AMFI Model Test Paper

The Concept and Role of Mutual Funds

1. Which of the following is not a Mutual Fund characteristic?a. Diversified portfoliob. Careful research and monitoring of the marketc. Substantial capitald. Expertise in stock market

2. Choose the advantage of Mutual Fundsa. Small amount of investmentb. Professional managementc. Risk diversificationd. All of the above

3. UTI was the only capital market intermediary for the period :a. 1964 to 1987b. 1963 to 1988c. 1964 to 1992d. None of the above

4. Mutual Funds can be defined asa. a link between the saving public and the capital marketsb. an active participant in promoting good corporate governance, investor protectionc. a participant that has brought in liquidity into the financial systemd. All of the above

5. The ownership of a Mutual Fund belongs toa. Board of Trusteesb. Sponsorc. AMCd. Unit-holders

6. A Mutual Funds’ investments are guided bya. AMCb. Board of Trusteesc. Investment objectivesd. Unit-holders

7. In USA, a mutual fund is constituted asa. Trustb. Investment company

c. Companyd. None of the above

8. In India, a mutual fund is constituted asa. Trustb. Investment companyc. Companyd. None of the above

9. An investor should not invest in Mutual Fund, ifa. his capital base is large and is able to monitor the stock marketb. he is able to carry out detailed investment researchc. Both of the aboved. None of the above

10. The advantage to a Mutual fund investor isa. The risk involved is diversifiedb. The investor can hold the diversified portfolio even with small investmentc. Expertise in stock market is not requiredd. All of the above

11. The term professional management indicatesa. investment management skillsb. research of available investment optionsc. Both the aboved. None of the above

12. Benefit of economies of scale is reaped by Mutual Funds because ofa. portfolio diversificationb. reduction of riskc. large volumes of tradesd. None of the above

13. Which of the following is not a disadvantage of investing through a Mutual Fund?a. No control over costsb. Liquidity and conveniencec. No tailor-made portfoliod. Managing a portfolio of funds

14. Mutual fund industry in India began ina. 1988b. 1964

c. 1992d. None of the above

15. Which of the following is untruea. UTI was set up in 1963b. UTI was formed by RBIc. UTI was established by an act of Parliamentd. UTI was not given a monopoly.

16. Which one has a largest investor base?a. ULIPb. Mastershare of UTIc. US-64d. SBI Magnum

17. Which is the first diversified equity investment scheme in India?a. SBI Magnumb. Master sharec. MEP-91d. Mastergain92

18. Which is the first Indian offshore fund?a. India Growth Fundb. India Fundc. India Infrastructure Fundd. None of the above

19. The first non-UTI mutual fund isa. SBI MFb. LIC MFc. Canbank MFd. Indian Bank MF

20. Private sector funds were granted permission to enter the Mutual Fund industry in :a. 1992b. 1993c. 1988d. 1995

21. The organisation responsible for a comprehensive set of regulations for all mutual funds in India is:a. RBI

b. SEBIc. AMFId. SHCIL

22. The 1999 Union Government Budget helped the Mutual fund industry bya. regulating the practices in MF industryb. exempting all mutual fund dividends from income tax in the hands of the investors.c. Approving the code of ethics suggested by AMFId. None of the above

23. The mobilisation of funds by Mutual Fund industry is in the range ofa. 5% to 6% of GDSb. 2% to 4% of GDSc. 7% to 10% of GDSd. 25% to 40% of GDS

24. Which of the following is untrue as per recent studies?a. UTI’s market share is increasing and private sector’s market share is decreasingb. UTI’s market share is decreasing and private sector’s market share is increasingc. The size of Mutual fund industry is increasing rapidlyd. The operations of Mutual fund industry are becoming complex day by day.

25. A load meansa. a sum paid to the investors.b. An expense charged to scheme/fundc. Sales chargesd. None of the above

26. 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 bya. Agents voluntarily paying back the commission to the Mutual fundb. Trail commission is not paid to the agentsc. None of the aboved. The whole of commission is paid to the agents

27. US-64 scheme of UTI isa. traded on stock exchangeb. fixed price of sale and repurchasec. traded through UTI as per the sales and repurchase price declared by UTI for a specified period.d. None of the above

28. The AMFI objectives does not include the followinga. to improve standards of mutual fund industryb. to regulate the stock markets along with SEBI in tandemc. to create awareness about mutual fundsd. to emphasise on ethical and moral trade practices

