NISM Series X-A Ch.11: Mutual Fund — 250 Practice Questions

Q: To be classified as a Large Cap fund, what is the minimum percentage of its total assets that must be invested in large-cap companies?

80%. The text states: 'To be classified as a large cap fund, at least 80% of the total assets should be invested in such large cap companies.'

Q: If an investor has 1,000 units in a mutual fund scheme and the Net Asset Value (NAV) is Rs. 12, what is the current value of the investment?

Rs. 12,000. The value of an investment is calculated by multiplying the number of units held by the current Net Asset Value (NAV). In this case, 1,000 units * Rs. 12/unit = Rs. 12,000

Q: What is the primary impact on Net Asset Value (NAV) when an investor redeems or makes an additional investment in a mutual fund scheme, assuming transactions are conducted at NAV?

The NAV will not directly affect the NAV.. The text states: 'A redemption or additional investment will not directly affect the NAV since the transactions are conducted at the NAV.'

Q: Which body is the primary regulator of mutual funds in India, responsible for governing their setup, structure, scheme launches, portfolio management, and investor protection?

Securities and Exchange Board of India (SEBI). The text states: 'The Securities and Exchange Board of India (SEBI) is the primary regulator of mutual funds in India. SEBI’s Regulations called the SEBI (Mutual Funds) Regulations, 1996, along with amendments made from time to time, govern the setting up a mutual fund and its structure, launching a scheme, creating and managing the portfolio, investor protection, investor services and roles and responsibilities of the constituents.'

Q: What is the minimum gap required between two specified transaction periods for an Interval Fund to allow investors to purchase and redeem units?

A minimum gap of 15 days.. The text states for Interval funds: 'The specified transaction periods are for a minimum period of two days and there must be a minimum gap of 15 days between two transaction periods.'

Q: According to the text, if an investor buys units and they are hypothetically allotted at face value (Rs. 10) when the NAV is Rs. 11.11, what is the immediate impact on the scheme's NAV?

The NAV will decrease.. The text states: 'The NAV of the scheme has come down because the units were allotted at a price different from the NAV and will have an impact on all the investors in the scheme.'

Q: An investor buys 1,000 units when the NAV is Rs. 11.11, but is hypothetically allotted units at a face value of Rs. 10. If the initial net assets were Rs. 100,000 with 9,000 outstanding units, what would be the NAV of the scheme immediately after this transaction, based on the example provided in the text?

Rs. 11.00. Based on the example in the text: 'The investor will bring in Rs.10,000 (1000* Rs.10). The net assets will go up by this Rs.10,000 to Rs.110,000. The number of units outstanding will go up by 1,000 to 10,000 units. The NAV post this transaction will be Rs.11.' Calculation: (100,000 + 10,000) / (9,000 + 1,000) = 110,000 / 10,000 = Rs. 11.00

Multiple Choice Questions (225)

Q1 MCQ · 1 mark MediumEquity Fund Categories

To be classified as a Large Cap fund, what is the minimum percentage of its total assets that must be invested in large-cap companies?

A65%

B75%

C80%

D90%

Q2 MCQ · 1 mark MediumNAV Calculation & Impact

An investor buys 1,000 units in a mutual fund scheme when the NAV is Rs. 11.11. If, hypothetically, these units are allotted at a face value of Rs. 10 instead of the NAV, what would be the immediate impact on the scheme's Net Asset Value (NAV)?

AThe NAV would increase, benefiting existing investors.

BThe NAV would decrease, impacting all investors in the scheme.

CThe NAV would remain unchanged, as redemptions and purchases do not directly affect it.

DThe NAV would fluctuate unpredictably due to market volatility.

Q3 MCQ · 1 mark EasyNAV Calculation Basics

If an investor has 1,000 units in a mutual fund scheme and the Net Asset Value (NAV) is Rs. 12, what is the current value of the investment?

ARs. 10,000

BRs. 11,110

CRs. 12,000

DRs. 12,220

Q4 MCQ · 1 mark EasyMutual Fund Basics

What is the primary impact on Net Asset Value (NAV) when an investor redeems or makes an additional investment in a mutual fund scheme, assuming transactions are conducted at NAV?

AThe NAV will directly increase.

BThe NAV will directly decrease.

CThe NAV will not directly affect the NAV.

DThe NAV will fluctuate unpredictably.

Q5 MCQ · 1 mark MediumInterval Funds

Which of the following is a characteristic of Interval Funds?

AThey are completely open-ended, allowing continuous transactions without any specified periods.

BThey are a variant of closed-end funds that become open-ended during specified periods for a minimum of two days.

CThey are not required to be listed on a stock exchange.

DThere must be a maximum gap of 15 days between two transaction periods.

