NISM Series V-A | Mock Test 7 | Solved MCQs 401 to 500 | Final Revision

NISM Series V-A | Mock Test 5 (Questions 401–500)

401. An equity fund's age and size are irrelevant when selecting a fund for investment:

• A) True | B) False (Correct)

402. The charge to an investor at the time he redeems his units is known as:

• A) recovery charge | B) repurchase load | C) redemption weight | D) exit load (Correct)

403. The load amount charged to a scheme over a period of time is called:

• A) entry load | B) exit load | C) deferred load (Correct) | D) no-load

404. Contingent Deferred Sales Charge (CDSC):

• A) is higher for long-term investors | B) is lower for investors who stay invested longer (Correct) | C) is the same for all | D) is not allowed in India

405. A fund's declared NAV does not include loads:

• A) True (Correct) | B) False

406. Which of the following fund types are comparable:

• A) Aggressive equity and Money Market | B) Value fund and G-Sec | C) Bond fund and Debt fund | D) A diversified equity fund and a debt fund (Correct - in a hybrid context)

407. Who is the primary guardian of unitholders' funds/assets:

• A) The AMC | B) The Trustees | C) The Registrars | D) The custodians (Correct)

408. In case of a fund merger or Take-over:

• A) High Court approval may not be necessary | B) SEBI approval is a must | C) all unitholders must be informed | D) all of the above (Correct)

409. Units of a money market mutual fund can be issued to:

• A) individuals | B) banks | C) trusts | D) all of the above (Correct)

410. Indian mutual funds have restricted borrowing (20% of net assets/6 months), but UTI historically had relaxed norms:

• A) True (Correct) | B) False

411. An equity fund is concentrated when:

• A) invests in 2-3 stocks | B) same sector focus | C) top ten holdings account for more than 50% of net assets (Correct) | D) top ten account for >25%

412. The size of the market capitalisation of a fund's holdings is inversely proportional to:

• A) returns that can be expected (Correct) | B) risk assumed | C) state of market | D) all of the above

413. A steady holding of investments in an equity fund's portfolio indicates:

• A) long-term orientation | B) lower transaction costs | C) both the above (Correct)

414. Ex-Mark of an equity fund measures its:

• A) performance (Correct) | B) risk | C) both | D) none

415. Beta of an equity fund measures its:

• A) performance | B) risk (Correct) | C) both | D) none

416. The best equity fund, relative to others, would have:

• A) higher Ex Marks, lower Beta and higher Gross Dividend Yield (Correct)

417. When selecting equity funds, those at the top of performance rankings should be avoided:

• A) True | B) False (Correct - though past performance isn't a guarantee, it's a valid metric)

418. A debt fund's age and size are not important when selecting a fund:

• A) True | B) False (Correct)

419. Debt schemes are popular because:

• A) Stock market is down | B) the returns are more predictable (Correct) | C) investors are in debt

420. Yield-to-maturity (YTM) of a portfolio is more important when the objective is:

• A) current income | B) total return | C) liquidity | D) all of the above (Correct)

421. Compared to equity funds, income margins for debt funds are:

• A) narrow (Correct) | B) higher | C) the same

422. Debt funds with long-term investments carry higher risk of capital loss:

• A) True (Correct - due to Interest Rate Risk) | B) False

423. The differentiating factor among debt funds of comparable maturity and quality is:

• A) gross yields | B) costs (Correct) | C) fund age

424. Distribution tax should be considered when computing net returns from:

• A) equity funds | B) debt funds | C) both the above (Correct - historical)

425. All debt fund investors are exposed to risk of principal loss:

• A) True (Correct) | B) False

426. Running a money market mutual fund requires more of:

• A) credit analysis skills (Correct) | B) equity skills | C) trading skills

427. Most important in selecting debt fund for better return:

• A) past performance | B) interest rates | C) fund expertise | D) the securities in which it has invested (Correct)

428. Investors should avoid a debt fund with a:

• A) lower rated portfolio and higher expense ratio (Correct)

429. An ideal money market mutual fund must have:

• A) lower returns | B) lower expense ratio (Correct) | C) low quality investments

430. Circumstances that might cause an investor to change portfolio composition:

• A) cyclical changes | B) unforeseen economic changes | C) both the above (Correct)

431. If a charitable trust approaches a distributor for MF investment:

• A) accept immediately | B) reject | C) refer to the offer document (to check eligibility) (Correct)