29. Load means :a) charge to scheme / fundb) charge paid by investorc) charge paid by AMC to SEBId) none of the above

30. What is not an advantage in investing in Mutual Funds against Equity;a) Professional Managementb) Diversification of Riskc) Reduction in costd) Tailor made portfolios

31 A fund is doing direct marketing , but they can take the help ofa) Agentsb) NBFCc) Distributors companyd) All of the above

32. Investment Mananger isa) AMCb) Custodianc) Trusteed) Sponsor

33. Appointment of brokers :a) Trustees appoint brokersb) AMC appoints brokersc) Trustees ensure due diligence on the part of AMC for empanelment of brokersd) B and C above

34. which of the entities can give loans against securitiesa) UTIb) Banksc) MFd) None of the above

Offer Document and SEBI Regulations

35. Offer document as per Trust deed is issued by:a. AMCb. Sponsorsc. Either of the aboved. Trustees

36. Investor has right toa) Access to informationb) Propotionate right in the beneficial ownership of the assets of the schemec) Inspect documentsd) All of the above

37. Initial expenses of an open-end schemes can bea. amortised over 10 years of the schemeb. amortised over 5 years of the schemec. cannot be amortisedd. amortised over 3 years

38. Which of the following does not constitute the fundamental attributes of a schemea. the scheme is income bearingb. Investment policy of the schemec. the names and addresses of the registrars and custodiansd. None of the above

39. An application form is normally supplied witha. Offer documentb. Annual reportc. Due diligence certificated. Key information memorandum

40. A mutual fund unitholder can suea. AMCb. Sponsorc. Trusteesd. All of the above

41. A unitholder of assured returns fund, can sue in case the fund does not meet its obligation:a. AMCb. Sponsor

c. the person/entity whose name is specifically mentioned in the Offer document as guarantor to scheme.d. Cannot sue

42. The investment and advisory fees for a fund with Rs.200 crores as average net assets is:a. 2.5 croresb. 2.25 croresc. 2 croresd. 200 crores

43.As per SEBI guidelines, a security traded on 21st July, Rs.22, 23rd July, Rs.25 and 25th July, Rs.28 would be valued on 28th July as:a. 25b. 23c. 28d. 22.5

44. As per SEBI guidelines, a security is to be treated as untraded whena. security is never traded on stock exchangeb. security is not traded for 30 daysc. security is not traded for 60 daysd. None of the above

45. Which of the following is true as per SEBI norms for debt investment?a. Investment of rated investment grade of a company should not exceed 15% of NAVb. In case of rated as well as unrated but below investment grade, debt investment in a company should not exceed 10% of NAVc. For all companies investment not to exceed 25% of NAVd. All of the above

46. As per RBI guidelines, MMMF can invest ina. Corporate bondsb. Equity sharesc. G-sec of maturity less than 1 yeard. None of the above

47. Which of the following is not a criteria for sponsor?a. Networth to be more than capital investmentb. Sponsor should contribute 40% of the net assetsc. Sponsor should ensure that 20% of the fund’s assets should be invested in sponsor’s company.

48. Which of the following is applicable to the debt market in India?a. The debt market is a wholesale marketb. There are large players like banks, financial institutions, mutual funds, etcc. Government securities are traded on a large scaled. All of the above

49. AMC can directly approach the investors as well as take the help ofa. Individual agentsb. Banks and NBFCc. Distribution companiesd. All of the above

50. SEBI guidelines for agents includesa. Agents can sell products of a single mutual fundb. Agents can sell products of mutual funds with whom he has entered into agreements.c. Agents could be only individualsd. No SEBI guidelines

51. A distributor is appointed bya. Trusteeb. AMCc. Sponsord. All of the above

52. As per SEBI guidelines, AMC is prohibited to undertake the following activitya. to be a trustee of some other mutual fundb. to provide advisory functions to pension and provident fundsc. to look after the schemes of other mutual funds

53. A prospective investor, as per SEBI regulations can seek recourse toa. sue the trusteesb. sue the AMCc. cannot seek recoursed. sue the SEBI

54. As per SEBI guidelines, a Due diligence certificate is not :a. signed by a Compliance Officer/ CEO/MD of the mutual fundb. all legal formalities of a scheme are completedc. attached to Annual reportd. forms part of Offer document

