Class Test- 3

Year 1; Semester 1: Mutual Fund Agent

Total Marks: 73
Total Time: 1 Hour & 15 Minutes
Chapter No. 6 & 7 of NISM V-A Module

Instruction: Please encircle the correct Answer.

1. Net assets of a scheme is nothing but its investment portfolio
A. True B. False

2. The difference between NAV and re-purchase price is

A. Entry Load B. Exit Load C. Expense D. Dividend Stripping

3. NAV of income funds is to be calculated upto ___ decimals

A. 4 B. 3 C. 2 D. 1

4. Securities Transaction Tax is applicable to Equity Schemes

A. True B. False

5. Wealth tax is payable at the applicable rates on equity mutual fund units
A. True B. False

6. if the investor bought units of a debt-oriented mutual fund scheme at Rs 10 and sold them at Rs 15,
after a period of over a year. Assume the government’s inflation index number was 400 for the year in
which the units were bought; and 440 for the year in which the units were sold. The investor would need
to pay tax
A. Rs.0.50 per unit B. Rs. 0.80 per unit C. Rs. 5 per unit D. None of the above

7. Which of the following NAVs of an equity fund is as per minimum regulatory requirement?
A. Rs. 12.452 B. Rs. 12.45 C. Rs. 12 D. Rs. 12.4525

8. An investor has sold his investments in a mutual fund two years after buying the units. The profits he
earns are taxable_____________.
A. as dividends B. at a rate of 10% C. as short term capital gains D. as long term capital gains

9. An investor earns long term capital losses from his debt fund investments. He also makes a long term
gain from his MIP investments. Which of the following is true?
A. The loss can be set off only against short term gains B. The loss cannot be set-off
B. The loss can be set off D. Only short term gains are available for set-off

10. The assets of a fund are Rs.200 cr. The current liabilities are Rs.20 cr. The unit capital is Rs. 50 cr.
And the face value per unit is Rs.10. What is the NAV of the fund?
A. Rs. 44 B. Rs. 32 C. Rs. 36 D. Rs. 40

11. Which of the following is a eligible for specific tax concessions?

A. Corporate bonds B. Post Office deposits C. Company deposits D. PPF

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12. An investor sells his units in an equity-oriented fund after 6 months, for a profit. What is the
taxability of this gain?
A. Taxable at 20% B. Taxable at 10% C. Taxable at marginal rates D. Taxable at 15%

13. The interest on bank deposits is:

A. Fully exempt from tax. B. Fully taxable C. Exempt from tax up to a limit D. Taxable up to a certain limit

14. An individual investor chooses a dividend reinvestment option in a debt fund. What is the DDT
applicable to the dividends that are reinvested?
A. DDT applies at 12.5% B. DDT applies only for dividend payout option
C. DDT applies at 20% D. DDT does not apply.

15. If there is a loss from sale of mutual funds, this cannot be set off against:
A. income from dividends and interest. B. Income from residential property
C. Income from salary D. Any other head of income

16. Securities transaction Tax (STT) is payable by mutual fund investors on:
A. Sale and repurchase of all units B. Re-purchase of equity-oriented units
C. Sale of equity-oriented units D. Repurchase of all units

17. A mutual fund may transfer investments from one scheme to another
A. Not at all B. At current market rates C. At cost price D. At a fixed premium over market rate

18. In a mutual fund investor's subscriptions are accounted for as

A. Liabilities B. Deposits C. Unit capital D. None of the above

19. Which of the below is a short-term capital asset?

A. Unit of MF held for a period of not more than one year preceding the date of transfer
B. Unit of MF held for a period of less than one year preceding the date of transfer
C. Unit of MF held for a period of less than three years preceding the date of transfer
D. Unit of MF held for a period of not more than three years preceding the date of transfer

20. For a scheme that has a load, the AMC can charge an investment management fee not exceeding
A. 1.50% B. 2.00% C. 1.25% D. 0.50%

21. Net Asset Value (NAV) of a mutual fund scheme is defined as the scheme’s
A. Assets minus liabilities B. Assets per unit C. Assets minus liabilities per unit D. None of the above

22. Contingent deferred sales charge (CDSC)

A. Is higher for investors who stay invested in the scheme longer
B. Is lower for investors who stay invested in the scheme longer
C. Is the same for all investors irrespective of how long they stay invested
D. Is not allowed to be charged to mutual fund investors in India

23. The charge to an investor at the time of redemption of units from the fund is known as
A. Recovery charge B. Repurchase load D. Redemption weight D. Exit load

24. The total net assets of a fund scheme increased from 100 cr to 120 cr. Of this, 5 cr was unrealized
gain. The number of units is 10 cr. The maximum dividend per unit the scheme can declare is:
A. Rs 2 B. Rs 1.50 C. Rs. 0.50 D. Rs. 1

