NISM Series V A Mutual Fund Distributors Exam Series - 11

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Q 1. What is the purpose of providing a prescribed deposit slip for cash investments?

a) To record the investment amount

b) To provide details of the scheme in which the investment is being made

c) To facilitate the deposit of cash at designated bank branches

d) All of the above

e) None of the above

Q 2. When can SIP be initiated in a mutual fund scheme?

a) Only during market downturns

b) Only during New Fund Offers (NFOs)

c) Only through lump sum investments

d) Only through high initial investments

e) During New Fund Offers (NFOs) or for additional purchases in an existing folio

Q 3. Why might an investor opt for an STP?

a) To minimize paperwork

b) To increase market risks

c) To maximize taxes

d) To transfer funds between different mutual fund companies

e) To make periodic investments into a volatile market or to rebalance a portfolio

Q 4. What determines the returns from real estate investments?

a) Rental income only

b) Capital appreciation only

c) Both rental income and capital appreciation

d) Neither rental income nor capital appreciation

e) None of the above

Q 5. What risks are associated with excessive reliance on very small ticket-size loans in a pool of loan assets?

a) Credit risk

b) Market risk

c) Concentration risk

d) Operational risk

e) Liquidity risk

Q 6. What is the primary difference between the Price Return Index (PRI) and the Total Return Index (TRI)?

a) PRI only includes capital gains, while TRI includes dividends/interest payments

b) PRI includes dividends/interest payments, while TRI includes only capital gains

c) PRI and TRI are identical in terms of components

d) PRI and TRI both exclude dividends/interest payments

e) PRI and TRI are both based solely on asset allocation patterns

Q 7. What is essential for deciding asset allocation in an investor's portfolio?

a) Market trends

b) Understanding mutual fund schemes

c) Risk profile and investment risks associated with various mutual fund schemes

d) Fund size and portfolio turnover

e) None of the above

Q 8. How does inflation affect the future value of money invested at a nominal interest rate?

a) It decreases the future value

b) It increases the future value

c) It does not affect the future value

d) It stabilizes the future value

e) It depends on the rate of inflation

Q 9. What role does a financial advisor play in the goal-setting process?

a) Making investment decisions on behalf of the investor

b) Providing guidance and assistance in setting appropriate financial goals

c) Guaranteed high returns on investments

d) Predicting market fluctuations accurately

e) Recommend speculative investment options

Q 10. How do the limitations of mutual funds regarding portfolio customization affect investors?

a) By increasing investment risk

b) By limiting investment returns

c) By reducing investment flexibility and control

d) By encouraging impulsive investment decisions

e) None of the above

Q 11. What is the minimum percentage of the portfolio that must be held in physical assets for Real Estate Mutual Fund schemes?

a) 20%

b) 35%

c) 50%

d) 75%

e) 90%

Q 12. What is one of the objectives of AMFI's nationwide investor awareness program?

a) To maximize profits for asset management companies

b) To facilitate transactions in mutual funds

c) To promote a proper understanding of the concept and working of mutual funds

d) To provide investment advice to clients

e) To regulate the conduct of investors

Q 13. Who is responsible for conducting the activities of the mutual fund?

a) Trustees

b) Custodian

c) Registrar & Transfer Agent (RTA)

d) Asset Management Company (AMC)

e) Sponsor

Q 14. What should be shown in addition to the Compounded Annual Growth Rate (CAGR) for mutual fund schemes?

A) Point-to-point returns on a standard investment of Rs. 1,000

B) Point-to-point returns on a standard investment of Rs. 10,000

C) Point-to-point returns on a standard investment of Rs. 100,000

D) Point-to-point returns on a standard investment of Rs. 50,000

E) Point-to-point returns on a standard investment of Rs. 5,000

Q 15. What is the purpose of disclosing the Total Expense Ratio (TER) on a daily basis?

A) To inform investors about the NAV changes

B) To track the scheme's performance

C) To ensure transparency regarding the expenses charged to the scheme

D) To calculate dividends for investors

E) None of the above

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