55. A mutual fund unit holder can seek redressal if his complaint is not entertained by the mutual fund

a. AMCb. Trusteesc. SEBId. RBI

56. If a unitholder does not agree with a merger of mutual fund / AMC with another mutual fund / AMC thena. he can opt for withdrawal in open-end schemeb. he can opt for withdrawal only when SEBI allows soc. he can opt for withdrawal in open-end or closed-end schemed. None of the above

57. Which of the following is not true of Key Information Memoranduma. It is an abridged version of offer documentb. It is not issued by AMC***c. It is supplied with application formd. It contains the terms of issue

58. Which of the following is not true as per SEBI norms?a. unrated securities are not to be valuedb. Bonds are valued at YTMc. Equity shares are valued at closing price in the market on the valuation dated. None of the above

59. The printing expenses of key information memorandum of an open end scheme can bea. amortised over 5 years of the schemeb. cannot be amortisedc. amortised over 10 years of the schemed. None of the above

60. A scheme transfers the securities to another scheme under same AMC. Which is incorrect :a) The AMC holds 4% in the total inter-scheme transfers.b) The securities are sold at market value + 10% add. Charges

61. The fund portfolio is submitted to SEBI by :a) AMC Directorsb) Trusteesc) Fund Managerd) Sponsors

62. The fundamental attributes have to be mentioned in the offer document .

a) The scheme objective is clearly defined.b) Any subsequent change will be approved / informed to unitholders.c) The nature of scheme is known.d) All of the above.

63. Direct marketing involves all of the following except ;a) Advertisement in newspapersb) Selling via employeesc) Using distribution company of sponsor.d) Seminar presentation.

64. The disclosures regarding the load to be disclosed in offer document for open ended schemea) Estimated load spread over 5 years including contingent deferred sales charge.b) Details of initial issue expenses for scheme and other schemes launched during the last fiscal by the AMC.c) Estimated annual recurring expenses as a percent of average weekly net assets.d) All of the above.

65. Initial issue expense limit is :a) 6%b) 3%c) 4%d) 5%

66. Fundamental attributes to be changed ;a) 75% of unitholders consent for closed-ended schemes and informing unitholders of open-ended schemesb) Approval of SEBIc) Approval of trusteesd) All of the above

67. KIM is also available ata) Agentsb) Banksc) Distribution Agenciesd) All of the above

68. Which of the following qualifies as a SROa) SEBIb) RBIc) BSE

d) AMFI

69. Unitholders expected a good return in past scheme but the expectations were not met. He can;a) sue the AMCb) sue the Trusteec) sue the Trustd) None of the above.

70. Beneficial owner means :a) owns part of Trustb) own the companyc) owns unitsd) none of the above

71. Custodian isa) handling mere securities in terms of physical delivery and eventual safekeepingb) holding financial dealings by holding its bank accountc) issuing and redeeming units of a mutual fundd) all of the above

72. Standard risk factorsa) Past performance of sponsor/AMC/MF is not indicative of the future performance of the Trustb) Risk arising from non-diversificationc) Assured return scheme, if assurance until maturity it must be statedd) All of the above

73. Which is not a fundamental attributea) Name / address of registrarb) It is an income schemec) The scheme is for 10 yearsd) 65% on debt security.

74. Associate transaction can be performed by giving the following disclosures.a) Policy for investingb) If invest more than 25% of its net assetsc) Business given to associate broker and distributorsd) All of the above

75. Who can invest in MF excepta) Banksb) NRI

c) FIIsd) Foreign citizens

76. Non traded securities as per SEBI, when a security is not traded on any Stock Exchangesa) 60 days prior to valuation dateb) 30 days prior to valuation datec) Marked to marketd) None of the above.

77. As per SEBI, which is untrue in respect of non traded securitiesa) Call money at cost + accrualb) Non traded instruments will be valued at cost plus interest accruedc) Untraded need not be valuedd) All of the above

78. Amortisation of initial issue expenses of closed-ended fundsa) Weeklyb) Monthlyc) Yearlyd) End of the period

79. Investment is treated NPAa) if no returns are provided by way of interest for more than 2 yearsb) if no returns are provided by way of interest for more than 18 monthsc) if no returns are provided by way of interest for more than 1 yearsd) all of the above

80. A mutual fund shall not investa) more than 5% of its NAV in the unlisted equity related instruments in case of OESb) more than 10% of its NAV in the unlisted equity related instruments in case of CESc) more than 10% of its NAV in equity related instruments of any companyd) all of the above

