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WorksheetsExam NISM - 90 marks
Total questions: 90
Worksheet time: 45mins
The risk mitigation strategies adopted by the fund management to control and manage the risks associated with investing in specific types of securities are described in the __________.
Scheme Information Document (SID)
Statement of Additional Information (SAI)
Fund Factsheet
KYC form
Share certificate is a physical asset
True
False
An investor already has a folio in a mutual fund scheme where he is a joint holder. Now he wants to do additional investments in the same scheme as a sole holder. How can he make the change ?
He can do the investments by mentioning the mode of holding in the application as single to apply only for the fresh investments being made
He will have to do the investments under a new folio and select the mode of holding as single
He can do the investment by changing the mode of holding for the additional units after the investment has been made
Identify the TRUE statements -
A) The diversified stock index has a Beta of 1
B) An investment with a beta of 0.7 will move 7 percent when markets move by 10 percent
Only A is True
Only B is True
A and B are True
Long term debt funds would be sensible in declining interest rate scenarios - True or False ?
True
False
Identify the TRUE statement(s) with respect to risk levels in mutual funds ?
A) Corporate bond funds are relatively more riskier than Credit risk fund
B) The NAV of Gilt funds generally fluctuate more than NAV of Liquid funds due to changes in yield
Only A is True
A and B are False
A and B are True
Only B is True
Dividend Distribution Tax (DDT) on Equity oriented mutual fund schemes for Corporate Investors is ____.
0.1
0.25
0.3
NIL TAX
While doing an asset allocation for an investor, which among the following factors will have the least importance ?
RBI's announcement that there could be huge recession
RBI's announcements of changes in interest rates
Bonus issued by one of the MF schemes
Changes in prices of equity shares
What is Indexation ?
Benchmarking the index fund against a suitable index like Sensex / Nifty
Adjusting the cost of acquisition downward to reflect the impact of inflation
Adjusting the cost of acquisition upwards to reflect the impact of inflation
Reduction of short and long term capital gains tax by using an index based calculation
Identify the TRUE statement.
A) While calculating scheme returns for an investor, if there is an entry load, then the initial value of the Net Asset Value (NAV) is taken as NAV plus Entry Load
B) While calculating scheme returns for an investor, if there is an exit load, then the later value of the Net Asset Value (NAV) is taken as NAV plus Exit Load
Only B
Both A and B
Only A
Which of the statement is true with respect to applicability of TDS in case of capital gains from mutual fund units ?
There is NIL TDS on capital gains in mutual fund for all investors
All capital gains from mutual fund investments are subject to TDS @ 10%
TDS is not applicable on capital gains for resident individuals but is applicable for Non Resident Individuals (NRI)
TDS is required to be deducted at 10 percent on all declared dividend
You are expecting interest rates (yields) to rise in the markets. Where would you invest your money considering this forecast ?
Banking Sector Funds
Equity Funds
Short Term Debt Funds
Long Terms Debt Funds
Investments owned by the scheme may be quoted in the market at higher than the cost paid and these gains are called as __________.
Notional Gain
Valuation Gains
Notional Losses
Booked Gains
What is the time duration in which SEBI has to approve the scheme related documents ?
14 working days
SEBI does not approve the documents. It gives its observations
7 working days
3 working days
Which is the first step that a mutual fund distributor should take in building a mutual fund portfolio for his investors ?
He should list good equity funds with the lowest expense ratio for the investor to select
He should list the best performing funds for the investor to select
He should set the financial goals of the investor
He should invest the amount in a liquid fund and set a Systematic Transfer Plan in good equity funds
Return from a fund is 11.5% and the risk free rate is 7%, the Standard deviation is 3 & Beta is 1.9. What will be the denominator for calculating the Sharpe ratio ?
2.3
3
4.5
1.9
Which of the following is a measure of fluctuation in periodic returns in an equity mutual fund scheme ?
Jensen’s Alpha
Modified Duration
Variance
Sharpe Ratio
In a Corporate Bond fund, the minimum investment in highest rated corporate bonds is ______ percent of the total assets.
50
60
65
80
Equity Linked Savings Schemes (ELSS) are eligible for deduction under Section 80C of the Income Tax Act. However, such schemes have a lock-in period of _______ from the date of investment.
3 years from the date of allotment of each individual unit
3 years from the date of original investment even in case of subsequent purchases
5 years from the date of allotment of each individual unit
If tax exemption is NOT availed, there will not be any lock-in period
The loss booked from a equity investment of 18 months can be set off against ________.