432. An application form is available with:

• A) offer document | B) annual report | C) key information memorandum (KIM) (Correct)

433. An aggrieved unit-holder can sue:

• A) the AMC | B) the trustees (Correct) | C) the sponsor

434. A security is considered "non-traded" when it has not been traded for:

• A) 60 days | B) 30 days prior to valuation (Correct) | C) is not listed

435. An Ex-Mark of 100% is possible for:

• A) growth fund | B) aggressive growth | C) an index fund (Correct)

436. A trail commission is justified when:

• A) investor cancels | B) short term redemption | C) an agent provides ongoing service and the money stays invested (Correct)

437. Which type of fund would have a higher P/E multiple than the market:

• A) Value Fund | B) Growth Fund (Correct) | C) Index Fund

438. Which is NOT true as per SEBI for Debt Funds?

• B) Total investment in unrated debt of single issuer should not exceed 25% of NAV (Correct - limit is lower, usually 10%)

439. A Money Market Mutual Fund is most likely to invest in:

• A) Corporate Bonds | B) Equity | C) Govt Securities with maturity < 1 year (Correct)

440. Suitable for a retiree with modest risk appetite:

• A) Value Fund | B) Diversified Equity | C) Growth Fund | D) Balanced Fund (Correct)

441. A high portfolio turnover indicates:

• A) fund is active | B) higher transaction costs | C) both the above (Correct)

442. US-64 Scheme price was:

• C) declared periodically by UTI (Correct - historically)

443. The Indian debt market:

• A) is Wholesale | B) comprises large players | C) trades G-Secs | D) all of the above (Correct)

444. A fund that charges a load is better than a no-load fund:

• A) True | B) False (Correct)

445. An AMC can approach investors directly or with:

• A) agents | B) banks/NBFCs | C) distribution companies | D) all of the above (Correct)

446. True for ELSS:

• A) Tax rebate | B) 3-year lock-in | C) Fixed min amount | D) All of the above (Correct)

447. A prospective investor:

• A) has same status as unit-holder | B) can sue AMC | C) has no legal recourse (Correct - until they invest)

448. An investor assesses performance by comparing with:

• A) same type funds | B) stock market | C) other products | D) all of the above (Correct)

449. Unrated securities in a portfolio are not to be valued:

• A) True | B) False (Correct - all assets must be valued)

450. An exit load guarantees a higher return:

• A) True | B) False (Correct)

451. Bonds in a portfolio are valued at yield to maturity (YTM):

• A) True (Correct) | B) False

452. Non-traded equity valuation is done at price 30 days prior:

• A) True | B) False (Correct - usually uses formula based on net worth/book value)

453. If a unit-holder disagrees with a merger, he has no exit option:

• A) True | B) False (Correct - exit option at NAV must be provided)

454. Important factor in corporate FD:

• A) yield | B) interest rate | C) credit rating (Correct)

455. Reason to prefer bank deposit over MF:

• A) creditworthiness | B) no security investment | C) that the bank offers a guarantee (Correct)

456. A deep discount bond:

• A) sold at discount | B) annual interest | C) redeemed at price much higher than issue price (Correct)

457. A mutual fund in India is a:

• A) body corporate | B) company | C) trust (Correct) | D) AMC

458. When selling a mutual fund, a good agent would never:

• A) describe performance | B) compare funds | C) assure a rate of return (Correct - illegal)

459. NAV buy Rs. 20, Dividend Rs. 3, NAV Sell Rs. 22. Total Return is:

• A) 25.00% (Correct - (22-20+3)/20 = 5/20)

460. 100 units, face value Rs. 10, NAV Rs. 12.25. Unit capital credited:

• A) Rs. 1225 | B) Rs. 225 | C) Rs. 1000 (Correct - credited at face value)

461. launched assured return scheme, offer document need NOT include:

• C) comparison with other mutual funds (Correct)

462. Mutual fund units can be distributed by:

• A) trustees | B) AMC | C) NBFCs | D) All of the above (via agents/direct) (Correct)

463. Dividend tax for investor on debt fund dividend:

• A) 10% | B) 20% | C) None (Correct - historically tax-free for investor, paid by fund via DDT)

464. DDT tax the debt fund pays:

• A) 10% | B) 12% | C) 25% + surcharge (Correct - varies by year, check current rates)