25. All mutual funds assets belong to

A. AMC B. AMFI C. Trustees D. Investors

26. Which of the following statements are correct?

A. Higher the interest, dividend and capital gains earned by the scheme, higher would be the NAV.
B. Higher the appreciation in the investment portfolio, higher would be the NAV.
C. Lower the expenses, higher would be the NAV. D. All of the above

Prepared By: Rahul Ranjan, Certified Financial Planner 2

9891303734, 9350024013; rahulranjanmf@gmail.com, rahulranjan_79@yahoo.co.in
27. NAV need to rounded of to 4 decimal points in case of
A. Liquid funds B. Index Funds C. Debt funds D.All of the above

28. NAV need to rounded of to 2 decimal points in case of

A. Balanced funds B. Equity funds C. Both A & B, D. None of the above

29. What would the total expense that an AMC would charge on their equity fund having an AUM of Rs.
1,000/- crore?
A. Rs. 25.00 crores B. Rs. 20.50 crores C. Rs. 17.50 crores D. Cannot calculate, incomplete data

30. The process of valuing each security in the investment portfolio of the scheme at its market value is
called ‘mark to market’ i.e. marking the securities to their market value.
A. True B. False

31. A scheme with 1000 unit holders has the following items in its balance sheet - Unit Capital
Rs.10,000; investments at market value Rs.25,000; other assets Rs.3,500; Other liabilities Rs.2,000;
issue expenses not written off Rs.500; reserves Rs.17,000. What is the scheme's NAV per unit?
A. Rs27 B. Rs29 C. Rs10 D. Rs27,000 E. None of the above

32. The unit capital of a mutual fund scheme is Rs.20 million. The market value of investments is Rs.55
million. If the number of units outstanding is 1 million, what is the NAV per unit?
A. Rs. 20 B. Rs. 75 C. Rs. 55 D. Cannot be determined

33. To get the benefit of dividend stripping, the investor would need to
A Buy the securities more than 3 months prior to the record date for the dividend
B Sell the securities more than 9 months of the record date, if purchased within 3 months prior to the record
date for dividend
C Both the above D A or B

34. If the NAV of a scheme is Rs 11.00 per unit, and it were to charge exit load of 1%, the Re-purchase
Price would be
A. Rs 11. 00 B. Rs. 11.11 C. Rs. 10.89 D. None of the above

35. The position since August 1, 2009 is that:

A. SEBI has banned entry loads. So, the Sale Price needs to be the same as NAV.
B. Exit loads / CDSC in excess of 1% of the redemption proceeds have to be credited back to the scheme
immediately i.e. they are not available for the AMC to bear selling expenses.
C. Exit load structure needs to be the same for all unit-holders representing a portfolio.
D. All of the above

36. Which of the following is/are kinds of expenses in mutual fund

A. Initial Issue Expenses B. Recurring Expenses C. Both A & B D. None of the above

37. Which of the following expenses cannot be charged to the scheme?

A. Listing fees and Depository fees B. Service Tax
C. Penalties and fines for infraction of laws. D. None of the above

38. Recurring expense limit (including management fees) for index schemes (including Exchange
Traded Funds) is
A. 1.50% B. 0.75% C. 1.25% D. None of the above

39. Where an individual security that is not traded or thinly traded, represents more than 5% of the net
assets of a scheme, an independent valuer has to be appointed.
A. True B. False

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9891303734, 9350024013; rahulranjanmf@gmail.com, rahulranjan_79@yahoo.co.in
40. Equity-oriented scheme is a mutual fund scheme where at least 65% of the assets are invested in
equity shares of domestic companies.
A. True B. False

41. Foreign nationals are freely permitted to invest in Indian mutual funds
A. True B. False
42. PAN Card is compulsory for all mutual fund investments above Rs 50,000, including SIPs
A. True B. False
43. Investments in mutual fund can be made using
A. Cheque / DD B. Remittance C. ASBA D. Any of the above
44. Cut-off timing guidelines are not applicable for
A. NFOs B. International Funds C. Both the above D. None of the above