81. A mutual fund shall not investa) more than 15% of its NAV in rated debt instruments issued by a single issuerb) more than 10% of its NAV in un-rated debt instruments issued by a single issuerc) total investment in un-rated debt instruments shall not exceed 25% of the NAVd) all of the above

82. Contigent deffered sales charges should not exceeda) 4% of the redemption proceeds in the first yearb) 3% of the redemption proceeds in the second year

c) 2% of the redemption proceeds in the third yeard) 1% of the redemption proceeds in the fourth yeare) all of the above

83. A scheme can be wound up ifa) If 75 % of unitholder pass a resolutionb) after repaying the amount due to the unitholderc) Disclosing reasons of winding up in two daily news papers having circulation all over India and a vernacular newspaper circulating at the place where mutual fund is formed.d) All of the above

84. Dividend received by the fund should be recogniseda) on the date of declarationb) on the date of receiptc) on the date of share is quoted on ex-dividend basisd) none of the above

85. Identify the recurring expenses:a) brokerage and transactions costb) marketing and selling expensesc) registrar feesd) all of the above

86. Purchase and sale of investment should be:a) recognised on the trade dateb) on the settlement datec) either of the a) and b )d) none of the above

Investment Management and Measuring & Evaluating

Mutual Fund Performance.

87. Net Asset Value isa. The value of each share or unit.b. The value of the total assets of the fund divided by total number of outstanding unitsc. The value of investor’s part ownership in the fundd. All of the above

88. If the value of total assets of a fund is 12000 and the fund has issued 900 units, the NAV of the unit is:a. 13.33b. 13.00

c. 14.00d. 13.35

89. If the NAV per unit is 14.55 and the outstanding units of a fund are 1365 then the total assets of the fund area. 20000b. 19860.75c. 19861d. 1986.75

90. An amount of Rs.300 becomes Rs.600 in 8 years. The annualised rate of return is:a. 12%b. 9%c. Insufficient datad. 100%

91. A closed-end scheme is quoted at discount to NAV in the stock exchange whena. the markets are bearishb. the investor perceives the inability of the fund to maintain the NAVc. Assets are undervaluedd. None of the above

92. An asset of Rs.75000 bought in 1995 was sold in 1998 for Rs.125000. The inflationary index in 1995 and 1998 are 251 and 361 respectively. The sum liable for tax is:a. Insufficient datab. Rs 50000/-c. Rs 17131/-d. Rs 125000/-

93. NAV of a unit purchased was 21 at the beginning and 23 at the end of a year. The unit was hold for 18 months. Find out the average annualised return on unit.a. 6.34%b. 7%c. 8.5%d. None of the above

94. Duration of a debt fund is 5. The yield spread increases from 0.3% to 0.9%. What is the percentage effect on price?a. 5%b. 3%

c. –3%d. Data is insufficient

95. When interest rate rises, Debt funda. increases in valueb. decreases in valuec. is not affected by interest rated. None of the above

96. Ex-marks with 100 % could be for the following fund:a. Growth fundb. Index fundc. Value fundd. Balanced fund

97. A high P/E multiple of a fund in comparison to average market multiple could be ofa. Value fundb. Growth fundc. Balanced fundd. Equity diversified fund

98. A Mutual fund declares Re 1 as distribution. The income in the hands of unit holders isa. taxable at 20%b. not taxable in the hands of unitholdersc. Information is inadequate to assess tax liabilityd. Income tax will be assessed as per unitholder’s liability

99. A high portfolio turnover meana. The fund is very active in marketb. Transaction costs are highc. A high risk is involved as per the investment objectivesd. All of the above

100. Why an investor should prefer investing in mutual funds to investing in equitiesa. the investor’s objectives will be mostly met by mutual fundb. the investor can diversify his portfolioc. professional management is not requiredd. reduced transaction costs are wiped out by management fees

101. What is true of the following?

a. A load increases value of NAVb. A load is paid towards initial expensesc. None of the above

102. Compounding of investment is best explained bya. Balanced fundb. Growth fundc. Value fundd. Equity fund

103. An investor can assess his fund’s performance toa. The performance of another mutual fundb. The performance of overall stock marketc. The performance of similar financial products and schemes available in the marketd. All of the above

104. When is the value of stock not unlocked.a) None of the belowb) when buy-back of shares takes placec) when corporate restructuring of companyd) when there is a bull run in the market.