Q6 MCQ · 1 mark EasyRegulatory Framework

Which body is the primary regulator of mutual funds in India, responsible for governing their setup, structure, scheme launches, portfolio management, and investor protection?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q7 MCQ · 1 mark HardEquity Fund Categories & Investment Styles

Which statement is accurate regarding specific categories or investment styles of open-ended equity funds as defined by SEBI?

AAn AMC can offer both a Value Fund and a Contra Fund simultaneously.

BFlexicap funds have a minimum investment limit of 25% across large, mid, and small caps.

CSector funds should invest at least 65% of their total assets in the equity and equity-related instruments of the identified sector.

DDividend yield funds typically invest in companies with high stable earnings but limited growth potential, paying a large portion of profits as dividends.

Q8 MCQ · 1 mark MediumScheme Types - Interval Funds

What is the minimum gap required between two specified transaction periods for an Interval Fund to allow investors to purchase and redeem units?

AA minimum period of two days.

BA minimum gap of 7 days.

CA minimum gap of 15 days.

DA minimum period of one month.

Q9 MCQ · 1 mark EasyNAV Impact

According to the text, if an investor buys units and they are hypothetically allotted at face value (Rs. 10) when the NAV is Rs. 11.11, what is the immediate impact on the scheme's NAV?

AThe NAV will increase.

BThe NAV will decrease.

CThe NAV will remain unchanged.

DThe NAV will become equal to the face value.

Q10 MCQ · 1 mark HardNAV Calculation

An investor buys 1,000 units when the NAV is Rs. 11.11, but is hypothetically allotted units at a face value of Rs. 10. If the initial net assets were Rs. 100,000 with 9,000 outstanding units, what would be the NAV of the scheme immediately after this transaction, based on the example provided in the text?

ARs. 11.11

BRs. 11.00

CRs. 10.00

DRs. 11.10

Q11 MCQ · 1 mark EasyRegulatory Framework

Which body is identified in the text as the primary regulator for mutual funds in India?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q12 MCQ · 1 mark MediumMark to Market

In the context of mutual funds, what does the process of 'marking to market' primarily involve?

ACalculating the expense ratio of the fund.

BValuing the fund's portfolio on a daily basis at current market prices.

CDetermining the brokerage fees for securities transactions.

DDistributing dividends to investors based on market performance.

Q13 MCQ · 1 mark HardEquity Fund Investment Style

What is a key regulatory distinction between a Value Fund and a Contra Fund, as per the text?

AValue funds invest in undervalued stocks, while Contra funds invest in high dividend yield stocks.

BValue funds have a shorter investment horizon, whereas Contra funds require a longer horizon.

CAn AMC can offer both a Value Fund and a Contra Fund, provided they have different fund managers.

DA mutual fund house can offer either a Contra Fund or a Value Fund, but not both.

Q14 MCQ · 1 mark MediumFeatures of Mutual Fund Schemes

Which of the following is a characteristic of Interval Funds, according to the provided text?

AThey are open-ended schemes that allow continuous transactions throughout the year.

BThey are a variant of closed-end funds, becoming open-ended during specified transaction periods.

CThey are not required to be listed on a stock exchange, unlike closed-ended funds.

DThe specified transaction periods must have a maximum gap of 15 days between them.

Q15 MCQ · 1 mark MediumEquity Fund Categorization

According to SEBI classification, what is the minimum investment requirement for a 'Large and Mid-cap fund' in large-cap companies and mid-cap companies, respectively?

AMinimum 80% of total assets in large-cap companies.

BMinimum 65% of total assets in mid-cap companies.

CMinimum 35% of total assets in large-cap companies and a minimum 35% in mid-cap companies.

DMinimum 25% of total assets in large-cap companies and a minimum 25% in mid-cap companies.

Q16 MCQ · 1 mark EasyNAV Calculation

An investor buys 1,000 units when the NAV is Rs. 11.11, but the units are allotted at the face value of Rs. 10. Assuming the net assets before this transaction were Rs. 100,000 with 9,000 units outstanding, what will be the impact on the scheme's NAV after this transaction?

AThe NAV will increase.

BThe NAV will remain unchanged.

CThe NAV will decrease.

DThe NAV will become equal to the face value.

Q17 MCQ · 1 mark MediumInterval Schemes

Which of the following statements accurately describes a feature of Interval Funds?

AThey allow continuous investment and redemption like open-ended schemes.

BThey are primarily unlisted and trade over-the-counter.

CThey become open-ended during specified transaction periods, which must be a minimum of two days long.

DTheir unit capital is fixed and does not change over the life of the scheme.

Q18 MCQ · 1 mark HardInterval Funds

Which statement accurately describes Interval Funds based on the provided text?

AThey are open-ended schemes that allow continuous transactions with no fixed tenor.

BThey are a variant of closed-end funds that become open-ended during specified periods, with mandatory stock exchange listing.

