets
d. None of the above

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

75. Flexible asset allocation means
a. Continuously changing the ratio of different assets in the portfolio
b. Not doing any re-balancing and letting the profits run
c. Active switching
d. None of the above

Earning:   Approval pending.