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NISM SERIES V A MUTUAL FUND DISTRIBUTORS

CERTIFICATION EXAM
PRACTICE TEST 1

Question 1
(a)
(b)
(c)
(d)

The fund manager of an Index fund will try to


.
Beat the benchmark by selecting high growth stocks
Beat the benchmark by Asset Allocation
Beat the benchmark by using Fundamental and Technical Analysis
None of the above

Question 2
(a)
(b)
(c)
(d)

is a short term Government Security.


Certificates of Deposit
Treasury Bills
Commercial Papers
All of the above

Correct Answer 1
Answer
Explanation

Correct Answer 2
Answer
Explanation

None of the above


An index fund manager would seek to minimize the tracking error betwwen
his fund and the benchmark index.
The stock selection will be strictly as per the composition of the benchmark
index.

Treasury Bills
Treasury Bills are short term debt instruments issued by the Reserve Bank of
India on behalf of the Government of India.
Certificates of Deposit are issued by Banks
Commercial Papers issued by Companies

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 3
(a)
(b)
(c)
(d)

Question 4
(a)
(b)

Correct Answer 3
Answer
Explanation

Correct Answer 4
Answer
Explanation

Calculate the Net Assets of a Fund if the market value of portfolio is


Rs.1000 crores and the current liabilities are Rs 50 crores ?
Rs 1050 cr
Rs 1000 cr
Rs 950 cr
Rs 50 cr

Commodity Sector funds are also a kind of Equity Funds - True or False
?
TRUE
FALSE

Rs 950 cr
Current Asset Value - Current Liabilities = Net Assets
Rs 1000 cr - Rs 50 cr = Rs 950 cr

TRUE
Commodity Sector funds invest in Equity Shares of various companies
associated with the Commodity Sector. For eg- Oil Companies, Farming
Companies etc.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 5
(a)
(b)
(c)
(d)

STT is not charged on


ELSS Funds
Arbitrage Funds
Gold ETF
Diversified Equity Fund

Question 6
(a)
(b)
(c)
(d)

The Fund Manager of a ' Fund of Fund ' has to select the
Right Stocks
Sectors
Funds
All of the above

Correct Answer 5

Gold ETF

Correct Answer 6

Funds

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 7
(a)
(b)
(c)
(d)

Question 8
(a)
(b)
(c)
(d)

Where the scheme has been in existence for less than


performance shall not be provided or advertised.
half
one
two
three

To meet the needs of of regular income, one can use the


Mutual Fund.

facility of a

SIP
STP
SWP
FMP

Correct Answer 7

one

Correct Answer 8

SWP

Answer
Explanation

year, past

SWP - Systematic Withdrawal Plan gives the investor an option to sell units at
a regular intervals to meet his liquidity need etc.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 9
(a)
(b)
(c)
(d)

Question 10

Mr and Mrs Gupta wants to make their son a pilot. This is an example of
_.
Financial Planning
Asset Allocation
Aspiration
Setting Financial Goals

An investor has 1000 units of a scheme which declares a 1: 2 bonus. The


NAV Ex Bonus becomes Rs 30. How much does the investor has to pay to
get the additional units as per the allotment due to him?

(a)
(b)
(c)
(d)

Rs 30,000
Rs 15,000
Rs 5,000
NIL

Correct Answer 9

Aspiration

Answer
Explanation

Correct Answer 10
Answer
Explanation

Parents wants their son to become a Pilot is an aspiration.


In order to realize this, formal education expenses, training expenses and
various other expenses need to be incurred over a number of years. The
estimated financial commitments towards these expenses become financial
goals.
The financial goals must be defined in terms of time horizon and the amount
of money required to fund the goal. Financial planning is a planned and
systematic approach to provide for the financial goals that will help people
realise their needs and aspirations.

NIL
NIL as Bonus units are allotted free of cost.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 11
(a)
(b)
(c)
(d)

Risk Profile of an investor is affected by


the nature of job
the regularity of his income
Psyche of the investor
All of the above

Question 12

The maximum commission payable to a Mutual Fund distributor for his


own investment is

(a)
(b)
(c)
(d)

1%
1.50%
2.50%
NIL

Correct Answer 11

All of the above

Correct Answer 12

NIL

Answer
Explanation

_.

Commission is payable to the distributors to mobilise money from their


clients.
No commission neither upfront nor trail is payable to the distributor for
their own investments (self business).

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 13
(a)
(b)
(c)
(d)

Asset allocation means investing in


Financial Assets
Physical Assets
Both Financial and Physical Assets
Either Financial or Physical Asset

Question 14

'Past Performance is not indicative of future performance' - This


statement
_.

(a)
(b)

should be a standard risk factor for all schemes


should be present in all performance related advertisement of Mutual Fund

(c)
(d)

should be only for some specific schemes where this statement is valid
both 1 and 2

Correct Answer 13
Answer
Explanation

Correct Answer 14
Answer
Explanation

Both Financial and Physical Assets


Asset Allocation can be both in Financial Assets like Equity, Debt etc and
Physical Assets like Gold, Real Estate etc.

both 1 and 2
Past performance of the Sponsor/AMC/Mutual Fund does not guarantee future
performance of the scheme is a standard risk factor.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 15
(a)
(b)
(c)
(d)

Question 16
(a)
(b)
(c)
(d)

Correct Answer 15
Answer
Explanation

Correct Answer 16
Answer
Explanation

system helps the investors book profit in rising markets


and increase holdings in a falling market.
Strategic Asset Allocation
Fixed Asset Allocation
Flexible Asset Allocation
Tactical Asset Allocation

The benchmark for a Gilt fund investing in Government Securities with


maturities ranging from 3 to 7 years is
.
Si-Bex
Mi-Bex
Li-Bex
None of the above

Fixed Asset Allocation


Fixed Asset Allocation for eg. are used by Balance Funds (say) 65 : 35 ratio in
Equity and Debt.
If Equity market rises, the fund manager sells equity and buys debt to
maintain the fixed ratio and vice versa.

Mi-Bex
ICICI Securities and Finance Company Limited (Isec) has been maintaining
ICICI Securities Sovereign Bond Index (i-BEX) since 1994 representing gilts
market.
In order to meet specific needs of market participants, it has also been
maintaining short-maturity index (Si-BEX) comprising securities maturing in
one to three years,
medium maturity index (Mi-BEX) comprising securities maturing in three to
seven years, and long-maturity index (Li-BEX) comprising securities
maturing later
than seven years since March 1996.
These three new indices along with a composite index, which is an average of
Si-BEX, Mi-BEX and Li-BEX were chosen by AMFI as benchmark gilt
indices for mutual fund
schemes.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 17
(a)
(b)
(c)
(d)

Question 18

(a)
(b)
(c)
(d)

Correct Answer 17
Answer
Explanation

Correct Answer 18

are largely close-ended, but become open ended at prespecified intervals.


ELSS Funds
Sectoral Funds
Interval Funds
Close Ended Funds

While calculating profits, all the expenses that relate to a period need to
be considered, irrespective of whether or not the expense has been paid.
This principal is referred to as?
Accrual system
Legal entity system
Double entry system
None of the above

Interval Funds
Interval Funds are largely close-ended, but become open ended at prespecified intervals. For instance, an interval scheme might become openended between January 1 to 15, and July 1 to 15, each year.
Minimum duration of an interval period in an interval scheme/plan is 15 days.
No redemption/repurchase of units are allowed except during the specified
transaction period (the period during which both subscription and redemption
may be made to and from the scheme).
Accrual system

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 19
(a)
(b)
(c)
(d)

Question 20
(a)
(b)
(c)
(d)

Correct Answer 19
Answer
Explanation
Correct Answer 20

The systematic approaches offered by mutual funds to promote an


investment discipline for long term wealth creation are
_.
SIP, SWP
SIP, STP
SIP, STP, SWP
None of the above

What is a process whereby an investors holding of investments in


physical form (paper) is converted into a digital record?
Re-materialization
Dematerialization
KYC
None of the above

SIP, STP, SWP


Systematic Investment Plan, Systematic Transfer Plan and Systematic
Withdrawal Plan.

Dematerialization

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 21
(a)
(b)

Legally SAI is part of the SID - True or False ?


TRUE
FALSE

Question 22

The principle of caveat emptor (let the buyer beware) applies to mutual fund
investments - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 21

TRUE

Answer
Explanation

Correct Answer 22

In practice, SID and SAI are two separate documents, though the legal
technicality is that SAI is part of the SID.

TRUE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 23
(a)
(b)

Question 24

Dividend warrants have to be sent to investors within 30 days of dividend


declaration - True or False ?
TRUE
FALSE

In the top-down approach, sector allocation precedes stock selection True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 23

TRUE

Correct Answer 24

TRUE

Answer
Explanation

In a top down approach, the portfolio manager decides how to distribute the
investible corpus between countries and sectors. Thereafter, the good stocks
within the identified sectors are selected for investment. Thus sector allocation
is a key decision.
In a bottom-up approach, not much importance is given to the countryallocation and sector-allocation. If a stock is good, it is picked for investment.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 25
(a)
(b)
(c)
(d)

Investment objective is closely linked to


Plan
Scheme
Option
Maturity

Question 26
(a)
(b)
(c)
(d)

The Mutual Fund application form is attached to the


KIM
SAI
SID
AMC Memorandum

Correct Answer 25
Answer
Explanation

Correct Answer 26
Answer
Explanation

_.

Scheme
Every scheme has a pre-announced investment objective.
When investors invest in a mutual fund scheme, they are effectively buying
into its investment objective.

KIM
KIM is a summary of the SID and SAI. It is more easily and widely
distributed in the market.
As per SEBI regulations, every application form is to be accompanied by the
KIM.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 27
(a)
(b)
(c)
(d)

Question 28
(a)
(b)
(c)
(d)

style is an approach of picking up stocks, which are


valued lower, based on fundamental analysis.
Dividend Yield
Value Investing
Growth Investing
Top Down Approach

Which of the following is a truly international asset class?


Gold
Equity Share
Real Estate
Debt

Correct Answer 27

Value Investing

Correct Answer 28

Gold

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 29
(a)
(b)
(c)
(d)

Question 30
(a)
(b)

have to make additional disclosures related to credit


evaluation policy, sectors and types of investments in the offer document.
ELSS Funds
Debt Funds
Sectoral Funds
Equity Funds

The specialty of a Sector Fund is that it invests in various economic


sectors - True or False ?
FALSE
TRUE

Correct Answer 29

Debt Funds

Correct Answer 30

FALSE

Answer
Explanation

Sector Funds are sector specific and invest in various companies of a specific
sector - for eg. Banking Sector Fund will invest in shares of various Banks.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 31

(a)
(b)

Question 32

Investors can choose to change their distributor or go direct and AMCs


will need to comply after getting a 'No Objection Certificate' from the
existing distributor - True or False ?
TRUE
FALSE

Mutual funds in India are governed by SEBI (Mutual Fund) Regulations,


1996 - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 31

FALSE

Answer
Explanation

Correct Answer 32

Investors can choose to change their distributor or go direct.


In such cases, AMCs will need to comply, without insisting on No Objection
Certificate from the existing distributor.

TRUE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 33
(a)
(b)
(c)
(d)

Cut-off timing guidelines are not applicable for


International Funds
New Fund Offer (NFO)
Both of the above
None of the above

Question 34

Liquid schemes are a variant of debt schemes that invest only in debt
securities of up to 60-days maturity - True or False ?

(a)
(b)

Correct Answer 33
Answer
Explanation

Correct Answer 34

TRUE
FALSE

Both of the above


The cut-off timing is not applicable for NFOs and International Schemes.

TRUE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 35
(a)
(b)
(c)
(d)

NFO's for ELSS schemes can remain open for


10
15
20
30

Question 36

Todays costs can be translated into future requirement of funds using


the formula:

(a)
(b)
(c)
(d)

Correct Answer 35
Answer
Explanation

Correct Answer 36

days

A = P / (1 + i)^n
A = P X (1 + i)^n
P = A^n X (1 + i)
P = A^n X (1 + i)^n

30
In the case of ELSS / RGESS schemes, the offering period shall be not be
more than 30 days.
Schemes other than ELSS and RGESS (Rajiv Gandhi Equity Saving Scheme)
can remain open for subscription for a maximum of 15 days.
A = P X (1 + i)^n

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 37
(a)
(b)

Question 38
(a)
(b)
(c)
(d)

Correct Answer 37
Answer
Explanation

Correct Answer 38
Answer
Explanation

Fundamental analysis is evaluation of the strength of the companies pricevolume charts - True or False ?
TRUE
FALSE

Every trust has beneficiaries and the beneficiaries, in the case of a mutual
fund trust, are
.
the Trustees of the AMC
the investors who invest in various schemes of the mutual fund.
the Employees of the Mutual Fund Company
the Chairperson and Managing Director of the AMC

FALSE
Technical analysis is evaluation of the strength of the companys pricevolume charts.
Fundamental Analysis is the study of the companys fundamentals - financial
statements, quality of management, competitive position in its product /
service market etc.

the investors who invest in various schemes of the mutual fund.


Every trust has beneficiaries. The beneficiaries, in the case of a mutual fund
trust, are the investors who invest in various schemes of the mutual fund.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 39

(a)
(b)

Question 40
(a)
(b)

In case of Money Market schemes or cash and liquid plans, wherein


investors have very short investment horizon, the performance can be
advertised by simple animalization of yields - True or False ?
TRUE
FALSE

Arbitrage Funds have BASIS risks - True or False?


TRUE
FALSE

Correct Answer 39

TRUE

Correct Answer 40

TRUE

Answer
Explanation

Arbitrage fund have basis risk ie. the risk that both cash and F&O position on
a company cannot be reversed at the same time. During the time gap between
unwinding of the two positions, the market can move adverse to the scheme

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

PRACTICE TEST 2
Question 1
(a)
(b)
(c)
(d)

Question 2
(a)
(b)

Correct Answer 1
Answer
Explanation

Correct Answer 2

The Risk Free Return of a scheme is 7% , the beta is 1.6 and the actual
return earned is 9 %. What is the Treynor Ratio of this scheme?
1.25
2.5
1.00074
2

In a MF scheme, loads for big investors and small investors are different True or False ?
TRUE
FALSE

1.25
Treynor Ratio = Return Earned - Risk Free Return / Beta
= 9 - 7 / 1.6
= 2 / 1.6
= 1.25
Treynor Ratio is a risk premium per unit of risk. Higher the Treynor Ratio,
better the scheme is considered to be.

FALSE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 3
(a)
(b)
(c)
(d)

Financial Planning involves


.
Assessing the clients financial details
Investing clients money in high growth stocks
Investing clients money in 100% secured investments
Helping clients to evade taxes

Question 4

Investors in the
Funds.

(a)
(b)
(c)
(d)

should allot a higher proportion to Income

Accumulation Phase
Distribution Phase
Inter generational transfer phase
Sudden Wealth category

Correct Answer 3

Assessing the clients financial details

Correct Answer 4

Distribution Phase

Answer
Explanation

Reaping / Distribution the stage when the investor needs regular money.
Hence, investors in this stage need to have higher allocation to income
generating assets.
It is the parallel of retirement phase in the Life Cycle.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 5
(a)
(b)
(c)
(d)

Question 6
(a)
(b)
(c)
(d)

When a person wins a big lottery (sudden wealth) he should


.
He should take riskier bets on Stock Markets so that he can grow his money
faster
He should not at all invest in Equity
He should look into the taxation aspect
No need to look into taxation as sudden wealth is not his regular income

Liquid schemes invest in securities of upto


31
61
91
181

Correct Answer 5

He should look into the taxation aspect

Correct Answer 6

61

days maturity,

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 7
(a)
(b)

Question 8
(a)
(b)

As per SEBI rules an AMC can manage the schemes of more than one
Mutual Fund - True or False ?
TRUE
FALSE

The last stage in developing a model portfolio is Fund selection - True or


False ?
TRUE
FALSE

Correct Answer 7

FALSE

Correct Answer 8

TRUE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 9
(a)
(b)
(c)
(d)

Question 10
(a)
(b)
(c)
(d)

Correct Answer 9
Answer
Explanation

Correct Answer 10
Answer
Explanation

Applications in NFO made using ASBA have to pay the money


_.
50% in advance and balance on allotment of units
25% in advance and balance on allotment of units
10% in advance and balance on allotment of units
Only on allotment of units

The details of the names and their background of key personnel of an


AMC is found in
.
SID
SAI
AMFI Guide
MF Advertisements

Only on allotment of units


Application Supported by Blocked Amount (ASBA) is a facility where the
investment application is accompanied by an authorization to the bank to block
the amount in the investors bank account.
The money goes out of the investors bank account only on allotment.
SAI
SAI - Statement of Additional Information contains - Information about
Sponsors, AMC and Trustee Company (includes contact information,
shareholding pattern, responsibilities, names of directors and their contact
information, profiles of key personnel, and contact information of service
providers and Collecting Bankers}

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 11
(a)
(b)
(c)
(d)

Question 12
(a)
(b)

Correct Answer 11
Answer
Explanation

Correct Answer 12
Answer
Explanation

The NAV of a Mutual Fund Scheme is Rs. 20 and the Exit Load is 1%.
What will be the sale price of this scheme ?
Rs 19.80
Rs 20
Rs 20.20
Rs 22

The prices of ETF varies during the day - True or False ?


TRUE
FALSE

Rs 20
There is no entry load so the sale price will be the same as NAV price ie. Rs
20.
In the above question, the Repurchase price / Redemption price will be lower
due to the exit load.
TRUE
ETF or Exchange Traded Funds are listed on the Stock Exchanges and are
bought and sold during trading hours.
The prices fluctuate as per the demand Supply and other factors. For eg -Gold
ETF.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 13
(a)
(b)

Question 14
(a)
(b)
(c)
(d)

Correct Answer 13
Answer
Explanation

Correct Answer 14
Answer
Explanation

Nomination facility is not available to investors holding the Mutual Fund


units jointly - True or False ?
TRUE
FALSE

Which of the following details is not required to be mentioned in the KIM


?
Benchmark for the scheme
Financial summary of the sponsor
Composition of the portfolio
Risk profile

FALSE
Nomination facility is also available in the case of joint holding.
Every unit-holder will have to sign the nomination form. If one joint holder
dies, then the Units will continue to be held by the surviving joint holder/s.
If all joint holders dies, then the Units will be transferred to the nominee.

Financial summary of the sponsor


Key Information Memorandum (KIM) is essentially a summary of the SID and
SAI and contains mostly the information of the scheme.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 15
(a)
(b)

Question 16
(a)
(b)
(c)
(d)

Correct Answer 15
Answer
Explanation

Correct Answer 16
Answer
Explanation

Value stocks are those stocks which are valued at a higher price based on
fundamental analysis - True or False ?
FALSE
TRUE

Mutual Funds can use Derivatives for


Re-Balancing the portfolio
Hedging against risk
Leveraging
Both 1 and 2

FALSE
Value investment style is an approach of picking up stocks, which are valued
lower, based on fundamental analysis.
The belief is that the market has not appreciated some aspect of the value in a
companys share and hence it is cheap.
When the market recognizes the intrinsic value, then the price would shoot up.
Such stocks are called value stocks.
Both 1 and 2
Mutual funds are permitted to use derivatives for hedging against risk or rebalancing the portfolio, but not for leveraging.
Investment in derivatives would have to be specifically permitted in the Offer
Document. If not already provided for in the offer document, approval of
investors would need to be taken, before the scheme can invest in derivatives.
Mutual Funds are barred from writing options. They can buy options.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 17
(a)
(b)
(c)
(d)

FMP's are usually offered as


Close Ended Funds
Interval Funds
Open Ended Funds
None of the above

Question 18

The mechanism used to ensure that the cutoff timing is strictly followed is
called
.

(a)
(b)
(c)
(d)

Stamp time
Time verification
Time stamping
Auditing

Correct Answer 17

Close Ended Funds

Correct Answer 18

Time stamping

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 19
(a)
(b)
(c)
(d)

The true worth of a unit of a scheme is also known as


Unit capital
NAV
NFO
Mutual fund scheme

Question 20

What refers to the cost of acquisition that is adjusted upwards to reflect


the impact of inflation?

(a)
(b)
(c)
(d)

Indexation
Marginal rate of tax
Education cess
None of the above

Correct Answer 19

NAV

Correct Answer 20

Indexation

Answer
Explanation

Indexation means that the cost of acquisition is adjusted upwards to reflect the
impact of inflation.
The government comes out with an index number for every financial year to
facilitate this calculation. Indexation benefit is available only in case of long
term capital gains and not short term capital gains.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 21
(a)
(b)

Question 22
(a)
(b)

Correct Answer 21
Answer
Explanation

Correct Answer 22
Answer
Explanation

Mutual funds are liable to pay tax on the income they earn - True or False
?
TRUE
FALSE

AMC directors are appointed with the permission of SEBI - True or


False?
FALSE
TRUE

FALSE
Mutual funds are not liable to pay tax on the income they earn.

FALSE
AMC directors are appointed with the permission of Trustees.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 23
(a)
(b)

Question 24
(a)
(b)
(c)
(d)

Correct Answer 23
Answer
Explanation

Correct Answer 24
Answer
Explanation

The investor cannot pledge the units of a Mutual Fund as a security to a


financer - True or False ?
TRUE
FALSE

PAN No. and KYC documentation is compulsory for mutual fund


investments with the only exception of
_.
ELSS Funds
Micro SIPs
Gilt Funds
Government Mutual Funds

FALSE
The investor can pledge the units as a security to a financier.

Micro SIPs
Micro-SIPs - SIPs where annual investment (12 month rolling or April-March
financial year) does not exceed Rs 50,000.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 25
(a)
(b)
(c)
(d)

Risk appetite of investors is assessed through


Asset Allocators
Financial Plan
Risk Profilers
Risk Appetizers

Question 26

Trail commissions are linked to valuation of portfolio in the market - True


or False ?

(a)
(b)

Correct Answer 25
Answer
Explanation

Correct Answer 26
Answer
Explanation

TRUE
FALSE

Risk Profilers
Risk Profilers usually revolve around investors answering a few questions,
based on which the risk appetite score gets generated.

TRUE
Trail Commission is calculated on net assets so the distributors benefit from
increase in net assets arising out of valuation gains in the market.
If the value of portfolio rises the trail commission also rises.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 27
(a)
(b)
(c)
(d)

NAV of income funds is to be calculated upto


1
2
3
4

Question 28

For life-long investment in gold one should prefer Gold Futures as against
Gold ETF - True or False ?

(a)
(b)

Correct Answer 27
Answer
Explanation

Correct Answer 28
Answer
Explanation

decimals.

TRUE
FALSE

4
NAV is to be calculated upto 4 decimal places in the case of index funds,
liquid funds and other debt funds.
NAV for equity and balanced funds is to be calculated upto at least 2 decimal
places.
FALSE
Gold futures contracts are traded in commodity exchanges and have an expiry
date.
Gold ETF's on the other hand have no expiry date. They can be bought and the
delivery takes place in Demat Form which can be held as long as you want.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 29
(a)
(b)

Question 30
(a)
(b)
(c)
(d)

Correct Answer 29
Answer
Explanation

Correct Answer 30
Answer
Explanation

Tactical Asset Allocation is the decision that comes out of calls on the
likely behaviour of the market - True or False ?
FALSE
TRUE

is a basis to select the better scheme in Index Funds.


Tracking Error
Beta
5 year performance
Fund Managers past record

TRUE
Tactical Asset Allocation is the decision that comes out of calls on the likely
behaviour of the market.
An investor who decides to go overweight on equities because of expectations
of a rise in share markets, is taking a tactical asset allocation call.
Tracking Error
The difference between an index funds return and the market return is the
tracking error.
An index fund manager would seek to minimize the tracking error. Because of
the tracking error, the scheme performance could be higher or lower than that
of the benchmark.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 31
(a)
(b)
(c)
(d)

Question 32
(a)
(b)
(c)
(d)

Correct Answer 31
Answer
Explanation

Correct Answer 32
Answer
Explanation

The maximum initial commission that an AMC can pay to distributors is


.
0.10%
0.50%
2.50%
NIL

The asset allocation that is worked out for an investor based on risk
profiling is called
.
Strategic Asset Allocation
Fixed Asset Allocation
Tactical Asset Allocation
Flexible Asset Allocation

NIL
As per the new rules : Upfront commission to distributors will be paid by the
investor directly to the distributor, based on his assessment of various factors
including the service rendered by the distributor.

Strategic Asset Allocation


Risk profiling is key to deciding on the strategic asset allocation.
For eg - If the investor is an retired/old person he should have more debt in his
portfolio.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 33

If the fund manager of a debt fund is expecting the interest rates to rise, he
will
.

(a)
(b)
(c)
(d)

increase the exposure to longer term fixed rate debt securities


switch the portfolio towards a higher proportion of floating rate instruments
The fund Manager cannot do much as all his money is generally fully invested
None of the above

Question 34

SEBI regulates Mutual Funds as well as Registrars and Transfer Agents True or False ?

(a)
(b)

Correct Answer 33
Answer
Explanation

Correct Answer 34
Answer
Explanation

TRUE
FALSE

switch the portfolio towards a higher proportion of floating rate instruments


When interest rates rise, the current debt instruments become less valuable.
So by buying Floating Rate instruments ( floating rate i.e. a rate linked to some
other rate that may be prevailing in the market ) he can be relatively safer.
TRUE
SEBI regulates Mutual Funds , Registrars and Transfer Agents, Depositories,
Stock Brokers etc.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 35
(a)
(b)

Question 36
(a)
(b)
(c)
(d)

Correct Answer 35
Answer
Explanation

Correct Answer 36
Answer
Explanation

The main objective of asset allocation is risk management - True or False


?
TRUE
FALSE

Beta as a risk measure is relevant for


Only Equity Schemes
Only Debt Schemes
Both Equity and Debt schemes
FMP's

TRUE
The distribution of an investors portfolio between different asset classes like
Equity, Debt, Gold etc is called asset allocation.
Asset Allocation is basically using the old proverb - Dont put all your eggs in
one basket to guide investments and managing the risks.

Only Equity Schemes


Beta as a measure of risk is relevant only for equity schemes.
The diversified stock index, by definition, has a Beta of 1. Companies or
schemes, whose beta is more than 1, are seen as more risky than the market.
Beta less than 1 is indicative of a company or scheme that is less risky than the
market

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 37
(a)
(b)

Stock selection is important in bottom-up approach - True or False ?


TRUE
FALSE

Question 38

New Application Form has to be filled in by the existing investor having a


folio no. for fresh investment in the same Mutual Fund - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 37

TRUE

Answer
Explanation

Correct Answer 38
Answer
Explanation

Stock selection is important in bottom-up approach.


In a top-down approach, sector allocation is the key decision.

FALSE
Once an investor has a folio with a mutual fund, subsequent investments with
the same mutual fund do not call for the full application form and
documentation.
Only transaction slip needs to be filled, and submitted with the requisite
payment.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 39
(a)
(b)
(c)
(d)

Accumulation is the phase applicable to


Young Unemployed
Young Unmarried
10th Pass
Retired Manager

Question 40

SEBI approval is required for an AMC to appoint a distributor - True or


False ?
TRUE
FALSE

(a)
(b)

Correct Answer 39
Answer
Explanation

Correct Answer 40
Answer
Explanation

Young Unmarried
Accumulation is the stage when the investor gets to build his wealth.
It covers the earning years of the investor i.e. the phases of the life cycle from
Young Unmarried to Pre-Retirement.

FALSE
No SEBI approval is required. A person has to clear the exam and get an AMFI
number. Based on this number AMC signs an agreement with the individulas /
companies and appoint them distributors.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

PRACTICE TEST 3
Question 1
(a)
(b)
(c)
(d)

Question 2
(a)
(b)
(c)
(d)

Which of the following need not be disclosed to the Mutual Fund investor
?
The Annual Report of the Scheme
Portfolio of the Scheme
The Annual Report of AMC
The Names of Fund Managers

What is the amount required to buy 500 units at NAV Rs 46 if the entry
load is 1%.
Rs 23000
Rs 23230
Rs 23330
Rs 23385

Correct Answer 1

The Annual Report of AMC

Correct Answer 2

Rs 23230

Answer
Explanation

500 units X Rs 46 = Rs 23000


Rs 23000 + 1% = Rs 23230.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 3

(a)
(b)
(c)
(d)

Question 4
(a)
(b)
(c)
(d)

is the process where all the financial goals of a


person are taken together, and the investment strategies worked out on
that basis.
Tactical Financial Planning
Comprehensive Financial planning
Strategical Financial Planning
Goal Oriented Financial Planning

Variance as a measure of risk is relevant for


Equity Schemes
Debt Schemes
both debt and equity schemes.
FMP's

Correct Answer 3

Comprehensive Financial planning

Correct Answer 4

both debt and equity schemes.

