5/12/24, 5:18 PM NISM Series V A - Mutual Fund Distributors Certification Exam|NISM Mutual Fund Mock Test : Pass4sure.
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Q 1. Day to day management of the Mutual Fund schemes is handled by the Trustees - True or False ?
False
True
CORRECT ANSWER
Explanation:
Day to day management of the schemes is handled by an AMC.
The AMC is appointed by the sponsor or the Trustees.
Q 2. Can the fundamental attributes of scheme be changed? If yes - how?
Yes- but with the consent of 100% of the unit holders
Yes - with the permission of SEBI and AMFI
Yes - but this should be communicated to unit holders who should be provided an option to exit the scheme
No - the fundamental attributes cannot be changed as it is based on these attributes that investors have invested their money
CORRECT ANSWER
Explanation:
The trustees shall not permit a change in the fundamental attributes of the scheme or any other change that will affect
the interests of the unit holders unless a written communication is sent to each unitholder, a notice is given in
the newspaper with national circulation and the unitholders are given the option to exit at NAV without paying an exit
load.
Q 3. Identify the true statement(s) - A) Individuals can register upto five bank accounts with a mutual fund B) A Non-
Individual can register upto ten bank accounts with a mutual fund
Only A is correct
Only B is correct
Both A and B are correct
Both A and B are incorrect
WRONG ANSWER
CORRECT ANSWER:
Both A and B are correct
Explanation:
Mutual funds provide investors the facility to register multiple bank accounts to facilitate receiving the redemption,
dividends and any other pay outs from the fund.
An individual investor can register up to five bank accounts and a non-individual investor, ten.
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5/12/24, 5:18 PM NISM Series V A - Mutual Fund Distributors Certification Exam|NISM Mutual Fund Mock Test : [Link]
Q 4. A Multi-Cap fund can have Nifty 500 index as its benchmark - State whether True or False?
True
False
WRONG ANSWER
CORRECT ANSWER:
True
Explanation:
A Multi-Cap fund invests in Large Cap, Mid Cap and Small Cap stocks as per proportions stipuated by SEBI.
The Nifty500 index represents top 100 large cap companies, top 150 Mid-cap companies and top 150 small cap
companies. Therefore, it can be a good benchmark for a Multi-Cap fund.
Q 5. From the below mentioned entities associated with a mutual fund, who has to mandatorily contribute to the corpus of
the mutual fund?
The Trustees
The Custodians
The Asset Management Company
The Sponsors
WRONG ANSWER
CORRECT ANSWER:
The Sponsors
Explanation:
The mutual fund trust is created by one or more Sponsors, who are the main persons behind the mutual fund
business.
The sponsor is the promoter of the mutual fund. The sponsor brings in capital and creates a mutual fund trust and
sets up the AMC.
The sponsor makes an application for registration of the mutual fund and contributes at least 40% of the net worth of
the AMC. In other words, every MF needs a sponsor before it can commence operations.
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5/12/24, 5:18 PM NISM Series V A - Mutual Fund Distributors Certification Exam|NISM Mutual Fund Mock Test : [Link]
Q 6. Which distributor will be covered under the due diligence process of the Asset Management Company as mandated by
SEBI?
A distributor who has presence in more than 10 locations
A distributor who has AUM of over Rs. 100 crores from non-institutional investors
A distributor who has received commission of over Rs 25 lakhs from one mutual fund
All of the above
WRONG ANSWER
CORRECT ANSWER:
A distributor who has AUM of over Rs. 100 crores from non-institutional investors
Explanation:
SEBI has mandated AMCs to put in place a due diligence process to regulate distributors who qualify any one of the
following criteria:
- Multiple point presence (More than 20 locations)
- AUM raised over Rs. 100 crores across the industry in the non-institutional category butincluding high net worth
individuals (HNIs)
- The commission received of over Rs. 1 Crore p.a. across industry
- The commission received of over Rs. 50 Lakhs from a single mutual fund
Q 7. The market value of a mutual fund scheme's portfolio is Rs. 15 crores. Its current liabilities are Rs. 2 crore. The unit
capital is Rs. 10 crore and face value per unit is Rs 10. Calculate the NAV per unit?
Rs. 15
Rs. 10
Rs. 11.50
Rs. 13
WRONG ANSWER
CORRECT ANSWER:
Rs. 13
Explanation:
The formula for calculating NAV is: (Total Assets minus Liabilities other than to Unitholders) / No. of outstanding Units
Total assets minus liabilities = 15 cr - 2 cr = Rs 13 cr
Number of outstanding units = Unit Capital / Face value = 10 cr / 10 = 1 crore outstanding units
NAV = 13 cr / 1 cr = Rs. 13
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5/12/24, 5:18 PM NISM Series V A - Mutual Fund Distributors Certification Exam|NISM Mutual Fund Mock Test : [Link]
Q 8. Identify the TRUE statement with respect to a Gilt Fund?
The minimum investment in G-secs (as a percentage of total assets) is 70%
The minimum investment in G-secs (as a percentage of total assets) is 75%
The minimum investment in G-secs (as a percentage of total assets) is 80%
The minimum investment in G-secs (as a percentage of total assets) is 85%
CORRECT ANSWER
Explanation:
Gilt Fund is an open-ended debt scheme investing in government securities across maturity. The minimum investment
in G-secs is defined to be 80 percent of total assets (across maturity).
Q 9. _______ 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
WRONG ANSWER
CORRECT ANSWER:
Product Label
Explanation:
The risk levels in different categories of mutual fund schemes can be understood with the help of product labelling of
Mutual Funds.
SEBI had introduced product labelling of mutual funds to address the issue of mis-selling and to provide investors an
easy understanding of the kind of product/scheme they are investing in and its suitability to them.
All the mutual funds were required to ‘Label’ their schemes on the parameters such as - Nature of scheme, Investment
objective, Level of risk depicted by colour code boxes etc.
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5/12/24, 5:18 PM NISM Series V A - Mutual Fund Distributors Certification Exam|NISM Mutual Fund Mock Test : [Link]
Q Identify the document which authorizes a company to invest in a specific mutual fund?
10.
Resolution passed in the shareholders meeting
Specific Board resolution
As per the Companies Act, a company can invest in any mutual fund scheme as long it is beneficial to the interest of the shareholders,
without any special authorisation
As per the Companies Act, a company cannot invest in mutual funds
WRONG ANSWER
CORRECT ANSWER:
Specific Board resolution
Explanation:
Since institutional investors like Companies etc. are not natural persons, authorised individuals invest on behalf of
the institution.
Therefore, some additional documents are essential and one of them is - Authorisation for the investing institution to
invest. This is typically in the form of a Board Resolution.
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