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1 Practice Test Bank

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NISM-Series-V-A: Mutual Fund Distributors Certification

** ** ** ! !** Examination
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

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 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

PRACTICE TEST NO. 4

Question1 In which of the following transactions a transaction charge can be deducted?

(a) Online purchases
(b) Systematic transfer plan (STP) transaction
(c) Purchases of Rs 10000 or more
(d) Purchase made on stock exchanges

Correct Answer Purchases of Rs 10000 or more

Answer A transaction charge is paid to distributors for investments of Rs. 10,000 and over.
Explanation

The transaction charge will be deducted from the gross investments of the investor
and paid to the distributor and the balance shall be invested.

Transactions like switches, systematic transfers, dividend transfers, dividend re-

investment is not eligible for transaction charges. Similarly, purchases or
subscriptions routed through the stock exchange are not eligible for transaction
charges.

Question2 There are various risk profiling tools available on the internet. A financial planner
can use any of these as risk profiling is just a process - State True or False ?
(a) TRUE
(b) FALSE

Correct Answer FALSE

Answer Risk profiling is an approach to understand the risk appetite of investors - an
Explanation essential pre-requisite to advise investors on their investments.

There are various factors which have influence on risk appetite.

Internet risk profiling tools are useful pointers, but it is important to understand the
robustness of such tools before using them in the practical world. Some of the tools
featured in websites have their limitations. So these tools cannot be always used.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question3 What is the relationship between Interest Rates and Real Estate prices ?
(a) Rise in interest rates lead to fall in real estate prices
(b) Fall in interest rates lead to fall in real estate prices

Correct Answer Rise in interest rates lead to fall in real estate prices
Answer When interest rates rises and money becomes expensive, these is less demand for
Explanation real estate - therefore this softens the real estate market.

When money is cheap and easily available, more people buy real estate. This pushes
up real estate values.

Question4 The unaudited accounts of the Mutual Fund schemes must be published once in
every six months .
(a) on the AMC website
(b) on the AMFI website
(c) in a minimum of 2 newspapers
(d) All of the above

Correct Answer in a minimum of 2 newspapers

Answer The mutual fund shall publish a complete statement of the scheme portfolio and the
Explanation unaudited financial results, within one month from the close of each half year, by
way of an advertisement at least, in one National English daily and one regional
newspaper in the language of the region where the head office of the mutual fund is
located.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question5 STT is on transactions in debt or debt-oriented mutual fund (including

liquid fund) units.
(a) applicable
(b) not applicable

Correct Answer not applicable

Answer STT is applicable only on equity transactions.
Explanation

Question6 Amit does not have a PAN Card. He wishes to invest Rs 1 lakh in a mutual fund
scheme. He does not fall into any exempt investor category. In which way can he
invest ?
(a) He cannot invest as PAN Card is mandatory
(b) He can sign up for a SIP and get an exemption from the requirements of a PAN card
(c) He can provide additional prescribe photo proofs like the Aadhaar , Voter Id etc.

Correct Answer He cannot invest as PAN Card is mandatory

Answer Permanent Account Number (PAN) Card with photograph is mandatory for all
Explanation applicants except those who are specifically exempt from obtaining PAN.

The following categories of investors are exempt from producing PAN:

o In case of transactions undertaken on behalf of Central/State government and by

officials appointed by court.
o Investors residing in the state of Sikkim.
o UN entities/Multilateral agencies exempt from paying taxes/filing tax returns in
India.
o Investments (including SIPs) in Mutual Fund schemes upto Rs.50,000/- per
investor per year per mutual fund.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question7 Which document is NOT required for the KYC process by a mutual fund investor ?
(a) Proof of Income
(b) Proof of Address
(c) Proof of Identity
(d) PAN Card

Correct Answer Proof of Income

Answer For the KYC process (for establishing proof of identity and address) following
Explanation documents are required:

- Permanent Account Number (PAN) Card

- Proof of Address such as Passport, Voter’s Id etc.

Question8 One of the disclosure which an AMC has to make is .

