NISM Series VA Mutual Fund
Exam Mock Test DemoIFMC Institute

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

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 ?

Explanation: 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.

____________ have to make additional disclosures related to credit evaluation policy, sectors and types of investments in the offer document.

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

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 country-allocation and sector-allocation. If a stock is good, it is picked for investment.

Fundamental analysis is evaluation of the strength of the company’s price-volume charts - True or False ?

Explanation: Technical analysis is evaluation of the strength of the company’s price-volume charts. Fundamental Analysis is the study of the company’s fundamentals - financial statements, quality of management, competitive position in its product / service market etc.

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 annualisation of yields - True or False ?

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?

The systematic approaches offered by mutual funds to promote an investment discipline for long term wealth creation are ___________.

Explanation: Systematic Investment Plan, Systematic Transfer Plan and Systematic Withdrawal Plan

The Fund Manager of a ' Fund of Fund ' has to select the _______.

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 ?

Explanation: Current Asset Value - Current Liablities = Net Assets Rs 1000 cr - Rs 50 cr = Rs 950 cr

Where the scheme has been in existence for less than _____ year, past performance shall not be provided or advertised.

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

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

Arbitrage Funds have BASIS risks - True or False ?

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.

NFO's for ELSS schemes can remain open for ____ days

Explanation: 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.

Every trust has beneficiaries and the beneficiaries, in the case of a mutual fund trust, are _____________.

Explanation: 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 Mutual Fund application form is attached to the _______.

Explanation: 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.

What is a process whereby an investor’s holding of investments in physical form (paper) is converted into a digital record?

_______________ system helps the investors book profit in rising markets and increase holdings in a falling market.

Explanation: 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.

The specialty of a Sector Fund is that it invests in various economic sectors - True or False ?

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

Cut-off timing guidelines are not applicable for _____.

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

Risk Profile of an investor is affected by __________.

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

Today’s costs can be translated into future requirement of funds using the formula:

'Past Performance is not indicative of future performance' - This statement ______________.

Explanation: Past performance of the Sponsor/AMC/Mutual Fund does not guarantee future performance of the scheme is a standard risk factor.

Mutual funds in India are governed by SEBI (Mutual Fund) Regulations, 1996 - True or False ?

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?

Explanation: NIL as Bonus units are alloted free of cost.

______________ is a short term Government Security.

Explanation: 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

The fund manager of an Index fund will try to ___________.

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

Dividend warrants have to be sent to investors within 30 days of dividend declaration - True or False ?

The benchmark for a Gilt fund investing in Government Securities with maturities ranging from 3 to 7 years is ___________.

Explanation: 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 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.

_______________are largely close-ended, but become open ended at pre-specified intervals.

Explanation: Interval Funds are largely close-ended, but become openended at pre-specified intervals. For instance, an interval scheme might become open-ended 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).

STT is not charged on __________.

Asset allocation means investing in _________

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

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

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

Which of the following is a truly international asset class?

Investment objective is closely linked to ________.

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

To meet the needs of of regular income, one can use the _____ facility of a Mutual Fund.

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

The maximum commission payable to a Mutual Fund distributor for his own investment is ____

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).

_________________ style is an approach of picking up stocks, which are valued lower, based on fundamental analysis.

Mr and Mrs Gupta wants to make their son a pilot. This is an example of __________.

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.

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