CThey are similar to ETFs, allowing trading throughout the day on a stock exchange but without specified transaction periods.

DThey are closed-end schemes that are never listed on a stock exchange and only redeem units at the end of their tenor.

Q19 MCQ · 1 mark MediumRegulatory Framework

Besides SEBI, which other regulatory body is involved in specific areas concerning mutual funds, particularly involving foreign exchange transactions and the role of the banking system?

AAMFI

BMinistry of Finance

CReserve Bank of India (RBI)

DNational Stock Exchange (NSE)

Q20 MCQ · 1 mark HardEquity Fund Investment Style

Which statement accurately describes the characteristics and rules for 'Value Funds' and 'Contra Funds'?

AValue Funds prioritize high dividend yield stocks, while Contra Funds focus on growth stocks.

BContra Funds adopt a contrarian investment strategy, and an AMC can offer both a Value Fund and a Contra Fund simultaneously.

CValue Funds seek companies trading below their inherent value with a longer investment horizon, and an AMC can offer either a Value Fund or a Contra Fund, but not both.

DBoth Value Funds and Contra Funds are required to invest a minimum of 75% of their total assets in equity and equity-related instruments.

Q21 MCQ · 1 mark MediumScheme Types

Which of the following statements accurately describes a characteristic of an Exchange Traded Fund (ETF) according to the provided text?

AETFs allow investors to invest in additional units and redeem investment continuously at current NAV.

BETFs offer units to investors only during the new fund offer (NFO) and are closed for transactions thereafter.

CETFs are listed on a stock exchange and can be traded all day long, with multiple prices available throughout the day.

DETFs become open-ended during specified periods, allowing purchases and redemptions.

Q22 MCQ · 1 mark MediumNAV Calculation Impact

According to the provided text, what is the direct impact of a redemption or an additional investment on a scheme's Net Asset Value (NAV)?

AIt always causes the NAV to increase.

BIt always causes the NAV to decrease.

CIt does not directly affect the NAV, as transactions are conducted at the NAV.

DIt causes the NAV to change only if the units are allotted at face value.

Q23 MCQ · 1 mark MediumValuation Principles

What is the process of 'marking to market' in the context of mutual funds?

AValuing the portfolio based on its historical purchase price.

BValuing the portfolio on a daily basis at the current market price of securities held.

CAdjusting the NAV to reflect expected future market trends.

DCalculating the fund's net assets only once a week to reduce operational costs.

Q24 MCQ · 1 mark MediumNAV Impact of Transactions

Under which of the following scenarios would a mutual fund scheme's Net Asset Value (NAV) be directly impacted (i.e., change) by an investor transaction?

AAn investor redeems units at the prevailing NAV.

BAn investor buys additional units at the prevailing NAV.

CUnits are allotted to an investor at a price different from the prevailing NAV.

DThe value of the scheme's portfolio increases due to market movements.

Q25 MCQ · 1 mark MediumEquity Funds - Market Capitalisation

According to SEBI classification, what are the minimum investment requirements for a 'Large and Mid-cap fund'?

AAt least 80% of total assets in large cap companies.

BAt least 65% of total assets in mid-cap companies.

CA minimum of 35% in large cap companies AND a minimum of 35% in mid-cap companies.

DAt least 75% of total assets in equity, with a minimum of 25% each in large, mid, and small caps.

Q26 MCQ · 1 mark EasyNAV Calculation

If an investor holds 1,000 units in a mutual fund scheme and the Net Asset Value (NAV) per unit is Rs. 12, what is the current value of the investor's investment?

ARs. 10,000

BRs. 11,110

CRs. 12,000

DRs. 1,000

Q27 MCQ · 1 mark MediumFeatures of Mutual Fund Schemes

Which of the following statements accurately differentiates between open-ended funds and Exchange Traded Funds (ETFs) based on the provided text?

AOpen-ended schemes have fixed unit capital, while ETFs allow continuous changes in unit capital.

BIn an open-ended fund, transactions occur between investors and the mutual fund, whereas in an ETF, investors trade with each other on a stock exchange.

COpen-ended schemes are for a fixed period, while ETFs are for perpetuity.

DETFs offer a single NAV for a day, similar to open-ended funds, but are listed on an exchange.

Q28 MCQ · 1 mark EasyRegulatory Framework

Which body is the primary regulator of mutual funds in India, as per the SEBI (Mutual Funds) Regulations, 1996?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q29 MCQ · 1 mark HardNAV Calculation & Impact of Transactions

An investor buys 1,000 units in a mutual fund scheme when the Net Asset Value (NAV) is Rs. 11.11. If, hypothetically, these units are allotted at a face value of Rs. 10, how would this transaction impact the scheme's NAV and why?