Answer
Explanation

Variance as a measure of risk is relevant for both debt and equity schemes.
Standard deviation is equal to the square root of variance.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 5

(a)
(b)
(c)
(d)

Question 6
(a)
(b)
(c)
(d)

Correct Answer 5
Answer
Explanation

Correct Answer 6

An investor buys a Mutual Fund scheme at NAV Rs 20 in Jan 2012. The


scheme declares a dividend of Rs 2. In May 2012, the investor sells all the
units at NAV Rs 15. What is the capital loss available for exemption ?
Rs 2
Rs 3
No capital loss available for exemption as its a short term loss
None of the above

Of the following attributes, which one you cannot consider while


investing in Mutual Funds ?
Guaranteed Return
Professional Management
Low Transaction Cost
Diversification

Rs 3
Buying Price Rs 20
Less Dividend Received Rs 2
So net buying cost Rs 18
Sold at Rs 15
So net loss (18-15) = Rs 3

Guaranteed Return

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 7
(a)
(b)

As per SEBI rules, SAI will contain the information regarding the Fund
and SID will contain information specific to the scheme - True or False ?
TRUE
FALSE

Question 8
(a)
(b)
(c)
(d)

is considered as a safe heaven among all asset classes.


Debt
Equity
Gold
Real Estate

Correct Answer 7

TRUE

Correct Answer 8

Gold

Answer
Explanation

Gold is seen as a safe haven asset class. Therefore, whenever there is political
or economic turmoil, gold prices shoot up.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 9
(a)
(b)
(c)
(d)

Question 10
(a)
(b)
(c)
(d)

Correct Answer 9
Answer
Explanation

Correct Answer 10
Answer
Explanation

Investors generally bear higher fund management expenses in


.
Diversified Equity Fund
Sectoral Equity Fund
Fund of Funds
ELSS Funds

Which of the below investments can be used for tax benefits ?


Fixed Deposits in Nationalised Banks
PPF
Post Office Deposits
Investments in Balanced Funds

Fund of Funds
A Fund of Funds invest in other funds. So it has to bear two costs - its own
fund management expenses and the fund management expenses of the funds
in which it invests.

PPF
PPF Deposits can be used for Tax Savings under Section 80C of the Income
Tax Act.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 11

As per SEBI regulations, a Mutual Fund can leverage / borrow money


under which of the foll condition(s) ?

(a)
(b)
(c)

A mutual fund scheme cannot borrow more than 20% of its net assets
The borrowing cannot be for more than 6 months
The borrowing is permitted only to meet the cash flow needs of investor
servicing

(d)

All of the above

Question 12
(a)
(b)
(c)
(d)

The portfolio composition and operational features of a scheme are


mentioned in the
SAI
SID
Addendum
None of the above

Correct Answer 11

All of the above

Correct Answer 12

SID

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 13
(a)
(b)
(c)
(d)

Which of the below option is true wrt. PPF ?


There is no upper limit of investments in PPF
PPF interest is Tax free
One can withdraw money after one of starting a PPF Account
Minors cannot open PPF Account

Question 14

In case of joint holding under the 'either or survivor' option, only the
first holder has to be KYC compliant - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 13

PPF interest is Tax free

Correct Answer 14

FALSE

Answer
Explanation

Any new investor, Joint holders, Power of Attorney holders, Donors and
Guardian (in case of minors) have to comply with the KYC formalities.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 15
(a)
(b)
(c)
(d)

Question 16
(a)
(b)

Correct Answer 15
Answer
Explanation

Correct Answer 16
Answer
Explanation

An investor is interested in high liquidity. Which fund will he NOT


choose ?
Diversified Equity Fund
ELSS Fund
Debt Fund
Open ended funds

The interest received from a Bank Fixed Deposit is fully taxable - True or
False ?
TRUE
FALSE

ELSS Fund
Equity Linked Saving Schemes - ELSS ie Tax Saving Schemes have a lockin
period of 3 years. So they will not be preferred by an investor seeking high
liquidity.

TRUE
Bank FD interest is fully taxable.
However if the investor does not fall in the tax bracket then its not taxed.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 17
(a)
(b)
(c)

An interval fund is
.
It is largely open ended and becomes close ended at pre-specified intervals
It is largely close ended and becomes open ended at pre-specified intervals
None of the above

Question 18

The difference between the NAV and the repurchase price is known as?

(a)
(b)
(c)
(d)

Correct Answer 17
Answer
Explanation

Correct Answer 18

Entry load
Exit load
Load
None of the above

It is largely close ended and becomes open ended at pre-specified intervals


Interval funds combine features of both open-ended and close ended schemes.
They are largely close-ended, but become open ended at pre-specified
intervals.
The benefit for investors is that, unlike in a purely close-ended scheme, they
are not completely dependent on the stock exchange to be able to buy or sell
units of the interval fund.
Exit load

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 19
(a)
(b)
(c)
(d)

The reduced NAV value after dividend payout is called


Cum dividend NAV
Ex dividend NAV
Dividend payout
Dividend NAV

Question 20

The dividend the investor receives from an equity oriented scheme is taxfree for the investor - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 19

Ex dividend NAV

Correct Answer 20

TRUE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 21
(a)
(b)
(c)
(d)

Question 22
(a)
(b)

Technical analysts study the price- volume charts of a company because


.
Is based on investor sentiment
It predicts future share price
To decide support levels, resistance levels, breakouts
All of the above

STP is a combination of SIP and SWP - True or False ?


TRUE
FALSE

Correct Answer 21

To decide support levels, resistance levels, breakouts

Correct Answer 22

TRUE

Answer
Explanation

In a STP ( Systematic Transfer Plan ), the amount that is withdrawn from a


scheme is re-invested in some other scheme of the same mutual fund.
Thus, it operates as a SWP ( Systematic Withdrawal Plan ) from the first
scheme, and a SIP ( Systematic Investment Plan ) into the second scheme.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 23
(a)
(b)

Question 24
(a)
(b)
(c)
(d)

Open-ended schemes generally offer exit option to investors through a


stock exchange.
TRUE
FALSE

The most appropriate measure of returns for a scheme in existence for


several years is
.
CAGR
Annualised Return
Dividend Return
Simple Return

Correct Answer 23

FALSE

Correct Answer 24

CAGR

Answer
Explanation

CAGR - Compounded Annual Growth Rate.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 25
(a)
(b)
(c)
(d)

Question 26
(a)
(b)
(c)
(d)

invest on the basis of a specified index, whose


performance it seeks to track.
Arbitrage Funds
Active Funds
Passive Funds
ELSS Funds

In mutual funds, the assets are held by


Fund Manager of that scheme
Registrar and Transfer Agents
Custodian
Trustees

Correct Answer 25

Passive Funds

Correct Answer 26

Custodian

Answer
Explanation

The custodian has custody of the assets of the fund.


Also as a part of this role, the custodian needs to accept and give delivery of
securities of the various schemes of the fund.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 27

According to the Certified Financial Planner Board of Standards


(USA), the first stage in financial planning is
.

(a)
(b)
(c)
(d)

Gather Client Data, Define Client Goals


Develop and Present Financial Planning Recommendations and / or Options
Analyse and Evaluate Clients Financial Status
Establish and Define the Client-Planner Relationship

Question 28

Investments in mutual fund units attract Wealth Tax if the investments


are over Rs 5 lacs - True or False ?

(a)
(b)

Correct Answer 27
Answer
Explanation

Correct Answer 28
Answer
Explanation

TRUE
FALSE

Establish and Define the Client-Planner Relationship


The steps in creating a comprehensive financial plan, as proposed by the
Certified Financial Planner Board of Standards (USA) are as follows:
Establish and Define the Client-Planner Relationship
Gather Client Data, Define Client Goals
Analyse and Evaluate Clients Financial Status
Develop and Present Financial Planning Recommendations and / or Options
Implement the Financial Planning Recommendations
Monitor the Financial Planning Recommendations

FALSE
Investments in mutual fund units are exempt from Wealth Tax. This is
irrespective of where the fund invests and the amount.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 29
(a)
(b)

Question 30

Brokers of recognised Stock exchanges can distribute mutual funds


without the requirement of passing the certifying test - True or False ?
TRUE
FALSE

If an investor wants to invest a sum of below Rs 20000 in cash in a


Mutual Fund then PAN card is not required - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 29

FALSE

Answer
Explanation

Correct Answer 30
Answer
Explanation

All distributors of Mutual Funds have to clear the test.

TRUE
Small investors investing in cash, upto Rs. 20,000 per mutual fund per
financial year do not need to provide PAN Card.
This is subject to compliance with Prevention of Money Laundering Act,
2002 and SEBI Circulars on Anti Money Laundering (AML)

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 31
(a)
(b)

Question 32
(a)
(b)
(c)
(d)

Correct Answer 31
Answer
Explanation

Correct Answer 32

To save on Wealth Tax one should invest in Gold ETF rather than
physical gold - True or False ?
TRUE
FALSE

For calculating Capital Gains, investment in mutual funds for less then 1
year is considered as
Long Term
Medium Term
Short Term
Ultra Short Term

TRUE
Investment in physical gold may attract wealth tax but investments in Gold
ETF mutual funds are exempt from wealth tax.

Short Term

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 33

(a)
(b)

Question 34

While choosing an Option in a Mutual Fund scheme, taxation and


liquidity needs are a major factor in deciding which option ( Growth or
Dividend Payout) to go for - True or False ?
FALSE
TRUE

Lower the expenses of a Mutual Fund, lower would be the NAV - True or
False ?

(a)
(b)

TRUE
FALSE

Correct Answer 33

TRUE

Correct Answer 34

FALSE

Answer
Explanation

NAV is basically the value of Portfolio less the MF expenses. So Lower the
expenses, higher would be the NAV.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 35
(a)
(b)

Question 36

In the National Pension System, Tier I (Pension account), is


withdrawable - True or False ?
TRUE
FALSE

Investment in physical gold or real estate may attract wealth tax in case
of direct investors, but investments in Gold ETF and real estate mutual
funds are exempt from wealth tax - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 35

FALSE

Answer
Explanation

Correct Answer 36
Answer
Explanation

In the National Pension System Tier I (Pension account), is nonwithdrawable.


Tier II (Savings account) is withdrawable to meet financial contingencies.
Also an active Tier I account is a pre-requisite for opening a Tier II account.
TRUE
Investments in mutual fund units are exempt from Wealth Tax.
This is irrespective of where the fund invests.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 37
(a)
(b)
(c)
(d)

Question 38
(a)
(b)
(c)
(d)

Correct Answer 37
Answer
Explanation

Correct Answer 38
Answer
Explanation

As SEBI has banned


NAV.

, the Sale Price of a MF unit is the same as

Entry Load
Exit Load
Commission Refund
SIP Transaction Charges

In which of the below funds is the investor unsure of his taxation liability
?
Sectoral Fund
ELSS Fund
Gilt Fund
Flexible Asset Allocation Fund

Entry Load
For eg - If the NAV of a MF unit is Rs 50 and entry load was 1% then the unit
was sold to the investors at Rs 50 + 1 % ie. Rs 50.50.
Now with the ban on entry loads the Sale price is equal to NAV ( Rs 50 in
above example)
Flexible Asset Allocation Fund
The fund manager of a Flexible Asset Allocation scheme can switch a large
part of their portfolio between debt and equity, depending on their view on the
respective markets.
So the investors do not know whether they are investing in a debt scheme or
an equity scheme and so are unsure of the taxation.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 39
(a)
(b)

Question 40

(a)
(b)

Correct Answer 39
Answer
Explanation

Correct Answer 40
Answer
Explanation

Securities Transaction Tax is not applicable on transactions in debtoriented mutual funds - True or False ?
TRUE
FALSE

Mr. Mahesh gives his investment application form to the distributor at 10


am. The distributor then goes to the Mutual Fund office and submits this
application at 1 pm. What is the cut off time for this investment ?
1:00 PM
10:00 AM

TRUE
STT is not applicable on transactions in debt or debt-oriented mutual fund
(including liquid fund) units.

1:00 PM
The cut off time is when the investment is submitted to the PoA - Point of
Acceptance is relevant not the time when the investor submits the
transaction request to the distributor.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

PRACTICE TEST 4
Question 1
(a)
(b)

Question 2

Entry and exit loads are not charged to Bonus units and units issued on
reinvestment of dividends - True or False ?
FALSE
TRUE

The Mutual Fund scheme which switches its portfolio among Equity and
Debt based on market condition is Strategic Asset Allocation Scheme True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 1

TRUE

Correct Answer 2

FALSE

Answer
Explanation

Balanced schemes which switch a large part of their portfolio between debt and
equity, depending on their view on the respective markets are called Flexible
Asset Allocation scheme.
Strategic Asset Allocation is as per the risk profile of the individual. For eqAged persons are advised less investment in Equities and more in Debt.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 3
(a)
(b)
(c)
(d)

Mutual Funds are allowed to borrow


.
for long term investment purposes
to meet redemption requests or dividend payments.
are not allowed to borrow at all
freely as per their investment objectives

Question 4

Mr. Rahul is an investor in a Mutual Fund scheme and wishes to do


additional purchases in the same scheme by giving a post dated cheque. Is
this acceptable?
Yes
No

(a)
(b)

Correct Answer 3
Answer
Explanation

Correct Answer 4
Answer
Explanation

to meet redemption requests or dividend payments.


As per SEBI regulations, MF borrowing is permitted only to meet the cash
flow needs of investor servicing viz. dividend payments or re-purchase
payments.

No
The cheque cannot be post-dated except for future installments under SIP.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 5

(a)
(b)
(c)
(d)

Question 6
(a)
(b)

Correct Answer 5
Answer
Explanation

Correct Answer 6

Mr Himanshu wants to withdraw Rs 20000 from his mutual fund. The


NAV is Rs 30 and the exit load is 1%. How many units will he have to
redeem ?
658.7
687.9
725.4
673.4

An investor has to get an No Objection Certificate (NOC) from his old


distributor if he wishes to change to a new distributor - True or False ?
TRUE
FALSE

673.4
Each unit is value at Rs 30.
Less Exit load of 1% = 0.30
So the net value of each unit is 30 - 0.30 = 29.70
Mr Himanshu wants Rs 20000
So 20000 / 29.70 = 673.40 units.

FALSE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 7
(a)
(b)

Question 8
(a)
(b)

Correct Answer 7
Answer
Explanation

Correct Answer 8
Answer
Explanation

The applicable NAV can be decided by the time stamp which has been put
by the distributor - True or False ?
TRUE
FALSE

Gilt funds are considered to be the safest among debt funds - True or
False ?
TRUE
FALSE

FALSE
The time stamps put at the official Points of Acceptance (PoAs) are only valid
for deciding the applicable NAV.

TRUE
Gilt funds invest in only treasury bills and government securities, which do not
have a credit risk
Since the government is unlikely to default on its obligations, Gilts Funds are
viewed as very safe.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 9
(a)
(b)
(c)
(d)

The fastest way to transfer funds is


SWIFT
NEFT
RTGS
All of the above

Question 10

The Mutual Funds shall provide the Account Statement to the Unitholders who have not transacted during the last
months prior to
the date of generation of account statements
three
six (c)

(a)
(b)
nine (d)
twelve

Correct Answer 9
Answer
Explanation

Correct Answer 10

_.

RTGS
RTGS (Real Time Gross Settlement) transfers are instantaneous.
NEFT (National Electronic Funds Transfer) transfers are batched together in
the banking system, and effected at various times during the day.
SWIFT transfers (for transfers from abroad) tend to pass through multiple
banks in different geographies, and multiple levels within the same bank,
resulting in delays.
six

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 11

(a)
(b)

Question 12
(a)
(b)
(c)
(d)

Correct Answer 11
Answer
Explanation

Correct Answer 12
Answer
Explanation

During the strong bull phase in the stock markets the Growth Stocks
perform well but eventually its the Value Stock which will give good
returns - True or False ?
TRUE
FALSE

The STT payable on sale of equity shares in a stock exchange is


0.17%
0.10%
0.01%
0.13%

TRUE
Growth investment style entails investing in high growth stocks i.e. stocks of
companies that are likely to grow much faster than the economy. However, in
the event of a market correction, these stocks tend to decline more.
Value investment style is an approach of picking up stocks, which are valued
lower, based on fundamental analysis. The belief is that the market has not
appreciated some aspect of the value in a companys share and hence it is
cheap. When the market recognizes the intrinsic value, then the price would
shoot up.

0.10%
STT payable on purchase / sale of equity shares in stock exchange is 0.1%
STT payable on sale of futures & options in stock exchange is 0.01%

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 13
(a)
(b)
(c)
(d)

Question 14
(a)
(b)
(c)
(d)

Correct Answer 13
Answer
Explanation

Correct Answer 14

In case of repurchase by a unit holder, the final redemption price is


.
The NAV
NAV - Entry Load
NAV - Exit Load
NAV + Exit Load

Securities Transaction Tax is applicable on


Gold ETF transactions
Equity transactions
Debt transactions
All of the above

NAV - Exit Load


In the case of an open-ended scheme, the unit will be bought back by the
scheme at the NAV less Exit Load.
SEBI legislations prescribe a maximum exit load of 7%; in practice, it was
rarely above 5%, which too was applicable only if investors exited from the
scheme within a year of investment.
Equity transactions

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 15
(a)
(b)
(c)
(d)

Returns in gold as an asset class depends on


Strength of the rupee
Global Prices of Gold
Indian gold exports
Both 1 and 2

Question 16

If units are held by 3 unit holders jointly, the redemption proceeds will be
paid
_.

(a)
(b)
(c)
(d)

Correct Answer 15
Answer
Explanation

Correct Answer 16

to the first holder


equally to all the holders
as per the declaration signed in the application form
to the nominee

Both 1 and 2
Political or economic turmoil, large purchase / sale of gold by big countries
have an effect on global gold prices.
Also when the rupee becomes stronger, the same foreign currency can be
bought for fewer rupees. Therefore, the same gold price (denominated in
foreign currency), translates into a lower rupee value for the gold portfolio.
This pushes down the returns in the gold fund. A weaker rupee, on the other
hand, pushes up the rupee value of the gold portfolio, and consequently the
returns in gold would be higher.

to the first holder

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 17
(a)
(b)
(c)
(d)

Question 18

(a)
(b)

Gilt funds and diversified debt funds should figure prominently in the
portfolio of
.
Employed with small children
Old couple with no family support
Young married with no children
None of the above

When the mutual fund scheme pays any money to the investors, either as
dividend or consideration for buying back the units of investors, the AUM
decreases - True or False ?
TRUE
FALSE

Correct Answer 17

Old couple with no family support

Correct Answer 18

TRUE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 19
(a)
(b)

Question 20
(a)
(b)
(c)
(d)

Every mutual fund scheme does not have a pre-announced investment


objective - True or False ?
TRUE
FALSE

What is the formula to calculate the value of NAV of the mutual fund ?
Unit-holders Funds in the Scheme * No. of Units
Unit-holders Funds in the Scheme No. of Units
Profits earned in the Scheme No. of Units
Assets of the Scheme No. of Units

Correct Answer 19

FALSE

Correct Answer 20

Unit-holders Funds in the Scheme No. of Units

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 21
(a)
(b)

Question 22
(a)
(b)

Correct Answer 21
Answer
Explanation

Correct Answer 22
Answer
Explanation

Benchmarking helps in assessing under-performance or out-performance


- True or False ?
TRUE
FALSE

Unit holders can hold their units in demat form - True or False ?
TRUE
FALSE

TRUE
How well or how bad did a scheme perform can be assessed by comparing its
performance to a pre-defined comparable ie. benchmark against which the
scheme can be compared.
TRUE
Investors can choose to hold the Units in dematerialised form.
The mutual fund / AMC co-ordinates with the RTA and Depository to
facilitate this.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 23
(a)
(b)
(c)
(d)

The difference between NAV and re-purchase price is


Exit Load
Entry Load
Commission of the MF Agent
Dividend Stripping

Question 24
(a)
(b)
(c)
(d)

Risk can be measured by


Standard Deviation
Beta
Variance
Any of the Above

Correct Answer 23
Answer
Explanation

Correct Answer 24

Exit Load
The difference between the NAV and Re-purchase Price is called the exit
load.
If the NAV of a scheme is Rs 20.00 per unit, and it were to charge exit load of
1%, the Re-purchase Price would be Rs 20 1% i.e. Rs 19.80.
Any of the Above

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 25
(a)
(b)

Question 26
(a)
(b)
(c)
(d)

Correct Answer 25
Answer
Explanation

Correct Answer 26

Securities Transaction Tax is applicable to Equity Schemes - True or False


?
TRUE
FALSE

National Pension System can invest in


Equity Funds
Government Securities
Corporate Debt
All of the above

TRUE
Mutual funds are exempt from tax.
However, Securities Transaction Tax (STT) is applicable on sale / redemption
transactions in units of equity mutual fund schemes.
All of the above

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 27
(a)
(b)

Question 28
(a)
(b)

Correct Answer 27
Answer
Explanation

Correct Answer 28

To get above average yields, High yield bond schemes invest in junk bonds
- True or False ?
TRUE
FALSE

AMFI is an industry body, but not a self-regulatory organization - True or


False ?
FALSE
TRUE

TRUE
Junk bond schemes or high yield bond schemes invest in bonds of companies
that are of poor credit quality.

TRUE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 29
(a)
(b)

Question 30
(a)
(b)

There is no Tax Deducted at Source (TDS) on dividend payments or repurchase payments of Mutual Funds for Indian investors - True or False ?
TRUE
FALSE

The Minimum networth requirement for AMC is Rs 100 crores - True or


False ?
TRUE
FALSE

Correct Answer 29

TRUE

Correct Answer 30

FALSE

Answer
Explanation

AMC should have networth of at least Rs 10 crore.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 31
(a)
(b)
(c)
(d)

Investor can get into long term investment commitments in


Inter-generational Phase
Accumulation Phase
Distribution Phase
Transition Phase

Question 32
(a)
(b)
(c)
(d)

Investors KYC details are stored in the server of


AMFI
AMC
KRA
SEBI

Correct Answer 31
Answer
Explanation

Correct Answer 32
Answer
Explanation

Accumulation Phase
Accumulation is the stage when the investor gets to build his wealth.
It covers the earning years of the investor i.e. the phases of the life cycle from
Young Unmarried to Pre-Retirement
KRA
KRA means KYC Registration Agency
The KRA after checking the KYC details uploads the details in the server of
any centralised KRA.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 33
(a)
(b)

Question 34
(a)
(b)
(c)
(d)

Correct Answer 33
Answer
Explanation

Correct Answer 34

Interval funds combine features of both open-ended and close-ended


schemes - True or False ?
FALSE
TRUE

Investments in mutual fund are allowed using


ASBA
Cheque / DD
Remittance
Any of the above

_.

TRUE
Interval Funds are largely close-ended, but become open-ended at pre-specified
intervals.

Any of the above

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 35
(a)
(b)

Question 36
(a)
(b)
(c)
(d)

Correct Answer 35
Answer
Explanation
Correct Answer 36

Its due to loads and taxes that there is a difference between scheme
returns and investor returns - True or False ?
FALSE
TRUE

Statement of Account is to be sent to investors within


closure.
3
5
10
30

days of NFO

TRUE
Loads like Exit Load and Taxes like STT reduce the scheme returns.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 37
(a)
(b)

Question 38

Distribution phase of Wealth Cycle is a parallel of Retirement phase of


Life Cycle - True or False ?
TRUE
FALSE

Dividend Distribution Tax (DDT) on debt-oriented mutual fund schemes


for Individual and HUF Investors is
+ Surcharge + Education Cess

(a)
(b)
(c)
(d)

10%
25%
30%
NIL

Correct Answer 37

TRUE

Answer
Explanation

Correct Answer 38

Reaping / Distribution is the stage when the investor needs regular money.
Hence, investors in this stage need to have higher allocation to income
generating assets. It is the parallel of retirement phase in the Life Cycle.
25%

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 4

Question 39
(a)
(b)
(c)
(d)

The ARN number is assigned by


The AMC
SEBI
AMFI
Stock Exchange

Question 40

No commission neither upfront nor trail is payable to the distributor for


their own investments (self business) - State True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 39

AMFI

Correct Answer 40

TRUE

Answer
Explanation

Commission is payable to the distributors to mobilise money from their clients.


Hence, no commission is payable to the distributor for their own investments.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

PRACTICE TEST 5
Question 1
(a)
(b)
(c)
(d)

Question 2
(a)
(b)

Correct Answer 1
Answer
Explanation

Correct Answer 2
Answer
Explanation

NRI cannot make a repartriable investment in Mutual Funds using a


Demand Draft
Investment by Demand Draft is not allowed in MF's
He can make such investment subject to approval from RBI
He can make such investments by providing FIRC certificate from his bankers
None of the above

When an investor chooses a particular scheme of a Mutual Fund, its


basically because he can get the portfolio of his choice - True or False ?
TRUE
FALSE

He can make such investments by providing FIRC certificate from his bankers
FIRC - Foreign Inward Remittance Certificate

FALSE
The investor has no say in deciding the portfolio of a MF scheme.
Its the Fund Managers prerogative as to which stocks to buy and sell or change
the portfolio.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 3
(a)
(b)
(c)
(d)

The trust cannot be sued by the unit holders because


the funds are managed by the AMC and not the trust
the trust is a notional entity
members of the trust are usually very trusted people
all of the above

Question 4

In case a Mutual Fund scheme is winded up and some of the illiquid


securities are sold after a period of two years, the funds so received are to
be
.

(a)
(b)
(c)
(d)

Correct Answer 3
Answer
Explanation

Correct Answer 4
Answer
Explanation

kept by the Mutual Fund under the head 'Other Profits'


transferred to the Investor Education Fund
paid to the old investors
transferred to AMFI and to be used for Mutual Fund promotional activities

the trust is a notional entity


Under the law, a trust is a notional entity. Therefore, investors cannot sue the
trust.
However if an investor feels that the trustees have not fulfilled their
obligations, then he can file a suit against the trustees for breach of trust.
transferred to the Investor Education Fund
If the amounts received on sale of illiquid securities are substantial, and
recovered within 2 years, then the amount is to be paid to the old investors
In other cases, the amount is to be transferred to the Investor Education Fund
maintained by each mutual fund.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 5
(a)
(b)
(c)
(d)

Question 6
(a)
(b)
(c)
(d)

The Mutual Fund AMC shall take investment decisions solely in the
interest of
.
The AMC employees
The MF unit holders
The Trustees
AMFI

is/are responsible for overall investments of the fund.


The Senior Fund Manager
The Chief Investment Officer
The Trustees
The Sponsors

Correct Answer 5

The MF unit holders

Correct Answer 6

The Chief Investment Officer

Answer
Explanation

Chief Investment Officer (CIO) is responsible for overall investments of the


fund.
Fund managers assist the CIO.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 7

(a)
(b)
(c)
(d)

Question 8
(a)
(b)
(c)
(d)

Correct Answer 7
Answer
Explanation

Correct Answer 8

The market value of investments of a Mutual Fund scheme is Rs 350 crore


and the total liabilities are Rs 27 crores. The number of units of face value
10 are 20 crores. What is the NAV of this scheme ?
14.35
15.75
16.15
17.35

The benefit of subsrcibing to health insurance early in ones life is


.
At later age insurance companies may reject the claim on the pretext of preexisting illness.
Premium at a young age is low
Both of the above
None of the above

16.15
Market Value of Investments = 350 crore
Less - Liabilities 27 crore
Divided by units 20 crore
NAV = 16.15

Both of the above

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 9
(a)
(b)
(c)
(d)

The role of
Banker
Custodian
Transfer Agent
Depositories

Question 10

Payment of tax on the interest received from a Bank deposit can be


deferred until its actually received - True or False ?

(a)
(b)

Correct Answer 9

Correct Answer 10
Answer
Explanation

is to issue and redeem units of a Mutual Fund.

TRUE
FALSE

Transfer Agent

FALSE
Tax on Bank Deposit interest has to be paid as and when accrued.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 11
(a)
(b)
(c)
(d)

Question 12

A Pharma Sector fund should invest atleast


companies.
50%
65%
90%
There is no such limitation

A Mutual Fund scheme gave an annualised return of 12.3% and the


annualised Standard Deviation of the fund is 5.46. The current risk free
return is 9%. Calculate the Sharpe Ratio.

(a)
(b)
(c)
(d)

0.60
0.75
0.88
1.24

Correct Answer 11

65%

Answer
Explanation

Correct Answer 12
Answer
Explanation

in shares of pharma

When a schemes name implies investment in a particular kind of security or


sector, it should have a policy that provides for investing at least 65% of its
corpus in that security or sector.

