AMFI Model Test Paper The Concept and Role of Mutual Funds 1.

Which of the following is not a Mutual Fund characteristic? a. Diversified portfolio b. Careful research and monitoring of the market c. Substantial capital d. Expertise in stock market 2. Choose the advantage of Mutual Funds a. Small amount of investment b. Professional management c. Risk diversification d. All of the above 3. UTI was the only capital market intermediary for the period : a. 1964 to 1987 b. 1963 to 1988 c. 1964 to 1992 d. None of the above 4. Mutual Funds can be defined as a. a link between the saving public and the capital markets b. an active participant in promoting good corporate governance, investor protection c. a participant that has brought in liquidity into the financial system d. All of the above 5. The ownership of a Mutual Fund belongs to a. Board of Trustees b. Sponsor c. AMC d. Unit-holders 6. A Mutual Funds investments are guided by a. AMC b. Board of Trustees c. Investment objectives d. Unit-holders 7. In USA, a mutual fund is constituted as a. Trust b. Investment company

c. Company d. None of the above 8. In India, a mutual fund is constituted as a. Trust b. Investment company c. Company d. None of the above 9. An investor should not invest in Mutual Fund, if a. his capital base is large and is able to monitor the stock market b. he is able to carry out detailed investment research c. Both of the above d. None of the above 10. The advantage to a Mutual fund investor is a. The risk involved is diversified b. The investor can hold the diversified portfolio even with small investment c. Expertise in stock market is not required d. All of the above 11. The term professional management indicates a. investment management skills b. research of available investment options c. Both the above d. None of the above 12. Benefit of economies of scale is reaped by Mutual Funds because of a. portfolio diversification b. reduction of risk c. large volumes of trades d. None of the above 13. Which of the following is not a disadvantage of investing through a Mutual Fund? a. No control over costs b. Liquidity and convenience c. No tailor-made portfolio d. Managing a portfolio of funds 14. Mutual fund industry in India began in a. 1988 b. 1964

c. 1992 d. None of the above 15. Which of the following is untrue a. UTI was set up in 1963 b. UTI was formed by RBI c. UTI was established by an act of Parliament d. UTI was not given a monopoly. 16. Which one has a largest investor base? a. ULIP b. Mastershare of UTI c. US-64 d. SBI Magnum 17. Which is the first diversified equity investment scheme in India? a. SBI Magnum b. Master share c. MEP-91 d. Mastergain92 18. Which is the first Indian offshore fund? a. India Growth Fund b. India Fund c. India Infrastructure Fund d. None of the above 19. The first non-UTI mutual fund is a. SBI MF b. LIC MF c. Canbank MF d. Indian Bank MF 20. Private sector funds were granted permission to enter the Mutual Fund industry in : a. 1992 b. 1993 c. 1988 d. 1995 21. The organisation responsible for a comprehensive set of regulations for all mutual funds in India is: a. RBI

b. SEBI c. AMFI d. SHCIL 22. The 1999 Union Government Budget helped the Mutual fund industry by a. regulating the practices in MF industry b. exempting all mutual fund dividends from income tax in the hands of the investors. c. Approving the code of ethics suggested by AMFI d. None of the above 23. The mobilisation of funds by Mutual Fund industry is in the range of a. 5% to 6% of GDS b. 2% to 4% of GDS c. 7% to 10% of GDS d. 25% to 40% of GDS 24. Which of the following is untrue as per recent studies? a. UTIs market share is increasing and private sectors market share is decreasing b. UTIs market share is decreasing and private sectors market share is increasing c. The size of Mutual fund industry is increasing rapidly d. The operations of Mutual fund industry are becoming complex day by day. 25. A load means a. a sum paid to the investors. b. An expense charged to scheme/fund c. Sales charges d. None of the above

26. Mutual funds do not justify the need for paying commission to agents when the investors skip out of the scheme before a specified period. In India, this practice is adopted by a. Agents voluntarily paying back the commission to the Mutual fund b. Trail commission is not paid to the agents c. None of the above d. The whole of commission is paid to the agents 27. US-64 scheme of UTI is a. traded on stock exchange b. fixed price of sale and repurchase c. traded through UTI as per the sales and repurchase price declared by UTI for a specified period. d. None of the above