(a) the commission paid to the distributors in the financial year on the website of AMC
(b) the distributor wise amount mobilised in the financial year on the website of AMC
(c) the annual report (scheme wise) and the abridged summary on the website of AMC
(d) All of the above

Correct Answer the annual report (scheme wise) and the abridged summary on the website of AMC
Answer The Annual Report of the AMC has to be displayed on the website of the mutual
Explanation fund. The Scheme-wise Annual Report will mention that unit-holders can ask for a
copy of the AMC’s Annual Report.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question9 What exception is made for investments by Systematic Invest Plans, if the annual
investment is below Rs 50000 ?
(a) KYC is not required to be done
(b) Photo identity is not required
(c) PAN Card is not required
(d) None of the above

Correct Answer PAN Card is not required

Answer Providing Permanent Account Number (PAN) is compulsory for all mutual fund
Explanation investments. Exception has been made for Micro-SIPs i.e. SIPs where annual
investment (12 month rolling or April-March financial year) does not exceed Rs
50,000.

Question10 Which is the most appropriate measure of evaluating how closely an index fund is
tracking its benchmark?
(a) Total Expense Ratio (TER)
(b) Assets Under Management (AUM)
(c) Tracking error
(d) Treynor ratio

Correct Answer Tracking error

Answer Tracking error is a measure of the consistency of the out-performance of the fund
Explanation manager relative to the benchmark. Earlier it was used as a measure of how closely
an index fund tracked the returns from the benchmark to which it was indexed.

Now, the tracking error is used to measure how consistently a fund is able to out-
perform its benchmark.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question11 A company has a Earning Per Share (EPS) of Rs 5 and Price to Earning (PE) ratio of
30. What will be the market price of the shares of this company ?
(a) Rs. 0.60
(b) Rs. 6
(c) Rs. 150
(d) Rs. 75

Correct Answer Rs. 150

Answer Price to Earnings Ratio (P/E Ratio) = Market Price / EPS
Explanation

So Market Price = PE X EPS

= 30 x 5

= Rs 150

Question12 What would be the most appropriate benchmark for a short term debt scheme ?
(a) 10 year dated GoI security
(b) 3 year dated GoI security
(c) 1 year T-Bill
(d) No such benchmark exists

Correct Answer 1 year T-Bill

Answer Appropriate Benchmarks :
Explanation

Equity scheme - Sensex or Nifty

Long term debt scheme - 10 year dated GoI security

Short-term debt fund - 1 year T-Bill

 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question13 Monthly Income Plan (MIPs) have no exposure to Equity - State True or False ?
(a) TRUE
(b) FALSE

Correct Answer FALSE

Answer MIPs have an element of equity in its portfolio to give a boost to the fund’s
Explanation return. This can typically range from 5 percent to 30 percent.

Question14 Who issues the 'Certificate of Deposit' ?

(a) Government
(b) Multinationals
(c) Banks
(d) Mutual Funds

Correct Answer Banks

Answer Certificates of Deposit are issued by Banks (for 7 days to 1 year) or Financial
Explanation Institutions (for 1 to 3 years)
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question15 Which of the below is /are FUNDAMENTAL ATTRIBUTES of a scheme ?

(a) The type of scheme
(b) Investment objective(s) of the scheme
(c) Terms of the issue
(d) All of the above

Correct Answer All of the above

Answer The Offer Document is the most important sources of information on the core
Explanation aspects of the scheme called its fundamental attributes. The fundamental attributes
of the scheme includes:

• The type of scheme ie. Open ended / Close ended / Equity / Balanced etc
• Investment objective(s) ie. Growth / Income etc
• Terms of the issue ie. listing /repurchase / redemption etc.

Question16 The first step in developing a model portfolio is _ .

(a) Deciding the size of portfolio
(b) Selection of the Mutual Fund schemes
(c) Setting of goals
(d) None of the above

Correct Answer Setting of goals

Answer Steps for developing a Model Portfolio -
Explanation

a. Enable your investor identify his investment needs and goals.

b. Understand the various financial products – their risk, return, liquidity and
maturity profile.

c. Combine the features of financial products with the investors’ financial needs and
determine appropriate mix of investments, technically referred to as asset
allocation.

d. Suggest suitable mutual fund schemes within the asset choices.