0.6
The formula for Sharpe Ratio is : ( Rs-Rf ) / Standard Deviation
ie. ( Return Earned - Risk free Return ) / Standard Deviation
(12.3 9) / 5.46
= 0.60

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 13
(a)
(b)
(c)
(d)

Question 14
(a)
(b)

cannot invest in Mutual Funds through the Micro SIP route.


HUF
Corporates
Persons of Indian Origin (PIO) residing abroad
All of the above

In an Open Ended fund the pool of money always remain constant - True
or False ?
TRUE
FALSE

Correct Answer 13

All of the above

Correct Answer 14

FALSE

Answer
Explanation

In an Open Ended fund the pool of money is fluctuating.


This is due to regular Inflows and Outflows of funds because of purchase and
sale of units by the investors.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 15
(a)
(b)
(c)
(d)

Question 16
(a)
(b)
(c)
(d)

Distribution Expenses in excess of what is specified by SEBI has to be


borne by
.
Unit holders
AMFI
AMC
Fund Manager

In which kind of funds can the investors enter and exit at any time even
after the NFO
Close Ended Funds
Open Ended Funds
Both 1 and 2
None of the above

Correct Answer 15

AMC

Correct Answer 16

Open Ended Funds

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 17
(a)

Which of the following expenses cannot be charged to the scheme?


Fees of various service providers, such as Trustees, AMC, Registrar &
Transfer Agents, Custodian and auditor

(b)
(c)

Penalties and fines for infraction of laws


Selling expenses including scheme advertising and commission to the
distributors
Expenses on investor communication, account statements, dividend /
redemption cheques / warrants

(d)

Question 18
(a)
(b)
(c)
(d)

Some proportion of assets in a scheme are maintained in liquid form


when
Dividend has to be paid
Market is overheated
There are re-purchase expectations
All of the above

Correct Answer 17

Penalties and fines for infraction of laws

Correct Answer 18

All of the above

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 19
(a)
(b)
(c)
(d)

Question 20
(a)
(b)
(c)
(d)

When a scheme is first launched the assets under management would be


.
Higher than the fund mobilized from the investors
Lower than the fund mobilized from the investors
Would be equal to the funds mobilized from the investors
Would be fixed at Rs 500 crores

After a NFO (New Fund Offer) the investors have which of the following
options ?
They pay a price that is linked to NAV
They pay a price that is not linked to NAV
They pay a price that may or may not be linked to NAV
None of the above

Correct Answer 19

Would be equal to the funds mobilized from the investors

Correct Answer 20

They pay a price that is linked to NAV

Answer
Explanation

Once the NFO is over, any investor who wants to buy units of this MF scheme
has to buy at the prevailing NAV.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 21
(a)
(b)
(c)
(d)

Investments in mutual funds can be made by


Cheque/DD
Remittances
ASBA
Any of the above

Question 22
(a)
(b)
(c)
(d)

The comparable for a liquid scheme is


Balanced Scheme
Equity scheme
Savings Bank account
Gilt Fund

Correct Answer 21

Any of the above

Correct Answer 22

Savings Bank account

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 23
(a)
(b)

Question 24
(a)
(b)
(c)
(d)

Correct Answer 23
Answer
Explanation

Correct Answer 24
Answer
Explanation

Evaluating a scheme and investing in it is an art, not a science - True or


False ?
TRUE
FALSE

If the fund manager is expecting the interest rates to fall, then the
manager
would buy fixed rate instruments of shorter tenor
would buy floating rate instruments
would buy longer term fixed rate debt securities.
None of the above

TRUE
Quantitative measures like yearly returns etc. are based on historical
performance, which may or may not be replicated in future.
So evaluating a MF scheme is more of an art than a science.

would buy longer term fixed rate debt securities.


When the interest rates fall, the current debt instruements of longer duration
become more valuable.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 27
(a)
(b)
(c)
(d)

Question 28
(a)
(b)
(c)
(d)

Correct Answer 27
Answer
Explanation

Correct Answer 28
Answer
Explanation

Institutional Mutual Fund Distributors build their reach through


.
Agents
Employees
Sub Brokers
All of the Above

In India, most investor service centres are offices of


AMC's
Registrars and Transfer Agents
Stock Brokers
Custodians

All of the Above


Institutional Mutual Fund Distributors like Banks, Stock Brokers etc. usually
appoint Agents and Subbrokers and also employ people to sell Mutual Fund
schemes.

Registrars and Transfer Agents


In India, most investor service centres are offices of Registrars and Transfer
Agents like CAMS.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 29
(a)
(b)

Mutual fund 'ranking' and 'rating' are one and the same - True or False ?
TRUE
FALSE

Question 30

Investment objective defines the broad investment charter - True or False


?
TRUE
FALSE

(a)
(b)

Correct Answer 29
Answer
Explanation

FALSE
Ranking generally means the rank of the fund among other similar funds in a
quarter. This depends on the returns of the funds and such ranking can change
regularly.
Ratings are given to funds by MF research agencies depending on the long
term returns and various other parameters. The ratings can be five star, four
star etc.

Correct Answer 30 TRUE


Answer
Explanation

Investment Objective defines the broad investment charter.


For example - A balanced scheme can have an investment objective like: To
achieve growth by investing in equity and equity related investments, balanced
with income generation by investing in debt and money market instruments

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 31
(a)
(b)
(c)
(d)

NFOs ( except ELSS and RGESS ) can be open for a maximum of


10 days
15 days
20 days
30 days

Question 32

Net assets of a scheme are same as its investment portfolio. - True or False
?
TRUE
FALSE

(a)
(b)

Correct Answer 31
Answer
Explanation

Correct Answer 32
Answer
Explanation

_.

15 days
Schemes other than ELSS and RGESS (Rajiv Gandhi Equity Saving Scheme)
can remain open for subscription for a maximum of 15 days.
In the case of ELSS / RGESS schemes, the offering period shall be not be
more than 30 days.
FALSE
Net asset includes the amounts originally invested, the profits booked in
the scheme, as well as appreciation in the investment portfolio.
It goes up when the market goes up, even if the investments have not been
sold.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 33
(a)
(b)

Question 34
(a)
(b)
(c)
(d)

Correct Answer 33
Answer
Explanation
Correct Answer 34
Answer
Explanation

One limitation of mutual funds is the lack of portfolio customization True or False ?
TRUE
FALSE

NAV of Equity funds is to be calculated upto


1
2
3
4

decimals.

TRUE
An investor in a MF scheme cannot instruct the portfolio of securities he
would want to have. He has to go along with the fund managers decisions.
2
NAV for equity and balanced funds is to be calculated upto at least 2 decimal
places.
NAV is to be calculated upto 4 decimal places in the case of index funds,
liquid funds and other debt funds.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 35
(a)
(b)

Question 36
(a)
(b)
(c)
(d)

STT is not applicable on transactions in debt or debt-oriented mutual


fund or Liquid Fund units.
TRUE
FALSE

Risks in mutual fund schemes would depend on the


liquidity of the portfolio
nature of portfolio
outside liabilities
all of the above

Correct Answer 35

TRUE

Correct Answer 36

all of the above

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 37
(a)
(b)
(c)
(d)

Question 38
(a)
(b)

of the Unit-holders can pass a resolution to wind-up a scheme.


25%
50%
60%
75%

Mutual Funds cannot accept cash from investors for investing in their
schemes - True or False ?
TRUE
FALSE

Correct Answer 37

75%

Correct Answer 38

FALSE

Answer
Explanation

Mutual funds usually do not accept cash.


However for small investors, who may not be tax payers and may not have
PAN/bank accounts, are allowed cash transactions for purchase of units in
mutual funds to the extent of Rs. 20,000/- per investor, per mutual fund, per
financial year.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

Question 39
(a)
(b)
(c)
(d)

What is the Absolute Return for a Mutual Fund investor if he had bought
at NAV 20 and sold at NAV 40 after two years ?
100%
50%
25%
Insufficient Data

Question 40

strategy is supposed to be a risky strategy of asset


allocation.

(a)
(b)
(c)
(d)

Correct Answer 39
Answer
Explanation

Correct Answer 40
Answer
Explanation

Strategic Asset Allocation


Tactical Asset Allocation
Both 1 and 2
None of the above

100%
Absolute Return or Simple Return is simply the change in the value of an
investment over a period of time.
Its not calculated on a yearly basis etc.
In the above example - A person bought a MF at NAV 20 and sold it after 2
years at NAV 40, then the Absolute Return is :
(Sale Price - Buy Price / Buy Price) X 100
40 - 20 / 20 = 1 or 100% absolute return
Tactical Asset Allocation
Tactical Asset Allocation is the strategy when the investor presumes the likely
behaviour of the market and goes over weight on equities. This is very risky.
Strategic Asset Allocation is as per risk profile of an individual depending on
the individuals age etc. This is a safer strategy.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM

PRACTICE TEST 6
Question 1

According to the Certified Financial Planner Board of Standards


(USA), the last stage in financial planning is
.

(a)

Develop and Present Financial Planning Recommendations and / or Options

(b)
(c)
(d)

Monitor the Financial Planning Recommendations


Implement the Financial Planning Recommendations
Establish and Define the Client-Planner Relationship

Question 2
(a)

Which of the below statement is FALSE with respect to objectives of


AMFI ?
To represent to the Government, Reserve Bank of India and other bodies on
all matters relating to the Mutual Fund Industry.

(b)
(c)

To regulate the Mutual Fund Industry


To disseminate information on Mutual Fund Industry and to undertake
studies and research directly and/or in association with other bodies.

(d)

To develop a cadre of well-trained Agent distributors

Correct Answer 1
Answer
Explanation

Correct Answer 2
Answer
Explanation

Monitor the Financial Planning Recommendations


The steps in creating a comprehensive financial plan, as proposed by the
Certified Financial Planner Board of Standards (USA) are as follows:
Establish and Define the Client-Planner Relationship
Gather Client Data, Define Client Goals
Analyse and Evaluate Clients Financial Status
Develop and Present Financial Planning Recommendations and / or Options
Implement the Financial Planning Recommendations
Monitor the Financial Planning Recommendations
To regulate the Mutual Fund Industry
SEBI is the regulator of Mutual Funds in India.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 3

(a)
(b)

Question 4
(a)
(b)
(c)
(d)

Correct Answer 3
Answer
Explanation

Correct Answer 4
Answer
Explanation

A Mutual Fund has several schemes running. To avoid more backoffice


work etc. it can put funds of all the schemes in a single bank account True or False ?
TRUE
FALSE

The benchmark for a Gilt fund investing in Government Securities with


maturities ranging from 1 to 3 years is
.
Si-Bex
Mi-Bex
Li-Bex
None of the above

FALSE
The funds of each scheme has to be maintained in a different Bank Account.

Si-Bex
ICICI Securities and Finance Company Limited (Isec) has been maintaining
ICICI Securities Sovereign Bond Index (i-BEX) since 1994 representing gilts
market.
In order to meet specific needs of market participants, it has also been
maintaining short-maturity index (Si-BEX) comprising securities maturing in
one to three years, medium maturity index (Mi-BEX) comprising
securities maturing in three to seven years, and long-maturity index (LiBEX) comprising securities maturing later than seven years since March
1996.
These three new indices alongwith a composite index, which is an average of
Si-BEX, Mi-BEX and Li-BEX were chosen by AMFI as benchmark gilt
indices for mutual fund schemes.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 5
(a)
(b)

Question 6
(a)
(b)
(c)
(d)

Floating rate debt market securities generally hold their value despite
changes in the yields in the debt market - True or False ?
TRUE
FALSE

Dividend warrants have to be dispatched to investors within


declaration of the dividend.
10
15
30
45

Correct Answer 5

TRUE

Correct Answer 6

30

days of

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 7

(a)
(b)
(c)
(d)

The Market Value of a scheme is Rs 240 crores. Dividend accrued but


not received is Rs 30 crore. The Expenses payable are Rs 10 crore. The
total number of outstanding units is 120 lakhs. What is the NAV of the
scheme ?
175.8
216.66
224.7
311.74

Question 8
(a)
(b)
(c)
(d)

Which of the following is not a benefit of investing in a Mutual Fund ?


Diversification of Risk
Professional Management of Funds
Time and cost savings
Custody of his share of the portfolio in his demat account

Correct Answer 7
Answer
Explanation

Correct Answer 8
Answer

216.66
Total Market Value = Rs 240 crore
Add Dividend Accrued of Rs 30 crore
Less Expenses Payable of Rs 10 crore
Divided by Units 120 lakhs
= 216.66 NAV
Custody of his share of the portfolio in his demat account
Explanation

Mutual Fund
investors do not
get shares in
their demat
account.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 9
(a)
(b)

AMFI is a Self Regulatory Organization (SRO) - True or False ?


FALSE
TRUE

Question 10

Mr. Mohit invested Rs 5000 in a Mutual Fund on 1 Jan 2011 and when
he redeemed on 31 Dec 2012 he got Rs 12000. Calculate the CAGR.

(a)
(b)
(c)
(d)

54.90%
69.75%
70.80%
125%

Correct Answer 9

FALSE

Answer
Explanation

Correct Answer 10
Answer
Explanation

Mutual Funds in India have not constituted any SRO for themselves.
Therefore, they are directly regulated by SEBI.
AMCs in India are members of AMFI, an industry body that has been created
to promote the interests of the mutual funds industry. AMFI is not an SRO.

54.90%
Formula for calculating Compounded Annual Growth Rate :
CAGR = { Ending Value / Beginning Value } ^ ( 1 / No. of years) - 1.
= { 12000 / 5000 } ^ 1 / 2 - 1
= {2.4} ^ 0.5 - 1
On the scientific calculator of your computer type 14000 then press x^y the
.5
= 1.549 - 1
= .549 x 100 = 54.90%

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 11
(a)
(b)

FMP dividends are Tax Free - True or False ?


TRUE
FALSE

Question 12

In the National Pension System -NPS, the investor is allotted a


.
Special NPS number
PRAN
QNPSN
MANN

(a)
(b)
(c)
(d)

Correct Answer 11

TRUE

Correct Answer 12

PRAN

Answer
Explanation

PRAN - Personal Retirement Account Number.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 13
(a)
(b)

Question 14
(a)
(b)
(c)
(d)

Investors of debt oriented mutual funds do not have to pay STT - True
or False ?
TRUE
FALSE

' Not more than 25% of the Net Assets will be invested in the Derivatives
Market' - This statement best describes
.
Investment Interest
Investment Objective
Investment Policy
Investment Strategy

Correct Answer 13

TRUE

Correct Answer 14

Investment Policy

Answer
Explanation

Investment objective defines the broad investment charter.


Investment policy describes in greater detail, the kind of portfolio that will be
maintained.
Investment strategies are decided on a day-to-day basis by the senior
management of the AMC.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 15

(a)

A Mutual Fund scheme has equity shares of ICICI Bank in its portfolio.
For calculation of NAV, which of the following prices will be considered
?
The closing price of ICICI Bank on Regional Stock Exchanges on the day of
calculation of NAV

(b)

The closing price of ICICI Bank on BSE / NSE on the day of calculation of
NAV

(c)

The Average trading price on Regional Stock Exchanges on the day of


calculation of NAV

(d)

The Average trading price on BSE/NSE on the day of calculation of NAV

Question 16

Minimum duration of an interval period in an interval scheme/plan is


.
15 Days
30 Days
45 Days
60 Days

(a)
(b)
(c)
(d)

Correct Answer 15

The closing price of ICICI Bank on BSE / NSE on the day of calculation of
NAV

Correct Answer 16

15 Days

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 17
(a)
(b)

Question 18
(a)
(b)
(c)
(d)

Correct Answer 17
Answer
Explanation

Correct Answer 18

The unit capital in an open ended fund keeps changing on a regular


basis - True or False ?
TRUE
FALSE

People who are better able to take the downside that comes with risk are
those who have a
.
Daring and adventurous psyche
Multi-skilled and qualified professionals
Regular source of income
All of the above

TRUE
Additional Investments and Withdrawals happen on a daily basis in an open
ended mutual fund. So the unit capital keeps changing.

All of the above

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 19
(a)
(b)

Question 20
(a)
(b)
(c)
(d)

Correct Answer 19
Answer
Explanation

The unit holder who has given his money to the Mutual Fund can decide
what securities or investments the scheme would buy - True or False ?
TRUE
FALSE

The advantages of mutual funds are :


Liquidity
Economics of scale
Both 1 and 2
None of the above

FALSE
The unit holder can never decide which investments the fund should buy.
The Fund Manager / Concerned Authority decided on the investments.

Correct Answer 20

Both 1 and 2

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 23
(a)
(b)
(c)
(d)

Question 24
(a)
(b)

Correct Answer 23
Answer
Explanation

Correct Answer 24
Answer
Explanation

Which of the following aspects of portfolio would an investor in a debt


scheme give most importance?
Number of securities in portfolio
Weighted Average Maturity
Stock selection
Sector selection

The NSEs platform for Mutual Fund trading is called NEAT MFSS True or False ?
TRUE
FALSE

Weighted Average Maturity


Longer the maturity of a debt security, higher would be its interest rate
sensitivity.
Therefore, weighted average maturity of debt securities in a schemes
portfolio is indicative of the interest rate sensitivity of a scheme.
(Also in the above question all the other three options are related to Equity
Fund)
TRUE
MFSS : Mutual Fund Service System.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 25
(a)
(b)
(c)
(d)

Question 26

is the regulator for the National Pension System.


AMFI
COMMERCE MINISTRY
SEBI
PFRDA

The Mutual Fund distributor can charge a fee from the investor - True
or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 25

PFRDA

Answer
Explanation

Correct Answer 26
Answer
Explanation

Pension Funds Regulatory and Development Authority (PFRDA) is the


regulator for the National Pension System.

TRUE
As per new rules : Upfront commission to distributors will be paid by the
investor directly to the distributor, based on his assessment of various factors
including the service rendered by the distributor.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 27
(a)
(b)
(c)
(d)

Question 28
(a)
(b)

Correct Answer 27
Answer
Explanation

Correct Answer 28

The STT charged on Purchase of Equity Share in a Stock Exchange is


.
0.01%
0.10%
1%
2.50%

Mutual funds are constituted as Trusts - True or False ?


FALSE
TRUE

0.10%
STT ie. Securities Transaction Tax on purchase or sale of equity shares in
stock exchange is 0.1%
STT on sale of futures & options in stock exchange is 0.01%
TRUE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 29
(a)
(b)

Question 30
(a)
(b)
(c)
(d)

Correct Answer 29
Answer
Explanation

Correct Answer 30

Fundamental analysis can be effectively used for Intra Day Trading True or False ?
TRUE
FALSE

Its compulsory to list units of


ELSS Fund
Close Ended Fund
Gilt Fund
Arbitrage Fund

on the stock exchange.

FALSE
It is generally agreed that longer term investment decisions are best taken
through a fundamental analysis approach.
Technical analysis is generally used for shorter term speculative decisions,
including intra-day trading.
Close Ended Fund

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 31
(a)
(b)
(c)
(d)

KIM has to be updated every


three months
six months
one year
five year

Question 32

Generally long term investment decisions taken through fundamental


analysis and for shorter term speculative decisions, including intra-day
trading one uses Technical Analysis - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 31

one year

Answer
Explanation

Correct Answer 32
Answer
Explanation

KIM is to be updated at least once a year.

TRUE
It is generally agreed that longer term investment decisions are best taken
through a fundamental analysis approach.
Technical analysis is generally used for shorter term speculative decisions,
including intra-day trading.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 33
(a)
(b)

Question 34

Fund accounting activity of a scheme has be 100% outsourced - True or


False ?
TRUE
FALSE

Offer documents of mutual fund schemes are approved by SEBI - True


or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 33

FALSE

Correct Answer 34

FALSE

Answer
Explanation

Offer Documents in the market are vetted by SEBI, though SEBI does not
formally approve them.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 35
(a)
(b)
(c)
(d)

Question 36
(a)
(b)

Correct Answer 35
Answer
Explanation

Correct Answer 36
Answer
Explanation

assumes that all dividend payouts are re-invested in the


scheme at the ex-dividend NAV.
Compounded Returns
Compounded Annual Growth Rate
Annualised Returns
Simple Returns

Nomination and Pledge options are not available for mutual fund
investors - True or False ?
TRUE
FALSE

Compounded Annual Growth Rate


Whenever a dividend is paid and compounding is to be considered - the
CAGR - Compounded Annual Growth Rate - technique prescribed by SEBI
is used.
This calculation is based on an assumption that the dividend would be reinvested in the same scheme at the ex-dividend NAV.
FALSE
Nomination and Pledge options are available for mutual fund investors.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 37
(a)
(b)

Question 38
(a)
(b)
(c)
(d)

Correct Answer 37
Answer
Explanation
Correct Answer 38

Day to day management of the MF schemes is handled by the Trustees True or False ?
FALSE
TRUE

Redemption / re-purchase cheques would need to be dispatched to


investors within
working days from the date of receipt of request.
2
3
5
10

FALSE
Day to day management of the schemes is handled by an AMC.
The AMC is appointed by the sponsor or the Trustees.
10

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION EXAM PRACTICE TEST 6

Question 39
(a)
(b)

Question 40

ELSS schemes should contain the least amount of Ill Liquid Investments
- True or False ?
TRUE
FALSE

Anyone who is aggrieved by a ruling of SEBI, can file an appeal with the
Ministry of Finance - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 39

FALSE

Answer
Explanation

Correct Answer 40
Answer
Explanation

Open-ended scheme, which have a greater need for liquidity because


investors can offer their units for re-purchase at any time - should have the
least amount of ill liquid investments in their portfolio.
ELSS Schemes have a lockin period of three years - so the fund manager can
buy more illiquid investments if he feels there is great potential in them in the
long run.
FALSE
Anyone who is aggrieved by a ruling of SEBI, can file an appeal with the
Securities Appellate Tribunal (SAT).

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

LAST DAY REVISION EXAM 1

Question 1

(a)
(b)

Question 2

(a)
(b)
(c)
(d)

Correct Answer 1
Answer
Explanation

Correct Answer 2
Answer
Explanation

The basis of Fundamental Analysis is studying the companies Price


Volume chart and then taking a decision on buying/selling - True or False
?
TRUE
FALSE

The average net asset of a Mutual Fund scheme is Rs 500 crores and the
investment transactions amounted to Rs 2000 crores in a year. What is
the average holding period of the investments ?
2 months
3 months
4 months
6 months

FALSE
Fundamental Analysis entails review of the companys fundamentals viz.
financial statements, quality of management, competitive position in its
product / service market etc.
Technical analysts study price-volume charts of the companys share prices.
3 months
Total Transactions = Rs 2000 cr
Avg Asset = Rs 500 cr
So 2000 / 500 = 4 times in a year the investments were churned
4 times a year = every 3 months.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 3
(a)
(b)
(c)
(d)

Which of the below is not a high risk fund ?


Banking Sector Fund
Diversified Equity Fund
Income Fund
Pharma Sector Fund

Question 4

Every investor should invest in


portfolio.
Arbitrage Funds
Diversified Equity Funds
Sector Funds
Thematic Funds

(a)
(b)
(c)
(d)

Correct Answer 3

Income Fund

Correct Answer 4

Diversified Equity Funds

as a part of his core

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 5
(a)
(b)
(c)
(d)

Question 6
(a)
(b)

Correct Answer 5
Answer
Explanation

Correct Answer 6
Answer
Explanation

The NAV of a Mutual Fund scheme is Rs 180. If the exit load is 2%, what
will be the effective re-purchase price ?
176
176.4
177.5
177.8

AMFI is the sole regulator of Mutual Funds in India - True or False ?


TRUE
FALSE

176.4
Rs 180 less 2%
180 X 2 / 100 = 3.6
180-3.6 = 176.40

FALSE
SEBI is the regulator of MF's in India.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 7
(a)
(b)
(c)
(d)

Long Term Capital Gain Tax is Debt Schemes is charged at


20% with indexation
10% without indexation
Lower of 1 and 2
There is no tax on Debt Schemes

Question 8

A purchase transaction of a Mutual fund scheme is completed online by


an investor at 12.25 pm (web server time). The same is processed at 3.50
pm. What is the applicable cut-off time for this transaction?

(a)
(b)
(c)
(d)

Correct Answer 7
Answer
Explanation

Correct Answer 8
Answer
Explanation

12.25 pm
3.30 pm
3.50 pm
Cut off time does not apply for online transaction

Lower of 1 and 2
In the case of Long Term Capital Gain, investor pays tax at the lower of the
following:
- 10% plus surcharge plus education cess, without indexation
- 20% plus surcharge plus education cess, with indexation
12.25 pm
For online transactions, the time as per the web server to which the instruction
goes, is used in determining the NAV for sale / re-purchase transactions.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 9
(a)
(b)
(c)
(d)

The Trustees have to take the consent of Unit Holders


when the trustees decide to wind up the scheme
whenever required by 75% of the unit holders
whenever required by SEBI in the interest of unit holders
All of the above

Question 10
(a)
(b)
(c)
(d)

The date of applicability of the NAV is not dependent on


scheme in which the money is invested
time at which the application is submitted
place at which the application is submitted
All of the above

Correct Answer 9

All of the above

Correct Answer 10

place at which the application is submitted

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 11
(a)
(b)
(c)
(d)

Question 12
(a)
(b)

Correct Answer 11
Answer
Explanation

Correct Answer 12
Answer
Explanation

The scheme in which physical gold is deposited in a bank and interest is


received on such deposit is known as
.
Loan against Gold scheme
Gold Deposit Scheme
Gold Transfer Scheme
There is no such scheme

No SEBI permission is required in appointing a Bank or a Stock Broker


as a Mutual Fund distributor - True or False ?
TRUE
FALSE

Gold Deposit Scheme


Gold deposit schemes are offered by some banks in India and are like a fixed
deposit in gold.
An investor depositing gold receives interest at regular intervals and on
maturity the gold of equivalent weight is returned.

TRUE
The AMC appoints its distributors as per the guidelines. No SEBI permission
is required for such appointments.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 13
(a)
(b)
(c)
(d)

Question 14
(a)
(b)

Correct Answer 13
Answer
Explanation

Correct Answer 14
Answer
Explanation

Mr. Mohan gives an application for investment in an Equity fund at 3.29


pm on Friday at the AMC's office. Which will be the applicable NAV ?
Fridays NAV
Saturdays NAV
Mondays NAV
Highest NAV of the above three

The Non Systematic Risk can be minimised by diversifying the portfolio True or False ?
FALSE
TRUE

Mondays NAV
For applications for an Equity Fund given after 3 pm, the next working days
NAV is considered.

TRUE
Non-systematic risk is unique to a company like risk arising out of change in
management or cheaper imports etc.
This can be minimised by diversification ie. investing in various companies of
different sectors.
(Systematic risk is integral to investing in the market; it cannot be avoided like
Political risks etc)

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 15
(a)
(b)

Question 16
(a)
(b)
(c)
(d)

Correct Answer 15
Answer
Explanation

Correct Answer 16
Answer
Explanation

Yield Spread is the additional risk premium that an investor gets for
bearing the credit risk - True Or False ?
TRUE
FALSE

A Mutual Fund scheme issued 36 crore units to its investors in an NFO at


face value Rs 10. What is the unit capital of this scheme ?
Rs 36 cr
Rs 360 cr
Rs 3600 cr
None of the above

TRUE
Eg- Additional return offered by a non-government issuer ( like a Company),
above the yield that the government offers, is called yield spread. Better the
credit quality, lower the yield spread.

Rs 360 cr
Each unit is of Rs 10.
So 36 cr units X Rs 10 = Rs 360 cr

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 17
(a)
(b)

Retirement Planning involves Tactical Asset Allocation - True or False ?


TRUE
FALSE

Question 18

Growth investment style entails investing in high growth stocks i.e. stocks
of companies that are likely to grow at the same pace as that of the
economy - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 17

FALSE

Answer
Explanation

Correct Answer 18
Answer
Explanation

Tactical asset allocation is suitable only for seasoned investors operating with
large funds as it involves taking a bet on the market movements.
Strategic Asset Allocation is best suited for Retirement Planning as it
considers the age - risk factor.

FALSE
Growth investment style entails investing in high growth stocks i.e. stocks of
companies that are likely to grow much faster than the economy.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 19

(a)
(b)
(c)
(d)

Question 20
(a)
(b)

Correct Answer 19
Answer
Explanation

Correct Answer 20
Answer
Explanation

An investor gives a cheque of Rs 1 lacs for investing in a Debt scheme at


3.30 pm at a Mutual Fund office. The NAV of which day will be
applicable to him ?
NAV of the same day
NAV of the next business day
NAV of the day on which funds will be available
None of the above

The Entry / Exit Loads and Taxes do not have an impact on the returns to
the investors - True or False ?
TRUE
FALSE

NAV of the next business day


For all Equity and Debt funds (except Liquid funds) - For investment of Rs 2
lacs and below - NAV of the same day if received before 3 pm ( cut-off time).
If received after 3 pm then NAV of the next business day.
For investments of amount over Rs 2 lacs, irrespective of the time of receipt of
application, NAV of the business day on which the funds are available for
utilisation before the cut-off time of that day is applicable.