28. The AMFI objectives does not include the following a. to improve standards of mutual fund industry b. to regulate the stock markets along with SEBI in tandem c. to create awareness about mutual funds d. to emphasise on ethical and moral trade practices 29. Load means : a) charge to scheme / fund b) charge paid by investor c) charge paid by AMC to SEBI d) none of the above 30. What is not an advantage in investing in Mutual Funds against Equity; a) Professional Management b) Diversification of Risk c) Reduction in cost d) Tailor made portfolios 31 A fund is doing direct marketing , but they can take the help of a) Agents b) NBFC c) Distributors company d) All of the above 32. Investment Mananger is a) AMC b) Custodian c) Trustee d) Sponsor 33. Appointment of brokers : a) Trustees appoint brokers b) AMC appoints brokers c) Trustees ensure due diligence on the part of AMC for empanelment of brokers d) B and C above 34. which of the entities can give loans against securities a) UTI b) Banks c) MF d) None of the above

Offer Document and SEBI Regulations 35. Offer document as per Trust deed is issued by: a. AMC b. Sponsors c. Either of the above d. Trustees 36. Investor has right to a) Access to information b) Propotionate right in the beneficial ownership of the assets of the scheme c) Inspect documents d) All of the above 37. Initial expenses of an open-end schemes can be a. amortised over 10 years of the scheme b. amortised over 5 years of the scheme c. cannot be amortised d. amortised over 3 years 38. Which of the following does not constitute the fundamental attributes of a scheme a. the scheme is income bearing b. Investment policy of the scheme c. the names and addresses of the registrars and custodians d. None of the above 39. An application form is normally supplied with a. Offer document b. Annual report c. Due diligence certificate d. Key information memorandum 40. A mutual fund unitholder can sue a. AMC b. Sponsor c. Trustees d. All of the above 41. A unitholder of assured returns fund, can sue in case the fund does not meet its obligation: a. AMC b. Sponsor

c. the person/entity whose name is specifically mentioned in the Offer document as guarantor to scheme. d. Cannot sue 42. The investment and advisory fees for a fund with Rs.200 crores as average net assets is: a. 2.5 crores b. 2.25 crores c. 2 crores d. 200 crores 43.As per SEBI guidelines, a security traded on 21st July, Rs.22, 23rd July, Rs.25 and 25th July, Rs.28 would be valued on 28th July as: a. 25 b. 23 c. 28 d. 22.5 44. As per SEBI guidelines, a security is to be treated as untraded when a. security is never traded on stock exchange b. security is not traded for 30 days c. security is not traded for 60 days d. None of the above 45. Which of the following is true as per SEBI norms for debt investment? a. Investment of rated investment grade of a company should not exceed 15% of NAV b. In case of rated as well as unrated but below investment grade, debt investment in a company should not exceed 10% of NAV c. For all companies investment not to exceed 25% of NAV d. All of the above 46. As per RBI guidelines, MMMF can invest in a. Corporate bonds b. Equity shares c. G-sec of maturity less than 1 year d. None of the above 47. Which of the following is not a criteria for sponsor? a. Networth to be more than capital investment b. Sponsor should contribute 40% of the net assets c. Sponsor should ensure that 20% of the funds assets should be invested in sponsors company.

48. Which of the following is applicable to the debt market in India? a. The debt market is a wholesale market b. There are large players like banks, financial institutions, mutual funds, etc c. Government securities are traded on a large scale d. All of the above 49. AMC can directly approach the investors as well as take the help of a. Individual agents b. Banks and NBFC c. Distribution companies d. All of the above 50. SEBI guidelines for agents includes a. Agents can sell products of a single mutual fund b. Agents can sell products of mutual funds with whom he has entered into agreements. c. Agents could be only individuals d. No SEBI guidelines 51. A distributor is appointed by a. Trustee b. AMC c. Sponsor d. All of the above 52. As per SEBI guidelines, AMC is prohibited to undertake the following activity a. to be a trustee of some other mutual fund b. to provide advisory functions to pension and provident funds c. to look after the schemes of other mutual funds 53. A prospective investor, as per SEBI regulations can seek recourse to a. sue the trustees b. sue the AMC c. cannot seek recourse d. sue the SEBI 54. As per SEBI guidelines, a Due diligence certificate is not : a. signed by a Compliance Officer/ CEO/MD of the mutual fund b. all legal formalities of a scheme are completed c. attached to Annual report d. forms part of Offer document 55. A mutual fund unit holder can seek redressal if his complaint is not entertained by the mutual fund

