Q&A Chapter 1

Q.1 In India, the first mutual fund after UTI was launched by

Q.2

1.
2.
3.
4.
1.
2.
3.
4.

Q.3
1.
2.
3.
4.

An investment company
A Trust
A Society
A Bank
Which of the following statement is TRUE?

1.
2.
3.
4.

Growth and risk are associated with equity funds

Stability is associated with debt funds
Both 1 & 2
None of the above
Investment in an Equity Linked Savings Scheme (ELSS)

1.
2.
3.
4.

Entitles the investor to claim income tax rebate

Requires the investment to be locked in for a period of 3 years
Automatically leads to investment in equity shares
All of these
Mutual funds should be recommended as

Q.4

Q.5

Q.6
1.
2.
3.
4.
Q.7 In

Q.8

Q9

Can bank mutual fund

Morgan Stanley
SBI mutual fund
LIC mutual fund
A Mutual Fund is a
Collective investment vehicle for the purchase of securities on behalf of investors.
Company that accepts fixed deposits
Fund that issues bond and debentures
None of the above
In India a mutual fund is a trust whereas in the USA it is

Investments to achieve long-term goals

A get rich quick investment option
Investments to take advantages from stock market swings
All of these
India, the public sector mutual funds came

1.
2.
3.
4.

Before private sector funds and UTI

After UTI but before SEBI regulation 1996
After SEBI Regulation 1996
After SEBI Regulation 1996 but before private sector funds
Which one of the below is correct?

1.
2.
3.
4.

UTIMF was established by a special act of parliament

UTIMF voluntarily accepted guidelines of SEBI
UTIMF is not the first MF in India
UTIMF was set up by Reserve Bank of India
Who published Making Mutual Funds Work for you- The Investors Guide

1.
2.
3.
4.

AMFI
SEBI
RBI
AMCs

Q.10

A close ended mutual fund has a fixed

1.

NAV

2.

Fund Size

3.

Rate of Return

4.

Number of Distributors

Q.11

Ownership of unit holders in mutual funds is

1.
2.
3.
4.

Q.12
1.
2.
3.
4.

Mutual
Beneficial
Mutual and Beneficial
None of the above
Which of the following is most significant event during February 2003?
UTI Act repealed
UTI MF found
UTI no longer has special legal status as a trust established by Act of parliament.
All of the above.

Q.13
1.
2.
3.
4.

The Board of Trustee of the UTI does not have nominees from
RBI
LIC
IDBI
The Bombay Stock Exchange (BSE)

Q.14

In the union budget 1999, which significant change was made?

1.
2.
3.
4.
Q.15
1.
2.
3.
4.

Dividends were made tax free in the hands of unit holders.

Capital Gain taxes were abolished.
Dividend distribution tax on all schemes were removed.
All of these
A close ended scheme is quoted on the stock exchange at a discount to its NAV when
The markets are bearish
Investors perceive that the fund will be unable to maintain the NAV
The assets of the fund are undervalued
None of the above

Q.16

AUM of Mutual Fund industry in year 2004-2005 was: (In crores)

1.
2.
3.
4.
Q.17

140000
150000
152000
120000
Which one is more diversified?

1.
2.
3.
4.
Q.18

Fund A which invests in Shares in India

Fund B which invests in shares in India and USA both
Both are equally diversified
Insufficient information.
Which of the following is not a specialty fund?

1.
2.
3.
4.
Q.19
1.
2.
3.
4.
Q.20

Sector fund
Mid cap /small cap fund
Foreign securities fund
Gilt fund
Where do Gilt funds invest?
Shares
Debentures
Dated securities
All of the above
Fixed Term plan series are:

1.
2.
3.
4.
Q.21

Closed ended
Generally short term in nature
Not listed on stock exchange
All of the above
Which of the following is not the right classification of funds?

1. Pension and Insurance Funds

2. Open ended and closed ended funds
3. Load and No load funds
4. Tax free and Tax exempt funds.
Q.22
The emergence of Private Funds in Indian Mutual Fund industry came in which Phase
of Mutual Funds history ?
1.
2.
3.
4.
Q.23

Phase
Phase
Phase
Phase

2
3
4
5

during
during
during
during

the
the
the
the

Portfolio diversification

2.

Risk reduction

1.
2.

1987
1993
1996
1999

to
to
to
to

1993
1996
1999
2004

Mutual fund can benefit from economics of scale because of

1.
3.
4.
Q.24

period
period
period
period

Large volume of trades

None of the above
Which of the following is incorrect?
An equity fund would invest in ordinary shares, preference shares and warrants
A bond fund would mainly buy debt instruments

3.
4.
Q.25

An index fund is indexed to inflation index

A sector fund invests in the shares of companies in a particular industry
A money market fund usually invests in

1.
2.
3.
4.
Q.26

Government treasury bills of less than one year maturity

6-month certificates of deposits of banks
The inter bank call money market
All of these
Mutual fund pay commission to their agents:

1.
2.
3.
4.
Q.27

As an incentive for having brought in an investor

As compensation for his before and after sales service to the investor
To off set any direct expenses that they may incur on sale of units
All of the above
Which of the following has the lowest risk?

1.
2.
3.
4.
Q.28

Liquid Fund (MMMF)

Gilt Fund
Diversified Debt Fund
Diversified Equity Fund
The current Mutual Fund Regulations from SEBI was introduced in

1.
2.
3.
4.
Q.29

1992
1994
1996
1998
Board of Trustees appoint Custodians for...

1.
2.
3.
4.
Q.30

Making payment to bankers on behalf of the fund

Selling units of a mutual fund
Safekeeping of physical securities of the mutual fund or participating in any clearing system.
None of these
Day to day investment management policies of a fund is determined by...

1.
2.
3.
4.
Q.31

AMC
Trustees
Investors
Sponsors
Shares, debentures, bonds, fixed deposits are the products normally issued by

1.
2.
3.
4.
Q.32
1.
2.
3.
4.
Q.33
1.
2.
3.
4.
Q.34
1.
2.
3.
4.

Banks
Corporate
Governments
Mutual finds
An investor in a close-ended fund can get his money back by selling his units:
Back to the fund
Back to AMFI
On a stock exchange where the fund is listed
To the agent who sold the units to the investor
Small funds are...
Relatively easier to manage
Achieve their objectives in more focused manner
Have limited holding
All of these
Stock markets investments in the market directly offer some advantages except...
Potential for high returns
Liquidity through trading on the stock exchanges
Low risk
The opportunity to capitalize on stock market fluctuations