105. For choosing an appropriate benchmark. The following are required excepta) The portfolio composition and size.b) Investment objectivec) Historical data of Fund performanced) Nature of investments

106. Comparison of Direct Equity and Mutual Fund Investment, which is true.a) A large capital required in MF as compared to direct investing.b) Diversification is possible in Direct Equity as compared to MF.c) Transaction costs with fund wipe out the profits as compared to equity.d) The investment objective is possible through MF investing as against Direct Equity investment.

107. Mainstream diversified debt funds is most affected by :a) Reinvestment riskb) Liquidity riskc) Interest rate riskd) Default risk

108. If yield falls, the Fund Manager will do all except;a) Sell short maturity stocks and buy long maturity stocks.

b) See that the funds average duration become longer than the market average duration.c) Sell long duration stocks and buy short duration stocks.d) Sell low coupon stocks and buy high coupon stocks.

109. The fixed asset allocation is all of these except :a) liquidation of a part of the higher asset class and reinvesting in the asset class with lower return.b) A conservative approach to portfolio managementc) A disciplined approach lets him book profits is rising markets and increase holdings in falling markets.d) Taking advantage of market fluctuations.

110. An investor purchased units in Mutual Fund in 1995 for Rs.75000/-. He sold the units in 1998 for Rs.125000/- Cost of inflation in 1995 – 271 and in 1998-371What is the captical gains.a) 22324.72b) 19487.52c) 70215.63d) None

111. Invest. At Market Value 700 crs.Liabilities 50 lakhsUnits o/s 28 crs.Find NAVa) 24.98b) 30c) 32d) 40

112. Assure that an investor purchased 1 unit of an open end equity fund at Rs.22. The Fund had an interim dividend of rs.4/-. The rate of NAV that time is 24. The closing NAV is 25. Find total return.a) 31.81b) 30.00c) 32.00d) 33.00

113. While comparing peer group, comparison cannot be made witha) 2 debt funds with 5 yrs. Maturityb) one broad based equity with ITc) government securities with government securityd) Money market with money market

e) None of the above

114. A bond with a coupon of 9% when interest rates for similar maturities are 11% will sell ata) Above parb) Below parc) At pard) At a price which is not related to interest rates for similar maturities

Fund Distributors as Financial Advisors115. The steps involved in selection of Equity fund area. Selection of sector, selection of fund managers and schemes, classification of assetsb. Classification of assets, Selection of sector, selection of fund managers and schemesc. Selection of fund managers and schemes, Selection of sector, Classification of assetsd. Selection of sector, classification of assets, selection of fund managers and schemes

116. An investor approaches you to build his portfolio. How will you build it?a. Selection of sector, selection of fund managers and schemes, classification of assetsb. Classification of assets, Selection of sector, selection of fund managers and schemesc. Selection of fund managers and schemes, Selection of sector, Classification of assetsd. Selection of sector, classification of assets, selection of fund managers and schemes

117.A Charitable Trust wishes to invest in units and approaches you as a distributor of Super Equity Fund 2001. What would you do?a. Accept the application form and not the cheque and send it to AMC for approvalb. Refuse to accept the applicationc. Accept the application form and the chequed. Check the Offer document to see whether Charitable Trusts are allowed to apply for the units

118.A 55 year old retired person with 25% equity and moderate risk appetite should be advised to invest in:a. Balance fundb. Value fundc. Diversified equity fundd. Growth fund

119.Investor should track mutual funds in which he has invested becausea. take decision of keeping, liquidating or acquiring mutual fundb. he comes to know the performance of the fundc. the annual reports inform him about the NAV of the fundd. None of the above

120.An investor wishes to switchover between Money market and equity funds. What advise would you give to him?a. He should not switch over and stick to one scheme that meets his objectivesb. Switching is done between funds to reap the benefits arising out of the cyclical movements in market

121.Steps in selection of Equity Fund .a) Evaluate past returns, review salient features of scheme, classify the equity schemes.b) Review salient features, evaluate past returns, classify the equity scheme.c) Classify equity schemes, evaluate past returns, review salient feature of schemed) Classify equity schemes, review salient features, evaluate past returns.

122.Which fund would a person wanting low risk (risk averse) and high yield choose.a) div.yield 15% , Beta - 1.5, ex-marks-90b) div.yield 10%, Beta -1, ex-marks-70c) div.yield 11%, Beta -0.9, ex-marks-80d) div.yield 12%, Beta -1.2, ex-marks-80

123.A good agent will not canvasa) stating the past performances of fund.b) the returns offered compared to other funds/schemes.c) For the commissions to be received.d) The benefits regarding tax.