a. AMC b. Trustees c. SEBI d. RBI 56. If a unitholder does not agree with a merger of mutual fund / AMC with another mutual fund / AMC then a. he can opt for withdrawal in open-end scheme b. he can opt for withdrawal only when SEBI allows so c. he can opt for withdrawal in open-end or closed-end scheme d. None of the above 57. Which of the following is not true of Key Information Memorandum a. It is an abridged version of offer document b. It is not issued by AMC*** c. It is supplied with application form d. It contains the terms of issue 58. Which of the following is not true as per SEBI norms? a. unrated securities are not to be valued b. Bonds are valued at YTM c. Equity shares are valued at closing price in the market on the valuation date d. None of the above 59. The printing expenses of key information memorandum of an open end scheme can be a. amortised over 5 years of the scheme b. cannot be amortised c. amortised over 10 years of the scheme d. None of the above 60. A scheme transfers the securities to another scheme under same AMC. Which is incorrect : a) The AMC holds 4% in the total inter-scheme transfers. b) The securities are sold at market value + 10% add. Charges 61. The fund portfolio is submitted to SEBI by : a) AMC Directors b) Trustees c) Fund Manager d) Sponsors 62. The fundamental attributes have to be mentioned in the offer document .

a) The scheme objective is clearly defined. b) Any subsequent change will be approved / informed to unitholders. c) The nature of scheme is known. d) All of the above. 63. Direct marketing involves all of the following except ; a) Advertisement in newspapers b) Selling via employees c) Using distribution company of sponsor. d) Seminar presentation. 64. The disclosures regarding the load to be disclosed in offer document for open ended scheme a) Estimated load spread over 5 years including contingent deferred sales charge. b) Details of initial issue expenses for scheme and other schemes launched during the last fiscal by the AMC. c) Estimated annual recurring expenses as a percent of average weekly net assets. d) All of the above.

65. Initial issue expense limit is : a) 6% b) 3% c) 4% d) 5% 66. Fundamental attributes to be changed ; a) 75% of unitholders consent for closed-ended schemes and informing unitholders of open-ended schemes b) Approval of SEBI c) Approval of trustees d) All of the above 67. KIM is also available at a) Agents b) Banks c) Distribution Agencies d) All of the above 68. Which of the following qualifies as a SRO a) SEBI b) RBI c) BSE

d) AMFI 69. Unitholders expected a good return in past scheme but the expectations were not met. He can; a) sue the AMC b) sue the Trustee c) sue the Trust d) None of the above. 70. Beneficial owner means : a) owns part of Trust b) own the company c) owns units d) none of the above 71. Custodian is a) handling mere securities in terms of physical delivery and eventual safekeeping b) holding financial dealings by holding its bank account c) issuing and redeeming units of a mutual fund d) all of the above 72. Standard risk factors a) Past performance of sponsor/AMC/MF is not indicative of the future performance of the Trust b) Risk arising from non-diversification c) Assured return scheme, if assurance until maturity it must be stated d) All of the above 73. Which is not a fundamental attribute a) Name / address of registrar b) It is an income scheme c) The scheme is for 10 years d) 65% on debt security. 74. Associate transaction can be performed by giving the following disclosures. a) Policy for investing b) If invest more than 25% of its net assets c) Business given to associate broker and distributors d) All of the above 75. Who can invest in MF except a) Banks b) NRI

c) FIIs d) Foreign citizens 76. Non traded securities as per SEBI, when a security is not traded on any Stock Exchanges a) 60 days prior to valuation date b) 30 days prior to valuation date c) Marked to market d) None of the above. 77. As per SEBI, which is untrue in respect of non traded securities a) Call money at cost + accrual b) Non traded instruments will be valued at cost plus interest accrued c) Untraded need not be valued d) All of the above 78. Amortisation of initial issue expenses of closed-ended funds a) Weekly b) Monthly c) Yearly d) End of the period 79. Investment is treated NPA a) if no returns are provided by way of interest for more than 2 years b) if no returns are provided by way of interest for more than 18 months c) if no returns are provided by way of interest for more than 1 years d) all of the above 80. A mutual fund shall not invest a) more than 5% of its NAV in the unlisted equity related instruments in case of OES b) more than 10% of its NAV in the unlisted equity related instruments in case of CES c) more than 10% of its NAV in equity related instruments of any company d) all of the above 81. A mutual fund shall not invest a) more than 15% of its NAV in rated debt instruments issued by a single issuer b) more than 10% of its NAV in un-rated debt instruments issued by a single issuer c) total investment in un-rated debt instruments shall not exceed 25% of the NAV d) all of the above 82. Contigent deffered sales charges should not exceed a) 4% of the redemption proceeds in the first year b) 3% of the redemption proceeds in the second year

