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

Ratio of sales or purchases( which ever is lower) to net assets of the fund

Ratio of sales or purchases( which ever is higher) to net assets of the fund


45. The rule of 72 is used to
(2-Mark)
compute entry load of a scheme

compute the period in which an investment will double at a provided rate of return

compute the rate at which money will grow to double in a provided period

both b and c


46. If there is an entry load in a scheme, the investors return
(2-Mark)
Will increase to the extent of load

Will not change because there will not be any exit load

Will decrease to the extent of load

None of the above


47. As per SEBI, mutual funds can borrow for short term to the extent of
(2-Mark)
Total net assets

50% of net assets

25% of net assets

20% of net assets


48. When selling a mutual fund, a good agent would never
(1-Mark)
define the past performance of the scheme

Compare the fund with other mutual funds

Assure a rate of return

Compare the fund with other financial products


49. Which of the subsequent is not a characteristic of company fixed deposits
(1-Mark)
A higher rate of interest

Higher risk

Unfavorable effect of tax

Very high liquidity


50. Which of the subsequent represent indirect investments?
(1-Mark)
Investment in a mutual fund

Investment in shares

Investment in bank deposit

Investment in post office schemes


51. The most important cause for an investor to prefer a bank deposit to a mutual fund is
(1-Mark)
The creditworthiness of the bank

Because the bank does not invest in securities

That the bank offers a guarantee

All of the above


52. The constraint on financial planning due to insufficient resources can be remedied to a few extent by
(1-Mark)
Decreasing the standard of residing

Disciplining children

Disciplined monthly budgeting

None of the above


53. Structural characterization of an equity fund include
(1-Mark)
Costs of investing

The specific securities in which the fund has invested

The number of employees of the AMC

All of the above


54. Listing of shares at a stock exchange ensures
(1-Mark)
Guaranteed returns

Long term capital appreciation

Low risk

High liquidity


55. Mutual fund investors should be advised to expect
(1-Mark)
Low post tax returns

Dramatic outcomes

Better returns than every other available choice

Only realistic wealth accumulation goals


56. Once a financial advisor works out ideal Asset Allocation, it can be used for all his investors
(1-Mark)
actual

False

-

-


57. A retired person generally needs a greater proportion
(1-Mark)
Debt funds

Equity funds

Money Market funds

All of the above


58. A fund with a high beta coefficient provide greater returns in a rising market, and is more risky in a falling market
(1-Mark)
actual

False

-

-


59. In which kind of schemes should an unmarried professional working in HLL invest
(2-Mark)
Scheme investing 80% in debt securities

50% in equity funds and 50% in income funds

At lowest 75% in equity funds having a higher P/E Ratio than the market

All the money in a balanced fund


60. The best equity fund, relative to others, would have
(2-Mark)
Higher Ex Marks, lower Beta and higher Gross Dividend Yield

Higher Ex Marks, higher Beta and higher Gross Dividend Yield

Lower Ex Marks, lower Beta and lower Gross Dividend Yield

Lower Ex Marks, higher Beta and higher Gross Dividend Yield


61. An investor wishes to switch ranging from a money market mutual fund and an equity fund. What would you advise him?
(2-Mark)
It would be better to stick to 1 kind of fund, the 1 that meets his investment objective.

He should keep switching parts of his investment from the equity fund to the money market fund as the market rises and switch back to the equity fund when the market falls

He should switch from the money market fund to the equity fund in a rising market and switch back to money market fund when the market falls

none of the above


62. If a charitable trust approaches a distributor for investment in a mutual fund, the distributor should
(2-Mark)
Accept the application without wasting time

Reject the application outright

Refer to the offer document

Accept the application as a direct application


63. Beta of an equity fund measures its
(2-Mark)
Performance

Risk

Both the above

None of the above


64. The basis of genuine investment advice should be
(2-Mark)
The current market situation

The agent commissions paid by various funds

Financial planning to suit the investor's needs

Planning to complete the agent's annual targets


65. 1 of your friends who has invested in a mutual fund is about to get Australian citizenship. What would you advise?
(2-Mark)
He should transfer the investment to his relative

He should get RBI approval for continuing

He can continue on to hold as PIO are allowed to invest in mutual funds in India

He should immediately redeem his investment since foreign citizens are not eligible investors


66. As per Bogle, asset allocation for older investors in accumulation phase should be
(2-Mark)
30% equity ; 70% debt

40% equity ; 60% debt

50% equity ; 50% debt

70% equity ; 30% debt


67. A steady holding of investments in an equity fund's portfolio shows
(2-Mark)
Long-term orientation

Lower transaction costs

Both the above

None of the above


68. An investor should not invest in a mutual fund if
(2-Mark)
He expects a customized portfolio

He is able to carry out detailed investment research and monitor the stock market

Both the above

None of the above


69. Which of the subsequent is not actual about the buy and hold strategy
(2-Mark)
It is preferred by a many investors

It does not involve rebalancing

It is very beneficial as investors may exit from poor performers and invest in better ones

All of the above

Earning:   Approval pending.