 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question17 If the ARN code is not mentioned and choice of plan is not indicated in the
application form, then the application will be .
(a) processed as a Direct Plan application
(b) rejected
(c) processed as a Regular Plan application
(d) treated as incomplete application and will be returned to the investor for
completion

Correct Answer processed as a Direct Plan application

Answer If the ARN code is not mentioned and choice of plan is not indicated then the
Explanation application will be processed as a Direct Plan application.

Question18 Which of these assets has the highest risk of loss through theft ?
(a) Real Estate
(b) Mutual Fund units
(c) Shares and Debentures
(d) Gold

Correct Answer Gold

Answer Gold suffers one of the highest risks of loss through theft.
Explanation
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question19 Which of the below is used to measure risk-adjusted performance ?

(a) Sharpe Ratio
(b) Standard Deviation
(c) R-squared
(d) Beta Coefficient

Correct Answer Sharpe Ratio

Answer Some important measures of risk-adjusted returns are Sharpe Ratio, Treynor Ratio,
Explanation Alpha etc.

(Higher the Sharpe Ratio, better the scheme is considered to be)

Question20 With respect to model portfolio for Senior Citizens, it will not have any exposure to
equity - State True or false ?
(a) TRUE
(b) FALSE

Correct Answer FALSE

Answer As per model portfolio for couple in their seventies, with no immediate family
Explanation support :

- 15 percent diversified equity index scheme; 10 percent gold ETF, 30 percent

diversified debt fund, 30 percent MIP, 15 percent liquid schemes.

This shows some exposure can be taken in equities.

 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question21 What is the Total Expense Ratio for an Index fund or an ETF?
(a) Total Expense Ratio shall not exceed 1.00 per cent of the daily net assets.
(b) Total Expense Ratio shall not exceed 2.00 per cent of the daily net assets.
(c) Total Expense Ratio shall not exceed 1.5 per cent of the daily net assets.
(d) Total Expense Ratio shall not exceed 0.50 per cent of the daily net assets.

Correct Answer Total Expense Ratio shall not exceed 1.00 per cent of the daily net assets.
Answer In case of an Index fund scheme or Exchange traded fund (ETF), the total expense
Explanation ratio of the scheme including the investment and advisory fees shall not exceed 1.00
per cent of the daily net assets.

Question22 If an investor in a Multicap Fund wants to know the industry wise allocation of the
funds then which document should he refer to?
(a) Fund Factsheet
(b) SID and SAI
(c) Investment management agreement
(d) Annual accounts of the AMC

Correct Answer Fund Factsheet

Answer One of the most popular document from the mutual fund is the monthly Fund
Explanation Factsheet. This document is extensively used by investors, fund distributors, fund
rating agencies, research analysts, media and others to access information about
the various schemes of the mutual fund.

In the factsheet, security wise as well as industry / sector wise allocation is provided
for equity schemes.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question23 Commodities as an asset class does not include _ .

(a) Food Crops
(b) Industrial Metals
(c) Gold
(d) Real Estate

Correct Answer Real Estate

Answer Real Estate is not a commodity as it cannot be standardised.
Explanation

Food crops ( Rice, wheat), Industrial Metals (Copper, Nickel) and Gold are all
commodities.

Question24 Indentify which of these statements is / are FALSE ? A) Banks and mutual funds both
offer the Gold Deposit Scheme B) Gold ETFs are closed ended funds
(a) Only A is false
(b) Only B is false
(c) Both A and B are false

Correct Answer Both A and B are false

Answer The Gold deposit scheme is offered only by banks to mobilise the idle gold in the
Explanation country and put it in productive use and to provide the customer an opportunity to
earn interest on the idle gold holdings.

All Exchange Traded Fund are open-ended schemes.

 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question25 An investor in debt oriented mutual receives the benefit of on long term
capital gains. A) Indexation B) Tax exemption
(a) Only A
(b) Only B
(c) Both A and B

Correct Answer Only A

Answer Indexation means that the cost of acquisition or the cost of purchase is adjusted
Explanation upwards to reflect the impact of inflation.

An investor in long term debt funds receives the benefit of indexation buy they are
not exempted from paying long term capital gains tax.

