NISM V-A Chapter 4-6 Set 1

NISM VA chapter 4-6 final set 1

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1. The Asset Management Companies have to disclose the Total Expense Ratios(TER) of the various schemes on their websites on a ______ basis.

Daily

Weekly

Monthly

Annual

Question 1 of 61

2. Segregated portfolio means _________ .

a portfolio which is kept aside for a ‘rainy day’ or contingency fund

a portfolio which is created out of debt or money market securities affected by acredit event

a portfolio which is left after removing poor credit quality papers

All of the above

Question 2 of 61

3. Whom should the investor approach if his complaint is not resolved by theAsset Management Company (AMC) ?

Securities and Exchange Board of India (SEBI)

Custodian

Company Law Board

Ombudsman

Question 3 of 61

4. For how long is the trail commission paid to the mutual fund distributor?

For the first one year only

For the first three years only

For the first ten years only

Till the money is held in the fund

Question 4 of 61

5. Securities and Exchange Board of India (SEBI) functions does not includewhich of the following?

Regulation of Stock Exchanges

Enforcing compliance of its regulations

Making regulations for the Mutual Fund industry

Approving the fund managers which have been appointed by the AMC

Question 5 of 61

6. Business model, experience and proficiency in the business is a compulsorycriteria for empanelment and review of which of the following category ofmutual fund distributors?

Institutional distributors who have points of presence in more than 10 locations

Individual distributors who have points of presence in more than 10 locations

Distributors who have received commission of over Rs. 1 Crore p.a. acrossindustry

All of the above

Question 6 of 61

7. Which of the following information about mutual fund distributors who havemultiple points of presence (more than 20 locations) must be disclosed by theAMCs? A) Distributor-wise gross inflows and net inflows B) Average assetsunder management C) Total commission and expenses paid to distributors

B and C

A and C

A and B

All A, B and C

Question 7 of 61

8. Which type of transactions are allowed on a stock exchange platform formutual fund trading? A - Redemptions B - Fresh subscription C - Additionalpurchases

Only B

A, B and C

A and B

B and C

Question 8 of 61

9. Which certification examination is mandated by SEBI for becoming a mutualfund distributor in the India?

NCFM Series VA Mutual Fund Distributors

NISM Series VA Mutual Fund Distributors

AMFI VA Mutual Fund Distributors

SEBI VA Mutual Fund Distributors

Question 9 of 61

10. Identify the TRUE statement - A) The AMC is not liable for any losses sufferedby the foreign portfolio investors due to adverse currency movements B) TheAMC has to compensate to foreign portfolio investors for any losses suffereddue to adverse currency movements

Only A

Only B

Both A and B

Question 10 of 61

11. Which of these documents have to be updated once in six months?

Mandatory portfolio disclosures

Scheme Information Document

Fund factsheet

All of the above

Question 11 of 61

12. The expenses on ________ cannot be charged to the mutual fund scheme.

Custodian fees

Depreciation on fixed assets of the Asset Management Company

Trustee Fees

Marketing Expenses

Question 12 of 61

13. SEBI Advertisement Code for Mutual Funds mentions the various guidelines tobe followed by __________ .

the investors who are interpreting the performance of their investments

the AMC’s while it is advertising the performance of their funds

the distributors while advertising their various services

the fund managers while monitoring the performance of the schemes they manage

Question 13 of 61

14. Which document will an investor look at if he has to know the fundamentalattributes of a mutual fund scheme?

Key Information Memorandum (KIM)

Addendum

Scheme Information Document (SID)

Statement of Additional Information (SAI)

Question 14 of 61

15. With respect to the procedure for getting empanelled as a mutual funddistributor with AMC, the applicant needs to sign a declaration for _______ .

Guarantee of adding a minimum of 5 investors every month

declaring the rebates given back to the investors

ensuring that all employees who are selling mutual funds will have more than onARN code

Commitment to abide by statutory codes, guidelines and circulars

Question 15 of 61

16. A mutual fund scheme mentions that it will use derivatives only to the extentof 30 % of its net assets. This is the scheme’s Investment Objective. Statewhether True or False?

TRUE

FALSE

Question 16 of 61

17. Mutual funds can use celebrities like MS Dhoni, Sachin Tendulkar etc. foradvertising their products/schemes. State whether True of False?

TRUE

FALSE

Question 17 of 61

18. KIM has to be updated every ________.

three months

Year

three years

six months

Question 18 of 61

19. The employees of institutions that are into the distribution of mutual fundsneed to clear the _______ and obtain an Employee Unique IdentificationNumber (EUIN) from AMFI.

SEBI - VA Mutual Fund Distributors Certification Examination

SEBI - VB Mutual Fund Distributors Certification Examination

AMFI - VA Mutual Fund Distributors Certification Examination

NISM - VA Mutual Fund Distributors Certification Examination

Question 19 of 61

20. The condensed financial information about all the mutual fund schemeslaunched by the AMC in the last 3 years is provided in the Fund Factsheet -State True or False?