FALSE
Loads and taxes pull the investors returns below that earned by the Scheme.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 21
(a)
(b)

Question 22
(a)
(b)

The distribution of an investors portfolio between different asset classes is


called asset allocation - True or False ?
TRUE
FALSE

Minors can invest in Mutual Funds - True or False ?


TRUE
FALSE

Correct Answer 21

TRUE

Correct Answer 22

TRUE

Answer
Explanation

Minors i.e. persons below the age of 18 are not legally eligible to contract, so
they need to invest through their Parents/Lawful guardians.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 23

(a)
(b)

Question 24

(a)
(b)
(c)
(d)

Correct Answer 23
Answer
Explanation

Correct Answer 24

Investments owned by the scheme may be quoted in the market at lower


price than the cost paid and these losses are called Notional Losses - True
or False ?
TRUE
FALSE

One of the objective of


is to interact with the Securities and
Exchange Board of India (SEBI) and to represent to SEBI on all matters
concerning the mutual fund industry.
AMFI
NSE / BSE
Investor Forum
Mutual Fund Distributors Association

FALSE
Investments owned by the scheme may be quoted in the market at lower than
the cost paid and these are called valuation losses.
Similarly, there can be valuation gains when securities are quoted in the
market at a price above the cost at which the scheme acquired them.

AMFI

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 25

(a)
(b)

Question 26
(a)
(b)
(c)
(d)

Correct Answer 25
Answer
Explanation

Correct Answer 26
Answer
Explanation

Mutual funds/AMCs shall disclose portfolio (along with ISIN) as on the


last day of the month for all their equity schemes on their respective
website on or before the third day of the succeeding month in a userfriendly and downloadable format - True or False ?
TRUE
FALSE

is the summary of SAI and SID


New Fund Offer Application
KIM
Attachments to all Advertisements
None of the above

FALSE
Its on or before the tenth day of the succeeding month.

KIM
KIM ( Key Information Memorandum) is essentially a summary of the SID
(Scheme Information Document) and SAI (Statement of Additional
Information).
It is more easily and widely distributed in the market. As per SEBI
regulations, every application form is to be accompanied by the KIM.
New Fund Offer contains the complete SID and SAI.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 27
(a)
(b)
(c)
(d)

Question 28

An investor in an active fund bears a


management, and takes a
risk.
Higher , Higher
Lower , Lower
Higher, Lower
Lower, Higher

Although
invest in equity markets, the expected returns are in
line with liquid funds.

(a)
(b)
(c)
(d)

Sectoral Funds
Arbitrage Funds
ELSS Funds
Debt Funds

Correct Answer 27

Higher , Higher

Correct Answer 28

Arbitrage Funds

Answer
Explanation

cost for the fund

Although Arbitrage funds are categorized as equity funds because they invest
in equity. In reality, the risks are arbitraged (i.e. cancelled out), normally
between the cash market and the F&O market.
The returns are lower more in line with money market returns/liquid funds,
rather than equity market returns as there is no open position and the profit is
the price difference between two markets.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 29
(a)
(b)

Question 30
(a)
(b)
(c)
(d)

Correct Answer 29
Answer
Explanation
Correct Answer 30

An investor who wants wider portfolio choices should invest in Mutual


Funds when compared to National Pension System - True or False ?
TRUE
FALSE

All advertisements and Sales Literature containing an AMC(s)/Mutual


Fund ranking must prominently disclose
.
The publisher of the ranking data.
Criteria on which the ranking is based.
The name of the Ranking Entity.
All of the above

TRUE
The NPS offers fewer portfolio choices than mutual funds.

All of the above

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 31
(a)

As per the Income Tax Act - which of the below option is True ?
Capital loss, short term or long term, can be set off against any other head of
income

(b)

Long term capital loss can be set off against long term and short term capital
gain

(c)
(d)

Short Term Capital gains is a tax free income


Short term capital loss is to be set off against short term capital gain or long
term capital gain

Question 32

(a)
(b)

Correct Answer 31

Answer
Explanation

Correct Answer 32
Answer
Explanation

An important objective of SEBI is to represent to the Government,


Reserve Bank of India and other bodies on all matters relating to the
Mutual Fund Industry - True or False ?
TRUE
FALSE

Short term capital loss is to be set off against short term capital gain or long
term capital gain
A few key provisions of the Income Tax Act are :
Capital loss, short term or long term, cannot be set off against any other head
of income (e.g. salaries)
Short term capital loss is to be set off against short term capital gain or long
term capital gain
Long term capital loss can only be set off against long term capital gain
FALSE
An important objective of AMFI is to represent to the Government, Reserve
Bank of India and other bodies on all matters relating to the Mutual Fund
Industry

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 33
(a)
(b)
(c)
(d)

Question 34

(a)
(b)
(c)
(d)

If an Institutional Investor is making an application for investing in a


Mutual Fund, which additional document is required ?
Audited Accounts for the last 3 years
Bank Statements
Board Resolution
Approval letter from SEBI

An investor gives a cheque of Rs 7 lacs at 4 pm at a Mutual Fund office


for investment in a Equity Fund. The NAV of which day will be
applicable to him ?
Same day NAV
NAV of the next business day
NAV of the day on which the funds are available
None of the above

Correct Answer 33

Board Resolution

Correct Answer 34

NAV of the day on which the funds are available

Answer
Explanation

For investments of amount over Rs 2 lacs, irrespective of the time of receipt of


application, NAV of the business day on which the funds are available for
utilisation before the cut-off time of that day is applicable.
For all Equity and Debt funds (except Liquid funds) - For investment of Rs 2
lacs and below - NAV of the same day if received before 3 pm ( cut-off time)

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 35

(a)
(b)

Question 36

If an investor feels that the trustees have not fulfilled their obligations,
then he can file a suit against the trustees for breach of trust - True or
False ?
TRUE
FALSE

Pension Funds Regulatory and Development Authority (PFRDA) is the


regulator for the National Savings System.

(a)
(b)

TRUE
FALSE

Correct Answer 35

TRUE

Correct Answer 36

FALSE

Answer
Explanation

Pension Funds Regulatory and Development Authority (PFRDA) is the


regulator for the National Pension System.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 37
(a)
(b)
(c)
(d)

Question 38
(a)
(b)
(c)
(d)

Correct Answer 37
Answer
Explanation

Correct Answer 38
Answer
Explanation

An elderly couple who have no immediate family members should ideally


invest in
.
ELSS Funds
Debt Funds
Sectoral Funds
Blue Chip Equity Funds

To source the data required to track the performance of mutual funds


most
offer free tools on their websites for this purpose.
AMC's
Distribution Houses
MF Research companies
All of the above

Debt Funds
Debts funds carry the least amount of risk so they can be recommended to the
elderly couple.
The other funds are Equity oriented and carry huge market risks.
All of the above
An investor who wants to study the performance of a MF by collecting daily
NAV etc. from the newspapers can find it frustratingly time consuming.
However ready-made solutions are available in the market. Many AMCs,
distribution houses and mutual fund research houses offer free tools in their
website.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 39
(a)
(b)
(c)
(d)

Question 40
(a)
(b)

Correct Answer 39
Answer
Explanation

Correct Answer 40
Answer
Explanation

Of the following documents, which is required to be appended to the


application form of a MF scheme ?
Statement of Additional Information - SAI
Addendum
Scheme Information Document - SID
Key Information Memorandum - KIM

A regular dividend paying mutual fund scheme can be used for capital
appreciation - True or False ?
FALSE
TRUE

Key Information Memorandum KIM


KIM is essentially a summary of the SID and SAI.
As per SEBI regulations, every application form is to be accompanied by the
KIM.
FALSE
A regular dividend paying mutual fund scheme can be used as a source of
regular income.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 41
(a)
(b)

Question 42

Mutual Funds are constituted as Investment Companies in India - True


or False ?
TRUE
FALSE

Recurring expenses cannot be charged to a Mutual Fund scheme as it drags


down the NAV - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 41

FALSE

Answer
Explanation

Correct Answer 42
Answer
Explanation

Mutual funds are constituted as Trusts.and they are governed by the Indian
Trusts Act, 1882

FALSE
Recurring Expenses can be charged to the scheme.
Since the recurring expenses drag down the NAV, SEBI has laid down the
expenses and their limits which can be charged to the scheme.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 43

(a)
(b)

Question 44

In the Scheme Information Document (SID), the condensed financial


information (for schemes launched in last 3 financial years) is mentioned True pr False ?
FALSE
TRUE

Liquid schemes and other debt schemes regularly park funds in short
term deposits of commercial banks but cannot charge management fees
on these - True or False ?

(a)
(b)

FALSE
TRUE

Correct Answer 43

FALSE

Answer
Explanation

Correct Answer 44
Answer
Explanation

Condensed financial information (for schemes launched in last 3 financial


years) is mentioned in the Statement of Additional Information (SAI).

TRUE
Management fees cannot be charged by liquid schemes and other debt
schemes on funds parked in short term deposits of commercial banks.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 45
(a)
(b)

Cash less medical insurance schemes has led to


More Liquidity with investors
Less Liquidity with investors

Question 46
(a)
(b)
(c)
(d)

Tax Deferral is a key feature of


Dividend Option
Growth Option
Arbitrage Fund
Liquid Schemes

Correct Answer 45
Answer
Explanation

Correct Answer 46

_.

Less Liquidity with investors


Investors keep less liquidity ( ready money ) as the insurance companies settle
the medical bills directly.

Growth Option

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 47

(a)
(b)

Question 48
(a)
(b)

Correct Answer 47
Answer
Explanation

Correct Answer 48
Answer
Explanation

Open-ended schemes have to re-open for sale / re-purchase within 5


business days of the allotment and that date is known as the Re-Opening
date - True or False ?
TRUE
FALSE

The Custodian accepts and gives delivery of securities for the purchase
and sale transactions of the various schemes of the fund - True or False ?
TRUE
FALSE

TRUE
As per SEBI guidelines, NFOs [other than ELSS and RGESS] can remain
open for a maximum of 15 days.
Allotment of units or refund of moneys, should be done within 5 business days
of closure of the scheme and Open-Ended schemes have to re-open for sale /
re-purchase within 5 business days of the allotment.
TRUE
The custodian is responsible for settling all the transactions on behalf of the
mutual fund schemes.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 49
(a)
(b)

Question 50

(a)
(b)
(c)
(d)

In the Mutual Fund industry - every AMC gives an ARN code number
which is renewed every three years - True or False ?
True - this is as per SEBI rules
False - AMFI issues the ARN code number.

All advertisements and Sales Literature containing an AMC(s)/Mutual


Fund ranking must prominently disclose, with respect to the ranking
.
The name of the Ranking Entity and the criteria on which the ranking is based
The name of the category (e.g. income/growth)
The number of AMC(s)/Mutual Funds in the category.
All of the above

Correct Answer 49

False - AMFI issues the ARN code number.

Correct Answer 50

All of the above

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 51

(a)
(b)
(c)
(d)

Question 52
(a)
(b)

Correct Answer 51
Answer
Explanation

Correct Answer 52
Answer
Explanation

Mr. Shah gives a local cheque at 4.30 pm of Rs 10 lacs at a Mutual Fund


office for investing in a Gilt Fund. Of which day will the NAV be
applicable to him ?
NAV of the same day
NAV of the next business day
NAV of the day on which the funds will be available
None of the above

Due to the popularity of cash less health insurance policies the liquidity
needs of the investors have reduced - True or False
TRUE
FALSE

NAV of the day on which the funds will be available


For investments of amount over Rs 2 lacs, irrespective of the time of receipt of
application, NAV of the business day on which the funds are available for
utilisation before the cut-off time of that day is applicable.
For investment of Rs 2 lacs and below - NAV of the same day if received
before 3 pm ( cut-off time)
TRUE
Earlier people use to save to meet medical emergencies. But due to cash less
medical insurance people keep less liquidity with them as the insurance
companies pay for the medical bills

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 53
(a)
(b)
(c)
(d)

Question 54
(a)
Options (c)
Schemes
(d)

Correct Answer 53
Answer
Explanation

Correct Answer 54
Answer
Explanation

Dividend Distribution Tax (DDT) on debt-oriented mutual fund schemes


for Corporate Investors is
+ Surcharge + Education Cess
15%
25%
30%
35%

Different investors have different investment needs and objectives. This is


the reason Mutual Fund offer different
.
Plans (b)

time horizons.

30%
Tax on dividend distributed by debt-oriented mutual fund schemes is as
follows:
Others: 30% + Surcharge + Education Cess
Individuals and HUF: 25% + Surcharge + Education Cess
Schemes
MF's have various schemes like Large Cap Funds, Mid Cap Funds. Sectoral
Funds etc. to suit varied investment requirements.
(Plans and Options are Dividend / Growth etc. which form a part of the
scheme)

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 55
(a)
(b)
(c)
(d)

Question 56
(a)
(b)
(c)
(d)

A person wishes to avail of a loan. For which of the below options he


cannot get a loan ?
To start a textile factory
To buy a car of value above Rs 20 lacs
To buy a high priced lottery ticket
To buy a house in a Union Territory

You are expecting interest rates (yields) to rise in the markets. Where
would you invest your money considering this forecast ?
Long Terms Debt Funds
Short Term Debt Funds
Equity Funds
Banking Sector Funds

Correct Answer 55

To buy a high priced lottery ticket

Correct Answer 56

Short Term Debt Funds

Answer
Explanation

If it is expected that interest rates would go up, it would be safer to go with


Short Term Debt Funds. As the rates rise, the short-term bonds would mature,
allowing the fund manager to deploy the proceeds at higher rates.
On the contrary, as interest rates in the market goes down, debt securities gain
in value. Therefore, long term debt funds would be sensible in declining
interest rate scenarios.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 57

(a)
(b)

Question 58
(a)
(b)
(c)
(d)

Correct Answer 57
Answer
Explanation

Correct Answer 58
Answer
Explanation

As per the provisions of the Income Tax Act - Short term capital loss is to
be set off against short term capital gain or long term capital gain - True
or False ?
TRUE
FALSE

For a Young Unmarried - which of the following phase is applicable ?


Accumulation
Distribution
Transfer
None of the above

TRUE
Some key provisions of IT Act related to Capital Gains are:
Capital loss, short term or long term, cannot be set off against any other head
of income (e.g. salaries)
Short term capital loss is to be set off against short term capital gain or long
term capital gain
Long term capital loss can only be set off against long term capital gain
Accumulation
Accumulation is the stage when the investor gets to build his wealth.
It covers the earning years of the investor i.e. the phases of the life cycle from
Young Unmarried to Pre-Retirement.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 59

(a)
(b)
(c)
(d)

Question 60
(a)
(b)
(c)
(d)

The prescribed ceiling for ill liquid investments is lower for


,
which have a greater need for liquidity because investors can offer their
units for re-purchase at any time.
ELSS Schemes
Close Ended Schemes
Open Ended Schemes
Debt Funds

Which one of the below mentioned document is not required for KYC
process ?
PAN Card
Address Proof
Income Proof
Identity Proof

Correct Answer 59

Open Ended Schemes

Correct Answer 60

Income Proof

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 61

(a)
(b)
(c)
(d)

Question 62
(a)
(b)

Correct Answer 61
Answer
Explanation

Correct Answer 62
Answer
Explanation

A Mutual Fund scheme gave an annualised return of 9.86% and the


annualised Standard Deviation of the fund is 3.47. The current risk free
return is 8%. Calculate the Sharpe Ratio.
0.89
0.72
0.49
0.35

Management fees cannot be charged by liquid schemes on funds parked


in short term deposits of commercial banks - True or False ?
TRUE
FALSE

0.35
The formula for Sharpe Ratio is : ( Rs-Rf ) / Standard Deviation
ie. ( Return Earned - Risk free Return ) / Standard Deviation
0.536023055
0.354466859
0.35
TRUE
SEBI has stipulated annual limits on recurring expenses (including
management fees) for various Equity and Debt schemes.
However management fees cannot be charged by liquid schemes and other
debt schemes on funds parked in short term deposits of commercial banks.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 63
(a)
(b)

Question 64
(a)
(b)
(c)
(d)

Correct Answer 63
Answer
Explanation

Correct Answer 64
Answer
Explanation

In a scenario where interest rates are falling, it would be advisable to


invest in a debt fund rather than bank deposit - True or False ?
TRUE
FALSE

The Pension Account of National Pension System (NPS) is known as


.
Tier I
Tier II
Tier III
Asset Class E

TRUE
As interest rates in the market goes down, debt securities gain in value.
Therefore, long term debt funds would be sensible in declining interest rate
scenarios.
Also if it is expected that interest rates would go up, it would be safer to go
with Short Term Debt Funds. As the rates rise, the short-term bonds would
mature, allowing the fund manager to deploy the proceeds at higher rates.
Tier I
Tier I A/c of the National Pension System (NPS) is the Pension account and
is non-withdrawable.
Tier II A/c is the Savings account and is withdrawable to meet financial
contingencies. An active Tier I account is a pre-requisite for opening a Tier II
account.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 65
(a)
(b)
(c)
(d)

Question 66
(a)
(b)
(c)
(d)

Correct Answer 65
Answer
Explanation

Correct Answer 66
Answer
Explanation

In Liquid funds, simple annualised return method is used to show the


returns because
.
Its a simpler way to calculate and investors understand it easily
The investment made is fixed for 30 - 90 - 180 days
The return is calculated over smaller time horizons
The amount invested is usually small

You are a mutual fund advisor. To whom would you advise investment of
more than 70 % of their funds in debt funds ?
A 33 year old well employed with one son
A 45 year old Executive Manager of a company who has 2 children
Elderly couple with no children
Young man working with Glaxo

The return is calculated over smaller time horizons


In case of Money Market schemes and liquid plans, wherein investors have
very short investment horizon, the performance can be measured and
advertised by simple annualisation of yields.

Elderly couple with no children


More Allocation to debt funds is recommended for senior citizens as they
carry the least amount of risk
Young people can take risks so they are advised to invest in Equity funds for a
long term.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 67
(a)
(b)

Question 68

The Stock Exchanges which provide facilities for Mutual Fund trading
also do the functions of Mutual Fund RTAs. - True or False ?
TRUE
FALSE

The National Pension System (NPS) offers a wider portfolio choice than
Mutual Funds - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 67

FALSE

Answer
Explanation

Correct Answer 68
Answer
Explanation

Stock Exchanges does are not required to do the role of Registrars and
Transfer Agents (RTA).

FALSE
The NPS offers fewer portfolio choices than mutual funds.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 69
(a)
(b)
(c)
(d)

Question 70
(a)
(b)

Correct Answer 69
Answer
Explanation

Correct Answer 70

Investments owned by the scheme may be quoted in the market at higher


than the cost paid and these gains are called as
.
Valuation Gains
Booked Gains
Notional Gains
Notional Losses

Loads and taxes pull the investors returns below that earned by the
Scheme - True or False ?
TRUE
FALSE

Valuation Gains
Investments owned by the scheme may be quoted in the market at higher than
the cost paid and these are called valuation gains.
Similarly, there can be valuation losses when securities are quoted in the
market at a price below the cost at which the scheme acquired them.
TRUE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 71
(a)
(b)
(c)
(d)

What is the full form of ASBA ?


Application Supported by Blocked Amount
Applicants Supporting Block Amount
Application Supported by Bankers Acceptance
Applications Superiority by Blocked Amount

Question 72

An investor gives a cheque of Rs 2 lacs for investing in a ELSS scheme at


2.30 pm at a Mutual Fund office. The NAV of which day will be
applicable to him ?
NAV of the same day
NAV of the next business day
NAV of the day on which funds will be available
None of the above

(a)
(b)
(c)
(d)

Correct Answer 71

Application Supported by Blocked Amount

Correct Answer 72

NAV of the day on which funds will be available

Answer
Explanation

For all Equity and Debt funds (except Liquid funds) - For investments of
amount of Rs 2 lacs and above, irrespective of the time of receipt of
application, NAV of the business day on which the funds are available for
utilisation before the cut-off time of that day is applicable.
For investment of below Rs 2 lacs - NAV of the same day if received before 3
pm ( cut-off time)

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 73
(a)
(b)
(c)
(d)

Question 74
(a)
(b)

Correct Answer 73
Answer
Explanation

Correct Answer 74
Answer
Explanation

The dividend received by a Mutual Fund investor will be taxed at a rate


of
_.
5%
10%
20%
No tax on Mutual Fund Dividends in the hands of the investor

A investors wishes to invest in debt mutual funds but wants high liquidity
- should he invest in Fixed Maturity Plans ?
Yes
No

No tax on Mutual Fund Dividends in the hands of the investor


The dividend received by an investor in a MF - be it Equity or Debt, is
exempt from tax.

No
Fixed maturity plans are a kind of debt fund where the investment portfolio is
closely aligned to the maturity of the scheme.
AMCs tend to structure the scheme around pre-identified investments. So it
will not be easy to liquidate the FMPs.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 75
(a)
(b)
(c)
(d)

Question 76

(a)
(b)
(c)
(d)

Correct Answer 75
Answer
Explanation

Correct Answer 76

Once the New Fund Offer (NFO) of a Close Ended Fund has closed, a
person can buy the listed units of such close ended fund
.
At prices usually higher than NAV
At prices usually lower than NAV
At prices which can be higher or lower than NAV
Units of a Close Ended Fund cannot be bought after NFO

To achieve growth by investing in equity and equity related investments,


along with income generation by investing in debt and money market
instruments would be the investment objective of a
.
debt fund
balanced scheme
ELSS Fund
Sectoral Equity fund

At prices which can be higher or lower than NAV


After the NFO of a close ended fund, sale and purchase transactions happen
on the stock exchange between two different investors, and that the fund is not
involved in the transaction.
The transaction price is likely to be different from the NAV. Depending on the
demand-supply situation for the units of the scheme on the stock exchange,
the transaction price could be higher or lower than the prevailing NAV.
balanced scheme

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 77
(a)
(b)

Question 78

Young Age, Good Steady Job, an Adventurous streak etc are some
qualities of an investor who takes risks in investments - True or False ?
FALSE
TRUE

The peak of earning capacity of an investor reached during the preretirement phase - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 77

TRUE

Correct Answer 78

TRUE

Answer
Explanation

In the Accumulation stage, the investor gets to build his wealth. It covers the
earning years of the investor i.e. the phases of the life cycle from Young
Unmarried to Pre-Retirement.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 79
(a)
(b)
(c)
(d)

Question 80
(a)
(b)
(c)
(d)

Correct Answer 79
Answer
Explanation

Correct Answer 80
Answer
Explanation

Investing in
Economic Turmoil.

can be a risky prospect during periods of

Gilt Securities
Debt Funds
Mid Cap Funds
Large Cap Funds

Asset allocation means


_.
Distribution of Funds between Fund Managers in a Mutual Fund
Distribution of funds between various asset classes in a portfolio
Distribution of funds between various persons after the death of a person
Distribution of funds between beneficiaries of an AMC

Mid Cap Funds


Mid Cap Stocks are intrinsically not as strong as the frontline (large cap)
stocks, so they become riskier during periods of economic turmoil.

Distribution of funds between various asset classes in a portfolio


The distribution of an investors portfolio between different asset classes is
called asset allocation.
For eg - If an investor wishes to invest Rs 10 lakhs - His funds can be divided
and invested in Equity, Debt and Gold - This is asset allocation.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 81

(a)
(b)
(c)
(d)

Question 82
(a)
(b)
(c)
(d)

Debt-oriented, close-ended / interval, schemes /plans need to disclose their


portfolio in their website every month, by the
working day of the
succeeding month.
3rd
10th
12th
15th

Condensed financial information for schemes launched in last 3 financial


years is mentioned in the
.
Scheme Information Document (SID)
Statement of Additional Information (SAI)
Fact Sheet
Prospectus

Correct Answer 81

3rd

Correct Answer 82

Statement of Additional Information (SAI)

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 83
(a)
(b)
(c)
(d)

Question 84
(a)
(b)

Correct Answer 83
Answer
Explanation

Correct Answer 84
Answer
Explanation

Post the New Fund Offer, investors who wishes to buy units need to pay
.
the NFO price plus inflation rate
the same price as NFO
a price linked to the inflation index
a price that is linked to its NAV.

Every trust has beneficiaries - True or False ?


TRUE
FALSE

a price that is linked to its NAV.


When a scheme is first made available for investment, it is called a New Fund
Offer (NFO).
During the NFO, investors have the chance of buying the units at their face
value.
Post-NFO, when they buy into a scheme, they need to pay a price that is
linked to its NAV.
TRUE
Every trust has beneficiaries. The beneficiaries, in the case of a mutual fund
trust, are the investors who invest in various schemes of the mutual fund.
The Trust acts through its trustees. Therefore, the role of protecting the
interests of the beneficiaries (investors) is that of the Trustees.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 85

(a)
(b)

Question 86
(a)
(b)
(c)
(d)

Investments in Mutual Funds are subject to market risks and therefore


do not provide any guarantee of Capital Growth / Protection - True or
False ?
TRUE
FALSE

Mutual funds can accept cash to the tune of Rs


investors.
No cash can be accepted by a MF
Rs 50,000
Rs 20,000
Rs 5,000

Correct Answer 85

TRUE

Correct Answer 86

Rs 20,000

Answer
Explanation

from small

Mutual funds usually do not accept cash.


However for small investors, who may not be tax payers and may not have
PAN/bank accounts, are allowed cash transactions for purchase of units in
mutual funds to the extent of Rs. 20,000/- per investor, per mutual fund, per
financial year.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 87
(a)
(b)
(c)
(d)

Gold Future Contracts


.
are traded on the Commodity Exchanges
are not standardised products
can be bought through Mutual Funds
None of the above

Question 88

If a person wants to appeal against the ruling of SEBI, he can do so with


.

(a)
(b)
(c)
(d)

Correct Answer 87
Answer
Explanation

Correct Answer 88
Answer
Explanation

RBI
Commerce Ministry
Company Law Board
Securities Appellate Tribunal

are traded on the Commodity Exchanges


Gold futures contracts are traded in commodity exchanges like the National
Commodities Exchange (NCDEX) and Multi-Commodity Exchange (MCX).
The value of these contracts goes up or down in line with increases or
decreases in gold prices.

Securities Appellate Tribunal


Anyone who is aggrieved by a ruling of SEBI, can file an appeal with the
Securities Appellate Tribunal (SAT).

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 89
(a)
(b)

Question 90

(a)
(b)
(c)
(d)

Correct Answer 89
Answer
Explanation

Correct Answer 90

There are no penalties for breach of code of conduct as mandated by


AGNI - True or False ?
TRUE
FALSE

Mutual funds/AMCs shall disclose portfolio (along with ISIN) as on the


last day of the month for all their schemes on their respective website on
or before the
of the succeeding month
3rd day
7th day
10th day
15th day

FALSE
As per 'AMFI Guidelines & Norms for Intermediaries' (AGNI) - In the event
of breach of the Code of Conduct by an intermediary the registration can be
cancelled after the set procedure is carried out.
10th day

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 91
(a)
(b)

Question 92
(a)
(b)
(c)
(d)

Correct Answer 91
Answer
Explanation

Correct Answer 92
Answer
Explanation

Investments in Mutual Funds can be done only through a AMFI


authorised MF distributors - True or False ?
TRUE
FALSE

Dividend Distribution Tax (DDT) on Equity oriented mutual fund


schemes for Corporate Investors is
+ Surcharge + Education Cess
10%
25%
30%
NIL TAX

FALSE
Investors can directly invest in MF's by visiting the MF office and other Point
of Sales (POS).

NIL TAX
Tax on dividend distributed is not payable on dividend distributed by equityoriented mutual fund schemes.
Its payable only on Debt oriented funds.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 93
(a)
(b)
(c)
(d)

Question 94
(a)
(b)
(c)
(d)

Which of the following should NOT be included in the Key Information


Memorandum ?
The risks associated with the scheme
The functions of Trustees and AMC
The opening - closing dates of the NFO
Minimum investments required and the cutoff time.

A Mutual Fund scheme is know to distribute dividends from time to time.


Such MF can be used as a source of
.
Good Capital Appreciation
Regular Income
Safety of Capital
Tax Planning

Correct Answer 93

The functions of Trustees and AMC

Correct Answer 94

Regular Income

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 95

(a)
(b)

Question 96

A Board Resolution is not required for an institutional investor to invest


in Mutual Funds if the Memorandum and Articles of Association permit
it to do so - True or False ?
TRUE
FALSE

At what rate is the Securities Transaction Tax charged on sale of units of


debt oriented mutual fund in a stock exchange ?