Question26 Foreign investors can invest in equity schemes of MFs registered with SEBI after
completing KYC process - State True or False ?
(a) TRUE
(b) FALSE

Correct Answer TRUE

 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question27 To maintain neutrality, all AMC's have same commission structure with respect to
commissions payable to distributors - State True or False ?
(a) TRUE
(b) FALSE

Correct Answer FALSE

Answer The commission structures vary between AMCs.
Explanation

Even for the same AMC, different commissions are applicable for different kinds of
schemes.

Question28 The valuation of Illiquid securities held by a Mutual Fund is done as per .
(a) the last traded price of that security on BSE or NSE
(b) the norms prescribed by SEBI to arrive at a fair valuation
(c) the average price of bid and ask quotation
(d) the lowest price calculated as per the above three methods

Correct Answer the norms prescribed by SEBI to arrive at a fair valuation

Answer Non traded securities/Illiquid securities are valued "in good faith" by the asset
Explanation management company on the basis of the valuation principles laid down by SEBI.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question29 If a charitable trust wishes to invest in a Mutual Fund, which amongst the following
document is not required to be submitted ?
(a) Memorandum and Articles of Association
(b) Trust Deed
(c) Board Resolution authorising the investments
(d) List of authorised signatories

Correct Answer Memorandum and Articles of Association

Answer A Charitable Trust does not have any Memorandum and Articles of Association. It
Explanation has a Trust Deed.

Question30 Advertisements regarding Mutual Fund schemes shall not contain statements which
directly or by implication or by omission may mislead the investor - State True or
False ?
(a) TRUE
(b) FALSE

Correct Answer TRUE

Answer As per the SEBI Regulations related to Sales Practices- Advertisements shall not be
Explanation so designed as likely to be misunderstood or likely to disguise the significance of any
statement. Advertisements shall not contain statements which directly or by
implication or by omission may mislead the investor.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question31 Risk appetite increases as the number of earning members .

(a) decreases
(b) increases
(c) becomes zero
(d) None of the above

Correct Answer increases

Answer More earning members means more income and so the risk taking capacity
Explanation increases.

Question32 Mr. Gupta invests Rs 1 crore in a Gilt Mutual Fund scheme and gives a local cheque
at 1 pm. Which will be the applicable NAV for allotment of units to Mr. Gupta ?
(a) Closing NAV of the day on which the application was made
(b) NAV of the business day on which the funds are available for utilisation before the
cut-off time of that day is applicable.
(c) Next business day NAV
(d) Closing NAV of the day immediately preceding the application day.

Correct Answer NAV of the business day on which the funds are available for utilisation before the
cut-off time of that day is applicable.
Answer For all Equity oriented funds and Debt funds (except liquid funds) if the transaction
Explanation is more than Rs. 2 lakhs : Irrespective of the time of receipt of application, NAV of
the business day on which the funds are available for utilisation before the cut-off
time of that day is applicable.

(If it is below Rs 2 lakhs - Same day NAV if received before cut off time ie. 3 pm)
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question33 The facility of ASBA - 'Application Supported by Blocked Amount' is mainly for
additional purchase of Mutual Funds units - State True or False ?
(a) TRUE
(b) FALSE

Correct Answer FALSE

Answer ASBA can only be used for IPO's of equity shares and NFO's of Mutual Funds. It
Explanation cannot be used for additional purchase.

Question34 Which is the ideal investment class for an investor who wishes to have an hedge
against inflation and has a long term perspective ?
(a) Bluechip Equity Shares
(b) Gold
(c) Real Estate
(d) Government Bonds

Correct Answer Gold

Answer Higher inflation means a weakening rupee which also leads to rise in gold prices. So
Explanation Gold is the best bet to hedge against inflation.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question35 As per SEBI rules, the NAV has to be published , in at least daily
newspapers having circulation all over India.
(a) daily , 4
(b) weekly , 2
(c) daily , 2
(d) weekly , 4

Correct Answer daily , 2

Question36 While making a Comprehensive Financial Plan, .