45. STP is a combination of SIP and SWP

A. True B. False
46. If you receive an application for investing in a mutual fund, which one of the following investors
would you reject?
A. HUFs B. PIOs C. OCBs D. NRIs
47. An investor buying mutual fund units for the first time uses the:
A. Statement of account B. Application form C. Switch form D. Transaction slip
48. If an investor uses the ASBA facility in NFO transactions, he makes the payment for units:
A. Upfront in advance B. Without making an application
C. Only on allotment of units D.In installments
49. The NAV for an equity fund purchase transaction will be applied based on:
A. Date of the cheque B. Date of realization of cheque
C. Date of the application D. Date on the time stamp
50. A company investing in a mutual fund is required to submit along with the application:
A. A copy of the tax returns B. A copy of the profit and loss account
C. A copy of the balance sheet D. A copy of the board resolution
51. An important benefit of SIPs is:
A. High rates of return B. Lower lock-in period C. Lower fund expenses D. Rupee cost averaging
52. KYC norms have to be complied for which of the following mutual fund transactions?
A. All transactions of Rs.50,000 or more in value. B. All transactions
C. All purchase transactions of Rs.50,000 or more in value
D. All purchase, additional purchase, new sip, new stp and switch-in transactions w.e.f 1st Jan, 2011,
Except Micro-SIP.
53. A transaction slip can be used in a mutual fund transaction if:
A. the value of the transaction is less than Rs. 50000 B. it is a first time transaction
C. it is a non-financial transaction D. it is a transaction in an existing folio
54. An investor transaction is completed using the online facility of a mutual fund at 11:30 AM. It is
processed at 4:00 PM. What is the applicable cut-off time for the transaction?
A. 4:00 PM B. 11:30 AM C. 3:00PM D. Cut-off time does not apply to such transactions
55. A company that intends to invest in a mutual fund scheme needs to take approval from:
A. SEBI B. Registrar of Companies C. Board of Directors D. Company Law Board
56. An application for a gilt fund is received with a cheque for Rs. 2 Crore at 11:00 AM. What is the the
applicable NAV?
A. Day of cheque realization B. Previous day C. Next Day D. Same day

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9891303734, 9350024013; rahulranjanmf@gmail.com, rahulranjan_79@yahoo.co.in
57. If an investor conducts a mutual fund transaction on a stock exchange platform, which of the
following is NOT true?
A. The transaction can be settled using a demat account
B. The transaction has to be conducted online
C. The transaction may have to be sent to the R&T agent
D. The transaction will be put through by a borker.
58. PAN is required for:
A. NFO transaction B. All mutual fund transaction
C. Purchase transaction above Rs.50,000 D. Re-purchase transactions
59. A purchase request for an equity fund was accepted at an AMC office on Wednesday, march 11 at
2:30 pm. What is the applicable NAV for the transaction?
A. NAV of March 9 B. NAV of March 11 C. NAV of March 10 D. NAV of March 12
60. What is the proof that the investor has invested in mutual fund units?
A. The investors receive units commensurate with the investment made
B. Investors get an account statement, showing their holdings and their price
C. The receipt of money acts as the proof D. None of the above
61. Which of the following is TRUE of an automatic reinvestment (or growth) plan?
A. The growth plan allows for the automatic reinvestment of all returns
B. The major benefit of automatic reinvestment is compounding
C. An investor who subscribes to the growth option under a scheme can later switch to a dividend option
D. All of these
62. A Systematic Investment Plan
A. Requires the investor to invest a fixed sum periodically
B. Enforces saving in a disciplined and phased manner
C. Provides the benefit of Rupee Cost Averaging D. All of these
63. A systematic withdrawal plan is ideal for
A. Investors with growth as the main investment objective
B. Investors who wish to benefit from market fluctuations
C. Investors who prefer a regular income stream
D. Investors who are not sure about themselves
64. Mutual fund in India do not offer
A. Nomination and transfer facilities B. Redemption of units C. C. Loans against units
D. Providing periodic statements to unit holders regarding their transactions
65. Loan against investors’ holding in a mutual fund can be given by
A. The mutual fund B. Bank or any other lender C. Both the above D. None of the above
66. Foreign investors can invest in equity schemes of MFs registered with SEBI after completing KYC
process.
A. True B. False
67. Investors have to give a declaration stating that the he does not have any existing Micro SIPs which
together with the current application will result in aggregate investments exceeding Rs. 50,000 in a year.
A. True B. False
68. ________________is a process whereby an investor’s holding of investments in physical form
(paper), is converted into a digital record.
A. Investment B. Dematerialisation C. Record Keeping D. Re-materialisation
69. The investor also has the option to convert the demat units into physical form. This process is
called_______________.
A. Investment B. Dematerialisation C. Record Keeping D. Re-materialisation
70. Thus, an investor who has invested Rs 12,000, in a scheme where the applicable sale price is Rs 12,
will be allotted
A. 1200 Units B. 1000 Units C. 100 Units D. 1250 Units

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9891303734, 9350024013; rahulranjanmf@gmail.com, rahulranjan_79@yahoo.co.in
71. For online transactions, the time as per the web server to which the instruction goes, is used in
determining the NAV for sale / repurchase transactions.
A. True B. False
72. The dividend received in the hands of the investor does not bear any tax.
A. True B. False
73. Once Units are pledged, the Unit-holder/s cannot sell or transfer the pledged units, until the pledgee
gives a no-objection to release the pledge.
A. True B. False

Prepared By: Rahul Ranjan, Certified Financial Planner 6

9891303734, 9350024013; rahulranjanmf@gmail.com, rahulranjan_79@yahoo.co.in