Long term capital loss only
Long term capital gain only
Short term capital gain only
Short term capital gain or long term capital gain
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
200
25
Mr. Suresh invests Rs 2,00,000 in a mutual fund with a face value of Rs 10 and NAV of Rs. 50. How many units will be allotted to him ?
4000 units
20000 units
Will be lower than 4000 units due to entry load
Will be lower than 20000 units due to entry load
In Liquid funds, simple annualised return method is used to show the returns because ___________.
The amount invested is usually small
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
At what rate is the Securities Transaction Tax charged on sale of units of debt oriented mutual fund in a stock exchange ?
0.0001
0.001
Not applicable
0.00125
What is the maximum Total Expense Ratio chargeable in case of index funds ?
Any amount that the AMC may deem appropriate
1.5 percent of the daily net assets
It depends as the TER changes in line with the size of the scheme
1 percent of the daily net assets
Decisions in Tactical Asset Allocation are taken on the basis of _____.
risk profile of the investor
income level of the investor
likely behaviour of the markets
All of the above
A creditable benchmark of a mutual fund scheme should be in sync with the __________.
A. Size of scheme
B. Investment objective of the scheme
C. Investment strategy of the scheme
D. Expenses ratio of the scheme
E. Asset allocation pattern of the scheme
B, C and E
A, C and D
B, D and E
A and B
An investor purchases through a distributor 20000 units of a mutual fund scheme at a NAV of Rs 65. The current NAV of the scheme is Rs 62. What will be the trail commission for today if the trail commission rate is 1% per annum.
Rs. 19.5543
Rs. 35.6164
Rs. 33.9726
Rs. 28.1217
Which of the following statements is ‘True’ with respect to celebrity endorsement for mutual funds ?
SEBI has permitted celebrity endorsements for promotion of individual mutual fund schemes
SEBI has permitted celebrity endorsement at the industry level for the purpose of increasing the awareness of mutual funds
Celebrities can endorse only NFOs
Celebrities can endorse only on-going mutual fund schemes
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.
173.33
177.33
184
186.74
In which document is a commentary on the current state of economy and markets is also generally provided ?
Scheme Information Document (SID)
Key Information Memorandum (KIM)
Statement of Additional Information (SAI)
Fund Fact Sheet
Identify the true statement(s) with respect to benchmark for Sector Funds.
A) Its ideal to benchmark a sector fund against an index representing the respective sector
B) Its advisable to benchmark a sector fund against a diversified fund to get the correct picture
Only A is True
Only B is True
Both A and B are True
What is negative Alpha ?
It is indicative of under-performance by the fund manager
It is indicative of under-hedging by the fund manager
It is indicative of over-hedging by the fund manager
It is indicative of over-hedging by the fund manager
When should the information under Foreign Account Tax Compliance Act (FATCA) provided ?
Only if the place of birth is other than India
Only if the investor is a resident of USA or Europe
Only if an NRI is doing the investment
Only if the investment is made from a foreign bank account
What is the restriction on a mutual fund scheme investing in the equity instruments of a company ?
2% of the net assets
5% of the net assets
7.5% of the net assets
10% of the net assets
An investor in an active fund bears a ________ cost for the fund management, and takes a ________ risk.
Lower, Higher
Lower, Lower
Higher, Higher
Higher, Lower
Which is the re-opening date for a scheme ?
The date on which NFO opens
The date when investors can go for re-purchase
The next working day after the close of a NFO
The date on which it lists on a Stock Exchange
Which of these statement(s) is/are FALSE with respect to Benchmarks ?
A) Portfolio concentration is an important factor while selecting a benchmark for an equity mutual fund
B) Choice of investment universe is not an important factor while selecting an appropriate benchmark for debt mutual funds
Only A is False
Only B is False
Both A and B are False
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
While deciding on investments for his clients, what should be the right sequence ?
Making a Model Portfolio - Risk Profiling - Selection of Scheme
Risk Profiling - Making a Model Portfolio - Selection of Scheme
Selection of Scheme - Making a Model Portfolio - Risk Profiling
Selection of Scheme - Risk Profiling - Making a Model Portfolio
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
On what basis will the payment be made to an investor who claims his erstwhile unclaimed redemption amount within three years ?
The amount paid will based on the NAV at the time of original redemption plus income earned on the unclaimed amount
The amount paid will based on the NAV at the time of original redemption plus income earned on the unclaimed amount and deducting any penalty on the same
The amount paid will based on the average of the NAV at the time original redemption and todays NAV after accounting for income earned and penalty if any
The amount paid will based on the prevailing NAV after adding the income earned on the unclaimed profits
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 ?