124.An unmarried professional working in HLL wanted to invest in Mutual Fund. Which type of scheme he should invest?a) 80% debt schemeb) 50% equity & 50% income and liquid schemec) 90% in high P/E ratio funds in the marketd) Balanced Fund

125.A person wants regular and standard income. In which fund he should invest? a) Monthly income open endedb) Closed-ended debt fundc) Open-ended debtd) ICICI bond

126.A person wanted to invest in diversified equity :a) Invest small amount in value stocks with different sectors.b) Highly aggressive stocks of various sectors.

127.Agent while canvassing should nota) Past performance of Fundb) Assure returnsc) Risks involved in investing in mutual funds.

128.Equity Linked Savings Scheme has the following featurea. It entitles the unitholder for tax rebateb. The investment is locked in for 3 yearsc. A minimum stated level of investments is made in equity related instrumentsd. All of the above

129.The following feature is not a feature of passive funda. A passive fund tracks the indexb. A passive fund matches the performance of the indexc. A passive fund selects the stocks that are not present in the indexd. All of the above

130.Which of the following is untrue of Systematic Investment plan?a. It allows investor to invest a fixed amount on a monthly basisb. It allows investor to change the amountc. It inculcates a discipline of regular investment in the investor

131.The objective of passive fund isa. to beat the index in which it has investedb. to be parallel to the indexc. to earn returns as per the returns earned by the index

132.In case of the corporate fixed deposits the most important thing an investor must look for isa. yieldb. rate of returnc. credit rating of deposit and of the companyd. None of the above

133.A person would prefer bank deposit to mutual fund only whena. the investor has no consideration for other investment aspects except safety.b. The returns on bank deposits are highc. The yield on mutual funds are higher than bank deposits

134.Bank deposits are superior to mutual funds becausea. bank deposits offer higher yieldb. they are guaranteed by the bankers for capital protectionc. transaction costs are low

d. they are not liquid as compared to mutual funds

135.Indira Vikas Patra has caught the attention of masses because ofa. popularity in rural areasb. easy transferability and identity of holder is not disclosedc. offers high yieldd. less risky

136.Cost of investing is most important in a :a) Balanced Fundb) Bond Fundc) Growth Fundd) Equity Fund

137.Triple compounding of growth scheme is achieved bya) Non-withdrawal of principal and investing additional amountb) Reinvesting the dividendc) Investing the tax arising out of dividend.d) All of the above.

138.Which of the following is true.a) Rupee cost averaging results in maximising returnsb) Value averaging results in maximising returnsc) A combination of both results in maximising returnsd) None

139.Systematic Withdrawal Plan characteristic :a) disciplined investment.b) Booking profits when market fluctuates.c) Regular incomed) None of the above

140.Passive management style.a) match the index.b) Book profits in bull market.c) Buy stocks of blue chip companies.d) none of the above

141.When comparing risk which is the highest in risk:a)Growth fundb)Sector fundc)Value fundd)Balanced fund

142.Automatic reinvestment plan is except this;a) the growth option allow the investor to reinvest in additional units.b) Reinvestment takes place at NAVc) Investor reaps the benefit of compoundingd) None of the above

143.Deep Discount bond isa) sold at discount at issue priceb) pay interest on periodic basisc) at redemption you get price greater than issue price and no periodic paymentd) exemption on maturity amount

144.The following is not a feature of PPFa) 50% withdrawal of 4th year balance in 7th year.b) 12% simple interestc) Tax free interestd) Income received in that particular year should be invested

145.LIC with profit givesa) Policy doesn’t pay the sum assured in the event of deathb) If the individual survives the term of the policy, he receives the sum assured plus bonus accruedc) If the individual survives, gets only sum assuredd) All of the above.