(a)
(b)
(c)
(d)

0.01%
0.10%
0.13%
0%

Correct Answer 95

FALSE

Answer
Explanation

Correct Answer 96
Answer
Explanation

A Board Resolution is required as an authorisation for the investing institution


to invest.

0%
STT is not applicable on transactions in debt or debt-oriented mutual fund
(including liquid fund) units.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 97

(a)
(b)

Question 98
(a)
(b)
(c)
(d)

Correct Answer 97
Answer
Explanation

Correct Answer 98
Answer
Explanation

Summary of SID - Scheme Information Document and SAI - Statement of


Additional Information is known as KIM - Key Information
Memorandum - True or False ?
TRUE
FALSE

What is the effect on bond prices when interest rates rises ?


Bond prices rises
Bond prices fall
No effect on bond prices
Can rise or fall depending on the performance of stock markets

TRUE
KIM is essentially a summary of the SID and SAI.
As per SEBI regulations, every application form is to be accompanied by the
KIM. So KIM is more easily and widely distributed in the market.
Bond prices fall
Lets take an example : An investor has invested in a bond that yields a return
of 9%.
Later, yields in the market for similar securities rise to 10%. So the bond,
which was bought at 9% yield, is no longer such an attractive investment. It
will therefore lose value.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 99
(a)
(b)

The strategy of Tactical Asset Allocation is considered to be a risky


strategy - True or False ?
TRUE
FALSE

Question 100

Mutual funds are constituted as


by the
.

(a)
(b)
(c)
(d)

Companies, Indian Companies Act


Trusts, Indian Trusts Act
Investment Agencies, SEBI Act
NGOs, NGO Act

Correct Answer 99
Answer
Explanation

Correct Answer
100

and therefore, they are governed

TRUE
Tactical Asset Allocation is the strategy when the investor presumes the
likely behaviour of the market.
An investor who decides to go overweight on equities i.e. take higher
exposure to equities, because of expectations of buoyancy in industry and
share markets. Such strategies are very risky and can backfire.

Trusts, Indian Trusts Act

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

LAST DAY REVISION EXAM 2

Question 1
(a)
(b)

Question 2
(a)
(b)
(c)
(d)

Beta is a measure of Market Risk and Standard Deviation is a measure


of Total Risk - True or False ?
TRUE
FALSE

ARN means
.
Applicant Registration Number
AMFI Recognition Number
AMFI Registration Number
Agent Registration Number

Correct Answer 1

TRUE

Correct Answer 2

AMFI Registration Number

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 3
(a)
(b)

Coupon of a debt security generally means the interest rate payable True or False ?
TRUE
FALSE

Question 4
Dividend is
under the Dividend Reinvestment Plan. (a)
Reinvested in the scheme at the Ex Dividend NAV to buy additional units (b)
Reinvested in the scheme at the Cum Dividend NAV to buy additional units
(c)
(d)

Accumulated and paid at the end of financial year


Accumulated and paid once a specific amount is accumulated

Correct Answer 3

TRUE

Correct Answer 4

Reinvested in the scheme at the Ex Dividend NAV to buy additional units

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 5
(a)
(b)
(c)
(d)

In Fundamental Analysis one has to study


Competitive position of the company in the industry
The financials of the company
The Management of the company
All of the above

Question 6

Returns for periods which are less than one year cannot be annualised True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 5

All of the above

Correct Answer 6

TRUE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 7
(a)
(b)

Question 8
(a)
(b)
(c)
(d)

Fixed Asset Depreciation and Software Development Expenses can be


charged to the scheme - True or False ?
TRUE
FALSE

Which of the following is true with respect to Gold ETF's ?


STT will be charged on trading in Gold ETFs on a stock exchange
Dividends if any will be subject to Dividend Distribution Tax but will be Tax
Free in the hands of the investor.
Indexation benefit, irrespective of the holding period can be availed by the
investors of Gold ETF's
Gold ETF's attract wealth tax

Correct Answer 7

FALSE

Correct Answer 8

Dividends if any will be subject to Dividend Distribution Tax but will be Tax
Free in the hands of the investor.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 9
(a)
(b)
(c)
(d)

Which of the following is true with respect of a Model Portfolio ?


Its designed by AMC
Its designed by SEBI
Its designed by a Financial Planner
Its designed by the Fund Manager

Question 10

When investing in Equity, the majority of gains generally come through


.

(a)
(b)
(c)
(d)

Dividend Income
Tax Savings
Capital Gains
Interest Received

Correct Answer 9

Its designed by a Financial Planner

Correct Answer 10

Capital Gains

Cllp\righl

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1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 11
(a)
(b)

Question 12
(a)
(b)
(c)
(d)

Correct Answer 11
Answer
Explanation

Correct Answer 12
Answer
Explanation

Cllp\righl

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The NAV of Gold Sector Fund directly influenced by the current gold
prices - True or False ?
TRUE
FALSE

Accumulation Phase is the stage


.
when the investor gets to build his wealth
covers the earning years of the investor
of the life cycle from Young Unmarried to Pre-Retirement
All of the above

FALSE
The Gold Sector funds invests in companies which are into Gold Mining etc.
So the NAV is directly influenced by the profits of such companies.

All of the above


Accumulation is the stage when the investor gets to build his wealth.
It covers the earning years of the investor i.e. the phases of the life cycle from
Young Unmarried to Pre-Retirement.

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 13
(a)
(b)
(c)
(d)

Question 14

(a)
(b)

Correct Answer 13
Answer
Explanation

Correct Answer 14

Cllp\righl

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Which of the below payment instrument is not accepted for Mutual Fund
purchases ?
Cheque from the applicants bank account
Cheque from the applicants brothers bank account. Both are majors.
Demand Draft
Pay Order

In case the fundamental attributes of a scheme are changed, the


dissenting unit-holders can exit at the current NAV without any exit load
- True or False ?
TRUE
FALSE

Cheque from the applicants brothers bank account. Both are majors.
Third-party cheques are not accepted except in special cases such as
grandparents/parents making payments not exceeding Rs. 50,000 on behalf of
a minor etc.

TRUE

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 15
(a)
(b)
(c)
(d)

AMC does not appoint the


R&T Agent
Custodian
Banker
Distributor

Question 16

An investor holds 5000 units of a scheme and this scheme announces a 1 :


5 bonus. How many more units will be allotted to the investor ?

(a)
(b)
(c)
(d)

Correct Answer 15
Answer
Explanation

Correct Answer 16
Answer
Explanation

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25000
10000
5000
1000

Custodian
Although the AMC manages the schemes, custody of the assets of the scheme
is with a Custodian, who is appointed by the Trustees.

1000
Bonus Ratio 1 : 5
Which means for every 5 units, 1 bonus unit will be allotted.
So for 5000 units : 1000 more units will be allotted

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 17
(a)
(b)

Question 18

After payment of dividend the NAV comes down even in the Dividend
Reinvestment option - True or False ?
TRUE
FALSE

The maximum expenses including the management expenses that can be


charged by Index and ETF schemes is
.

(a)
(b)
(c)
(d)

1%
1.50%
2%
2.50%

Correct Answer 17

TRUE

Answer
Explanation

Correct Answer 18

Cllp\righl

( \\\\\\

The NAV falls but the units increase as more units are allotted due to
Dividend Reinvestment.

1.50%

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 19
(a)
(b)

Question 20
(a)
(b)
(c)
(d)

Correct Answer 19
Answer
Explanation

Correct Answer 20

Cllp\righl

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Trail commission is calculated on the Average Net Assets of the investors


-True or False ?
TRUE
FALSE

SIP works on two main principles which are


Rupee Cost Averaging and Power of Compounding
Rupee Cost Averaging and Dividend Accumulation
Rupee Cost Averaging and Timely Profit Booking
Rupee Cost Averaging and Investment Discipline

TRUE
The trail commission is normally paid by the AMC on a quarterly basis and it
is calculated on net assets.
So the distributors benefit from increase in net assets arising out of valuation
gains in the market.
Rupee Cost Averaging and Investment Discipline

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 21
(a)
(b)

Question 22

Units of Fixed Maturity Plans (FMP) are allotted in Demat form only True or False ?
TRUE
FALSE

Investors in equity oriented schemes of mutual fund have to pay


STT while buying the units.

(a)
(b)
(c)
(d)

0.10%
0.13%
0.00%
NIL

Correct Answer 21

FALSE

Correct Answer 22

NIL

Answer
Explanation

Cllp\righl

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No Securities Transaction Tax is payable on buying a MF unit.


0.001% STT is payable on sale of a MF unit.

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 23
(a)
(b)
(c)
(d)

Question 24
(a)
(b)
(c)
(d)

Complete the sentence - Investments in Mutual Funds are subject to


market risks and so
.
provide protection against a significant downfall
provide insurance
does not provide any guarantee of capital protection
provide capital protection through diversification

The Price Earning (PE) Ratio of a company is 7 and its Earning Per
Share is Rs 10. What is the Market Price of this company ?
Rs 49
Rs 70
Rs 700
Rs 10

Correct Answer 23

does not provide any guarantee of capital protection

Correct Answer 24

Rs 70

Answer
Explanation

Cllp\righl

( \\\\\\

PE Ratio = Market Price / EPS


7
= Market Price / 10
Market Price = 7 x 10
= 70

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 25

(a)
(b)

Question 26

Once the NFO of an Open ended Mutual Fund ( other than ELSS ) is
over and the allotment is done, the scheme has to reopen for sale / repurchase in 7 business days - True or False ?
FALSE
TRUE

Long term debt funds would be sensible in declining interest rate


scenarios - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 25

FALSE

Answer
Explanation

Correct Answer 26
Answer
Explanation

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Open-ended schemes, other than ELSS, have to re-open for ongoing sale / repurchase within 5 business days of allotment.

TRUE
As yields in the market goes down, debt securities gain in value.
Therefore, long term debt funds would be sensible in declining interest rate
scenarios.

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 27
(a)
(b)
(c)
(d)

Question 28
(a)
(b)
(c)
(d)

Correct Answer 27
Answer
Explanation

Correct Answer 28
Answer
Explanation

Cllp\righl

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A Mutual Fund scheme has a portfolio of shares whose beta is more than
1. This indicates that the scheme is
.
More risky than the market
Less risky than the market
Equally risky as the market
None of the above

Relaxation in documentation requirements for micro-SIPs is not


available for
.
Non Resident Indians
Hindu Undivided Family
Individulas
All of the above

More risky than the market


Beta is a measure of risk of a security or a portfolio. If the Beta more than 1,
this means the security or the portfolio will rise or fall more than the index.
Simillary if the Beta of a scrip or portfolio is less than 1, this means the
security or the portfolio will rise or fall less than the index.

Hindu Undivided Family


Relaxation in documentation requirements for micro-SIPs is not available for
HUFs and non-individuals. Such relaxation is available for NRIs.

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 29
(a)
(b)
(c)
(d)

Question 30
(a)
(b)
(c)
(d)

Correct Answer 29
Answer
Explanation

Correct Answer 30
Answer
Explanation

Cllp\righl

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The benefit of
is that the money goes out of the investors bank
account only on allotment.
ABSA
AABS
ASBA
ASAB

The highest risk appetite is a characteristic of


A well qualified young person with a steady job
A non qualified young person with a steady job
A family man with many dependents
A retired person

ASBA
ASBA - Application Supported by Blocked Amount.

A well qualified young person with a steady job


Young, well qualified and multi-skilled professionals can afford to take more
risk.

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 31
(a)
(b)
(c)
(d)

In the
Young Married
Pre Retirement
Young Unmarried
Retirement

Question 32

For next 30 days after a New Fund Offer closes, an investor can buy
units at face value - True or False ?

(a)
(b)

Correct Answer 31
Answer
Explanation

Correct Answer 32
Answer
Explanation

Cllp\righl

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stage, a persons earning capacity reaches his peak.

TRUE
FALSE

Pre Retirement
In the Accumulation stage, the investor gets to build his wealth. It covers the
earning years of the investor i.e. the phases of the life cycle from Young
Unmarried to Pre-Retirement.

FALSE
Post-NFO, when investors buy into a scheme, they need to pay a price that is
linked to its NAV.

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 33

(a)
(b)

Question 34
(a)
(b)

As regards cut-off timing, the time when it is submitted to the Points of


Acceptance PoA is relevant and not the time when the investor submits
the transaction request to the distributor - True or False ?
TRUE
FALSE

There is an direct relationship between yields/interest rates and value of


debt securities/bonds - True or False ?
TRUE
FALSE

Correct Answer 33

TRUE

Correct Answer 34

FALSE

Answer
Explanation

Cllp\righl

( \\\\\\

There is an inverse relationship between yields and value of such debt


securities.
When interest rates rise the bond value falls as the existing bonds become less
attractive.
Similarly when interest rate fall the existing bonds value rises.

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 35
(a)
(b)

An Index fund has an beta of 1 - State True or False ?


FALSE
TRUE

Question 36
(a)
(b)

Is Real Estate Fund a physical asset or a financial asset ?


Physical Asset
Financial Asset

Correct Answer 35
Answer
Explanation

Correct Answer 36

Cllp\righl

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TRUE
Beta is a measure of risk of a security or a portfolio as compared to the
market ie. Index.
Since an Index fund invests in shares which are a part of the index, the NAV
will rise or fall as per the movements of index. So the beta is 1.
Financial Asset

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 37
(a)
(b)

Gold ETF's cannot be bought by retail investors - True or False ?


FALSE
TRUE

Question 38

To generate capital appreciation from a portfolio of predominantly


equity related securities would be the investment objective of a balanced
fund - True or False ?
TRUE
FALSE

(a)
(b)

Correct Answer 37
Answer
Explanation

Correct Answer 38
Answer
Explanation

Cllp\righl

( \\\\\\

FALSE
Gold ETF's can be easily bought by retail investors as the minimum traded
quantity is 1 unit ie. 1 gram.

FALSE
To generate capital appreciation from a portfolio of predominantly equity
related securities would be the investment objective of a Diversified Equity
Fund.

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 39
(a)
(b)

Question 40

The Tier I account of the National Pension System (NPS) is the Pension
Account and is non withdrawable - True or False ?
TRUE
FALSE

Its compulsory for the Mutual Fund to list its Close Ended schemes on
the Stock Exchange - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 39

TRUE

Answer
Explanation

Correct Answer 40
Answer
Explanation

Cllp\righl

( \\\\\\

Pension Funds Regulatory and Development Authority (PFRDA) is the


regulator for the National Pension System. There will be two types of
accounts in this Tier I (Pension account), is non-withdrawable.
Tier II (Savings account) is withdrawable to meet financial contingencies.

TRUE
Listing of Close Ended schemes is compulsory .
Therefore, after the NFO, investors who want to buy or sell units can do it
through the Stock Exchange.

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 41
(a)
(b)

Question 42

All the records of the investors of a Mutual Fund are maintained by the
Fund Manager - True or False ?
TRUE
FALSE

In Financial Planning of an individual - Model Portfolios are part of a


structured approach to investment counseling - True or False.

(a)
(b)

TRUE
FALSE

Correct Answer 41

FALSE

Answer
Explanation

Correct Answer 42
Answer
Explanation

Cllp\righl

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The RTA - Registrar and Transfer Agents maintains investor records.


Sometimes the AMC itself does this activity.

TRUE
Since investors risk appetites vary, a single portfolio cannot be suggested for
all. Financial planners often work with model portfolios the asset allocation
mix that is most appropriate for different risk appetite levels.

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 43
(a)
(b)
(c)
(d)

Who is responsible for implementation of uniform KYC.


The Mutual Funds thro' their PoAs
Registrars
Depository Participants
KYC Registration Agencies

Question 44
(a)
(b)
(c)
(d)

cannot invest in Gold Mining Companies.


Gold Sector Fund
Gold ETF
Tax Saving ELSS Fund
Balanced Fund

Correct Answer 43
Answer
Explanation

Correct Answer 44
Answer
Explanation

Cllp\righl

( \\\\\\

KYC Registration Agencies


To do away with multiple KYC formalities with various intermediaries, SEBI
has mandated a unified KYC for the securities market through KYC
Registration Agencies registered with SEBI.

Gold ETF
Gold ETF merely tracks the gold prices. It does not invest in any Gold
Mining Company.
All other funds can invest in Gold Mining Companies as per the fund
strategy.

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 45
(a)
(b)

Question 46

One should not invest in Government Securities during periods of


economic turmoil. State True or False ?
TRUE
FALSE

Mutual Fund offer various plans/options in accordance to the risk profile


of the investor - True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 45

FALSE

Answer
Explanation

Correct Answer 46
Answer
Explanation

Cllp\righl

( \\\\\\

One should not invest in Mid Cap and Small Cap stocks during periods of
economic turmoil as these stocks are fundamentally weak.

FALSE
MF's have various schemes like Large Cap Funds, Mid Cap Funds. Sectoral
Funds etc. to suit varied investment requirements.
(Plans and Options like Dividend / Growth etc. form a part of the scheme)

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 47
(a)
(b)

Question 48
(a)
(b)

Correct Answer 47
Answer
Explanation

Correct Answer 48
Answer
Explanation

Cllp\righl

( \\\\\\

A Mutual Fund wants to launch a new scheme with a Face Value of Rs


50. Will it get the required permissions ?
Yes
No

The dividend received by a Mutual Fund investor will be taxed at a rate


of 12.5% - True or False ?.
TRUE
FALSE

No
As per the law, every unit has a face value of Rs. 10.

FALSE
Mutual Fund dividend is exempt from tax in the hands of the investor.

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 49
(a)
(b)
(c)
(d)

Which of the below is a physical asset ?


GOLD Exchange Traded Funds - ETF
Real Estate Fund
Building
Debentures

Question 50
(a)
(b)
(c)
(d)

The cost of fund management are the highest in


Passive Funds
Active Funds
Index Funds
None of the Above

Correct Answer 49

Building

Correct Answer 50

Active Funds

Answer
Explanation

Cllp\righl

( \\\\\\

In Active Funds like Diversified Equity Funds, the Fund manager does a lot
of buying / selling. Also a lot of research work goes into it. So the cost of
fund management are higher.

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 51
(a)
(b)
(c)
(d)

Question 52
(a)
(b)
(c)
(d)

Correct Answer 51
Answer
Explanation

Correct Answer 52

Cllp\righl

( \\\\\\

A Mutual Fund scheme has a portfolio of shares whose beta is less than
1. This indicates that the scheme is
.
Very Very risk compared to the market
Some what risky than the market
Less risky than the market
Equally risky as the market

Why do we need Financial Planners ?


because people are not aware of investment avenues
because people do not have the time
because people do not know their financial goals
all of the above

Less risky than the market


Beta is a measure of risk of a security or a portfolio. If the Beta more than 1,
this means the security or the portfolio will rise or fall more than the index.
Similarly if the Beta of a scrip or portfolio is less than 1, this means the
security or the portfolio will rise or fall less than the index.
all of the above

1'\'>'>j'>II{I.I'\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 53
(a)
(b)
(c)
(d)

Which of the below expenses can be charged to a fund ?


Expenses to manage a fund
Expenses to launch a new fund
Expenses done by the AMC
Expenses done by the Investors

Question 54

The amount which is paid to the distributor at the time the money is
invested in a scheme is called
_.

(a)
(b)
(c)
(d)

Correct Answer 53
Answer
Explanation

Correct Answer 54

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Trail Commission
Upfront Commission
Rebate
Fund Incentive

Expenses to manage a fund


Earlier expenses to launch a fund were charged to the fund but now they
cannot.

Upfront Commission

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 55
(a)
(b)
(c)
(d)

Question 56
(a)
(b)
(c)
(d)

Open-ended schemes, except ELSS, have to re-open for ongoing sale / repurchase within
business days of allotment.
3
5
10
30

The
is the phase when the earning years usually starts.
Young Unmarried
Young Married
Married with one children
During graduation

Correct Answer 55

Correct Answer 56

Young Unmarried

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 57
(a)
(b)
(c)
(d)

The Transaction Slips are used by


First time investors of Mutual Funds
NFO Investors
Existing Investors
Relatives of Existing Investors

Question 58

Which of the following is an important aspect of an OFFER


DOCUMENT ?
To inform the investors about the AMC's views on Stock Markets
To inform the investors on the performance of the scheme
To provide a comparison of the schemes
To inform the investors on the detailed information about the scheme

(a)
(b)
(c)
(d)

Correct Answer 57
Answer
Explanation

Correct Answer 58

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Existing Investors
For a first time investment in a mutual fund Full application form is to be
filled .
Then once an investor has a folio with a mutual fund, subsequent investments
/ sale with the same mutual fund do not call for the full application form.
Only Transaction Slip needs to be filled and submitted.
To inform the investors on the detailed information about the scheme

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 59

(a)
(b)
(c)
(d)

Question 60
(a)
(b)
(c)
(d)

An investor who has a long term view and is looking for capital
appreciation and also has high risk tolerance should opt for investments
in
.
Gold
Equities
Fixed Deposits
High interest bearing junk bonds

Relaxation in documentation requirements for micro-SIPs is available


for
.
Non Resident Indians
Non Individuals
Hindu Undivided Family
None of the Above

Correct Answer 59

Equities

Correct Answer 60

Non Resident Indians

Answer
Explanation

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Relaxation in documentation requirements for micro-SIPs is not available for


HUFs and non-individuals.
Such relaxation is available for NRIs.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 61
(a)
(b)
(c)
(d)

The Absolute Return is calculated using the formula


(Sale Price - Cost Price) / Cost Price
(Cost Price - Sale Price ) / Sale Price
(Sale Price / Cost Price) - 1
1 - (Cost Price / Sale Price)

Question 62
(a)
(b)
(c)
(d)

On liquidity parameters, which is most liquid ?


Equity Shares
Gold
Bank Fixed Deposits
Real Estate

Correct Answer 61
Answer
Explanation

Correct Answer 62
Answer
Explanation

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(Sale Price - Cost Price) / Cost Price


Absolute Return or Simple Return is simply the change in the value of an
investment over a period of time.
Its not calculated on a yearly basis etc.
For eg - A person bought a MF at NAV 10 and sold it after 2 years at NAV
18, then the Absolute Return is :
18 - 10 / 10 = 0.8 or 80% absolute return
Equity Shares
Liquidity - which means the ease of buying and selling. Equity Shares are
most easy to buy and sell.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 63
(a)
(b)

Question 64
(a)
(b)
(c)
(d)

Correct Answer 63
Answer
Explanation

Correct Answer 64
Answer
Explanation

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Prediction of equity markets in the short run is easier than in the long
run - True or False ?
TRUE
FALSE

Mr Pratap wants to send his son for Medical Education. Which of the
options below will best suited to him for financing the education ?
Use his credit card to pay the fees
Sell his house and move into a rental accommodation
Take an educational loan
Take a personal loan

FALSE
In the long run, equity markets are a good barometer of the real economy.
In the short run, markets can get over-optimistic or over-pessimistic, leading
to spells of greed and fear and so are very unpredictable in the short term.

Take an educational loan


The interest rate on educational loans are quiet low and will be best suited to
his needs.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 65

(a)
(b)

Question 66
(a)
(b)
(c)
(d)

Correct Answer 65
Answer
Explanation

Correct Answer 66
Answer
Explanation

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To do away with multiple KYC formalities with various intermediaries, SEBI


has mandated a unified KYC for the securities market through the Depository
Participants registered with SEBI - True or False ?
TRUE
FALSE

Of the below options, what is FALSE with respect to Arbitrage Funds ?


Arbitrage Funds have Basis Risks
Arbitrage Funds invest in Equity Markets
Arbitrage Funds invest in both Spot and Futures Market
Arbitrage Funds are more riskier than Sectoral Funds

FALSE
To do away with multiple KYC formalities with various intermediaries, SEBI
has mandated a unified KYC for the securities market through KYC
Registration Agencies registered with SEBI.

Arbitrage Funds are more riskier than Sectoral Funds


Arbitrage Funds make profits by using the price differences between two
markets - so they are the least risky among Equity Funds.
Sectoral Funds are the most risk funds as they are not diversified.
Arbitrage Funds have basis risk the risk that both cash and F&O position
on a company cannot be reversed at the same time. During the time gap
between unwinding of the two positions, the market can move adverse to the
scheme.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 67
(a)
(b)
(c)
(d)

Question 68
(a)
(b)
(c)
(d)

Correct Answer 67
Answer
Explanation

Correct Answer 68
Answer
Explanation

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Which of the following is true with respect to Growth Option in Mutual


Fund schemes ?
The change in NAV captures the scheme performance
Units rise or fall depending on the schemes performance
The NAV falls as and when dividend is declared
Dividend Distribution Tax is applicable

A Mutual Fund investor can file a case against the


of trust.

for breach

Mutual Fund
Trustees
Stock Exchange
No, a MF investor cannot file a suit.

The change in NAV captures the scheme performance


In Growth Option, the NAV rises or falls depending on the schemes
performance.
No dividend is declared in Growth Option.
Trustees
If an investor feels that the trustees have not fulfilled their obligations, then
he can file a suit against the trustees for breach of trust.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 69
(a)
(b)

Question 70

Expenses incurred to launch a new fund can be charged to the fund True or False ?
TRUE
FALSE

Many AMCs, distribution houses and mutual fund research houses offer free
tools in their website which can be used for evaluating a funds performance True or False ?

(a)
(b)

TRUE
FALSE

Correct Answer 69

FALSE

Answer
Explanation

Correct Answer 70

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Initial Issue Expenses are one-time expenses that come up when the scheme
is offered for the first time (NFO).
These need to be borne by the AMC and cannot be charged (either one time
or deferred) to the scheme.
TRUE

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 71
(a)
(b)
(c)
(d)

The
maintains investor records.
Registrars and Transfer Agents
The specific fund accountants
The Back Office of AMFI
The Fund Manager and his team

Question 72

The price of a company's share is Rs 100 on the stock market. The EPS
of this company is Rs 10. What is the PE ratio ?

(a)
(b)
(c)
(d)

Correct Answer 71
Answer
Explanation

Correct Answer 72
Answer
Explanation

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Rs 1000
Rs 100
Rs 10
Insufficient Data

Registrars and Transfer Agents


The RTA maintains investor records.
The appointment of RTA is done by the AMC. It is not compulsory to
appoint a RTA and the AMC can choose to handle this activity in-house.
Rs 10
PE Ratio = Market Price / EPS
= 100 / 10
= 10

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 73
(a)
(b)

Gold ETF's are meant only for FI's and FII's - True oe False ?
TRUE
FALSE

Question 74

As per SEBI regulations, every application form is to be accompanied by


.

(a)
(b)
(c)
(d)

Correct Answer 73
Answer
Explanation

Correct Answer 74
Answer
Explanation

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Key Information Memorandum (KIM)


Scheme Information Document (SID)
Addendum
Statement of Additional Information

FALSE
Golds Exchange Traded Funds (ETF) can be bought even by retail invetors in
small quantities like one unit (one gram).

Key Information Memorandum (KIM)


As per SEBI regulations, every application form is to be accompanied by the
KIM.
KIM is essentially a summary of the SID and SAI. It is more easily and
widely distributed in the market.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 75
(a)
(b)
(c)
(d)

Question 76

(a)
(b)
(c)
(d)

Which of the following options form the basis of appointment of a


Mutual Fund distributor ?
An agreement between the AMC and the Distributor
Approval from SEBI
Power of Attorney from the AMC
An agreement with AMFI

The Market Value of a scheme is Rs 579 crores. Dividend accrued but


not received is Rs 18 crore. The Expenses payable are Rs 3 crore. The
total number of outstanding units is 300 lakhs. What is the NAV of the
scheme ?
188
198
208
218

Correct Answer 75

An agreement between the AMC and the Distributor

Correct Answer 76

198

Answer
Explanation

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Total Market Value = Rs 579 crore


Add Dividend Accrued of Rs 18 crore
Less Expenses Payable of Rs 3 crore
Divided by Units 300 lakhs
= 198 NAV

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 77
(a)
(b)
(c)
(d)

Which of the following is a measure of market risk ?