c) 2% of the redemption proceeds in the third year d) 1% of the redemption proceeds in the fourth year e) all of the above 83. A scheme can be wound up if a) If 75 % of unitholder pass a resolution b) after repaying the amount due to the unitholder c) Disclosing reasons of winding up in two daily news papers having circulation all over India and a vernacular newspaper circulating at the place where mutual fund is formed. d) All of the above 84. Dividend received by the fund should be recognised a) on the date of declaration b) on the date of receipt c) on the date of share is quoted on ex-dividend basis d) none of the above 85. Identify the recurring expenses: a) brokerage and transactions cost b) marketing and selling expenses c) registrar fees d) all of the above 86. Purchase and sale of investment should be: a) recognised on the trade date b) on the settlement date c) either of the a) and b ) d) none of the above Investment Management and Measuring & Evaluating Mutual Fund Performance. 87. Net Asset Value is a. The value of each share or unit. b. The value of the total assets of the fund divided by total number of outstanding units c. The value of investors part ownership in the fund d. All of the above 88. If the value of total assets of a fund is 12000 and the fund has issued 900 units, the NAV of the unit is: a. 13.33 b. 13.00

c. 14.00 d. 13.35 89. If the NAV per unit is 14.55 and the outstanding units of a fund are 1365 then the total assets of the fund are a. 20000 b. 19860.75 c. 19861 d. 1986.75 90. An amount of Rs.300 becomes Rs.600 in 8 years. The annualised rate of return is: a. 12% b. 9% c. Insufficient data d. 100% 91. A closed-end scheme is quoted at discount to NAV in the stock exchange when a. the markets are bearish b. the investor perceives the inability of the fund to maintain the NAV c. Assets are undervalued d. None of the above 92. An asset of Rs.75000 bought in 1995 was sold in 1998 for Rs.125000. The inflationary index in 1995 and 1998 are 251 and 361 respectively. The sum liable for tax is: a. Insufficient data b. Rs 50000/c. Rs 17131/d. Rs 125000/93. NAV of a unit purchased was 21 at the beginning and 23 at the end of a year. The unit was hold for 18 months. Find out the average annualised return on unit. a. 6.34% b. 7% c. 8.5% d. None of the above 94. Duration of a debt fund is 5. The yield spread increases from 0.3% to 0.9%. What is the percentage effect on price? a. 5% b. 3%

c. 3% d. Data is insufficient 95. When interest rate rises, Debt fund a. increases in value b. decreases in value c. is not affected by interest rate d. None of the above 96. Ex-marks with 100 % could be for the following fund: a. Growth fund b. Index fund c. Value fund d. Balanced fund 97. A high P/E multiple of a fund in comparison to average market multiple could be of a. Value fund b. Growth fund c. Balanced fund d. Equity diversified fund 98. A Mutual fund declares Re 1 as distribution. The income in the hands of unit holders is a. taxable at 20% b. not taxable in the hands of unitholders c. Information is inadequate to assess tax liability d. Income tax will be assessed as per unitholders liability 99. A high portfolio turnover mean a. The fund is very active in market b. Transaction costs are high c. A high risk is involved as per the investment objectives d. All of the above 100. Why an investor should prefer investing in mutual funds to investing in equities a. the investors objectives will be mostly met by mutual fund b. the investor can diversify his portfolio c. professional management is not required d. reduced transaction costs are wiped out by management fees 101. What is true of the following?

a. A load increases value of NAV b. A load is paid towards initial expenses c. None of the above 102. Compounding of investment is best explained by a. Balanced fund b. Growth fund c. Value fund d. Equity fund 103. An investor can assess his funds performance to a. The performance of another mutual fund b. The performance of overall stock market c. The performance of similar financial products and schemes available in the market d. All of the above 104. When is the value of stock not unlocked. a) None of the below b) when buy-back of shares takes place c) when corporate restructuring of company d) when there is a bull run in the market. 105. For choosing an appropriate benchmark. The following are required except a) The portfolio composition and size. b) Investment objective c) Historical data of Fund performance d) Nature of investments 106. Comparison of Direct Equity and Mutual Fund Investment, which is true. a) A large capital required in MF as compared to direct investing. b) Diversification is possible in Direct Equity as compared to MF. c) Transaction costs with fund wipe out the profits as compared to equity. d) The investment objective is possible through MF investing as against Direct Equity investment. 107. Mainstream diversified debt funds is most affected by : a) Reinvestment risk b) Liquidity risk c) Interest rate risk d) Default risk 108. If yield falls, the Fund Manager will do all except; a) Sell short maturity stocks and buy long maturity stocks.