(a) High time commitment is required from the investor / client
(b) High time commitment is required from the planner
(c) High time commitment is required both from the client and planner
(d) Not much time commitment as all the planning is done in the computer

Correct Answer High time commitment is required both from the client and planner
Answer A comprehensive financial plan calls for significantly more time commitment on the
Explanation part of both the investor and the financial planner.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question37 Investors in Mutual Fund are not responsible for .

(a) monitoring their investments regularly
(b) checking the risk factors before investing
(c) reading the offer documents carefully
(d) taking investment decisions of behalf of the fund manager

Correct Answer taking investment decisions of behalf of the fund manager

Answer Investors need to note that their investment is governed by the principle of caveat
Explanation emptor i.e. let the buyer beware. An investor is presumed to have read the Offer
Document, checked the risk factors etc.

However an investor cannot ask / instruct the fund manager to buy / sell particular
security.

Question38 If an investor wishes to beat the benchmark and is also ready to bear the risks, then
he should opt for Actively managed funds - State True or False ?
(a) TRUE
(b) FALSE

Correct Answer TRUE

Answer Actively managed funds are funds where the fund manager has the flexibility to
Explanation choose the investment portfolio. The fund manager invests in better performing
sectors so that the returns are better than the benchmark index.

However this strategy could also give lower or negative returns if the fund managers
predictions go wrong.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question39 The AMC pays commission to Mutual Fund Agents, but no such commission is paid
to stock brokers who trade in mutual funds on the Stock Exchange platform - State
True or False ?
(a) TRUE
(b) FALSE

Correct Answer TRUE

Answer The AMC does not pay the brokers any commission on the trades through them on
Explanation the Stock Exchange platform. The Stock Brokers get their commissions from the
investor by charging brokerages on MF transactions.

Question40 While doing an asset allocation for an investor, which amongst the following factors
will have the least importance ?
(a) RBI's announcement that there could be huge recession
(b) RBI's announcements of changes in interest rates
(c) Bonus issued by one of the MF schemes
(d) Changes in prices of equity shares

Correct Answer Bonus issued by one of the MF schemes

Answer The purpose of asset allocation is not to enhance returns, but to reduce the risk.
Explanation

Bonus issue is just a book entry and will have no effect on asset allocation.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question41 ‘To achieve growth by investing in equity and equity related investments, balanced
with income generation by investing in debt and money market instruments’• - is
the likely investment objective of a Diversified Debt Scheme - State True or False ?
(a) TRUE
(b) FALSE

Correct Answer FALSE

Answer This is the likely objective of a BALANCED SCHEME.
Explanation

The investment objective of a diversified debt scheme could be: “To generate
income by investing predominantly in a wide range of debt and money market
securities”

Question42 Risk Appetite is influenced by which financial factor(s) ?

(a) Capital Base
(b) Regularity of Income
(c) Both 1 and 2
(d) None of the above

Correct Answer Both 1 and 2

Answer Higher the capital base, better the ability to financially take the downsides that
Explanation come with risk.

People earning regular income can take more risk than those with unpredictable
income streams.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question43 Amongst the below given options, which one is NOT an example of Transition Phase
?
(a) house to be purchased
(b) trying to get a better job
(c) Children’s higher education
(d) marriage approaching

Correct Answer trying to get a better job

Answer Transition is a phase when financial goals are in the horizon.
Explanation

As funds will be soon required, investors tend to increase the proportion of their
portfolio in liquid assets.

Question44 The Scheme Information Document (SID) prepared by the AMC is approved by
.
(a) SEBI
(b) Board of Trustees
(c) Sponsors
(d) Stock Exchanges

Correct Answer Board of Trustees

Answer Scheme Information Document and Statement of Additional Information are the
Explanation part of Offer Documents

AMC prepares the Offer Document for the NFO. This needs to be approved by the
Trustees and the Board of Directors of the AMC.

SEBI does not approve or disapprove Offer Documents, it gives its observations and
these are incorporated.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question45 Due to the Index scheme's performance could be higher or lower than
that of the benchmark.
(a) Market Volatility
(b) Bull Run
(c) Tracking Error
(d) Systematic Risks

Correct Answer Tracking Error

Answer Gaps between the scheme performance, and that of the benchmark, are called
Explanation tracking errors.

An index fund manager would seek to minimize the tracking error. Due to the
tracking error, the scheme performance could be higher or lower than that of the
benchmark.