Beta Coefficient
Sharpe Ratio
Treynor Ratio
None of the above

Question 78

The trail commission paid by Mutual Funds to a distributor


.
Is paid only for high valued transactions
Is linked to the NAV
Grows at a steady rate
Is paid to the Corporate and Bank Distributors only

(a)
(b)
(c)
(d)

Correct Answer 77

Beta Coefficient

Correct Answer 78

Grows at a steady rate

Answer
Explanation

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Dedicated MF distributors have accumulated a portfolio of loyal investors to


whom they offer superior service.
The trail commission on these investments ensures a steadily rising income
for the distributor. Additional investments from the same investors, and other
investors referred by the current investors, help them grow the portfolio.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 79
(a)
(b)
(c)
(d)

Question 80
(a)
(b)
(c)
(d)

Correct Answer 79
Answer
Explanation

Correct Answer 80
Answer
Explanation

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The Price Earning ie. PE Ratio of a company is 16 and its Earning Per
Share is Rs 8. What is the Market Price of this company ?
Rs 2
Rs 16
Rs 74
Rs 128

The strategy of maintaining a constant ratio of asset allocation is know as


_.
Dynamic Asset Allocation
Fixed Asset Allocation
Flexible Asset Allocation
SIP

Rs 128
PE Ratio = Market Price / EPS
16 = Market Price / 8
Market Price = 16 x 8
= 128

Fixed Asset Allocation


For eg - Balanced funds adopt a stable asset allocation policies, e.g. 55:45
between equity and debt at all times, are said to be operating within a fixed
asset allocation framework.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 81

(a)
(b)
(c)
(d)

Question 82

(a)
(b)

One of the objective of


is to disseminate information on Mutual
Fund Industry and to undertake studies and research directly and/or in
association with other bodies.
Stock Exchanges
SEBI
AMFI
CCAI

While selling mutual fund products of the distributors


group/affiliate/associates, the distributor shall make disclosure to the
customer regarding the conflict of interest arising from the distributor
selling such products - True or False ?
TRUE
FALSE

Correct Answer 81

AMFI

Correct Answer 82

TRUE

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 83
(a)
(b)

Question 84

After deciding the model portfolio, Sharpe Ratio is used for finalizing the
schemes of Equity and Debt - True or False ?
TRUE
FALSE

To have a structured approach to Financial Planning and Investment


counseling, Financial Planners use Model Portfolios - True or False ?

(a)
(b)

FALSE
TRUE

Correct Answer 83

TRUE

Answer
Explanation

Correct Answer 84
Answer
Explanation

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True. As it help decide optimum securities within the asset class.

TRUE
Since investors risk appetites vary, a single portfolio cannot be suggested for
all.
Financial planners often work with model portfolios the asset allocation
mix that is most appropriate for different risk appetite levels.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 85
(a)
(b)

Tier II account of the National Pension System is called the


Pension Account
Savings Account

Question 86

In a flexible asset allocation scheme of a mutual fund the investors are


not sure of their taxation liability - True or False ?

(a)
(b)

Correct Answer 85
Answer
Explanation

Correct Answer 86
Answer
Explanation

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FALSE
TRUE

Savings Account
National Pension System (NPS) has two types of accounts :
1. Tier I (Pension account), is non-withdrawable.
2. Tier II (Savings account) is withdrawable to meet financial contingencies.

TRUE
The fund manager of a Flexible Asset Allocation scheme can switch a large
part of their portfolio between debt and equity, depending on their view on
the respective markets.
So the investors do not know whether they are investing in a debt scheme or
an equity scheme and so are unsure of the taxation.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 87
(a)
(b)

Question 88

(a)
(b)
(c)
(d)

Correct Answer 87
Answer
Explanation

Correct Answer 88
Answer
Explanation

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The floating rate debt securities tend to hold their value, despite changes
in yield in the debt market - True or False ?
TRUE
FALSE

The investment objective of a


might read as follows:To
generate capital appreciation from a portfolio of predominantly equity
related securities
Money Market Fund
Balanced Fund
Arbitrage Fund
Diversified Equity Fund

TRUE
Floating rate funds invest largely in floating rate debt securities i.e. debt
securities where the interest rate payable by the issuer changes in line with
the market.
Since the interest rate itself keeps adjusting in line with the market, these
floating rate debt securities tend to hold their value, despite changes in yield
in the debt market.

Diversified Equity Fund


A Diversified Equity Fund invests mainly in equity for long term capital
appreciation.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 89

(a)
(b)
(c)
(d)

Question 90
(a)
(b)
(c)
(d)

To generate income by investing predominantly in a wide range of debt


and money market securities - this could be the investment objective of a
Diversified debt scheme
Diversified equity scheme
ELSS Scheme
Arbitrage Fund

Minors are not legally eligible to contract, so for investing in Mutual


Funds they
.
have to become 18 years before investing
can invest thro' their guardians
can invest only in long term capital gain funds
can invest in specific 'Minors Only' Mutual Funds

Correct Answer 89

Diversified debt scheme

Correct Answer 90

can invest thro' their guardians

Answer
Explanation

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Minors i.e. persons below the age of 18 are not legally eligible to contract,
they need to invest through their Parents/Lawful guardians.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 91
(a)
(b)

An important feature of Growth Option is Tax Deferral - True or False ?


TRUE
FALSE

Question 92
(a)
(b)
(c)
(d)

Who receives and delivers securities on behalf of the Mutual Fund ?


Authorised Stock Brokers
The AMC to which the fund belongs
Custodian
Merchant Bankers

Correct Answer 91
Answer
Explanation

Correct Answer 92
Answer
Explanation

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TRUE
When an investor chooses the Growth Option, the gains are accumulated and
he need not pay tax on the gains each year.
Only when he sells the Mutual Fund he needs to pay the tax, if any.

Custodian
The custodian has custody of the assets of the fund. The custodian accepts
and gives delivery of securities for the purchase and sale transactions of the
various schemes of the fund.
Thus, the custodian settles all the transactions on behalf of the mutual fund
schemes.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 93
(a)
(b)

Question 94

(a)
(b)
(c)
(d)

Correct Answer 93
Answer
Explanation
Correct Answer 94

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Exchange Traded Funds-ETF Gold regularly invest in good gold mining


companies - True or False ?
TRUE
FALSE

Even thought investment in Mutual Funds are subject to market risks,


an investor invests in an equity fund after reading the risk factors etc.
Due to a fall in the stock markets the value of the fund goes down
drastically. The investor
.
can get some remedy if he appeals to SEBI
can get some remedy if he appeals to AMC
can get some remedy if he appeals to AMFI
cannot get any remedy from the AMC

FALSE
Gold Sector funds invest in gold mining companies. Gold ETF merely track
the gold prices.

cannot get any remedy from the AMC

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 95
(a)
(b)

Can recurring expenses be charged to a mutual fund scheme ?


Yes, they can be charged.
No, they cannot be charged.

Question 96
(a)
(b)
(c)
(d)

The face value of a Mutual Fund unit in India is generally


Rs 1
Rs 10
Rs 100
Decided by AMFI

Correct Answer 95

Answer
Explanation

Correct Answer 96
Answer
Explanation

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Yes, they can be charged.


Recurring Expenses can be charged to the scheme.
Since the recurring expenses drag down the NAV, SEBI has laid down the
expenses and their limits which can be charged to the scheme.

Rs 10
As per the law, every unit has a face value of Rs. 10.
However, older schemes in the market may have a different face value.

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 97
(a)
(b)
(c)
(d)

Which is the re-opening date for a scheme ?


The next working day after the close of a NFO
The date when investors can go for re-purchase
The date on which it lists on a Stock Exchange
The date on which NFO opens

Question 98

You have to construct a model portfolio for your client - which amongst
the following factors will you consider ?
Clients Employment status
Clients Risk Profile
The size of portfolio
All of above

(a)
(b)
(c)
(d)

Correct Answer 97
Answer
Explanation

Correct Answer 98

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The date when investors can go for re-purchase


Scheme Re-Opening Date This is the date from which the investors can
offer their units for re-purchase to the scheme (at the re-purchase price); or
buy new units of the scheme (at the sale price).

All of above

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NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 99
(a)
(b)

Question 100
(a)
(b)

Correct Answer 99
Answer
Explanation

Correct Answer
100
Answer
Explanation

Usually Diversified Equity funds are safer than Diversified Debt funds True or False ?
TRUE
FALSE

Units of Close Ended Mutual Funds can be bought / sold on the Stock
Exchange - True or False ?
FALSE
TRUE

FALSE

Under normal circumstances Euity Funds are always riskier than Debt Funds.

TRUE
For Close Ended schemes the fund makes arrangements for the units to be
traded, post-NFO in a stock exchange. This is done through a listing of the
scheme in a stock exchange. Such listing is compulsory for close-ended
schemes.
Therefore, after the NFO, investors who want to buy or sell Units will have to
find a seller or buyer for those units in the stock exchange.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

LAST DAY REVISION EXAM 3

Question 1

The size of equity portfolio of an young unmarried investor is determined by


.

(a)

Liquidity needs

(b)

Lifestyle

(c)

Income levels

(d)

All of the above

Question 2

To create the investment portfolio for a particular scheme of a Mutual Fund,


the fund manager takes into account
.

(a)

the age and income of the investors

(b)

the risk profile of the investors

(c)

the investment objective of the scheme

(d)

All of the above

Correct Answer 1

All of the above

Correct Answer 2

the investment objective of the scheme

Answer
Explanation

A MF scheme has thousands of investors with different risk profiles. So


devising a portfolio which will suit all will not be possible.
A fund manager has to focus on the investment objective of the scheme / fund
and invest accordingly.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 3

A Mutual Fund scheme gives a return of 10 % and the beta of that scheme is
0.5. The risk free return is 7.5%. What is the Treynor Ratio of this scheme ?

(a)

3%

(b)

5%

(c)

7.50%

(d)

10%

Question 4

If the interest rates are rising, the bond funds with short maturity instruments
are more likely to outperform - State True or False ?

(a)

TRUE

(b)

FALSE

5%
Treynor Ratio measures the returns earned in excess of that which would
have earned on a riskless investment.
Treynor Ratio Formula :
(Return earned on the Scheme - Risk Free Rate) / Beta of the Scheme

Correct Answer 3
Answer
Explanation

= (10 - 7.5) / 0.5


= 5%

TRUE
Bond prices rises when interest rates fall and fall when interest rate rises.
The degree of impact of change in debt fund NAV depends on the tenure of
the securities held in a portfolio. As a rule, long term bonds are more
sensitive to interest rate movements than short term bond funds.
If interest rates rise, short term bond funds will benefit more (as compared to
long term bond funds) and if interst rates fall, the long term bond funds will
benefit more.

Correct Answer 4
Answer
Explanation

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

While deciding on investments for his clients, what should be the right
sequence ?

Question 5
(a)

Selection of Scheme - Risk Profiling - Making a Model Portfolio

(b)

Risk Profiling - Making a Model Portfolio - Selection of Scheme

(c)

Making a Model Portfolio - Risk Profiling - Selection of Scheme

(d)

Selection of Scheme - Making a Model Portfolio - Risk Profiling

Question 6

The AMC pays commission to Mutual Fund Agents, but no such commission
is paid to stock brokers who trade in mutual funds on the Stock Exchange
platform - State True or False ?

(a)

TRUE

(b)

FALSE

Risk Profiling - Making a Model Portfolio - Selection of Scheme

Correct Answer 5

It is a good practice to first understand the risk exposure that is appropriate

Answer
Explanation

for an investor, then decide how the investors investments should be


distributed between different asset classes and make a model portfolio. Once
this is over, select the good schemes most suitable as per the model portfolio.
True

Correct Answer 6

The Stock Brokers get their commissions by charging brokerages on MF


transactions done through them on the Stock Exchange platform.

Answer
Explanation

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 7

Calculate the NAV for the following information : Value of stock 200 cr,
Value of money market instruments - Rs 25 cr, Dividend accrued but not
received - Rs 10 cr, Amount receivable on sale of shares - Rs 5 cr, Amount
payable on purchase of shares: Rs. 10.5 cr, Fees payable - Rs 1 cr. No. of
outstanding units:3 cr

(a)

75.83

(b)

80.77

(c)

76.16

(d)

79.17

Question 8

Very good returns can be expected from long term debt funds if the interest
rates are falling - State True or False ?

(a)

TRUE

(b)

FALSE

76.16
Correct
Answer 7
NAV = (Value of stocks + Value of money market instruments + Dividend accrued but
Answer
Explanation not received + Amount receivable on sale of shares Amount payable on purchases of
shares Fees payable) / No. of outstanding units
= 200 cr + 25 cr + 10 cr + 5 cr - 10.5 cr - 1 cr / 3 cr
= 76.16

TRUE
Correct
Answer 8
As interest rates in the market goes down, debt securities gain in value.
Answer
Explanation Therefore, long term debt funds would be sensible in declining interest rate scenarios.
Also if it is expected that interest rates would go up, it would be safer to go with Short
Term Debt Funds. As the rates rise, the short-term bonds would mature, allowing the
fund manager to deploy the proceeds at higher rates.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

.
Question 9

The Standard Risk Factors of a Mutual Fund scheme are disclosed in the
Statement of Additional Information (SAI) - State True or False ?

(a)

TRUE

(b)

FALSE

Question 10

An investor invests in equity shares of Gold Mining company. The share


price of such gold mining company depend upon
.

(a)

the efficiency of the gold mining company's operations

(b)

the gold prices

(c)

the gold reserves

(d)

all of the above

Correct Answer 9
Answer
Explanation

FALSE
The Standard Risk Factors of a Mutual Fund scheme are disclosed in
the Scheme Information Document (SID).

Correct Answer 10
Answer
Explanation

all of the above


The equity prices will be effected by all three options - 1) better efficiency
will lead to better profits 2) higher gold prices - better profits 3) more
reserves - more production - better profits and vice versa.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 11

Amongst the following options,

(a)

Gold

(b)

Real Estate

(c)

Shares

(d)

Bank Fixed Deposits

Question 12

is the most illiquid.

To calculate the Unit Capital of a Mutual Fund scheme, we have to multiply


the face value with the number of units - State True or False ?

(a)

TRUE

(b)

FALSE

Correct Answer 11

Real Estate

Correct Answer 12
Answer
Explanation

TRUE
The investment that an investor makes in a scheme is translated into a certain
number of Units in the scheme.
The number of units multiplied by its face value (Rs. 10) is the capital of the
scheme its Unit Capital.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 13

Advertisements regarding Mutual Fund schemes shall not contain statements


which directly or by implication or by omission may mislead the investor State True or False ?

(a)

TRUE

(b)

FALSE

Question 14

Management fees cannot be charged by liquid schemes and other debt


schemes on funds parked in short-term deposits of commercial banks - State
True or False ?

(a)

TRUE

(b)

FALSE

Correct Answer 13
Answer
Explanation

TRUE
As per the SEBI Regulations related to Sales Practices- Advertisements shall
not be so designed as likely to be misunderstood or likely to disguise the
significance of any statement. Advertisements shall not contain statements
which directly or by implication or by omission may mislead the investor.

Correct Answer 14

TRUE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 15

While doing an asset allocation for an investor, which amongst the following
factors will have the least importance ?

(a)

RBI's announcement that there could be huge recession

(b)

RBI's announcements of changes in interest rates

(c)

Bonus issued by one of the MF schemes

(d)

Changes in prices of equity shares

Question 16

An investor can convert his Mutual Fund units into demat form but again
converting the demat unit into physical form is not allowed - State True or
False ?

(a)

TRUE

(b)

FALSE

Correct Answer 15
Answer
Explanation

Bonus issued by one of the MF schemes


The purpose of asset allocation is not to enhance returns, but to reduce the
risk.
Bonus issue is just a book entry and will have no effect on asset allocation.

Correct Answer 16
Answer
Explanation

FALSE
The investor also has the option to convert the demat units into physical form.
This process is called re-materialisation.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 17

Who holds the securities purchased by a Mutual Fund ?

(a)

The AMC

(b)

The Fund Manager

(c)

The Broker through whom the transaction was done

(d)

The Custodian

Question 18

is the process of determining the ability of an investor to


bear losses from various investments.

(a)

Delta Hedgeing (b)

Asset Allocation (c)


Portfolio Churning (d)
Risk Profiling

Correct Answer 17
Answer
Explanation

The Custodian
While the AMC manages the investments of the scheme, the assets of the
scheme are held by the Custodian.

Correct Answer 18

Risk Profiling
Risk profiling is an approach to understand the risk appetite of investorsand is
an essential pre-requisite to advise investors on their investments.

Answer
Explanation

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 19

Which is the ideal investment class for an investor who wishes to have an
hedge against inflation and has a long term perspective ?

(a)

Bluechip Equity Shares

(b)

Gold

(c)

Real Estate

(d)

Government Bonds

Question 20

The trustees / AMC cannot make any change in the fundamental attributes of
a scheme, unless approval is received from

(a)

Unit holders

(b)

SEBI

(c)

Sponsor

(d)

Fund Manager of that scheme

Correct Answer 19
Answer
Explanation

Gold
Higher inflation means a weakening rupee which also leads to rise in gold
prices. So Gold is the best bet to hedge against inflation.

Correct Answer 20
Answer
Explanation

Unit holders
The trustees / AMC cannot make any change in the fundamental attributes of
a scheme, unless a written communication about the proposed change is sent
to each Unit-holder and their approval is sought.
The Dissenting unit-holders are given the option to exit at the prevailing Net
Asset Value.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 21

The current market value of the stocks of a Mutual Fund scheme portfolio is
Rs 12 cr and the current liabilities are 7 cr. The unit capital is Rs 10 cr and the
face value per unit is Rs 10. What is the current NAV of this scheme ?

(a)

Rs 10

(b)

Rs 12

(c)

Rs 19

(d)

Rs 5

Question 22

is a short term Government security.

(a)

Commercial Paper

(b)

Certificate of deposit

(c)

Fixed Deposit

(d)

T Bill

Correct Answer 21
Answer
Explanation

Rs 5
Current Valuation is Rs 12 cr less Rs 7 cr (current liability) = Rs 5 cr
Thus the Rs 10 cr unit capital has now become Rs 5 cr ie. 50 % fall
So the Rs 10 NAV when the scheme was launched has now fallen by 50% to
Rs 5.

Correct Answer 22
Answer
Explanation

T Bill
Treasury Bills (T Bills) are short term debt instruments issued by the Reserve
Bank of India on behalf of the Government of India.
Commercial Papers are short term securities (upto 1 year) issued by
companies.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 23

If a family is facing financial problems, which amongst the following options


it is NOT likely to choose ?

(a)

The wife can start working

(b)

The husband takes up part time job on Sundays

(c)

They economise on their expenses

(d)

They move to a better locality buy buying a new house

Question 24

Mutual Fund distributors are appointed by

(a)

The AMC

(b)

SEBI

(c)

The Trustees

(d)

The Cutodian

Correct Answer 23

They move to a better locality buy buying a new house

Correct Answer 24
Answer
Explanation

The AMC
The appointment as the distributor will be at the sole discretion of the AMC
and will be subject to written confirmation by AMC.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 25

All type of Mutual Funds, be it Debt or Equity, have to pay the Securities
Transaction Tax (STT) - State True or False ?

(a)

FALSE

(b)

TRUE

Question 26

Due to
the Index scheme's performance could be higher or lower
than that of the benchmark.

(a)

Market Volatility

(b)

Bull Run

(c)

Tracking Error

(d)

Systematic Risks

FALSE

Correct Answer 25

STT is applicable only on equity shares, derivatives and equity mutual fund
units.
It is not applicable on transactions in debt or debt-oriented mutual fund
(including liquid fund) units.

Answer
Explanation

Tracking Error
Gaps between the scheme performance, and that of the benchmark, are called
tracking errors.
An index fund manager would seek to minimize the tracking error. Due to the
tracking error, the scheme performance could be higher or lower than that of
the benchmark.

Correct Answer 26
Answer
Explanation

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 27

For those investors who find it difficult to pay insurance premium, Money
Back Policy are an ideal investment option - State True or False ?

(a)

TRUE

(b)

FALSE

Question 28

A Mutual Fund Trust is exempt from Tax - State True or False ?

(a)

FALSE

(b)

TRUE

Correct Answer 27
Answer
Explanation

FALSE
Money back policy provides life coverage during the term of policy and the
maturity benefits are paid in installments. Its ideal for individuals who need
regular income at their disposal and fulfill their financial goals uninterrupted.

Correct Answer 28
Answer
Explanation

TRUE
The mutual fund trust is exempt from tax. The trustee company however pays
tax in the normal course on its profits.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 29

Mrs. Reena purchases MF units at NAV Rs 13. After 500 days , she redeems
it at NAV Rs 15.70. What is the compounded rate of return ?

(a)

13.69%

(b)

14.70%

(c)

15.00%

(d)

15.88%

Question 30

To achieve growth by investing in equity and equity related investments,


balanced with income generation by investing in debt and money market
instruments' - is the likely investment objective of a Diversified Debt Scheme
- State True or False ?

(a)

TRUE

(b)

FALSE

Correct Answer 29
Answer
Explanation

14.70%
The formula to find the CAGR - Compunded Annual Growth Rate holding
period return is :
[ ( End Price / Bgn Price) ^ (1/n) ] -1
End Price = 15.70 , Begin Price = 13
n = time. We have to find yearly return so 500 / 365 = 1.369
So [( 15.70/13 )^ 1/1.369] 1
= (1.207 ^ 0.73) 1
On the scientific calculator of your computer type 1.207 then use x^y key and
then type 0.73 = 1.147
1.147 - 1 = .147 x 100 = 14.7 %

Correct Answer 30
Answer
Explanation

FALSE
This is the likely objective of a BALANCED SCHEME.
The investment objective of a diversified debt scheme could be: To
generate income by investing predominantly in a wide range of debt and
money market securities

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 31

Amongst the below given options, which one is NOT an example of


Transition Phase ?

(a)

house to be purchased

(b)

trying to get a better job

(c)

children's higher education

(d)

marriage approaching

Question 32

Which amongst the following has the highest to lowest risk sequence ?

(a)

Capital Protection Oriented Funds - Monthly Income Plans - Balanced Funds


(Flexible Allocation)

(b)

Monthly Income Plans - Balanced Funds (Fixed Allocation) - Balanced Funds


(Flexible Allocation)

(c)

Capital Protection Oriented Funds - Balanced Funds (Flexible Allocation) Monthly Income Plans

(d)

Balanced Funds (Flexible Allocation) - Monthly Income Plans - Capital


Protection Oriented Funds

Correct Answer 31
Answer
Explanation

trying to get a better job


Transition is a phase when financial goals are in the horizon.
As funds will be soon required, investors tend to increase the proportion of
their portfolio in liquid assets.

Correct Answer 32

Balanced Funds (Flexible Allocation) - Monthly Income Plans - Capital


Protection Oriented Funds
The risk hierarchy of the above mentioned schemes ( Highest to Lowest ) is :
Balanced Funds (Flexible Allocation) - Balanced Funds (Fixed Allocation) Monthly Income Plans - Capital Protection Oriented Funds

Answer
Explanation

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 33

The mutual fund schemes sale and purchase of investments are executed by
the
in the stock market.

(a)

Operator

(b)

AMC

(c)

Dealer

(d)

Sponsor

Question 34

Mutual Fund distributors receive commission on investments made by their


clients as well as on the investments they make for themselves in their own
name - State True or False ?

(a)

TRUE

(b)

FALSE

Correct Answer 33

Dealer
The various dealers of a Stock Broker buy and sell shares as per the orders of
the Mutual Fund.

Answer
Explanation

FALSE
Distributors get commission on investments made through them by their
clients. However, no commission is payable on their own investments.

Correct Answer 34
Answer
Explanation

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 35

Amongst the following options, which of the following is TRUE ?

(a)

STT is paid on purchase of the units of Equity Mutual Funds through a stock
exchange

(b)

STT is paid on purchase of the units of Equity Mutual Funds from the fund
house

(c)

STT is paid on repurchase / redemption of the units of Equity Mutual Funds

(d)

STT is paid on purchase of the units of Debt Mutual Funds

Question 36

The Scheme Information Document (SID) is approved by

(a)

SEBI

(b)

AMC and the Board of Trustees

(c)

Sponsors

(d)

Stock Exchanges

Correct Answer 35
Answer
Explanation

STT is paid on repurchase / redemption of the units of Equity Mutual Funds


Securities Transaction Tax (STT) is applicable on sale / redemption
transactions in units of equity mutual fund schemes.
There is no STT on Debt funds.

Correct Answer 36

AMC and the Board of Trustees

Scheme Information Document and Statement of Additional Information are


the part of Offer Documents
AMC prepares the Offer Document for the NFO. This needs to be approved
by the Trustees and the Board of Directors of the AMC.
SEBI does not approve or disapprove Offer Documents, it gives its
observations and these are incorporated.

Answer
Explanation

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 37

In the

stage, the investor needs regular money.

(a)

Reaping / Distribution

(b)

Transition

(c)

Accumulation

(d)

Inter-Generational Transfer

Question 38

Amongst the given options, which will require a due diligence process by the
AMC ?

(a)

If a distributor receives commission of over Rs. 50 lakhs from a single


Mutual Fund/AMC

(b)

If he gets funds of more than Rs 1 crore for a single Mutual Fund

(c)

If he receives commissions of over Rs. 10 crore p.a. across industry

(d)

All of the above

Correct Answer 37 Reaping / Distribution


In the Reaping phase the investor needs regular money. It is the parallel of
Answer
retirement phase in the Life Cycle.
Explanation
Investors in this stage need to have higher allocation to income generating
assets.
If a distributor receives commission of over Rs. 50 lakhs from a single Mutual Fund/AMC
Correct
Answer 38
Due diligence is mandatory if commission and expenses paid to distributors who satisfy
Answer
Explanation one or more of the following conditions with respect to non-institutional (retail and HNI)
investors:
i. Multiple point of presence (More than 20 locations)
ii. AUM raised over Rs. 100 crore across industry in the non-institutional category but
including high networth individuals (HNIs).
iii. Commission received of over Rs. 1 crore p.a. across industry
iv. Commission received of over Rs. 50 lakhs from a single Mutual Fund/AMC.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 39

A Mutual Fund Trust must have beneficiaries - State True or False ?

(a)

TRUE

(b)

FALSE

Question 40

In a market correction ie. when market falls, the


more than
.

(a)

Value Funds , Growth Funds

(b)

Growth Funds , Value Funds

(c)

Index Funds , Sectoral Funds

(d)

None of the above

can decline much

TRUE

Correct Answer 39

Every trust has beneficiaries. In the case of a mutual fund trust, the
beneficiaries are the investors who invest in various schemes of the mutual
fund.

Answer
Explanation

Correct Answer 40

Growth Funds , Value Funds

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 41

invests mainly in Corporate Bonds.

(a)

Diversified Equity Schemes

(b)

Diversified Debt Schemes (Income Funds)

(c)

Nifty Index Funds

(d)

Gold Funds

Question 42

Dormant investors are those investors who have not transacted during the
previous
months.

(a)

(b)

(c)

12

(d)

24

Correct Answer 41

Diversified Debt Schemes (Income Funds)

Correct Answer 42

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 43

What would you suggest to an investor having a long term horizon and
looking for high growth ?

(a)

Long term Debt Funds

(b)

Treasury Bonds

(c)

Liquid Funds

(d)

Equity Funds

Question 44

To maintain neutrality, all AMC's have same commission structure with


respect to commissions payable to distributors - State True or False ?

(a)

TRUE

(b)

FALSE

Correct Answer 43 Equity Funds


Equity as an investment avenue has proved to give the best returns over a
Answer
long term period.
Explanation

FALSE
The commission structures vary between AMCs.
Even for the same AMC, different commissions are applicable for different
kinds of schemes.

Correct Answer 44
Answer
Explanation

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 45

When an investor gives an request for a new purchase in a MF scheme, it has


to be made specifying the
.

(a)

Lots

(b)

Units

(c)

Amount

(d)

All of the above

Question 46

As per the AMFI Code of Ethics, an AMC has to disclose which amongst the
following information to its unit holders ?

(a)

Unit holders investment pattern

(b)

portfolio turnover

(c)

transactions of purchase and sale of securities entered into with any of their
associates

(d)

All of the above

Correct Answer 45
Answer
Explanation

Amount
Purchase request in a MF scheme can only be given specifying the amount
the investor will be investing. The units allotted will depend on the NAV of
the date of allotment.

Correct Answer 46
Answer
Explanation

All of the above


As per the AMFI Code of conduct, the AMC has to disclose the investment
objectives, investment policies, financial position and general affairs of the
scheme, investment pattern, portfolio details, ratios of expenses to net assets
and total income, portfolio turnover, transactions of purchase and sale of
securities entered into with any of their associates or any significant unit
holder etc. to the unit holders.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 47

Foreign investors can invest in equity schemes of MFs registered with SEBI
after completing KYC process - State True or False ?

(a)

TRUE

(b)

FALSE

Question 48

The valuation of Illiquid securities held by a Mutual Fund is done as per


.

(a)

the last traded price of that security on BSE or NSE

(b)

the norms prescribed by SEBI to arrive at a fair valuation

(c)

the average price of bid and ask quotation

(d)

the lowest price calculated as per the above three methods

Correct Answer 47

TRUE

Correct Answer 48
Answer
Explanation

the norms prescribed by SEBI to arrive at a fair valuation


Non traded securities/Illiquid securities are valued "in good faith" by the asset
management company on the basis of the valuation principles laid down by
SEBI.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 49

Consolidated Account Statement (CAS) has to dispatched to the investors


.