146.Life Insurance is viewed more as an Investment Option ;a) Proceeds in the event of his surviving the term of the policy do not make insurance a worthwhile investmentb) It is important for an individual to evaluate the need for insurance with respect to his earning potential and the financial impact on his dependants in the event of his untimely death.c) They tend to opt for it on account of the tax benefits.d) All of the above

147.Why a fund distributor be a financial plannera) Strong potential demand for such servicesb) One of the most lucrative and sought after professionc) Limited supply of financial plannerd) All of the above

148.What is the benefit of financial planninga) establish long term relation

b) build a profitable businessc) a) and b) bothd) none of the above

149.A good financial planner should nota) build good relations with the clientb) have a good knowledge of financial productsc) sale financial products on the basis of commission he/she is going to received) have a n understanding of various stages in a client’s life and wealth cycle

150.CFS-US i.e Certified Financial Planner – Board of Standards (USA) has not set up following steps :a) Establishing and defining the client – planner relationshipb) Gathering client data and defining client goalsc) Setting up regulations for investmentsd) Monitoring the financial planning recommendations

151.What is the order of financial planning process

1) Defining clients goals2) Determine risk tolerance3) Establishing and defining the client – planner relationship4) Gathering and analyse client data5) Executing the plan and making client invest6) Recommending appropriate asset allocation and specific investments7) Monitoring the financial planning recommendations8) Ascertain Client’s tax situation

a) 3,1,4,2,8,6,5 and 7b) 3,2,1,4,5,6,8, and 7c) 2,1,4,5,3,6,8 and 7d) 7,1,2,3,4,6,8 and 5

152.Mistakes that advisors and investors must avoidsa) Financial planning is relevant only for wealthyb) Expecting unrealistic returns on investmentsc) Expecting realistic returns on investmentsd) That financial planning is tax planning

153.How would you define tranisition stagea) One or more client’s goals are approaching and clearly in sightb) Goal and purpose towards which the clients have been investing have arrivedc) Clients are looking to build wealt

d) Clients upto their early 50’s may not yet feel the need to take care of the next generation in the event of their own death.

154.Affluent investors area) wealth creatingb) wealth preservingc) a and b bothd) none of the above

155.Jacob’s recommendation isa) Combine the rupee cost averaging and value averagingb) Rupee cost averagingc) Value averagingd) Buy and hold

156.What is the distribution phase in the life of investora) When investor is building assets by periodic investmentsb) When investor stops adding assets and starts receiving dividends as incomec) When investor is in position to distribute his investments as loand) None of the above

157.Comparison of financial products is done bya) comparing by nature of investment and by performanceb) comparing index fund with a sector fundc) comparing income fund with ELSSd) none of the above

158.Arrange in ascending order according to the risk associated with the fund

1) Sectorfunds2) Money Market funds3) Balanced funds4) Index Funds

a) 4,3,2,1b) 2,3,4,1c) 2,4,1,3d) 2,1,3,4

159.Equity price risks area) Company specificb) Sector Specificc) Market level

d) All of the above

160.Jacob’s four – step program for developing a model portfolio

1) Determine the Asset allocation of the investment portfolio2) Determine the sector distribution3) Work with investors to develop long term goals4) Select specific fund managers and their schemes

a) 1,2,3,4b) 3,1,2,4c) 2,3,4,1d) 4,1,3,2

161.Match the following

InvestorRecommended Model PortfolioA) Young, Unmarried professional1)25% in moderate Aggressive equity fund30% in short term Municipal bond funds35% in long term Municipal bond funds10% in Emerging growth equityB) Young Couple with two incomes and two children2) 30% in Aggressive equity fund25% in High yields bonds and Growth and Income funds35% in Municipal bond funds10% Conservative MMMFs

C) Older Couple, single Income3) 35% in conservative equity funds for capital preservation / income25% in moderately aggressive equity for modest capital growth40% in Conservative MMMFs

D) Recently Retired Couple4) 50 % in Aggressive equity fund25 % in High yields bonds and Growth and Income funds25 % in Conservative MMMFs

a) A-1,B-3,C-4,D-2b) A-4,B-2,C-1,D-3c) A-4,B-3,C-1,D-2d) A-1,B-2,C-4,D-3

162.Average Maturity is an important factor in selecting the right funda) debt fundb) balanced fundc) money market or liquid fundd) both a) and b) above

163.Match the following for selection of a fund

A) Money market fund1) Fund age and size, relative yields, debt portfolio character, costs,average maturity, tax implications,past returnsB) Balanced fund2) costs, quality yieldsC) Debt fund3) Portfoilio balance, debt portfolio character, costs, portfolios statistics, returns

a) A-1,B-3,C-2b) A-2,B-3,C-1c) A-2,B-1,C-3d) A-1,B-2,C-3

164.Ex Mark is defined asa) fund’s performance in relation to a benchmark like a market indexb) judges’s the fund strategy by the size of the market capitalisationc) look at a fund’s performance over five to ten yearsd) none of the above