M.

com Sem I-
Mutual fund management and wealth management

Q1. Choose the most appropriate option from the given options and fill up the
blanks:
1. The first scheme launched by UTI was __________.
a. UTI Banking & Financial Services Fund
b. UTI Dividend Yield Fund
c. UTI Equity Fund
d. Unit Scheme 1964

2. Investors who buy units of mutual fund are called as __________.

a. Equity shareholders
b. Unit holders
c. Preference shareholders
d. Partners
3. NAV in mutual fund stands for __________.
a. Net Asset Value
b. Newly Acquired Value
c. Net Available Value
d. Net Asset Variable
4. Investors can enter and exit under _________ at ant time.
a. Fixed maturity plan
b. Open-ended funds
c. Interval funds
d. Fixed maturity plan
5. CAMS and KARVY Mutual funds Services are the _________.
a. Custodian
b. Trustee
c. AMC
d. Registrar agents
6. The application to SEBI for registration of a mutual find is made by the
_________.
a. Trustees
b. Sponsors
c. AMC
d. Fund manager
7. Investors’ subscriptions are accounted as _________.
 a. Liabilities
b. Unit capital
c. Deposits
d. Cash
8. All listed and traded securities are valued at _______.
a. Cost
b. Book value
c. Closing market price
d. Cost plus profit
9. _________ can be traded throughout the trading day at market prices.
a. MMMF
b. Equity fund
c. Debt fund
d. ETF
10. Expense ratio of passively managed fund is _________.
a. Higher
b. Fixed irrespective of AUM
c. Lower
d. Nil
Q2. Answer the following in one sentence: (05 marks)
1. What are some common categories of mutual funds?
Equity funds, Debt funds, money market funds, balanced funds

2. What are some of the advantages offered by mutual funds?

Professional investment management, portfolio diversification,
administrative convenience, low cost of management.

3. Why is AMFI code of Ethics important in Mutual funds?

The AMFI Code of Ethics sets out the standards of good practices to
be followed by the Asset management companies in their operations
and their dealings with investors, intermediaries and the public.

4. Who are the principle entities involved in mutual funds?

Sponsors, Mutual fund trust, Board of Trustee, Asset management
company, custodian, registrar and transfer agents.

5. What are the three important role of SEBI?

 Disclosure by issuers of securities, efficiency of transactions in the
securities markets, low cost transactions.

6. How is market capitalisation calculated?

Market capitalisation is calculated by multiplying the numbers of
shares issued by the company with the market price per share.

7. How is large cap, mid cap and small cap defined?

Large cap= 1st- 100th company in terms of full market capitalisation
Mid cap= 101st-250th company in terms of full market capitalisation
Small cap= 251st company onwards in terms of full market
capitalisation

8. Define Focused Fund?

An open-ended equity scheme investing in maximum 30 stock.
minimum investment in equity and equity related instruments shall be
65% of total assets.

9. Give acronyms of : AUM, AMC, ETF and SIP

AUM : Assets Under Management
AMC : Asset Management Company
ETF : Exchange Traded Fund
SIP : Systematic Investment Plan

10. What is Entry Load and Exit Load?

Entry load is a one-time fees deducted from the investment amount
when investing in a fund. whereas, exit load is a fees charged when
redeeming or withdrawing funds.
Q 3. Answer in detail (Any 2/4) [10 marks]

1. What is the meaning of SIP? Describe its benefits.

Meaning of SIP: It is important to invest in volatile equity market
regularly so as to average out the purchase price of equity shares. SIP is
an approach. where the investor invests constant amounts at regular
intervals for a fixed number of years or fixed number of instalments. A
benefit of such an approach, particularly in equity schemes, is that it
averages the unitholder's cost of purchase since more units are up.
a. Disciplined Investing: SIP encourages regular investments,
fostering a habit of saving and investing over time, which can lead
to wealth accumulation.
b. Rupee Cost Averaging: By investing a fixed amount regularly,
investors buy more units when prices are low and fewer when
prices are high, averaging out the cost over time.
c. Affordability: SIPs allow investors to start with small amounts,
making it accessible for individuals regardless of their financial
situation.
d. Compounding Benefits: Over time, returns on investments can
generate their own returns, enhancing growth potential through the
power of compounding.
e. Flexibility: Investors can modify their SIPs by increasing or
decreasing the investment amount, or even pausing or stopping
contributions as needed, providing financial flexibility.

2. Describe mutual fund guidelines on advertisement by SEBI.

The Securities and Exchange Board of India (SEBI) has established guidelines
for mutual fund advertisements to ensure transparency, fairness, and investor
protection. Here are key aspects of these guidelines:

1. Truthfulness and Clarity: Advertisements must be truthful and not

misleading. They should present information clearly and avoid
exaggeration or ambiguity.
 2. Balanced Information: Advertisements should provide a balanced view
of risks and rewards, ensuring that potential investors understand both the
benefits and the risks associated with the investment.
3. Disclosures: Essential disclosures, such as past performance, risk factors,
and the nature of the fund, must be clearly mentioned. Any disclaimers
should be easily readable.
4. Target Audience: Advertisements should not target vulnerable or
unsophisticated investors without appropriate warnings about the risks
involved.
5. Prohibition of Comparison: Direct comparisons with other mutual funds
or financial instruments are generally discouraged unless they are factual
and do not mislead.

These guidelines aim to promote ethical marketing practices and protect

investors by ensuring they receive accurate and comprehensive information.

Q3
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Q4.