b) See that the funds average duration become longer than the market average duration. c) Sell long duration stocks and buy short duration stocks. d) Sell low coupon stocks and buy high coupon stocks. 109. The fixed asset allocation is all of these except : a) liquidation of a part of the higher asset class and reinvesting in the asset class with lower return. b) A conservative approach to portfolio management c) A disciplined approach lets him book profits is rising markets and increase holdings in falling markets. d) Taking advantage of market fluctuations. 110. An investor purchased units in Mutual Fund in 1995 for Rs.75000/-. He sold the units in 1998 for Rs.125000/- Cost of inflation in 1995 271 and in 1998-371 What is the captical gains. a) 22324.72 b) 19487.52 c) 70215.63 d) None 111. Invest. At Market Value 700 crs. Liabilities 50 lakhs Units o/s 28 crs. Find NAV a) 24.98 b) 30 c) 32 d) 40 112. Assure that an investor purchased 1 unit of an open end equity fund at Rs.22. The Fund had an interim dividend of rs.4/-. The rate of NAV that time is 24. The closing NAV is 25. Find total return. a) 31.81 b) 30.00 c) 32.00 d) 33.00 113. While comparing peer group, comparison cannot be made with a) 2 debt funds with 5 yrs. Maturity b) one broad based equity with IT c) government securities with government security d) Money market with money market

e) None of the above 114. A bond with a coupon of 9% when interest rates for similar maturities are 11% will sell at a) Above par b) Below par c) At par d) At a price which is not related to interest rates for similar maturities Fund Distributors as Financial Advisors 115. The steps involved in selection of Equity fund are a. Selection of sector, selection of fund managers and schemes, classification of assets b. Classification of assets, Selection of sector, selection of fund managers and schemes c. Selection of fund managers and schemes, Selection of sector, Classification of assets d. Selection of sector, classification of assets, selection of fund managers and schemes 116. An investor approaches you to build his portfolio. How will you build it? a. Selection of sector, selection of fund managers and schemes, classification of assets b. Classification of assets, Selection of sector, selection of fund managers and schemes c. Selection of fund managers and schemes, Selection of sector, Classification of assets d. Selection of sector, classification of assets, selection of fund managers and schemes 117.A Charitable Trust wishes to invest in units and approaches you as a distributor of Super Equity Fund 2001. What would you do? a. Accept the application form and not the cheque and send it to AMC for approval b. Refuse to accept the application c. Accept the application form and the cheque d. Check the Offer document to see whether Charitable Trusts are allowed to apply for the units 118.A 55 year old retired person with 25% equity and moderate risk appetite should be advised to invest in: a. Balance fund b. Value fund c. Diversified equity fund d. Growth fund 119.Investor should track mutual funds in which he has invested because a. take decision of keeping, liquidating or acquiring mutual fund b. he comes to know the performance of the fund c. the annual reports inform him about the NAV of the fund d. None of the above

120.An investor wishes to switchover between Money market and equity funds. What advise would you give to him? a. He should not switch over and stick to one scheme that meets his objectives b. Switching is done between funds to reap the benefits arising out of the cyclical movements in market 121.Steps in selection of Equity Fund . a) Evaluate past returns, review salient features of scheme, classify the equity schemes. b) Review salient features, evaluate past returns, classify the equity scheme. c) Classify equity schemes, evaluate past returns, review salient feature of scheme d) Classify equity schemes, review salient features, evaluate past returns. 122.Which fund would a person wanting low risk (risk averse) and high yield choose. a) div.yield 15% , Beta - 1.5, ex-marks-90 b) div.yield 10%, Beta -1, ex-marks-70 c) div.yield 11%, Beta -0.9, ex-marks-80 d) div.yield 12%, Beta -1.2, ex-marks-80 123.A good agent will not canvas a) stating the past performances of fund. b) the returns offered compared to other funds/schemes. c) For the commissions to be received. d) The benefits regarding tax. 124.An unmarried professional working in HLL wanted to invest in Mutual Fund. Which type of scheme he should invest? a) 80% debt scheme b) 50% equity & 50% income and liquid scheme c) 90% in high P/E ratio funds in the market d) Balanced Fund 125.A person wants regular and standard income. In which fund he should invest? a) Monthly income open ended b) Closed-ended debt fund c) Open-ended debt d) ICICI bond 126.A person wanted to invest in diversified equity : a) Invest small amount in value stocks with different sectors. b) Highly aggressive stocks of various sectors.