FALSE

TRUE

Question 20 of 61

21. Identify the TRUE statement with respect to mutual fund trading on StockExchanges -

Mutual funds units can be bought on stock exchanges but they cannot be soldthere

Mutual funds units which have been purchased on a stock exchange have acompulsory lock-in period of 3 years

Stock exchanges offer a good channel for mutual fund AMCs to reach out to theinvestors

All of the above are true

Question 21 of 61

22. In which of the following transactions a 'Transaction charge' can be deducted?

Online purchases

Systematic transfer plan (STP) transaction

Purchases of Rs 10000 or more

Purchase made on stock exchanges

Question 22 of 61

23. The main purpose why SEBI has issued norms for investments by mutual fundschemes is to _________ .

get better returns by mutual fund schemes

improve the credit ratings of the mutual fund schemes

protect the interests of the mutual fund investors

protect the interests of the mutual fund industry

Question 23 of 61

24. The Investment management and advisory fee that an AMC can recover onunclaimed amounts in schemes is at a maximum rate of 2 percent per annum -State True or False?

TRUE

FALSE

Question 24 of 61

25. In case of a segregated portfolios, when is the NAV need to be disclosed?

Monthly basis after the credit event

Weekly basis after the credit event

Daily basis after the credit event

None of the above

Question 25 of 61

26. The Scheme Information Document (SID) does not give information on thenames of all the securities in the mutual fund scheme portfolio - State whetherTrue or False?

TRUE

FALSE

Question 26 of 61

27. SEBI's web-based centralized grievance redress system is known as ______ .

REFREE

SCORES

MATCH-UP

WINNER

Question 27 of 61

28. Identify which of these is not included in the 'Fundamental Attributes - Termsof Issue' of a mutual fund scheme?

Aggregate fees and expenses charged to the scheme

Any safety net or guarantee provided

Exit Loads

Liquidity provisions such as listing, repurchase, redemption

Question 28 of 61

29. To terminate the appointment of an Asset Management Company, 90% of theunitholders should approve this termination - State True or False?

TRUE

FALSE

Question 29 of 61

30. Statement of Additional Information' SAI contains inforrmation which is

meant only for Close Ended Schemes

applicable for all schemes

applicable only for Open Ended Schemes

meant only for one particular scheme

Question 30 of 61

31. Which of these expenses can be charged to a mutual fund scheme by the AMC?

Office salaries of fund management team

Rent of the AMC registered office

AMC general admdinistration expenses

Custodian and Fund Administrator fees

Question 31 of 61

32. Which of the below documents can be inspected by the unit holder?

Trust Deed

Custodial Services Agreement

Investment Management Agreement

All of the above

Question 32 of 61

33. The full form of AGNI is ________

AMFI Guidelines for New Investors

AMFI Guidelines for New issues and Investments

AMFI Guidelines for Nominations and Investments

AMFI Guidelines and Norms for Intermediarie

Question 33 of 61

34. With respect to KIM - Key Memorandum, which of the following statement is NOT true?

KIM is basically an abridged version of the offer document

KIM basically contains only the names of Sponsor, Trust and AMC and not their functions

The KIM is attached to each and every mutual fund application form

KIM has to be provided only if the investors ask for it

Question 34 of 61

35. A summary of the scheme related information documents is found in the _____

Statement of Additional Information (SAI)

Key Information Memorandum - KIM

Fact Sheet

Addendum

Question 35 of 61

36. A Segregated Portfolio be created out of a debt fund scheme when ______________

there is a credit event

a change occurs in the fund management team

interest rates move down

interest rates move up

Question 36 of 61

37. Why does SEBI have regulations pertaining to restrictions on the investment policies of mutual fund schemes?

So that the mutual fund scheme has a minimum diversification as per the requirements

So that the mutual scheme can improve their ratings over a period of time

So that the scheme returns are better than the benchmark returns

Question 37 of 61

38. No redemption or subscription is allowed in a Segregated Portfolio - State whether True or False?

TRUE

FALSE

Question 38 of 61

39. According to the SEBI Advertisement Guidelines for Mutual Funds, when the mutual fund scheme has been in existence for m more than three years, point - to - point returns on a standard investment of Rs. 10,000 shall also be shown in addition to CAGR for the scheme to provide ease of understanding to retail investors. - State whether True or False?

TRUE

FALSE

Question 39 of 61

40. Statement of Additional Information (SAI) has to be regularly updated and the updation has to be done by the end of 3 months every financial year - State whether True or False?

True

FALSE

Question 40 of 61

41. While empaneling mutual fund distributors, and AMC to do due diligence to satisfy the 'Fit and Proper' criteria for eligible distributors. Which of the following form a part of this due diligence process?

The eligible distributor should have the requisite Employee to Customer ratio as prescribed by SEBI

The eligible distributor should have strict internal controls to limit investors exposure to an asset class or fund house

Adequate controls to delink sales functions from customer risk and investment objective evaluation.

