Association of Mutual Funds in India (AMFI) 2007 AMFI Mutual Fund Basic Module Model Mock Test - Question Paper

a. Be valued at book value
b. Be valued at a discount of 25%
c. Valued at cost price
d. Assigned a value of zero

41. Ex-Marks of an equity fund measures its
a. performance
b. Risk
c. Both the above
d. None of the above

42. Which of the subsequent is untrue of an automatic reinvestment plan?
a. The plan allows for automatic reinvestment of all income and capital gains
b. Automatic reinvestment allows for accumulation of additional units of the fund
c. The major benefit of automatic reinvestment is compounding
d. The benefit of automatic reinvestment is often lost on account of the heavy load charge on the reinvestment

43. Retired investors should
a. Not draw down on their capital
b. Not invest in securities which bear risk of capital erosion
c. Continue holding a major portion of their holding in equity growth funds
d. Never invest in equity







44. A criticism of rupee-cost averaging is
a. Investment is for the identical amount at regular intervals
b. Over a period of time, the avg. purchase price will work out lower than if 1 tries to guess the market highs and lows
c. It does not tell you when to but, sell or switch from 1 scheme to a different
d. Rupee cost averaging has no serious shortcomings

45. A 55 year old investor, who is employed and earning well, can be stated to be in
a. Accumulation stage
b. Transition stage
c. Distribution stage
d. Inter-generational wealth transfer stage

46. In order to decide an improper index as benchmark for an actively traded fund, 1 should consider
a. Fund size and portfolio composition
b. Whether the fund is broad based or focused on specific kind of securities
c. Investment objective of the fund
d. All of the above
e. None of the above

47. An equity investor wants to maximize his return in the long run. He should
a. Buy and hold investment for a long time
b. Invest in gold and silver only
c. Keep selling good performing funds
d. Keep selling off poor performing schemes and change them with good performing schemes

48. Which is the most important factor 1 should consider before investing in company fixed deposit?
a. Interest rate on the deposit?
b. Assets against which deposits are secured
c. Its credit rating
d. All of the above
e. Only a and c are actual

49. After developing a financial plan for a client, financial planners should
a. Leave it as it is
b. Review it periodically
c. Review it once in 5 years
d. None of the above

50. The KIM of a mutual fund scheme is available
a. At the AMC office
b. At the offices of authorised agents
c. At the branches of all banks
d. Only a and b

51. Investors can inspect the subsequent documents
a. Trust deed
b. Agreements with different constituents
c. Memorandum and articles of association of AMC and Trustee company
d. All of the above

52. A bond has been issued with a call provision. This means the issuer may call it back whenever the interest
a. Fall
b. Rise
c. Change
d. Are lower than the coupon rate

53. In determining the holding cost of an investment
a. Average cost method is to be followed
b. The weighted avg. cost method is to be followed
c. The market value method to be followed
d. Either a or b

54. As per wealth cycle guide, during the accumulation stage
a. The client looks to build wealth
b. The clients’ goals are approaching
c. Client cashes out
d. Client feel the need to take care of the next generation

55. If the commission paid to agents exceeds the distribution expense rates specified in the offer document, the excess has to be borne by
a. AMC
b. Trustees
c. Unit of the mutual fund
d. DRF of the mutual fund
e. Investor protection fund

56. Unit holders who do not agree with the merger of a fund’s scheme have the choice to
a. Exit from the scheme if it is an open ended scheme
b. Exit from the scheme after six months
c. Cannot exit if the AMC does not permit such withdrawal
d. Can exit only after approval of SEBI

57. While choosing ranging from a bank deposit and a debt income fund, the investor must consider
a. Credit rating of the bank
b. Quality of the mutual fund assets
c. His investment objective and risk appetite
d. All of the above

58. The jurisdiction for resolving legal disputes concerning a mutual fund is
a. Given in the offer document
b. Stated in the stock exchanges
c. Decided by company legal regulations board
d. Decided by BSE

59. Passive fund is expected to
a. Beat the return of the index
b. Furnish the returns of the market index
c. Keep the costs low
d. Both c and d

60. Which classification of mutual fund does not exist?
a. Closed end or open end
b. Load fund or no load fund
c. Pension fund or insurance fund
d. Active fund or passive fund

61. An investor cannot plead ignorance of the procedures while investing in a mutual fund because
a. Mutual fund is a risky investment
b. Law does not permit the investor to sue the Trust
c. While applying the investor sign an agreement stating they have learn and understood the terms and conditions
d. An investor is expected to be careful while investing

62. A portfolio turnover of 200% implies that an avg. security stays in a portfolio for
a. 6 months
b. 12 months
c. 48 months
d. 36 months

63. Sharpe and Treynor ratios are measures of
a. Risk
b. Return
c. Risk adjusted return
d. Beta of the portfolio

64. Company legal regulations Board can hear complaints agians
a. Agents
b. The board of trustees
c. Distributors
d. Stock exchanges where close ended funds are listed





65. Closed end funds have to compute and publish their NAV
a. Daily
b. Monthly
c. Quarterly
d. Half yearly
e. Can calculate NAV every week, but disclosures have to be made every day

66. If you bought a fund at Rs. 14 and sold after two years at Rs. 22, what is the annualized rate of return, using the modifications in NAV method?
a. 57.14%
b. 28.57%
c. 36.36%
d. 18.18%

Earning:   Approval pending.