NISM Series V-A | Mock Test 2 | 45 Advanced Solved MCQs

NISM Series V-A: Mock Test 2 (45 Solved Questions)

🚀 PRO-LEVEL PREPARATION:

This second set covers advanced operational and regulatory concepts. In my experience, these specific 45 questions cover the "trick" areas of the exam. Study these to secure your 71%+ score!

Q1. When should an investor adopt a strategy of limiting their equity exposure via equity index funds?
A) In the accumulation phase | B) In the retirement phase (Correct) | C) In the sudden wealth phase | D) None of the above
Explanation: As individuals approach retirement, they should limit equity exposure to protect accumulated wealth.

Q2. Thematic funds will always have a wider exposure than the sector funds.
A) True (Correct) | B) False
Explanation: Thematic funds invest in a broad theme (e.g., Urbanization) which includes multiple sectors (e.g., Steel, Cement, Banking).

Q3. The mechanism used to ensure that the cut-off timing is strictly followed is called:
A) Stamp time | B) Time verification | C) Time stamping (Correct) | D) Auditing

Q4. When interest rates are rising, bond funds which have short average maturity are more likely to outperform.
A) True (Correct) | B) False
Explanation: Short-duration bonds are less sensitive to interest rate hikes compared to long-duration bonds.

Q5. Can an investor transact directly through the websites of some mutual fund companies?
A) Yes (Correct) | B) No
Explanation: Direct plans allow investors to purchase units directly from the AMC website.

Q6. Investors in India are usually highly organized in managing their financial transactions and decisions.
A) True | B) False (Correct)
Explanation: Surveys indicate a lack of basic financial literacy in a majority of the Indian population.

Q7. Usually, active funds give higher returns as investors bear higher fund management expense.
A) True | B) False (Correct)
Explanation: Higher fees do not guarantee higher returns; passive funds often outperform after accounting for costs.

Q8. The document containing details of legal structure, constitution of AMC, etc., is:
A) SID | B) SAI (Correct) | C) KIM | D) Fact Sheet

Q9. The investment objective of a scheme can be altered by the AMC without taking the consent of unit holders.
A) True | B) False (Correct)

Q10. It is the duty of the trustees to ensure that schemes are managed according to offer documents.
A) True (Correct) | B) False

Q11. Which of the following is not a risk associated with mutual funds?
A) Credit risk | B) Interest rate risk | C) Reinvestment risk | D) None of the above (Correct)

Q12. Which of the following is most suitable for a long-term investment horizon?
A) Debt funds | B) Money market funds | C) Equity funds (Correct) | D) Liquid funds

Q13. Which of the following is not true of a debt mutual fund?
A) It invests only in equities (Correct) | B) It invests in fixed-income | C) It is less volatile

Q14. What is the primary role of a mutual fund distributor?
A) To provide financial advice | B) To collect investment applications (Correct) | C) To manage portfolio

Q15. Which investor requires Board approval before investing?
A) NRIs | B) Institutional investors (Correct) | C) HNI | D) Retail

Q16. Gilt schemes have more risk than liquid schemes due to yield market fluctuations.
A) True (Correct) | B) False

Q17. By investing in mutual funds, an investor uses the services of a professional:
A) Actuary | B) Insurance agent | C) Investment manager (Correct) | D) Tax planner

Q18. In which type of fund is the risk of not selecting the correct sector maximum?
A) Thematic funds | B) Sector funds (Correct) | C) Arbitrage funds | D) Index funds

Q19. Tactical asset allocation is suitable only for seasoned investors with large surpluses.
A) True (Correct) | B) False

Q20. At which price can a close-ended fund be sold?
D) Higher, lower, or same as NAV (Correct)
Reason: These are traded on the secondary market at market price.

Q21. The auditor of scheme accounts is the same as the auditor of the AMC.
A) True | B) False (Correct)
Note: Must be different for independent oversight.

Q22. Which one is the SRO for the mutual fund industry?
A) SEBI | B) Sponsors | C) Trustees | D) None of the above (Correct)
Note: AMFI is not yet an official SRO.

Q23. Which of the following has the highest credit risk?
A) Money market fund | B) Junk bond (Correct) | C) G-Sec fund | D) Income fund

Q24. Condensed financial information for schemes launched in last 3 years is in:
A) SID | B) SAI (Correct) | C) Fund Fact Sheet | D) Prospectus

Q25. Investment range in equity for a conservative hybrid fund?
A) 20% to 30% | B) 30% to 40% | C) 10% to 25% (Correct) | D) 5% to 20%

Q26. Current NAV ₹8, NFO price ₹10. If transactions occur at NFO price:
C) New investors gain at the cost of existing investors (Correct)

Q27. Anand needs money in the short term. In which fund should he NOT invest?
A) Liquid fund | B) Money market fund | C) Index fund (Correct) | D) Overnight fund

Q28. The first step in the sequence of creating a mutual fund product?
D) Approval of Trustees/AMC Board and drafting of the SID (Correct)

Q29. Regarding time horizon:
A) Longer the horizon, ability to take risk is higher (Correct)

Q30. Mutual funds cannot distribute income or dividend out of:
A) Capital gains | B) Profits | C) Fund management expenses (Correct)

Q31. Dividend reinvestment grows faster than growth option.
A) True | B) False (Correct)

Q32. How is an application processed if the ARN is wrongly mentioned?
D) Treated as regular plan subject to correction (Correct)

Q33. If USD appreciates against INR in an international fund:
A) INR NAV will appreciate (Correct)

Q34. Identify the FALSE statement:
A) Both false | B) Only statement 1 is false (Correct)
Note: Statement 2 (Gold ETF benchmark is gold price) is True.

Q35. Used by fund managers to communicate views on economy?
A) KIM | B) SAI | C) SID | D) Fund Fact Sheet (Correct)

Q36. SEBI has to approve scheme documents in how many days?
D) SEBI only gives observations (Correct)

Q37. When must an investor provide FATCA information?
C) When place of birth is outside India (Correct)

Q38. KIM and SID are the true broad types of documents.
A) True | B) False (Correct)
Note: SID and SAI are the main documents.

Q39. Responsibility for developing debt benchmarks?
A) AMFI | B) Research and Rating Agencies (Correct) | C) AMC

Q40. Personal trade disclosure by key personnel happens:
A) Weekly | B) Monthly | C) Half-yearly basis (Correct) | D) Yearly

Q41. Debt benchmark chosen based on type and size only.
A) True | B) False (Correct)

Q42. Which of the following do NOT impact calculation of NAV?
A) Asset value | B) Expenses | C) Income | D) Change in number of investors (Correct)

Q43. Core/Satellite allocation depends on risk profile.
A) True (Correct) | B) False

Q44. Can an investor redeem from a segregated portfolio?
D) An investor cannot redeem any amount (Correct)

Q45. Which of these can be a benchmark for a banking fund?
A) FMCG Index | B) Auto Index | C) S&P BSE Bankex (Correct) | D) BSE 500

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Dhaval Visariya

AMFI Registered Distributor (ARN-327925) | Software Developer & Finance Enthusiast

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Disclaimer: I am an AMFI Registered Mutual Fund Distributor. Views expressed here are for educational purposes. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
📧 Contact: info.apollofinancialservices@gmail.com