All of the above

Question 41 of 61

42. SEBI Complaint Redress System (SCORES) helps an invetor to ________. 1. Lodge a complaint for a grievance 2. Make a follow -up on the complaint. 3. Track the status of redressal of such complaints online

Only 1

Only 1 and 3

Only 1 and 2

All 1, 2 and 3

Question 42 of 61

43. Identify the INCORRECT statement with respect to SEBI Compaint Redress System (SCORES).

SCORES enables the market intermediaries and listed companies to receive complaints from investors, redress suc complaints and report redressal

SCORES is a web based centralized grievance redress system

SCORES is completely online, so an investor cannot lodge a physical complaint

If an investor lodges a physical complaint then such complaints are scanned and then unploaded in SCORES for processing.

Question 43 of 61

44. How often should the Key Information Memorandum (KIM) be updated ?

Every quarter

Twice in a year

At least once a year

It need not be updated after it is issued once

Question 44 of 61

45. Which of the following is true for unclaimed dividend in mutual fund schemes?

Asset Management Company is expected to make a continuous effort to remind the investors to claim their dues

The responsibility for ensuring that the dues are claimed lies with the distributor in a dividedn plan

The responsibility for ensuring that the dues are claimed lies solely with the investor

Question 45 of 61

46. Identify the TRUE statement with respect to Total Expense Ratio (TER).

Disclosure of TER is very critical as there is no regulation capping it

As the TER of mutual fund schemes is highly regulated and therefore no disclosures are required

SEBI has specific and strict regulations regarding the cap of TER as well as the periodic disclosures of the same.

None of the above

Question 46 of 61

47. As per the Advertisement Guidelines for Mutual Funds, Point-to-point returns on a standard investment of Rs. 10,000 shall also be shown in addition to CAGR for a scheme which has been for existence _______ .

More than 5 years

More than 3 years

More than 2 years

Irrespective of years of existence, all mutual fund schemes must show the point to point returns

Question 47 of 61

48. ______ is/are frequently used by media and research analysts to check the performance of various schemes of a mutual fund

Fund Fact Sheet

Annual Accounts of the AMC

Key Information Memorandum (KIM)

Investment Management Agreement

Question 48 of 61

49. Unitholders have the right to inspect key document/s like ________ with respect to their mutual fund investments.

Memorandum & Articles of Association

RTA agreement

Custodial Services Agreement

All of the above

Question 49 of 61

50. Who specifies the heads of expenses that can be charged to a mutual fund scheme by the Asset Management Company?

SEBI

AMFI

Trustees

RBI

Question 50 of 61

51. _______ will help help the investors understand the suitability of a mutual fund scheme to them.

Product Label

Standard Deviation / Beta

Tracking Error

Alpha of the scheme

Question 51 of 61

52. Mr. Sonu reads about the risk factors given in the offer document and invests in an equity mutual fund scheme. After a few days the stock market crashes and NAV of the equity fund goes down. What can Mr. Sonu do in such a situation?

He can appeal to SEBI and get a remedy

He can get a remedy from the AMC

He is not likely to get any remedy from the AMC

He is likely to get a remedy from the trustees of the AMC

Question 52 of 61

53. Which of these statement(s) is / are TRUE ? A) The Asset Management Company (AMC) is not accountable for the procedures for detecting incorrect valuation B) It is mandatory for the AMC to disclose the valuation policy

Only A is true

Only B is true

Both A and B are true

Both A and B are false

Question 53 of 61

54. As per SEBI's mandate, AMCs has to put in place a due diligence process to regulate distributors. Which of these mutual fund distributors would NOT be subjected to the due diligence process?

AUM raised of Rs. 60 crore across industry in the non-institutional category

Commission received of over Rs. 125 lakhs p.a. across industry

Multiple point presence in more than 25 locations

Commission received of over Rs. 75 Lakhs from a single mutual fund

Question 54 of 61

55. Which of these is NOT included in the Key Information Memorandum (KIM) ?

Dates of Issue Opening, Issue Closing and Re-opening

Investment Objective

Risk profile of the scheme

Functions of the sponsor, trustee and AMC

Question 55 of 61

56. When is the Scheme Information Document (SID) updated?

Every Year

Every month

Every two years

Every six months

Question 56 of 61

57. The interim changes in an mutual fund scheme are updated to the investors through ___________

Key Information Memorandum (KIM)

Statement of Additional Information (SAI)

Addendum

Scheme Information Document (SID)

Question 57 of 61

58. The distributors are mainly compensated through ______ by the mutual funds.

Commissions

Salaries

Portfolio Profits

Annual Fees

Question 58 of 61

59. The stock exchanges which provide mutual fund trading facilities also have to provide for settlement guarantee - State True or False?

TRUE

FALSE

Question 59 of 61

60. Condensed financial information for schemes launched in last 3 financial years is mentioned in the ___________.

Scheme Information Document (SID)

Statement of Additional Information (SAI)

Fact Sheet

Prospectus

Question 60 of 61

61.

Question 61 of 61