465. NIFTY constitutes of how many scrips:

• A) 40 | B) 100 | C) 30 | D) 50 (Correct)

466. First step in financial planning:

• A) Asset Allocation (Correct) | B) selection of fund

467. Why buy insurance?

• C) due to need for insurance/risk protection and not primarily as investment (Correct)

468. SEBI MF Regulations formulated in:

• A) 1992 | B) 1993 | C) 1995 | D) 1996 (Correct)

469. Printing expenses for KIM can be amortised over:

• A) 10 Yrs | B) 5 Yrs | C) Cannot be amortised (Correct - must be expensed)

470. Mutual funds' investments are guided by:

• A) AMC | B) Trustees | C) Investment Objectives (Correct)

471. UTI was the only mutual fund during:

• A) 1984-88 | B) 1963 to 1988 (Correct) | C) 1964-92

472. Fixed Asset Allocation approach means:

• A) maintaining balance by liquidating outperforming assets and buying underperforming ones (Correct)

473. Investor should NOT invest in mutual fund if:

• A) large capital | B) can carry out research | C) both the above (Correct)

474. Mutual fund benefit from economies of scale because of:

• C) large volume of trades (Correct)

475. Disadvantage for a mutual fund investor:

• A) liquidity | B) diversification | C) no tailor-made portfolio (Correct)

476. Disadvantage is no control over investment costs:

• A) True (Correct) | B) False

477. Untrue about UTI:

• A) set up in 1963 | B) formed by RBI | C) act of Parliament | D) it was not given a monopoly status (Correct - it WAS a monopoly until 1987)

478. Largest investor base scheme:

• A) ULIP | B) UTI Mastershare | C) US-64 (Correct) | D) SBI Magnum

479. First diversified equity scheme in India:

• A) SBI Magnum | B) UTI Mastershare (Correct) | C) MEP-91

480. Private sector entry granted in:

• A) 1992 | B) 1993 (Correct) | C) 1998

481. First non-UTI mutual fund was:

• A) SBI MF (Correct) | B) LIC MF

482. Organisation responsible for comprehensive MF regulations:

• A) RBI | B) SEBI (Correct) | C) AMFI

483. 1999 Union Budget helped industry by:

• B) exempting dividends in the hands of investors from income tax (Correct - historically)

484. Mobilisation during 1992-99 was:

• B) 2% - 4% of gross domestic savings (Correct)

485. Untrue for PPF:

• C) The rate of interest is 12% p.a. (Correct - it is much lower now)

486. Close-ended scheme discount to NAV occurs when:

• B) investors perceive fund will be unable to maintain NAV (Correct)

487. Fundamental attribute of a scheme:

• B) The nature of the scheme being income bearing (Correct)

488. Offer Document is:

• C) required as per SEBI regulations (Correct)

489. Redemption procedure is a fundamental attribute:

• A) True (Correct) | B) False

490. Steps in selecting an equity fund:

• C) asset classification, sector selection, selection of fund managers and schemes (Correct)

491. Compounding of interest best explained by:

• A) balanced fund | B) growth fund (Correct) | C) value fund

492. Redressal if complaint not entertained:

• A) AMC | B) Board of Trustees | C) SEBI (Correct)

493. Advice for switching between Money Market and Equity:

• C) switch from money market to equity in a rising market and back when falling (Tactical) (Correct)

494. NOT required for choosing a benchmark:

• C) historical data of fund performance (Correct - benchmark is based on portfolio type)

495. Risk-averse investor should choose:

• C) Gross dividend yield 11%, Beta 0.9 (Low risk), Ex-Marks 80 (Correct)

496. Mainstream diversified debt fund most affected by:

• A) reinvestment risk | B) liquidity risk | C) interest rate risk (Correct) | D) default risk

497. If yields fall, a debt manager will NOT:

• C) sell long duration securities and buy short duration securities (Correct - they would do the opposite to gain from price rise)

498. Unmarried professional should invest in:

• C) 90% in equity funds (High risk appetite due to age) (Correct)

499. If expectations are not met, investor can:

• A) sue AMC | B) sue trustees | D) none of the above (Correct - market risk is borne by investor)

500. Market value Rs. 700Cr, Liabilities Rs. 0.5Cr, Units 28Cr. NAV is:

• A) Rs. 24.98 (Correct - (700 - 0.5) / 28)

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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.
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