(a)

only when the investors sends an request for it

(b)

on a monthly basis, before the 10th of the succeeding month

(c)

for every transaction for every folio

(d)

quarterly for dormant investors

Question 50

In the event of delays in dispatching dividend warrants or redemption


cheques, the penalties payable to the investors will be charged to the scheme
expenses - State True or False ?

(a)

TRUE

(b)

FALSE

Correct Answer 49
Answer
Explanation

on a monthly basis, before the 10th of the succeeding month


A Consolidated Account Statement (CAS) for each calendar month will have
to be sent by post/email on or before 10th of the succeeding month.
If there are no transactions, then a six monthly CAS can be sent.

Correct Answer 50
Answer
Explanation

FALSE
In the event of delays in dispatching dividend warrants or redemption
cheques, the AMC has to pay the unit-holder, interest at the rate of 15% p.a.
This expense has to be borne by the AMC and it cannot be charged to the
scheme

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 51

In which phase would an financial planner suggest his client to go for equity
investments through SIP ?

(a)

Inter-Generational Transfer Phase

(b)

Accumulation Phase

(c)

Transition Phase

(d)

Reaping / Distribution Phase

Question 52

The main document which authorises a company to invest in a particular


Mutual Fund scheme is
.

(a)

The Articles of Association

(b)

The Memorandum of Association

(c)

Share holder Resolution

(d)

Specific Board Resolution

Correct Answer 51
Answer
Explanation

Accumulation Phase
Accumulation Phase is the stage when the investor gets to build his wealth. It
covers the earning years of the investor i.e. the phases of the life cycle from
Young Unmarried to Pre-Retirement. So long term investments in equity
through SIP will be preferred.
Transition is a phase when financial goals are in the horizon. For eg approaching marriage expenses.
Reaping / Distribution Phase is when the investor needs regular money. It is
the parallel of retirement phase in the Life Cycle.
Inter-Generational Transfer Phase is when the investor starts thinking about
orderly transfer of wealth to the next generation, in the event of death.

Correct Answer 52

Specific Board Resolution


The Board resolution authorises the company to invest in mutual fund
schemes.

Answer
Explanation

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 53

A company has a Earning Per Share (EPS) of Rs 10 and Price to Earning (PE)
ratio of 20. What will be the market price of this company ?

(a)

Rs 2

(b)

Rs 20

(c)

Rs 200

(d)

Rs 2000

Question 54

As per SEBI rules, the NAV has to be published


daily newspapers having circulation all over India.

(a)

daily , 4

(b)

weekly , 2

(c)

daily , 2

(d)

weekly , 4

Correct Answer 53
Answer
Explanation

Rs 200
Price to Earnings Ratio (P/E Ratio) = Market Price / EPS
Market Price = PE X EPS.
= 20 x 10 = Rs 200

Correct Answer 54

daily , 2

, in at least

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 55

Mr. Singh gives a redemption request in a liquid fund scheme at 2 pm. What
would be the applicable NAV for this re-purchase ?

(a)

Closing NAV of the same day

(b)

Closing NAV of the next working day

(c)

Closing NAV of the previous working day

(d)

Closing NAV of the day preceding the next business day

Question 56

Returns Earned : 10%, Risk Free Return : 12%, Standard Deviation : 0.5.
Calculate the Sharpe Ratio.

(a)

4 (b)

-4 (c)
10 (d)
0.75

Correct Answer 55
Answer
Explanation

Closing NAV of the same day


For Equity Oriented Funds, Debt funds and Liquid funds , if the redemption
request is received before 3 pm, then the same days closing NAV is
applicable.
If received after 3 pm then the next business day's NAV is applicable.

Correct Answer 56
Answer
Explanation

-4
The formula for Sharpe Ratio is : ( Rs-Rf ) / Standard Deviation
ie. ( Return Earned - Risk free Return ) / Standard Deviation
= (10 - 12) / 0.5
= -2 / 0.5
=-4
(Sharpe Ratio will be negative if Return Earned is lower than Risk Free
Returns)
\

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 57

A monthly income is assured in a MIP - Monthly Income Plan - State True or


False ?

(a)

TRUE

(b)

FALSE

Question 58

The additional Total Income Ratio (TER) on account of inflows from beyond
top 15 cities so charged shall be clawed back in case the same is redeemed
within a period of
from the date of investment.

(a)

6 months

(b)

9 months

(c)

1 year

(d)

2 years

Correct Answer 57
Answer
Explanation

FALSE
Monthly Income Plan tries to declare a dividend every month; however the
same is not assured as MIP has an element of equity in its portfolio.

Correct Answer 58

1 year

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 59

How the distributors compensated by the Mutual Funds ?

(a)

Primarily through commissions

(b)

Primarily through salaries

(c)

Primarily through fixed annual fees plus commissions

(d)

Primarily through a salaries plus variable commissions

Question 60

AGNI stands for - AMFI Guidelines for New Investors - State True or False ?

(a)

TRUE

(b)

FALSE

Correct Answer 59

Primarily through commissions

Correct Answer 60
Answer
Explanation

FALSE
The full form of AGNI is - AMFI Guidelines and Norms for Intermediaries.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 61

Mr. Gupta invests Rs 1 crore in a Gilt Mutual Fund scheme and gives a local
cheque at 1 pm. Which will be the applicable NAV for allotment of units to
Mr. Gupta ?

(a)

Closing NAV of the day on which the application was made

(b)

NAV of the business day on which the funds are available for utilisation
before the cut-off time of that day is applicable.

(c)

Next business day NAV

(d)

Closing NAV of the day immediately preceding the application day.

Question 62

is responsible for settlement of Mutual Fund transactions which are


executed on the Stock Exchanges.

(a)

AMC

(b)

Stock Exchange

(c)

Clearing House

(d)

AMFI

Correct Answer 61

NAV of the business day on which the funds are available for utilisation
before the cut-off time of that day is applicable.
For all Equity oriented funds and Debt funds (except liquid funds) if the
transaction is more than Rs. 2 lakhs : Irrespective of the time of receipt of
application, NAV of the business day on which the funds are available for
utilisation before the cut-off time of that day is applicable.

Answer
Explanation

(If it is below Rs 2 lakhs - Same day NAV if received before cut off time ie. 3
pm)
AMC
A Stock Exchange is essentially an order routing system between the
investors and the AMC, the exchanges do not offer Settlement Guarantee.
Responsibility for settlement is that of the AMC.

Correct Answer 62
Answer
Explanation

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 63

Does SEBI specify the language in which the Scheme Information Document
(SID) is to be provided by Mutual Funds ? State Yes or No.

(a)

Yes

(b)

No

Question 64

Fund Age is an more important criteria to be studied while investing in


.

(a)

Debt Schemes (b)

Equity Schemes (c)


Treasury Bonds (d)
None of the above

Correct Answer 63
Answer
Explanation

No
SEBI does not approve or disapprove Offer Documents, it basically gives its
observations. The mutual fund needs to incorporate these observations in the
Offer Document. Thus, the Offer Documents in the market are vetted by
SEBI, though SEBI does not formally approve them.
Since investors are not experts of finance or law, the SID and SAI are
prepared in simple language, and in clear, concise and easy to understand
style.

Correct Answer 64
Answer
Explanation

Equity Schemes
A Mutual fund scheme with a long history has a track record that can be
studied before deciding on investments.
Fund age is very important for equity schemes, where there are more
investment options, and divergence in performance of schemes within the
same category tends to be more.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 65

SEBI has been given the responsibility to develop a cadre of well-trained


agent-distributors for Mutual Funds - State True of False ?

(a)

TRUE

(b)
FALSE

Question 66

Mr. Rohit approaches his Financial Planner to help him get a home loan.
Which amongst the following options will the financial planner NOT do ?

(a)

He will contact some home loan financers to get details

(b)

He will advise Mr. Rohit not to go for home loan as its unethical to borrow
money to buy a home

(c)

He will inform Mr. Rohit about the current scene in the home loan market
like the interest rates charged etc.

(d)

He will ask Mr Rohit to contact an expert on home loans

FALSE

Correct Answer 65

It is the objective of AMFI to develop a cadre of well-trained agentdistributors and to implement a programme of training and certification for all
intermediaries and others engaged in the industry.

Answer
Explanation

Correct Answer 66

He will advise Mr. Rohit not to go for home loan as its unethical to borrow
money to buy a home
Taking an home loan is not at all unethical.

Answer
Explanation

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 67

Risk appetite increases as the number of earning members

(a)

decreases

(b)

increases

(c)

becomes zero

(d)

None of the above

Question 68

Which schemes of a Mutual Fund offer the advantages of diversity of asset


classes in a single scheme ?

(a)

ELSS Schemes

(b)

Index Schemes

(c)

Balanced Schemes

(d)

Debt Schemes

Correct Answer 67
Answer
Explanation

increases
More earning members means more income and so the risk taking capacity
increases.

Correct Answer 68
Answer
Explanation

Balanced Schemes
A balanced scheme invests in a mix of equity and debt securities and offers
advantages of both the asset classes.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 69

Investors in Mutual Fund are not responsible for

(a)

monitoring their investments regularly

(b)

checking the risk factors before investing

(c)

reading the offer documents carefully

(d)

taking investment decisions of behalf of the fund manager

Question 70

Asset Class E of National Pension System (NPS) can invest in

(a)

predominantly equity market instruments

(b)

Debt securities other than Government Securities

(c)

Government Securities

(d)

all of the above

Correct Answer 69 taking investment decisions of behalf of the fund manager


Investors need to note that their investment is governed by the principle of
Answer
caveat emptor i.e. let the buyer beware. An investor is presumed to have read
Explanation
the Offer Document, checked the risk factors etc.
However an investor cannot ask / instruct the fund manager to buy / sell
particular security.
predominantly equity market instruments

Correct Answer 70

National Pension System :


-Asset Class E: Investment in predominantly equity market instruments
-Asset Class C: Investment in Debt securities other than Government
Securities
-Asset Class G: Investments in Government Securities

Answer
Explanation

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 71

Which statement is TRUE ?

(a)

SEBI regulates the Mutual Fund industry in India

(b)

The Mutual Fund industry is largely unregulated in India

(c)

The Stock Exchanges regulate the Mutual Fund industry in India

(d)

Bank sponsored Mutual Funds are regulated by Banks and not SEBI.

Question 72

While making a Comprehensive Financial Plan,

(a)

High time commitment is required from the investor / client

(b)

High time commitment is required from the planner

(c)

High time commitment is required both from the client and planner

(d)

Not much time commitment as all the planning is done in the computer

Correct Answer 71
Answer
Explanation

SEBI regulates the Mutual Fund industry in India


SEBI is the regulatory authority for securities markets in India. It regulates,
among other entities, mutual funds, depositories, custodians and registrars &
transfer agents in the country.

Correct Answer 72
Answer
Explanation

High time commitment is required both from the client and planner
A comprehensive financial plan calls for significantly more time commitment
on the part of both the investor and the financial planner.
The steps in creating a comprehensive financial plan are as follows:
Establish and Define the Client-Planner Relationship
Gather Client Data, Define Client Goals
Analyse and Evaluate Clients Financial Status
Develop and Present Financial Planning Recommendations and / or Options
Implement the Financial Planning Recommendations
Monitor the Financial Planning Recommendations
-These require significant time commitments from both planner and investor.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 73

A Flexible Asset Allocation scheme is an example of Passive Investment


strategy - State True or False ?

(a)

TRUE

(b)

FALSE

Question 74

Asset Class C of the National Pension System (NPS) can invest in


Government Debt Securities - State True or False ?

(a)

TRUE

(b)

FALSE

Correct Answer 73

FALSE

Answer
Explanation

A Flexible Asset Allocation scheme switches a large part of their portfolio


between debt and equity, depending on the views of the fund manager on the
respective markets. This is a very active investment strategy and not a passive
one.
Passive funds invest on the basis of a specified index, whose performance it
seeks to track.

Correct Answer 74
Answer
Explanation

FALSE
Asset Class C can invest in Debt securities other than Government Securities.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 75

Mr. Nayak is an investor having a low risk tolerance and is looking for
income. He should ideally invest in
_.

(a)

Equity

(b)

Insurance

(c)

Bank Deposits

(d)

Property

Question 76

If a charitable trust wishes to invest in a Mutual Fund, which amongst the


following document is not required to be submitted ?

(a)

Memorandum and Articles of Association

(b)

Trust Deed

(c)

Board Resolution authorising the investments

(d)

List of authorised signatories

Correct Answer 75

Bank Deposits

Correct Answer 76
Answer
Explanation

Memorandum and Articles of Association


A Charitable Trust does not have any Memorandum and Articles of
Association. It has a Trust Deed.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 77

An investor does not wish to take any equity exposure- so investing in


Monthly Income Plan (MIP) schemes will be a good option for him - State
True or False ?

(a)

TRUE

(b)

FALSE

Question 78

Who makes the application to SEBI for registration of a Mutual Fund ?

(a)

The AMC

(b)

The Trust

(c)

The Sponsor

(d)

The Fund Manager

Correct Answer 77
Answer
Explanation

FALSE
MIP also invests a small portion of its funds in equity. So investors, who do
not wish to take any equity exposure, should opt for a regular debt fund.

Correct Answer 78
Answer
Explanation

The Sponsor
The application to SEBI for registration of a mutual fund is made by the
sponsor/s.
Afterwards, the sponsor invests in the capital of the AMC.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 79

An index fund manager would seek to minimize the

(a)

Delta Error

(b)

R Squared factor

(c)

Tracking Error

(d)

Arbitrage between Cash and Future markets

Question 80

is not a source of information about investors who are eligible


to invest in a particular Mutual Fund scheme.

(a)

Scheme Annual Report

(b)

SID -Scheme Information Document

(c)

SAI -Statement of Additional Information

(d)

KIM -Key Information Memorandum

Correct Answer 79
Answer
Explanation

Tracking Error
Gaps between the scheme performance, and that of the benchmark, are called
tracking errors.
Since Index funds are benchmarked to an index like Sensex, Nifty etc, the
fund manager will try to minimise the difference in returns (tracking error) of
his fund and the benchmark.

Correct Answer 80
Answer
Explanation

Scheme Annual Report


A MF Scheme annual report shows the performance of the scheme, the
portfolio etc. It does not gives information on eligible investors.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 81

Who can attest the copies of supporting documents in the KYC procedure ?

(a)

Gazetted Officer

(b)

Manager of a Scheduled Commercial Bank

(c)

Notary Public

(d)

All of the above

Question 82

An investor buys an equity mutual fund scheme at NAV Rs 11 on 15 April.


On 15 September the NAV was Rs 12.50. What is the simple return on the
scheme in this period ?

(a)

7.45%

(b)

9.00%

(c)

12.00%

(d)

13.77%

Correct Answer 81
Answer
Explanation

All of the above


KYC documents can be attested by a Notary Public, Gazetted Officer or
Manager of a Scheduled Commercial Bank.

Correct Answer 82
Answer
Explanation

12%
We have to use the Holding Period formula ie. :
[ {End Price - Begin Price + Income (If Any)} / (Begin Price) ]
= [ ( 12.50 - 11 + 0) / 12.50 ]
= 0.12
0.12 x 100 = 12%

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 83

The facility of ASBA - 'Application Supported by Blocked Amount' is mainly


for additional purchase of Mutual Funds units - State True or False ?

(a)

TRUE

(b)

FALSE

Question 84

Risk Appetite is influenced by which financial factor(s) ?

(a)

Capital Base

(b)

Regularity of Income

(c)

Both 1 and 2

(d)

None of the above

Correct Answer 83
Answer
Explanation

FALSE
ASBA can only be used for IPO's of equity shares and NFO's of Mutual
Funds. It cannot be used for additional purchase.

Correct Answer 84
Answer
Explanation

Both 1 and 2
Higher the capital base, better the ability to financially take the downsides
that come with risk.
People earning regular income can take more risk than those with
unpredictable income streams.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 85

Mutual Funds gives more investment options as compared to National


Pension System - State True or False ?

(a)

TRUE

(b)

FALSE

Question 86

The OFFER DOCUMENT does not contain

(a)

the projected returns of the scheme

(b)

the statutory information about the mutual fund

(c)

the tax implications for investors

(d)

the scheme objectives

Correct Answer 85
Answer
Explanation

TRUE
There are several restrictions in investments for the NPS and so it offers
fewer portfolio choices than mutual funds..

Correct Answer 86

the projected returns of the scheme

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 87

Mr. Suresh invests Rs 30000 in an equity fund. The face value of this scheme
is Rs 10 and the NAV is Rs 14. How many units will be alloted to Mr. Suresh
assuming there is no entry load ?

(a)

3000

(b)

2142.8571

(c)

3147.8744

(d)

2411.1574

Question 88

The main advantage of investing in a Mutual Fund is

(a)

Portfolio Diversification

(b)

Portfolio Concentration

(c)

Portfolio Balancing

(d)

None of the above

Correct Answer 87
Answer
Explanation

2142.8571
Mutual Fund units are allotted as per the current NAV.
Rs 30000 / Rs 14 = 2142.8571 units

Correct Answer 88
Answer
Explanation

Portfolio Diversification
Even a small investment in a mutual fund scheme can give investors a
diversified investment portfolio.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 89

To calculate the Standard Deviation, which amongst the following functions


of MS Excel have to be used ?

(a)

SD

(b)

SDV

(c)

VAR

(d)

STDEV

Question 90

A major factor affecting the rate of interest of a corporate deposit is

(a)

the assets it has

(b)

the market share its product has

(c)

the profits of the company

(d)

the credit rating assigned to it

Correct Answer 89

STDEV

Correct Answer 90
Answer
Explanation

the credit rating assigned to it


The interest rate offered by Corporate Deposits depends on the credit rating
assigned to it. Higher the credit risk, higher is likely to be the interest rates
offered.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 91

Network Ltd has a share capital of Rs 100 crores and accumulated reserves of
Rs 40 crores. What will be the BOOK VALUE of its share if it has issued a
total of 10 crore shares ?

(a)

Rs 10

(b)

Rs 40

(c)

Rs 14

(d)

Rs 21

Question 92

The details and information provided in Scheme Information Document


(SID) and Statement of Additional Information (SAI) are
_.

(a)

applicable only for closed ended schemes

(b)

applicable only for open ended schemes

(c)

common for all schemes - open or close ended

(d)

applicable only for a particular scheme

Correct Answer 91
Answer
Explanation

applicable only for a particular scheme


Book Value per Share: Net Worth / No. of equity shares
(Net worth = share capital plus reserves minus accumulated losses)
In the above question :
Net Worth = 100 cr + 40 cr = Rs 140 cr
Book Value = 140 cr / 10 cr
= Rs 14.

Correct Answer 92

Custodian

Answer
Explanation

SID and SAI form a part of the Offer Document which gives the details of a
New Fund Offer ie. when a new scheme is launched in the market.
Thus every scheme will have its own SID and SAI as per the investment
objectives etc. of that particular scheme.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 93

What is the NAV if the value of stocks in a Mutual Fund scheme is Rs 100 cr,
Value of Bonds is Rs 10 cr, Value of Money Market Instruments is Rs 25 cr,
Dividend Accrued but not received is Rs 3 cr and Fees payable is Rs 5 cr. The
number of outstanding units is 75 lacs.

(a)

173.33

(b)

177.33

(c)

184

(d)

186.74

Question 94

In Mutual Fund transaction through a Stock Exchange,

(a)

the units are offered at a higher price than the NAV

(b)

the units are allotted by the RTA (Registrar and Transfer Agents)

(c)

only fresh purchase of units are allowed and not additional purchase

(d)

All of the above

Correct Answer 93
Answer
Explanation

177.33
NAV = (Value of stocks + Value of bonds + Value of money market
instruments + Dividend accrued but not received + Interest accrued but not
received Fees payable) / No. of outstanding units
= 100 cr + 10 cr + 25 cr + 3 cr + 0 - 5 cr / 75 lacs
= 133 cr / 75 lacs
= 177.33

Correct Answer 94
Answer
Explanation

the units are allotted by the RTA (Registrar and Transfer Agents)
The Stock Exchanges only offer a transaction platform and the allotment of
units etc. is done by the RTA.
Also fresh subscriptions in a mutual fund, as well as additional purchases are
possible. Similarly, redemptions are permitted on a Stock Exchange.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 95

Mutual funds offer facilities that help investor invest constant amounts
regularly through a
.

(a)

Systematic Withdrawal Plan

(b)

Systematic Transfer Plan

(c)

Systematic Saving Plan

(d)

Systematic Investment Plan

Question 96

The Dividend Distribution Tax on Individuals and HUF is


+ Education Cess.

(a)

15%

(b)

20%

(c)

25%

(d)

30%

Correct Answer 95

Systematic Investment Plan

Correct Answer 96
Answer
Explanation

25%
Dividend Distribution Tax (DDT) is as follows:
Individuals and HUF: 25% + Surcharge + Education Cess
Others: 30% + Surcharge + Education Cess

+ Surcharge

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

If an investor wishes to beat the benchmark and is also ready to bear the risks,
then he should opt for Actively managed funds - State True or False ?

Question 97
(a)

TRUE

(b)

FALSE

Higher the Capital Base,

Question 98

the Risk Appetite.

(a)

Higher

(b)

Lower

(c)

Capital base has no effect on risk appetite

(d)

No change

TRUE

Correct Answer 97

Actively managed funds are funds where the fund manager has the flexibility
to choose the investment portfolio. The fund manager invests in better
performing sectors so that the returns are better than the benchmark index.
However this strategy could also give lower or negative returns if the fund
managers predictions go wrong.

Answer
Explanation

Correct Answer 98

Higher

Answer
Explanation

Higher the capital base, better the ability to financially take the downsides
that come with risk - so the risk appetite is higher.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION V.IMP LAST DAY REVISION EXAM

Question 99

Floating rate debt securities tend to hold their values, even if interest rates
fluctuate - State True or False ?

(a)

TRUE

(b)

FALSE

Question 100

Asset Class G of National Pension System (NPS) can invest in

(a)

Debt securities other than Government Securities

(b)

Predominantly equity market instruments

(c)

Government Securities

(d)

all of the above

Correct Answer 99

TRUE
A debt instrument with a variable interest rate is known as a floater - a
floating rate notes interest rate is tied to a benchmark.
Floating rate debt securities tend to hold their values, even if interest rates
fluctuate

Answer
Explanation

Correct Answer
100

Government Securities
National Pension System :
-Asset Class G: Investments in Government Securities
-Asset Class E: Investment in predominantly equity market instruments
-Asset Class C: Investment in Debt securities other than Government
Securities

Answer
Explanation

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

THIS IS A MOCK EXAM TO TEST YOUR PREPARATIONS. PLEASE SOLVE THESE 100 QUESTIONS
IN 2 HOURS. THE ANSWERS ARE PROVIDED IN THE END.

Question 1

(a)
(b)
(c)
(d)

Question 2

(a)
(b)
(c)
(d)

Even thought investment in Mutual Funds are subject to market risks,


an investor invests in an equity fund after reading the risk factors etc.
Due to a fall in the stock markets the value of the fund goes down
drastically. The investor
.
can get some remedy if he appeals to SEBI
can get some remedy if he appeals to AMC
cannot get any remedy from the AMC
can get some remedy if he appeals to AMFI

An investor gives a cheque of Rs 2 lacs for investing in a ELSS scheme at


2.30 pm at a Mutual Fund office. The NAV of which day will be
applicable to him ?
NAV of the same day
NAV of the next business day
NAV of the day on which funds will be available
None of the above

Question 3
(a)
(b)
(c)
(d)

Which of the below is a physical asset ?


GOLD Exchange Traded Funds - ETF
Real Estate Fund
Building
Debentures

Question 4

Which of the following is true with respect to Growth Option in Mutual


Fund schemes ?

(a)
(b)
(c)
(d)

Dividend Distribution Tax is applicable


The change in NAV captures the scheme performance
Units rise or fall depending on the schemes performance
The NAV falls as and when dividend is declared

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 5
(a)
(b)
(c)
(d)

For calculating Capital Gains, investment in mutual funds for less then 1
year is considered as
Long Term
Medium Term
Short Term
Ultra Short Term

Question 6

Mutual funds are constituted as


by the
.

(a)
(b)
(c)
(d)

Companies, Indian Companies Act


NGOs, NGO Act
Trusts, Indian Trusts Act
Investment Agencies, SEBI Act

Question 7
(a)
(b)
(c)
(d)

Question 8

(a)
(b)
(c)
(d)

Question 9

(a)
(b)

and therefore, they are governed

If an Institutional Investor is making an application for investing in a


Mutual Fund, which additional document is required ?
Bank Statements
Audited Accounts for the last 3 years
Approval letter from SEBI
Board Resolution

The investment objective of a


might read as follows:To
generate capital appreciation from a portfolio of predominantly equity
related securities
Balanced Fund
Money Market Fund
Diversified Equity Fund
Arbitrage Fund

A Board Resolution is not required for an institutional investor to invest


in Mutual Funds if the Memorandum and Articles of Association permit
it to do so - True or False ?
TRUE
FALSE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 10
(a)
(b)
(c)
(d)

Different investors have different investment needs and objectives. This


is the reason Mutual Fund offer different
.
Plans
Options
Schemes
time horizons.

Question 11
(a)
(b)
(c)
(d)

Which of the following is a measure of market risk ?


Beta Coefficient
Sharpe Ratio
Treynor Ratio
None of the above

Question 12

A investors wishes to invest in debt mutual funds but wants high liquidity
- should he invest in Fixed Maturity Plans ?

(a)
(b)

Question 13

(a)
(b)

Question 14
(a)
(b)

Yes
No

To do away with multiple KYC formalities with various intermediaries,


SEBI has mandated a unified KYC for the securities market through the
Depository Participants registered with SEBI - True or False ?
TRUE
FALSE

Nomination facility is not available to investors holding the Mutual Fund


units jointly - True or False ?
TRUE
FALSE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 15
(a)
(b)
(c)
(d)

Question 16
(a)
(b)
(c)
(d)

As per SEBI regulations, every application form is to be accompanied by


.
Key Information Memorandum (KIM)
Scheme Information Document (SID)
Addendum
Statement of Additional Information

Of the following documents, which is required to be appended to the


application form of a MF scheme ?
Scheme Information Document - SID
Statement of Additional Information - SAI
Key Information Memorandum - KIM
Addendum

Question 17
(a)
(b)
(c)
(d)

Gold Future Contracts


.
are traded on the Commodity Exchanges
are not standardised products
can be bought through Mutual Funds
None of the above

Question 18

(a)

All advertisements and Sales Literature containing an AMC(s)/Mutual


Fund ranking must prominently disclose, with respect to the ranking
.
The name of the Ranking Entity and the criteria on which the ranking is based

(b)
(c)
(d)

The number of AMC(s)/Mutual Funds in the category.


The name of the category (e.g. income/growth)
All of the above

Question 19
(a)
(b)
(c)
(d)

The trail commission paid by Mutual Funds to a distributor


.
Is paid only for high valued transactions
Is linked to the NAV
Grows at a steady rate
Is paid to the Corporate and Bank Distributors only

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 20
(a)
(b)
(c)
(d)

Question 21
(a)
(b)
(c)
(d)

Gilt funds and diversified debt funds should figure prominently in the
portfolio of
.
Employed with small children
Old couple with no family support
Young married with no children
None of the above

An investor in an active fund bears a


management, and takes a
risk.

cost for the fund

Higher, Lower
Lower , Lower
Higher , Higher
Lower, Higher

Question 22
(a)
(b)
(c)
(d)

Of the below options, what is FALSE with respect to Arbitrage Funds ?


Arbitrage Funds have Basis Risks
Arbitrage Funds invest in Equity Markets
Arbitrage Funds invest in both Spot and Futures Market
Arbitrage Funds are more riskier than Sectoral Funds

Question 23

While selling mutual fund products of the distributors


group/affiliate/associates, the distributor shall make disclosure to the
customer regarding the conflict of interest arising from the distributor
selling such products - True or False ?

(a)
(b)

Question 24

(a)
(b)
(c)
(d)

TRUE
FALSE

A Mutual Fund scheme gave an annualised return of 9.86% and the


annualised Standard Deviation of the fund is 3.47. The current risk free
return is 8%. Calculate the Sharpe Ratio.
0.63
0.55
0.48
0.35

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 25
(a)
(b)
(c)
(d)

Question 26
(a)
(b)
(c)
(d)

Minimum duration of an interval period in an interval scheme/plan is


.
15 Days
30 Days
45 Days
60 Days

All advertisements and Sales Literature containing an AMC(s)/Mutual


Fund ranking must prominently disclose
.
The publisher of the ranking data.
Criteria on which the ranking is based.
The name of the Ranking Entity.
All of the above

Question 27
(a)
(b)
(c)
(d)

The face value of a Mutual Fund unit in India is generally


Re 1
Rs 10
Rs 100
Decided by AMFI

Question 28
(a)
(b)
(c)
(d)

Its compulsory to list units of


Close Ended Fund
ELSS Fund
Gilt Fund
Arbitrage Fund

Question 29

After payment of dividend the NAV comes down even in the Dividend
Reinvestment option - True or False ?