127.Agent while canvassing should not a) Past performance of Fund b) Assure returns c) Risks involved in investing in mutual funds. 128.Equity Linked Savings Scheme has the following feature a. It entitles the unitholder for tax rebate b. The investment is locked in for 3 years c. A minimum stated level of investments is made in equity related instruments d. All of the above 129.The following feature is not a feature of passive fund a. A passive fund tracks the index b. A passive fund matches the performance of the index c. A passive fund selects the stocks that are not present in the index d. All of the above 130.Which of the following is untrue of Systematic Investment plan? a. It allows investor to invest a fixed amount on a monthly basis b. It allows investor to change the amount c. It inculcates a discipline of regular investment in the investor 131.The objective of passive fund is a. to beat the index in which it has invested b. to be parallel to the index c. to earn returns as per the returns earned by the index 132.In case of the corporate fixed deposits the most important thing an investor must look for is a. yield b. rate of return c. credit rating of deposit and of the company d. None of the above 133.A person would prefer bank deposit to mutual fund only when a. the investor has no consideration for other investment aspects except safety. b. The returns on bank deposits are high c. The yield on mutual funds are higher than bank deposits 134.Bank deposits are superior to mutual funds because a. bank deposits offer higher yield b. they are guaranteed by the bankers for capital protection c. transaction costs are low

d. they are not liquid as compared to mutual funds 135.Indira Vikas Patra has caught the attention of masses because of a. popularity in rural areas b. easy transferability and identity of holder is not disclosed c. offers high yield d. less risky 136.Cost of investing is most important in a : a) Balanced Fund b) Bond Fund c) Growth Fund d) Equity Fund 137.Triple compounding of growth scheme is achieved by a) Non-withdrawal of principal and investing additional amount b) Reinvesting the dividend c) Investing the tax arising out of dividend. d) All of the above. 138.Which of the following is true. a) Rupee cost averaging results in maximising returns b) Value averaging results in maximising returns c) A combination of both results in maximising returns d) None 139.Systematic Withdrawal Plan characteristic : a) disciplined investment. b) Booking profits when market fluctuates. c) Regular income d) None of the above 140.Passive management style. a) match the index. b) Book profits in bull market. c) Buy stocks of blue chip companies. d) none of the above 141.When comparing risk which is the highest in risk: a)Growth fund b)Sector fund c)Value fund d)Balanced fund

142.Automatic reinvestment plan is except this; a) the growth option allow the investor to reinvest in additional units. b) Reinvestment takes place at NAV c) Investor reaps the benefit of compounding d) None of the above 143.Deep Discount bond is a) sold at discount at issue price b) pay interest on periodic basis c) at redemption you get price greater than issue price and no periodic payment d) exemption on maturity amount 144.The following is not a feature of PPF a) 50% withdrawal of 4th year balance in 7th year. b) 12% simple interest c) Tax free interest d) Income received in that particular year should be invested 145.LIC with profit gives a) Policy doesnt pay the sum assured in the event of death b) If the individual survives the term of the policy, he receives the sum assured plus bonus accrued c) If the individual survives, gets only sum assured d) All of the above. 146.Life Insurance is viewed more as an Investment Option ; a) Proceeds in the event of his surviving the term of the policy do not make insurance a worthwhile investment b) It is important for an individual to evaluate the need for insurance with respect to his earning potential and the financial impact on his dependants in the event of his untimely death. c) They tend to opt for it on account of the tax benefits. d) All of the above 147.Why a fund distributor be a financial planner a) Strong potential demand for such services b) One of the most lucrative and sought after profession c) Limited supply of financial planner d) All of the above 148.What is the benefit of financial planning a) establish long term relation

