NISM Series V A: Mutual Fund Distributors Mock Test - Free Demo /10 NISM Series V A: Mutual Fund Distributors Mock Test – Free Demo 1 / 10 1. Among the entities listed below associated with a mutual fund, who is obligated to make mandatory contributions to the mutual fund’s corpus? a) The Custodians b) The Trustees c) The Sponsors d) The Asset Management Company ExplanationThe 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. 2 / 10 2. Identify the TRUE statement with respect to a Gilt Fund? a) The minimum investment in G-secs (as a percentage of total assets) is 80% b) The minimum investment in G-secs (as a percentage of total assets) is 75% c) The minimum investment in G-secs (as a percentage of total assets) is 70% d) The minimum investment in G-secs (as a percentage of total assets) is 85% ExplanationGilt 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). 3 / 10 3. Can you fill in the blank in the following statement: Within a category, a scheme that consistently outperforms its peers is referred to as _______? a) Is the best choice for an investor to invest his funds b) Usually remains the top performer for a long period of time c) Usually be the worst performer in the next years to come d) May or may not be the top performer in the next years to come ExplanationAs experience has shown time and again, the top performers during one period may not necessarily remain as a top performer forever or near the other top performers. In such a case, simply buying into a scheme due to good returns in the recent past may not be a wise approach.The mutual fund advertisements use the disclaimer: “Past performance may or may not be sustained in future”. 4 / 10 4. What is the Net Asset Value (NAV) per unit for a mutual fund scheme with a portfolio market value of Rs. 15 crores, current liabilities of Rs. 2 crores, unit capital of Rs. 10 crores, and a face value per unit of Rs. 10? a) Rs. 11.50 b) Rs. 13 c) Rs. 15 d) Rs. 10 ExplanationThe formula for calculating NAV is: (Total Assets minus Liabilities other than to Unitholders) / No. of outstanding UnitsTotal assets minus liabilities = 15 cr – 2 cr = Rs 13 crNumber of outstanding units = Unit Capital / Face value = 10 cr / 10 = 1 crore outstanding unitsNAV = 13 cr / 1 cr = Rs. 13 5 / 10 5. Can a Multi-Cap fund have the Nifty 500 index as its benchmark? State whether this statement is True or False. a) True b) False ExplanationA 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. 6 / 10 6. Which distributors are encompassed in the due diligence process conducted by the Asset Management Company, as mandated by SEBI? a) A distributor who has received commission of over Rs 25 lakhs from one mutual fund b) A distributor who has presence in more than 10 locations c) A distributor who has AUM of over Rs. 100 crores from non-institutional investors d) All of the above ExplanationSEBI 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 7 / 10 7. What will assist investors in comprehending the appropriateness of a mutual fund scheme for their needs? a) Standard Deviation / Beta b) Product Label c) Tracking Error d) Alpha of the scheme ExplanationThe 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. 8 / 10 8. Identify the true statementsA) Individuals may register up to five bank accounts with a mutual fund.B) Non-individuals may register up to ten bank accounts with a mutual fund. a) Only B is correct b) Only A is correct c) Both A and B are correct d) Both A and B are incorrect ExplanationMutual 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. 9 / 10 9. Day to day management of the Mutual Fund schemes is handled by the Trustees – True or False ? a) True b) False ExplanationDay to day management of the schemes is handled by an AMC.The AMC is appointed by the sponsor or the Trustees. 10 / 10 10. What is the document that grants a company the authorization to invest in a particular mutual fund? a) Specific Board resolution b) Resolution passed in the shareholders meeting c) As per the Companies Act, a company cannot invest in mutual funds d) 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 ExplanationSince 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. Your score is 0% Restart quiz Exit