(a)
(b)

TRUE
FALSE

on the stock exchange.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 30
(a)
(b)
(c)
(d)

Question 31
(a)
(b)

Question 32
(a)
(b)
(c)
(d)

Question 33
(a)
(b)
(c)
(d)

Question 34
(a)
(b)
(c)
(d)

Open-ended schemes, except ELSS, have to re-open for ongoing sale / repurchase within
business days of allotment.
3
5
10
12

The Stock Exchanges which provide facilities for Mutual Fund trading
also do the functions of Mutual Fund RTAs. - True or False ?
FALSE
TRUE

You have to construct a model portfolio for your client - which amongst
the following factors will you consider ?
Clients Employment status
Clients Risk Profile
The size of portfolio
All of above

You are a mutual fund advisor. To whom would you advise investment of
more than 70 % of their funds in debt funds ?
A 33 year old well employed with one son
A 45 year old Executive Manager of a company who has 2 children
Elderly couple with no children
Young man working with Glaxo

The Transaction Slips are used by


First time investors of Mutual Funds
NFO Investors
Relatives of Existing Investors
Existing Investors

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 35
(a)
(b)
(c)
(d)

In Liquid funds, simple annualised return method is used to show the


returns because
.
Its a simpler way to calculate and investors understand it easily
The investment made is fixed for 30 - 90 - 180 days
The return is calculated over smaller time horizons
The amount invested is usually small

Question 36
(a)
(b)
(c)
(d)

The
maintains investor records.
The specific fund accountants
Registrars and Transfer Agents
The Back Office of AMFI
The Fund Manager and his team

Question 37
(a)
(b)
(c)
(d)

Cut-off timing guidelines are not applicable for


International Funds
New Fund Offer (NFO)
Both of the above
None of the above

Question 38

To have a structured approach to Financial Planning and Investment


counseling, Financial Planners use Model Portfolios - True or False ?
TRUE
FALSE

(a)
(b)

Question 39
(a)
(b)

Every trust has beneficiaries - True or False ?


TRUE
FALSE

Question 40

Prediction of equity markets in the short run is easier than in the long
run - True or False ?

(a)
(b)

TRUE
FALSE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 41
(a)
(b)

Question 42
(a)
(b)
(c)
(d)

The floating rate debt securities tend to hold their value, despite changes
in yield in the debt market - True or False ?
TRUE
FALSE

A Mutual Fund scheme is know to distribute dividends from time to


time. Such MF can be used as a source of
.
Good Capital Appreciation
Regular Income
Safety of Capital
Tax Planning

Question 43
(a)
(b)

Stock selection is important in bottom-up approach - True or False ?


TRUE
FALSE

Question 44

Summary of SID - Scheme Information Document and SAI - Statement


of Additional Information is known as KIM - Key Information
Memorandum - True or False ?

(a)
(b)

Question 45
(a)
(b)

Question 46
(a)
(b)
(c)
(d)

TRUE
FALSE

Young Age, Good Steady Job, an Adventurous streak etc are some
qualities of an investor who takes risks in investments - True or False ?
TRUE
FALSE

AMC does not appoint the


Custodian
R&T Agent
Banker
Distributor

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 47
(a)
(b)
(c)
(d)

Question 48
(a)
(b)
(c)
(d)

A Mutual Fund scheme has a portfolio of shares whose beta is less than
1. This indicates that the scheme is
.
Very Very risk compared to the market
Some what risky than the market
Less risky than the market
Equally risky as the market

Mutual funds can accept cash to the tune of Rs


investors.

from small

Rs 5000
Rs 20000
Rs 25000
No cash ca be accepted

Question 49
(a)
(b)
(c)
(d)

The cost of fund management are the highest in


Active Funds
Passive Funds
Index Funds
None of the Above

Question 50
(a)
(b)
(c)
(d)

NAV of Equity funds is to be calculated upto


1
2
3
4

Question 51

Exchange Traded Funds-ETF Gold regularly invest in good gold mining


companies - True or False ?

(a)
(b)

TRUE
FALSE

decimals.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 52
(a)
(b)

Question 53
(a)
(b)
(c)
(d)

The National Pension System (NPS) offers a wider portfolio choice than
Mutual Funds - True or False ?
TRUE
FALSE

The amount which is paid to the distributor at the time the money is
invested in a scheme is called
_.
Trail Commission
Upfront Commission
Rebate
Fund Incentive

Question 54
(a)
(b)

Can recurring expenses be charged to a mutual fund scheme ?


Yes, they can be charged.
No, they cannot be charged.

Question 55

As per the provisions of the Income Tax Act - Short term capital loss is to
be set off against short term capital gain or long term capital gain - True
or False ?
FALSE
TRUE

(a)
(b)

Question 56
(a)
(b)
(c)
(d)

Question 57
(a)
(b)

Which of the following should NOT be included in the Key Information


Memorandum ?
The risks associated with the scheme
The functions of Trustees and AMC
The opening - closing dates of the NFO
Minimum investments required and the cutoff time.

Tier II account of the National Pension System is called the


Savings Account
Pension Account

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 58
(a)
(b)
(c)
(d)

Question 59
(a)
(b)

Which one of the below mentioned document is not required for KYC
process ?
PAN Card
Address Proof
Income Proof
Identity Proof

There are no penalties for breach of code of conduct as mandated by


AGNI - True or False ?
TRUE
FALSE

Question 60
(a)
(b)
(c)
(d)

The
is the phase when the earning years usually starts.
Young Unmarried
Young Married
Married with one children
During graduation

Question 61

Which of the following is an important aspect of an OFFER


DOCUMENT ?
To inform the investors about the AMC's views on Stock Markets
To inform the investors on the performance of the scheme
To provide a comparison of the schemes
To inform the investors on the detailed information about the scheme

(a)
(b)
(c)
(d)

Question 62
(a)
(b)

An Index fund has an beta of 1 - State True or False ?


TRUE
FALSE

Question63

The strategy of Tactical Asset Allocation is considered to be a risky


strategy - True or False ?

(a)
(b)

TRUE
FALSE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 64
(a)
(b)
(c)
(d)

Which of the below expenses can be charged to a fund ?


Expenses to manage a fund
Expenses to launch a new fund
Expenses done by the AMC
Expenses done by the Investors

Question 65

Post the New Fund Offer, investors who wishes to buy units need to pay
.

(a)
(b)
(c)
(d)

Question 66

(a)
(b)

the NFO price plus inflation rate


the same price as NFO
a price linked to the inflation index
a price that is linked to its NAV.

Mr. Deven gives his investment application form to the distributor at 10


am. The distributor then goes to the Mutual Fund office and submits this
application at 1 pm. What is the cut off time for this investment ?
10:00 AM
1:00 PM

Question 67
(a)
(b)
(c)
(d)

Mutual Funds are allowed to borrow


.
for long term investment purposes
are not allowed to borrow at all
to meet redemption requests or divdend payments.
freely as per their investment objectives

Question 68

Relaxation in documentation requirements for micro-SIPs is available


for
.

(a)
(b)
(c)
(d)

Non Resident Indians


Non Individuals
Hindu Undivided Family
None of the Above

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 69
(a)
(b)
(c)
(d)

Which is the re-opening date for a scheme ?


The next working day after the close of a NFO
The date when investors can go for re-purchase
The date on which it lists on a Stock Exchange
The date on which NFO opens

Question 70
(a)
(b)
(c)
(d)

On liquidity parameters, which is most liquid ?


Equity Shares
Bank Fixed Deposits
Gold
Real Estate

Question 71

ELSS schemes should contain the least amount of Ill Liquid Investments
- True or False ?

(a)
(b)

Question 72
(a)
(b)
(c)
(d)

Question 73
(a)
(b)

TRUE
FALSE

Which of the following options form the basis of appointment of a


Mutual Fund distributor ?
An agreement between the AMC and the Distributor
Approval from SEBI
Power of Attorney from the AMC
An agreement with AMFI

After deciding the model portfolio, Sharpe Ratio is used for finalizing the
schemes of Equity and Debt - True or False ?
TRUE
FALSE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 74

(a)
(b)
(c)
(d)

Question 75

(a)
(b)
(c)
(d)

Mutual funds/AMCs shall disclose portfolio (along with ISIN) as on the


last day of the month for all their schemes on their respective website on
or before the
of the succeeding month
3rd day
7th day
10th day
15th day

To achieve growth by investing in equity and equity related investments,


along with income generation by investing in debt and money market
instruments would be the investment objective of a
.
balanced scheme
debt fund
Sectoral Equity fund
ELSS Fund

Question 76
(a)
(b)
(c)
(d)

The Absolute Return is calculated using the formula


(Cost Price - Sale Price ) / Sale Price
(Sale Price / Cost Price) - 1
(Sale Price - Cost Price) / Cost Price
1 - (Cost Price / Sale Price)

Question 77

Every trust has beneficiaries and the beneficiaries, in the case of a


mutual fund trust, are
.

(a)
(b)
(c)
(d)

Question 78
(a)
(b)

the Employees of the Mutual Fund Company


the Trustees of the AMC
the Chairperson and Managing Director of the AMC
the investors who invest in various schemes of the mutual fund.

Investments in Mutual Funds can be done only through a AMFI


authorided MF distributors - True or False ?
TRUE
FALSE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 79
(a)
(b)

Foreign nationals can invest in Indian mutual funds - True or False ?


TRUE
FALSE

Question 80

Many AMCs, distribution houses and mutual fund research houses offer
free tools in their website which can be used for evaluating a funds
performance - True or False ?

(a)
(b)

Question 81

(a)
(b)
(c)
(d)

Question 82
(a)
(b)

Question 83
(a)
(b)
(c)
(d)

TRUE
FALSE

Mr. Shah gives a local cheque at 4.30 pm of Rs 10 lacs at a Mutual Fund


office for investing in a Gilt Fund. Of which day will the NAV be
applicable to him ?
NAV of the same day
NAV of the next business day
NAV of the day on which the funds will be available
None of the above

AMC directors are appointed with the permission of SEBI - True or


False?
TRUE
FALSE

Minors are not legally eligible to contract, so for investing in Mutual


Funds they
.
have to become 18 years before investing
can invest thro' their guardians
can invest only in long term capital gain funds
can invest in specific 'Minors Only' Mutual Funds

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 84
(a)
(b)

Question 85
(a)
(b)
(c)
(d)

Question 86
(a)
(b)
(c)
(d)

Question 87
(a)
(b)
(c)
(d)

Question 88
(a)
(b)

Due to the popularity of cash less health insurance policies the liquidity
needs of the investors have reduced - True or False
TRUE
FALSE

Investments owned by the scheme may be quoted in the market at higher


than the cost paid and these gains are called as
.
Valuation Gains
Booked Gains
Notional Gains
Notional Losses

Dividend Distribution Tax (DDT) on debt-oriented mutual fund schemes


for Corporate Investors is
+ Surcharge + Education Cess
15%
30%
35%
40%

At what rate is the Securities Transaction Tax charged on sale of units of


debt oriented mutual fund in a stock exchange ?
0.01%
0.10%
0.13%
0%

An important feature of Growth Option is Tax Deferral - True or False ?


TRUE
FALSE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 89
(a)
(b)
(c)
(d)

Asset allocation means


_.
Distribution of Funds between Fund Managers in a Mutual Fund
Distribution of funds between various persons after the death of a person
Distribution of funds between various asset classes in a portfolio
Distribution of funds between beneficiaries of an AMC

Question 90

A person wishes to avail of a loan. For which of the below options he


cannot get a loan ?

(a)
(b)
(c)
(d)

Question 91

(a)
(b)

Question 92
(a)
(b)

Question 93
(a)
(b)
(c)
(d)

To start a Pharma factory


To buy a car of value above Rs 20 lacs
To buy a high priced lottery ticket
To buy a house in a Union Territory

Investments in Mutual Funds are subject to market risks and therefore


do not provide any guarantee of Capital Growth / Protection - True or
False ?
FALSE
TRUE

Loads and taxes pull the investors returns below that earned by the
Scheme - True or False ?
TRUE
FALSE

The strategy of maintaining a constant ratio of asset allocation is know as


_.
Dynamic Asset Allocation
Fixed Asset Allocation
Flexible Asset Allocation
SIP

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 94
(a)
(b)

Question 95

(a)
(b)
(c)
(d)

Question 96
(a)
(b)
(c)
(d)

Question 97
(a)
(b)
(c)
(d)

Question 98
(a)
(b)
(c)
(d)

Investments in mutual fund units attract Wealth Tax if the investments


are over Rs 5 lacs - True or False ?
TRUE
FALSE

Debt-oriented, close-ended / interval, schemes /plans need to disclose


their portfolio in their website every month, by the
working day of
the succeeding month.
3rd
10th
12th
15th

If you are expecting interest rates (yields) to rise in the markets. Where
would you invest your money considering this forecast ?
Long Terms Debt Funds
Short Term Debt Funds
Equity Funds
Banking Sector Funds

Condensed financial information for schemes launched in last 3 financial


years is mentioned in the
.
Scheme Information Document (SID)
Statement of Additional Information (SAI)
Fact Sheet
Prospectus

The dividend received by a Mutual Fund investor will be taxed at a rate


of
_.
5%
10%
20%
No tax on Mutual Fund Dividends in the hands of the investor

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Question 99
(a)
(b)
(c)
(d)

Question 100
(a)
(b)

A Mutual Fund investor can file a case against the


of trust.

for breach

Mutual Fund
Trustees
Stock Exchange
No, a MF investor cannot file a suit.

Management fees cannot be charged by liquid schemes on funds parked


in short term deposits of commercial banks - True or False ?
FALSE
TRUE

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

ANSWERS TO REAL FEEL MOCK EXAM QUESTIONS :

Correct Answer 1

cannot get any remedy from the AMC

Correct Answer 2

NAV of the day on which funds will be available

Answer
Explanation

For all Equity and Debt funds (except Liquid funds) - For investment of
below Rs 2 lacs - NAV of the same day if received before 3 pm ( cut-off
time)
For investments of amount of Rs 2 lacs and above, irrespective of the time of
receipt of application, NAV of the business day on which the funds are
available for utilisation before the cut-off time of that day is applicable.

Correct Answer 3

Building

Correct Answer 4

The change in NAV captures the scheme performance

Answer
Explanation

In Growth Option, the NAV rises or falls depending on the schemes


performance.
No dividend is declared in Growth Option.

Correct Answer 5

Short Term

Correct Answer 6

Trusts, Indian Trusts Act

Correct Answer 7

Board Resolution

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 8
Answer
Explanation

Diversified Equity Fund


A Diversified Equity Fund invests mainly in equity for long term capital
appreciation.

Correct Answer 9

FALSE

Correct Answer 10

Schemes

Answer
Explanation

MF's have various schemes like Large Cap Funds, Mid Cap Funds. Sectoral
Funds etc. to suit varied investment requirements.
(Plans and Options are Dividend / Growth etc. which form a part of the
scheme)

Correct Answer 11

Beta Coefficient

Correct Answer 12

No

Correct Answer 13
Answer
Explanation

FALSE
To do away with multiple KYC formalities with various intermediaries, SEBI
has mandated a unified KYC for the securities market through KYC
Registration Agencies registered with SEBI.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 14
Answer
Explanation

Correct Answer 15
Answer
Explanation

Correct Answer 16
Answer
Explanation

FALSE
Nomination facility is also available in the case of joint holding.
Every unit-holder will have to sign the nomination form. If one joint holder
dies, then the Units will continue to be held by the surviving joint holder/s.
If all joint holders dies, then the Units will be transferred to the nominee.

Key Information Memorandum (KIM)


As per SEBI regulations, every application form is to be accompanied by the
KIM.
KIM is essentially a summary of the SID and SAI. It is more easily and
widely distributed in the market.

Key Information Memorandum KIM


KIM is essentially a summary of the SID and SAI.
As per SEBI regulations, every application form is to be accompanied by the
KIM.

Correct Answer 17

are traded on the Commodity Exchanges

Correct Answer 18

All of the above

Correct Answer 19

Grows at a steady rate

Answer
Explanation

Correct Answer 20

Dedicated MF distributors have accumulated a portfolio of loyal investors to


whom they offer superior service.
The trail commission on these investments ensures a steadily rising income
for the distributor. Additional investments from the same investors, and other
investors referred by the current investors, help them grow the portfolio.

Old couple with no family support

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 21

Higher , Higher

Correct Answer 22

Arbitrage Funds are more riskier than Sectoral Funds

Answer
Explanation

Arbitrage Funds make profits by using the price differences between two
markets - so they are the least risky among Equity Funds.
Sectoral Funds are the most risk funds as they are not diversified.
Arbitrage Funds have basis risk the risk that both cash and F&O position
on a company cannot be reversed at the same time. During the time gap
between unwinding of the two positions, the market can move adverse to the
scheme.

Correct Answer 23

TRUE

Correct Answer 24

0.35

Answer
Explanation

The formula for Sharpe Ratio is : ( Rs-Rf ) / Standard Deviation


ie. ( Return Earned - Risk free Return ) / Standard Deviation
0.536023055
0.354466859
0.35

Correct Answer 25

15 Days

Correct Answer 26

All of the above

Correct Answer 27

Rs 10

Answer
Explanation

As per the law, every unit has a face value of Rs. 10.
However, older schemes in the market may have a different face value.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 28

Close Ended Fund

Correct Answer 29

TRUE

Answer
Explanation

The NAV falls but the units increase as more units are allotted due to
Dividend Reinvestment.

Correct Answer 30

Correct Answer 31

FALSE

Answer
Explanation

Stock Exchanges does are not required to do the role of Registrars and
Transfer Agents (RTA).

Correct Answer 32

All of above

Correct Answer 33
Answer
Explanation

Elderly couple with no children


More Allocation to debt funds is recommended for senior citizens as they
carry the least amount of risk
Young people can take risks so they are advised to invest in Equity funds for
a long term.

Correct Answer 34

Existing Investors

Answer
Explanation

For a first time investment in a mutual fund Full application form is to be


filled .
Then once an investor has a folio with a mutual fund, subsequent investments
/ sale with the same mutual fund do not call for the full application form.
Only Transaction Slip needs to be filled and submitted.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 35

The return is calculated over smaller time horizons

Correct Answer 36

Registrars and Transfer Agents

Answer
Explanation

Correct Answer 37
Answer
Explanation

Correct Answer 38
Answer
Explanation

The RTA maintains investor records.


The appointment of RTA is done by the AMC. It is not compulsory to
appoint a RTA and the AMC can choose to handle this activity in-house.

Both of the above


The cut-off timing is not applicable for NFOs and International Schemes.

TRUE
Since investors risk appetites vary, a single portfolio cannot be suggested for
all.
Financial planners often work with model portfolios the asset allocation
mix that is most appropriate for different risk appetite levels.

Correct Answer 39

TRUE

Correct Answer 40

FALSE

Correct Answer 41

TRUE

Answer
Explanation

Floating rate funds invest largely in floating rate debt securities i.e. debt
securities where the interest rate payable by the issuer changes in line with
the market.
Since the interest rate itself keeps adjusting in line with the market, these
floating rate debt securities tend to hold their value, despite changes in yield
in the debt market.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 42

Regular Income

Correct Answer 43

TRUE

Answer
Explanation

Correct Answer 44
Answer
Explanation

Stock selection is important in bottom-up approach.


In a top-down approach, sector allocation is the key decision.

TRUE
KIM is essentially a summary of the SID and SAI.
As per SEBI regulations, every application form is to be accompanied by the
KIM. So KIM is more easily and widely distributed in the market.

Correct Answer 45

TRUE

Correct Answer 46

Custodian

Answer
Explanation

Correct Answer 47
Answer
Explanation

Correct Answer 48
Answer
Explanation

Although the AMC manages the schemes, custody of the assets of the scheme
is with a Custodian, who is appointed by the Trustees.

Less risky than the market


Beta is a measure of risk of a security or a portfolio. If the Beta more than 1,
this means the security or the portfolio will rise or fall more than the index.
Similarly if the Beta of a scrip or portfolio is less than 1, this means the
security or the portfolio will rise or fall less than the index.

Rs 20000
Mutual funds usually do not accept cash.
However for small investors, who may not be tax payers and may not have
PAN/bank accounts, are allowed cash transactions for purchase of units in
mutual funds to the extent of Rs. 20,000/- per investor, per mutual fund, per
financial year.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 49
Answer
Explanation

Correct Answer 50
Answer
Explanation

Correct Answer 51
Answer
Explanation

Correct Answer 52
Answer
Explanation

Active Funds
In Active Funds like Diversified Equity Funds, the Fund manager does a lot
of buying / selling. Also a lot of research work goes into it. So the cost of
fund management are higher.

2
NAV for equity and balanced funds is to be calculated upto at least 2 decimal
places.
NAV is to be calculated upto 4 decimal places in the case of index funds,
liquid funds and other debt funds.

FALSE
Gold Sector funds invest in gold mining companies. Gold ETF merely track
the gold prices.

FALSE
The NPS offers fewer portfolio choices than mutual funds.

Correct Answer 53

Upfront Commission

Correct Answer 54

Yes, they can be charged.

Answer
Explanation

Recurring Expenses can be charged to the scheme.


Since the recurring expenses drag down the NAV, SEBI has laid down the
expenses and their limits which can be charged to the scheme.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 55
Answer
Explanation

TRUE
Some key provisions of IT Act related to Capital Gains are:
Capital loss, short term or long term, cannot be set off against any other
head of income (e.g. salaries)
Short term capital loss is to be set off against short term capital gain or long
term capital gain
Long term capital loss can only be set off against long term capital gain

Correct Answer 56

The functions of Trustees and AMC

Correct Answer 57

Savings Account

Answer
Explanation

National Pension System (NPS) has two types of accounts :


1. Tier I (Pension account), is non-withdrawable.
2. Tier II (Savings account) is withdrawable to meet financial contingencies.

Correct Answer 58

Income Proof

Correct Answer 59

FALSE

Answer
Explanation

As per 'AMFI Guidelines & Norms for Intermediaries' (AGNI) - In the event
of breach of the Code of Conduct by an intermediary the registration can be
cancelled after the set procedure is carried out.

Correct Answer 60

Young Unmarried

Correct Answer 61

To inform the investors on the detailed information about the scheme

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 62
Answer
Explanation

TRUE
Beta is a measure of risk of a security or a portfolio as compared to the
market ie. Index.
Since an Index fund invests in shares which are a part of the index, the NAV
will rise or fall as per the movements of index. So the beta is 1.

Correct Answer 63

TRUE

Correct Answer 64

Expenses to manage a fund

Answer
Explanation

Correct Answer 65
Answer
Explanation

Correct Answer 66
Answer
Explanation

Correct Answer 67
Answer
Explanation

Earlier expenses to launch a fund were charged to the fund but now they
cannot.

a price that is linked to its NAV.


When a scheme is first made available for investment, it is called a New
Fund Offer (NFO).
During the NFO, investors have the chance of buying the units at their face
value.
Post-NFO, when they buy into a scheme, they need to pay a price that is
linked to its NAV.

1:00 PM
The cut off time is when the investment is submitted to the PoA - Point of
Acceptance is relevant not the time when the investor submits the
transaction request to the distributor.

to meet redemption requests or divdend payments.


As per SEBI regulations, MF borrowing is permitted only to meet the cash
flow needs of investor servicing viz. dividend payments or re-purchase
payments.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 68
Answer
Explanation

Correct Answer 69
Answer
Explanation

Non Resident Indians


Relaxation in documentation requirements for micro-SIPs is not available for
HUFs and non-individuals.
Such relaxation is available for NRIs.

The date when investors can go for re-purchase


Scheme Re-Opening Date This is the date from which the investors can
offer their units for re-purchase to the scheme (at the re-purchase price); or
buy new units of the scheme (at the sale price).

Correct Answer 70

Equity Shares

Correct Answer 71

FALSE

Answer
Explanation

Open-ended scheme, which have a greater need for liquidity because


investors can offer their units for re-purchase at any time - should have the
least amount of ill liquid investments in their portfolio.
ELSS Schemes have a lockin period of three years - so the fund manager can
buy more illiquid investments if he feels there is great potential in them in the
long run.

Correct Answer 72

An agreement between the AMC and the Distributor

Correct Answer 73

TRUE

Correct Answer 74

10th day

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 75

balanced scheme

Correct Answer 76

(Sale Price - Cost Price) / Cost Price

Answer
Explanation

Correct Answer 77
Answer
Explanation

Correct Answer 78
Answer
Explanation

Correct Answer 79
Answer
Explanation

Absolute Return or Simple Return is simply the change in the value of an


investment over a period of time.
Its not calculated on a yearly basis etc.
For eg - A person bought a MF at NAV 10 and sold it after 2 years at NAV
18, then the Absolute Return is :
18 - 10 / 10 = 0.8 or 80% absolute return

the investors who invest in various schemes of the mutual fund.


Every trust has beneficiaries. The beneficiaries, in the case of a mutual fund
trust, are the investors who invest in various schemes of the mutual fund.

FALSE
Investors can directly invest in MF's by visiting the MF office and other Point
of Sales (POS).

TRUE
Foreign nationals are permitted to invest in Indian mutual funds, subject to
KYC.

Correct Answer 80

TRUE

Correct Answer 81

NAV of the day on which the funds will be available

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 82
Answer
Explanation

Correct Answer 83
Answer
Explanation

Correct Answer 84
Answer
Explanation

Correct Answer 85
Answer
Explanation

Correct Answer 86
Answer
Explanation

Correct Answer 87
Answer
Explanation

FALSE
AMC directors are appointed with the permission of Trustees.

can invest thro' their guardians


Minors i.e. persons below the age of 18 are not legally eligible to contract,
they need to invest through their Parents/Lawful guardians.

TRUE
Earlier people use to save to meet medical emergencies. But due to cash less
medical insurance people keep less liquidity with them as the insurance
companies pay for the medical bills

Valuation Gains
Investments owned by the scheme may be quoted in the market at higher than
the cost paid and these are called valuation gains.
Similarly, there can be valuation losses when securities are quoted in the
market at a price below the cost at which the scheme acquired them.

30%
Tax on dividend distributed by debt-oriented mutual fund schemes is as
follows:
Others: 30% + Surcharge + Education Cess
Individuals and HUF: 25% + Surcharge + Education Cess

0%
STT is not applicable on transactions in debt or debt-oriented mutual fund
(including liquid fund) units.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 88
Answer
Explanation

Correct Answer 89
Answer
Explanation

TRUE
When an investor chooses the Growth Option, the gains are accumulated and
he need not pay tax on the gains each year.
Only when he sells the Mutual Fund he needs to pay the tax, if any.

Distribution of funds between various asset classes in a portfolio


The distribution of an investors portfolio between different asset classes is
called asset allocation.
For eg - If an investor wishes to invest Rs 10 lakhs - His funds can be divided
and invested in Equity, Debt and Gold - This is asset allocation.

Correct Answer 90

To buy a high priced lottery ticket

Correct Answer 91

TRUE

Correct Answer 92

TRUE

Correct Answer 93

Fixed Asset Allocation

Answer
Explanation

Correct Answer 94
Answer
Explanation

For eg - Balanced funds adopt a stable asset allocation policies, e.g. 55:45
between equity and debt at all times, are said to be operating within a fixed
asset allocation framework.

FALSE
Investments in mutual fund units are exempt from Wealth Tax. This is
irrespective of where the fund invests and the amount.

NISM SERIES V A MUTUAL FUND DISTRIBUTORS


CERTIFICATION REAL FEEL MOCK EXAM

Correct Answer 95

3rd

Correct Answer 96

Short Term Debt Funds

Answer
Explanation

If it is expected that interest rates would go up, it would be safer to go with


Short Term Debt Funds. As the rates rise, the short-term bonds would mature,
allowing the fund manager to deploy the proceeds at higher rates.
On the contrary, as interest rates in the market goes down, debt securities gain
in value. Therefore, long term debt funds would be sensible in declining
interest rate scenarios.

Correct Answer 97

Statement of Additional Information (SAI)

Correct Answer 98

No tax on Mutual Fund Dividends in the hands of the investor

Answer
Explanation

Correct Answer 99

Correct Answer
100
Answer
Explanation

The dividend received by an investor in a MF - be it Equity or Debt, is


exempt from tax.

Trustees

TRUE
SEBI has stipulated annual limits on recurring expenses (including
management fees) for various Equity and Debt schemes.
However management fees cannot be charged by liquid schemes and other
debt schemes on funds parked in short term deposits of commercial banks.