b) build a profitable business c) a) and b) both d) none of the above 149.A good financial planner should not a) build good relations with the client b) have a good knowledge of financial products c) sale financial products on the basis of commission he/she is going to receive d) have a n understanding of various stages in a clients life and wealth cycle 150.CFS-US i.e Certified Financial Planner Board of Standards (USA) has not set up following steps : a) Establishing and defining the client planner relationship b) Gathering client data and defining client goals c) Setting up regulations for investments d) Monitoring the financial planning recommendations 151.What is the order of financial planning process 1) Defining clients goals 2) Determine risk tolerance 3) Establishing and defining the client planner relationship 4) Gathering and analyse client data 5) Executing the plan and making client invest 6) Recommending appropriate asset allocation and specific investments 7) Monitoring the financial planning recommendations 8) Ascertain Clients tax situation a) 3,1,4,2,8,6,5 and 7 b) 3,2,1,4,5,6,8, and 7 c) 2,1,4,5,3,6,8 and 7 d) 7,1,2,3,4,6,8 and 5 152.Mistakes that advisors and investors must avoids a) Financial planning is relevant only for wealthy b) Expecting unrealistic returns on investments c) Expecting realistic returns on investments d) That financial planning is tax planning 153.How would you define tranisition stage a) One or more clients goals are approaching and clearly in sight b) Goal and purpose towards which the clients have been investing have arrived c) Clients are looking to build wealt

d) Clients upto their early 50s may not yet feel the need to take care of the next generation in the event of their own death. 154.Affluent investors are a) wealth creating b) wealth preserving c) a and b both d) none of the above 155.Jacobs recommendation is a) Combine the rupee cost averaging and value averaging b) Rupee cost averaging c) Value averaging d) Buy and hold 156.What is the distribution phase in the life of investor a) When investor is building assets by periodic investments b) When investor stops adding assets and starts receiving dividends as income c) When investor is in position to distribute his investments as loan d) None of the above 157.Comparison of financial products is done by a) comparing by nature of investment and by performance b) comparing index fund with a sector fund c) comparing income fund with ELSS d) none of the above 158.Arrange in ascending order according to the risk associated with the fund 1) Sectorfunds 2) Money Market funds 3) Balanced funds 4) Index Funds a) 4,3,2,1 b) 2,3,4,1 c) 2,4,1,3 d) 2,1,3,4 159.Equity price risks are a) Company specific b) Sector Specific c) Market level

d) All of the above 160.Jacobs four step program for developing a model portfolio 1) Determine the Asset allocation of the investment portfolio 2) Determine the sector distribution 3) Work with investors to develop long term goals 4) Select specific fund managers and their schemes a) 1,2,3,4 b) 3,1,2,4 c) 2,3,4,1 d) 4,1,3,2 161.Match the following Investor Recommended Model Portfolio A) Young, Unmarried professional 1)25% in moderate Aggressive equity fund 30% in short term Municipal bond funds 35% in long term Municipal bond funds 10% in Emerging growth equity B) Young Couple with two incomes and two children 2) 30% in Aggressive equity fund 25% in High yields bonds and Growth and Income funds 35% in Municipal bond funds 10% Conservative MMMFs C) Older Couple, single Income 3) 35% in conservative equity funds for capital preservation / income 25% in moderately aggressive equity for modest capital growth 40% in Conservative MMMFs D) Recently Retired Couple 4) 50 % in Aggressive equity fund 25 % in High yields bonds and Growth and Income funds 25 % in Conservative MMMFs a) A-1,B-3,C-4,D-2 b) A-4,B-2,C-1,D-3 c) A-4,B-3,C-1,D-2 d) A-1,B-2,C-4,D-3

162.Average Maturity is an important factor in selecting the right fund a) debt fund b) balanced fund c) money market or liquid fund d) both a) and b) above 163.Match the following for selection of a fund A) Money market fund 1) Fund age and size, relative yields, debt portfolio character, costs,average maturity, tax implications,past returns B) Balanced fund 2) costs, quality yields C) Debt fund 3) Portfoilio balance, debt portfolio character, costs, portfolios statistics, returns a) A-1,B-3,C-2 b) A-2,B-3,C-1 c) A-2,B-1,C-3 d) A-1,B-2,C-3 164.Ex Mark is defined as a) funds performance in relation to a benchmark like a market index b) judgess the fund strategy by the size of the market capitalisation c) look at a funds performance over five to ten years d) none of the above