Rs 19
Rs 5
Rs 10
Rs 12
An investor in India is investing in US Dollar based funds. He/She will benefit when ______.
The US Dollar becomes stronger
The US Dollar becomes weaker
The US Dollar remains steady
Complete the sentence - Investments in Mutual Funds are subject to market risks and so _____________.
does not provide any guarantee of capital protection
provide capital protection through diversification
provide protection against a significant downfall
provide insurance
In case the units are pledged, the unit holder ______.
cannot sell the units
cannot sell but can switch the units to another scheme
can sell the units after the lockin period
cannot do additional purchase
‘Once it is finalized, a mutual fund scheme’s benchmark cannot be changed at a later date.’ State whether the statement is True or False.
True
False
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
Identify the true statement(s) with respect to benchmark for mutual fund schemes.
A) For International Equity fund, the ideal benchmark will be BSE 500 index as it is a very broad based index covering 500 companies
B) For Gold ETF, gold prices will be the ideal benchmark
Only A is correct
Only B is correct
Both A and B are correct
Neither A nor B are correct
Mr. Mohit has filled up a application form for subscribing to a mutual fund scheme. However the address mentioned in the application form is different from the address provided at the time of KYC compliance. Which address will be included in the mutual funds records once the KYC compliance is validated ?
The address provided for KYC compliance
The address provided in the application form will be used for all communications
The address provided in the application form
Mr. Mohit can indicate which address is correct
Investors tend to extrapolate the current event into the future and expect a repeat. This is an example of ________ bias.
Overconfidence
Familiarity
Herd Mentality
Recency
Which of these statement(s) is/are TRUE ?
A) If the mutual fund units are held in demat form, they cannot be converted in to physical form
B) When a mutual fund is redeemed or when there is a dividend pay-out, the amount will be credited to the bank account linked to the demat account for those mutual fund investors who opt for demat units
Only A is correct
Only B is correct
Both A and B are correct
Identify the TRUE statement with respect to benchmark for Gold ETFs.
Internationally it is proven that there is no need of any type of benchmark for Gold ETFs
Gold ETFs are benchmarked against gold prices
CRISIL Gilt fund index is widely used as a benchmark for Gold ETFs
There can be no benchmark for Gold ETFs
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
0.72
0.53
0.49
0.89
If there is a breach of the Code of Conduct by an intermediary and a second violation by the intermediary is proved then the registration of the intermediary is _______.
Not renewed
Suspended
Cancelled
Withheld
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 day on which the funds will be available
NAV of the same day
NAV of the next business day
None of the above
One should not invest in Government Securities during periods of economic turmoil. State True or False ?
True
False
Identify the true statement(s) -
A) Beta is a measure of risk only for equity schemes
B) Variance is a measure of risk for both debt and equity schemes
C) A fall in prices of the debt securities due to default etc is known as a 'credit event'
Only B and C are True
Only A and C are True
Only A and B are True
All A, B and C are True
An International Fund is investing in US stocks. What would be the impact on it if US Dollar depreciates against the Indian Rupee ?
No impact on the fund as its investing in stocks and not currency
The NAV of the scheme in Indian Rupees will depreciate
The NAV of the scheme in Indian Rupees will appreciate
How can an investor remit money in an Indian mutual fund from abroad ?
Through National electronic funds transfer (NEFT)
Through Immediate Payment Service (IMPS)
Through Society for Worldwide Interbank Financial Telecommunication (SWIFT)
Through Real time gross settlement (RTGS)
Due to __________ the Index scheme's performance could be higher or lower than that of the benchmark.
Tracking Error
Systematic Risks
Bull Run
Market Volatility
Business model, experience and proficiency in the business is a compulsory criteria for empanelment and review of which of the following category of mutual fund distributors ?
Individual distributors who have points of presence in more than 10 locations
Institutional distributors who have points of presence in more than 10 locations
Distributors who have received commission of over Rs. 1 Crore p.a. across industry
All of the above
If the sale and purchase transactions for a year amounted to Rs. 10,000 crore, and the average size of net assets is Rs. 5,000 crore, this means that investments are held in the portfolio, on an average for ________.
2 months
3 months
6 months
12 months
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 70
Rs 10
Rs 49
Rs 700
STT is _________ on transactions in debt or debt-oriented mutual fund (including liquid fund) units.
not applicable
applicable
From which of these can the mutual fund NOT distribute dividends ?
