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

b. Total Return with Reinvestment of distributions assumes reinvestment at NAV on the distribution date
c. As a measure of performance, Total Return with Reinvestment of distribution seeks to overcome the shortcomings of simple Total Return
d. Because of its simplicity, simply Total Return is preferred in practice to Total Return with Reinvestment of distribution

52. Financial planning allows a person
a. To become a billionaire
b. To achieve financial goals through proper management of finances
c. To invest in foreign countries
d. None of the above

53. Financial Planning comprises
a. Defining a client’s profile and goals
b. Recommending improper asset allocation
c. Monitoring financial planning recommendations
d. All of the above

54. Financial planning does not include
a. Enabling investors to describe financial goals
b. Assessing the investors risk and return requirements
c. Recommending an improper asset allocation
d. Selecting securities that will be included in the investor’s portfolio

55. A small investor can build a diversified portfolio by
a. Buying 1 share every of the listed companies
b. Investing in a mutual fund
c. Borrowing enough money to buy shares of well-managed companies
d. None of the above

56. Direct investment in stock market can be a better choice than investing through mutual funds if the investor
a. Wants better returns than those offered by mutual funds
b. Has large capital, knowledge and resource for research
c. Has identified a bullish phase in the stock market
d. Wants to invest for the long term

57. Indira Vikas Patra is an investment product popular with
a. Rural investors
b. Investors in high tax bracket
c. Urban investors
d. Investors who want to protect their identity


58. Most individuals invest in life Insurance policies for
a. Risk protection
b. Tax benefits
c. Easy liquidity
d. High returns

59. Which of the subsequent about PPF is false?
a. Investments have to be made from taxable income of the relevant year.
b. Investments once made cannot be withdrawn until maturity.
c. Both interest and principal are tax free in the year of withdrawal
d. Investments enjoy tax benefits under part 88 of the IT Act.

60. The difference ranging from debenture and bond is:
a. Bonds are issued by corporations and debentures are issued by PSUs.
b. Bonds are unsecured and debentures are secured.
c. Bonds are backed by loans and debentures are backed by assets
d. None of the above

61. 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 ties to guess the market highs and lows
c. It does not tell you when to buy, sell or switch from 1 scheme to a different
d. Rupee cost averaging has no serious shortcomings

62. 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

63. A high proportion of investment in equity funds is advisable for investors
a. In distribution phase
b. In accumulation phase
c. In transition phase
d. Who are wealth preserving affluent individuals

64. Investors who follow the fixed Asset Allocation approach
a. Maintain balance in their portfolio by liquidating a part of the position in the asset class which has provided higher return and reinvesting in the other asset class which has lower return
b. Are not disciplined
c. Increase their equity position when equity prices tend to climb
d. None of the above

65. Mutual fund investors should be advised to expect
a. Low post tax returns
b. Dramatic outcomes
c. Better returns than every other available choice
d. Only realistic wealth accumulation

66. Which of the subsequent fund kinds are comparable
a. An aggressive equity fund and a money market mutual fund
b. A value fund and a government securities fund
c. A bond fund and a debt fund
d. A diversified equity fund and a debt fund

67. Which of the subsequent is a disadvantage of standard deviation
a. Standard Deviation measures total risk, not just market risk
b. It is based on past returns, which does not necessarily indicate further performance
c. It is an independent number
d. All kinds of funds can be measured with standard deviation

68. Which of the subsequent is most risky?
a. Investing in a money market mutual fund
b. Investing in an index fund
c. Short term investment in an equity fund
d. Long term investment in an equity fund

69. Yield-to-maturity of a debt fund is more important if the investment objective is
a. Current income
b. Total return
c. Liquidity
d. All of the above

Earning:   Approval pending.