Question46 The trustees / AMC cannot make any change in the fundamental attributes of a
scheme, unless approval is received from
(a) Unit holders
(b) SEBI
(c) Sponsor
(d) Fund Manager of that scheme

Correct Answer Unit holders

Answer The trustees / AMC cannot make any change in the fundamental attributes of a
Explanation scheme, unless a written communication about the proposed change is sent to each
Unit-holder and their approval is sought.

The Dissenting unit-holders are given the option to exit at the prevailing Net Asset
Value.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question47 The current market value of the stocks of a Mutual Fund scheme portfolio is Rs 12 cr
and the current liabilities are 7 cr. The unit capital is Rs 10 cr and the face value per
unit is Rs 10. What is the current NAV of this scheme ?
(a) Rs 10
(b) Rs 12
(c) Rs 19
(d) Rs 5

Correct Answer Rs 5
Answer Current Valuation is Rs 12 cr less Rs 7 cr (current liability) = Rs 5 cr
Explanation

Thus the Rs 10 cr unit capital has now become Rs 5 cr ie 50 % fall

So the Rs 10 NAV when the scheme was launched has now fallen by 50% to Rs 5.

Question48 While deciding on investments for his clients, what should be the right sequence ?
(a) Selection of Scheme - Risk Profiling - Making a Model Portfolio
(b) Risk Profiling - Making a Model Portfolio - Selection of Scheme
(c) Making a Model Portfolio - Risk Profiling - Selection of Scheme
(d) Selection of Scheme - Making a Model Portfolio - Risk Profiling

Correct Answer Risk Profiling - Making a Model Portfolio - Selection of Scheme

Answer It is a good practice to first understand the risk exposure that is appropriate for an
Explanation investor, then decide how the investor’s investments should be distributed between
different asset classes and make a model portfolio. Once this is over, select the good
schemes most suitable as per the model portfolio.
 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Question49 What is the NAV if the value of stocks in a Mutual Fund scheme is Rs 100 cr, Value of
Bonds is Rs 10 cr, Value of Money Market Instruments is Rs 25 cr, Dividend Accrued
but not received is Rs 3 cr and Fees payable is Rs 5 cr. The number of outstanding
units is 75 lacs.
(a) 173.33
(b) 177.33
(c) 184
(d) 186.74

Correct Answer 177.33

Answer NAV = (Value of stocks + Value of bonds + Value of money market instruments +
Explanation Dividend accrued but not received + Interest accrued but not received – Fees
payable) / No. of outstanding units

= 100 cr + 10 cr + 25 cr + 3 cr + 0 - 5 cr / 75 lacs

= 133 cr / 75 lacs

= 177.33

Question50 Mrs. Reena purchases MF units at NAV Rs 13. After 500 days , she redeems it at NAV
Rs 15.70. What is the compounded rate of return ?
(a) 13.69%
(b) 14.70%
(c) 15.00%
(d) 15.88%

Correct Answer 14.70%

Answer The formula to find the CAGR - Compunded Annual Growth Rate holding period
Explanation return is :

[ ( End Price / Bgn Price) ^ (1/n) ] -1

End Price = 15.70, Begin Price = 13

n = time. We have to find yearly return so 500 / 365 = 1.369

So [( 15.70/13 )^ 1/1.369] – 1 = 0.147218937

On the scientific calculator of your computer type 1.207 then use x^y key and then
type 0.73 = 1.147

1.147 - 1 = .147 x 100 = 14.7 %

 NISM SERIES V A – MUTUAL FUND DISTRIBUTORS
PRACTICE TEST NO. 4

Practice Question Banks also available for :

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NISM Series VI: NISM Series VI - Depository Operations Certification Exam
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NISM Series VII: Equity Derivatives Certification Exam
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NISM Series X B: Investment Adviser (Level 2) Certification Exam
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Crema Blclg, 2i cl Floor.
Next to Bot1lhay Stock Exchangc.
Fort. MUMBAI 400 001

Tcl : 022 - 25436548, 08082566088

(Mon fo Sat - S. 30 fo 6.30 tent)
info@t›‹c ss4srire.in