Dividends which are received from equity investments
Unrealized appreciation in value of investments
Realized gain from sale of investments
Income accruals
Identify the true statement(s) with respect to stamping of application for Non Financial transactions of a mutual fund.
A) Time stamping is relevant
B) Date stamping is pertinent
C) Date and Time stamping is done
All A, B and C are True
Only A and B are True
Only B and C are True
Only A and C are True
Identify the true statement(s) -
A) Individuals can register upto five bank accounts with a mutual fund
B) A Non-Individual can register upto ten bank accounts with a mutual fund
Only A is correct
Only B is correct
Both A and B are correct
Both A and B are incorrect
Which of these is NOT a function of Registrars and Transfer Agents ?
Maintaining investors records
Processing redemption and dividend payouts
Analysing mutual fund performance and making it available to investors
Updating unit capital of fund
A Mutual Fund wants to launch a new scheme with a Face Value of Rs 50. Will it get the required permissions ?
Yes
No
Which of these funds has the highest risk ?
Long Duration Funds
Gilt Funds
Index Funds
Diversified Equity Fund
When is a Consolidated Account Statement (CAS) dispatched to the investor ?
When ever the investor asks for a CAS
bi-monthly for dormant investors
Every month, before the 10th working day of the following month
When ever there is a transaction in the folio
Identify the TRUE statement ?
SEBI regulates mutual funds in India
Mutual funds which are bank sponsored are regulated by RBI and not SEBI
SEBI and AMFI both regulate mutual funds in India
Stock Exchanges regulates mutual funds in India
What is real rate of return ?
Return that the investor gets after adjusting inflation
Return that the investor gets after taxes
Return that the investor gets after payment of all expenses
Return that the investor gets after adjusting the risks
An Index fund has an beta of 1 - State True or False ?
False
True
Which of these entities can invest in Indian mutual funds ?
A) Foreign portfolio investor
B) Insurance company
C) Salaried individual
Only C
A and B
B and C
All A, B, and C
Short term capital loss from an investment can be set off against _____.
Short term capital loss cannot be set off
short term capital gains only
long term capital gains only
short term capital gain or long term capital gain
Identify the false statement with respect to mutual fund scheme related documents.
SID has details of the particular scheme
SAI has statutory information about the mutual fund
KIM is essentially a summary of the SID and SAI
KIM and SID are two broad types of scheme documents
Identify which statement is true ?
Investors can hold the units of a mutual fund in market lots of 100 units
Investors can hold the units of a mutual fund in fraction of 1 unit
Investors cannot hold the units of a mutual fund in fraction of 1 unit
Investors can hold the units of a mutual fund in market lots of 50 units
The Absolute Return is calculated using the formula _________.
1 - (Cost Price / Sale Price)
(Sale Price - Cost Price) / Cost Price
(Cost Price - Sale Price ) / Sale Price
(Sale Price / Cost Price) - 1
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 ?
1000
100
10
Insufficient Data
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 ?
False
True
Which of these statement(s) is/are TRUE with respect to Benchmarks ?
A) The process of choosing a benchmark for an Index Fund is very complex
B) An independent agency should calculate the benchmark in a transparent manner
Only A is True
Only B is True
Both A and B are True
Of the below options, what is FALSE with respect to Arbitrage Funds ?
Arbitrage Funds are more riskier than Sectoral Funds
Arbitrage Funds invest in Equity Markets
Arbitrage Funds have Basis Risks
Arbitrage Funds invest in both Spot and Futures Market
The Scheme Information Document (SID) prepared by the AMC is approved by ______.
SEBI
Stock Exchanges
Board of Trustees
Sponsors
The difference between NAV and re-purchase price is _______.
Dividend Stripping
Exit Load
Entry Load
Commission of the MF Agent
______ is / are Non Financial transaction(s) in a mutual fund.
A) Switch
B) Pledge of units
C) Nomination
D) Transmission
B, C and D
A, C and D
C and D
A, B and C
Identify which of these is a function of Association of Mutual Funds in India’s (AMFI) ?
To regulate and control insider trading
To manage the Investor Protection Fund
To make available the AUM, NAV and other important data of the mutual fund industry
To calculate the correct NAVs
With respect to the procedure for getting empanelled as a mutual fund distributor with AMC, the applicant needs to sign a declaration for _______.
Ensuring that all employees who are selling mutual funds will have more than on ARN code
Commitment to abide by statutory codes, guidelines and circulars
Guarantee of adding a minimum of 5 investors every month
Declaring the rebates given back to the investors
Which of the following is a money market instrument?
Treasury bills
Equity shares
Real estate
Mutual funds
