Mutual Fund

______ are suitable for investors with a long term investment horizon and looking for growth.

• Equity funds

• Income funds

• Liquid funds

• Long duration funds

Answer explanation

Equity funds are ideal for long-term investors seeking growth, as they invest primarily in stocks, which have the potential for higher returns over time compared to other fund types like income or liquid funds.

A custodian of a mutual fund scheme performs which of the following functions?

• Keep safe custody of the securities held by the mutual fund scheme

• Issue account statements to the unit holders

• Issue fund portfolio statement to the scheme investors

• Execute the buy and sell orders in the securities market on behalf of the mutual fund

Answer explanation

The custodian of a mutual fund scheme is responsible for keeping safe custody of the securities held by the scheme. This ensures the protection and proper management of the assets, while other functions are typically handled by different entities.

A mutual fund can have a common _____ for all its schemes.

• Scheme Information Document (SID)

• Key Information Memorandum (KIM)

• Statement of Additional Information (SAI)

• Offer Document

Answer explanation

The Statement of Additional Information (SAI) provides comprehensive details about a mutual fund and can be common for all its schemes, unlike the other documents which are specific to individual schemes.

A portfolio with a beta less than 1 is ________.

• Equally risky than market

• More risky than market

• Less risky than market

• Highly risky compared to market

Answer explanation

A portfolio with a beta less than 1 indicates it is less volatile than the market. Therefore, it is considered less risky than the market, making 'Less risky than market' the correct choice.

As per the SEBI Advertising Code for mutual funds, NO celebrities should endorse any schemes of a particular mutual fund. State whether True or False.

• true

• false

Answer explanation

According to the SEBI Advertising Code for mutual funds, it is prohibited for celebrities to endorse any mutual fund schemes. Therefore, the statement is true.

Asset Management Companies (AMC) in India are members of Association of Mutual Funds in India (AMFI). State whether True or False.

• true

• false

Answer explanation

True. Asset Management Companies (AMCs) in India are indeed members of the Association of Mutual Funds in India (AMFI), which represents the mutual fund industry and promotes its growth.

Mutual funds can charge higher expense ratio if there is a specific percentage of new inflows/ assets under management from other than __________, as per the geographical data consolidated by the Association of Mutual Funds in India (AMFI)

• Top 10 cities

• Top 30 cities

• Top 20 cities

• Top 25 cities

Answer explanation

Mutual funds can charge a higher expense ratio if new inflows/assets under management come from outside the Top 30 cities, as per AMFI data. This highlights the significance of the broader market beyond major urban centers.

No pre-requisites are mandated by SEBI for becoming a mutual fund distributor. State whether True or False.

• true

• false

Answer explanation

False is correct because SEBI requires mutual fund distributors to complete specific training and obtain a certification to ensure they are knowledgeable about mutual funds and can provide appropriate advice.

Which amongst the following expenses cannot be charged to the mutual fund scheme?

• Software Development Expenses

• Registrar & Transfer Agent Fees

• Custodian Expenses

• Goods and Services Tax

Answer explanation

Software Development Expenses cannot be charged to the mutual fund scheme as they are considered non-operational costs, unlike Registrar & Transfer Agent Fees, Custodian Expenses, and Goods and Services Tax, which are operational.

A mutual fund scheme is made up of ________.

• A pool of sponsor funds

• A pool of investor funds

• A pool of trustee money

Answer explanation

A mutual fund scheme is made up of a pool of investor funds, which are collected from multiple investors to be invested in various securities. This allows for diversification and professional management of the investments.