AThe NAV would remain unchanged because redemptions or additional investments do not directly affect the NAV.

BThe NAV would increase because the net assets go up by Rs. 11,110 for 1,000 units.

CThe NAV would decrease because the units were allotted at a price different from the NAV, impacting all investors.

DThe NAV would increase because the scheme received more cash (Rs. 11,110) than the face value of units allotted (Rs. 10,000).

Q30 MCQ · 1 mark MediumNAV Impact

Under what specific circumstance will a purchase of units by an investor at a price different from the prevailing NAV directly impact the NAV of a mutual fund scheme?

AWhen the investor redeems units at the prevailing NAV.

BWhen the investor buys units at the face value, which is different from the prevailing NAV.

CWhen the NAV is calculated on a daily basis for liquid schemes.

DWhen the fund's portfolio undergoes mark to market valuation.

Q31 MCQ · 1 mark EasyRegulatory Framework

Which industry body oversees the functioning of the mutual fund industry in India, recommends best practices, and represents the industry's requirements to the regulator, government, and other stakeholders?

AReserve Bank of India (RBI)

BSecurities and Exchange Board of India (SEBI)

CAssociation of Mutual Funds in India (AMFI)

DNational Institute of Securities Markets (NISM)

Q32 MCQ · 1 mark MediumInterval Funds

Interval funds are a variant of closed-end funds. Which of the following statements accurately describes their unique feature?

AThey are open for continuous transactions throughout their fixed tenor.

BThey allow purchase and redemption of units during specified periods, with a minimum gap of 15 days between two transaction periods.

CTheir unit capital is not fixed but changes continuously with investments and redemptions.

DThey are not required to be listed on a stock exchange.

Q33 MCQ · 1 mark HardScheme Types - ETFs vs Open-ended

What is a key difference in how transactions occur between investors and the fund in an Exchange Traded Fund (ETF) compared to an open-ended fund?

AIn an ETF, investors trade with each other, while in an open-ended fund, investors transact with the mutual fund.

BETFs offer a single NAV for the day, whereas open-ended funds have multiple prices throughout the day.

COpen-ended funds are mandatorily listed on a stock exchange, unlike ETFs.

DETFs allow continuous investment and redemption, while open-ended funds are closed for transactions after NFO.

Q34 MCQ · 1 mark EasyMutual Fund Valuation

What is the process of valuing a mutual fund's portfolio on a daily basis at its current market value called?

ANet Asset Valuation

BMark to Market

CFund Rebalancing

DPortfolio Liquidation

Q35 MCQ · 1 mark EasyRegulatory Bodies

Which entity is the primary regulator of mutual funds in India?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q36 MCQ · 1 mark MediumNAV Calculation

According to the provided text, what is the impact on a mutual fund scheme's Net Asset Value (NAV) if new units are hypothetically allotted to an investor at a price different from the prevailing NAV?

AThe NAV of the scheme will increase, benefiting all existing investors.

BThe NAV of the scheme will decrease, impacting all existing investors.

CThe NAV of the scheme will remain unchanged as new investments do not affect NAV.

DThe NAV will only be affected if the new units are allotted at a price higher than the prevailing NAV.

Q37 MCQ · 1 mark MediumMark to Market

The process of 'marking to market' the portfolio of a mutual fund primarily ensures that:

AThe fund manager can frequently adjust the portfolio for optimal returns.

BThe portfolio reflects the current market price of the securities held.

CInvestors can trade their units throughout the day at real-time prices.

DThe fund's net assets remain stable regardless of market fluctuations.

Q38 MCQ · 1 mark HardInvestment Style Funds (Contra vs. Value)

A mutual fund house is considering launching two new equity schemes based on investment style. Based on SEBI guidelines mentioned in the text, which of the following combinations of funds *cannot* be offered by the same Asset Management Company (AMC)?

AA Value Fund and a Dividend Yield Fund.

BA Contra Fund and a Large Cap Fund.

CA Value Fund and a Contra Fund.

DA Flexicap Fund and a Small Cap Fund.

Q39 MCQ · 1 mark MediumNAV Calculation

An existing mutual fund scheme has net assets of Rs. 100,000 and 9,000 units outstanding. If a new investor hypothetically buys 1,000 units and is allotted them at a face value of Rs. 10 (instead of the initial NAV of Rs. 11.11), how will the NAV of the scheme change immediately after this transaction, as per the example in the text?

AThe NAV will remain unchanged at Rs. 11.11.

BThe NAV will increase to Rs. 12.

CThe NAV will decrease to Rs. 11.

DThe NAV will increase to Rs. 11.20.

Q40 MCQ · 1 mark EasyNAV Calculation Frequency

For mutual fund schemes other than liquid schemes, how often is the Net Asset Value (NAV) typically calculated?

AWeekly

BMonthly

CEvery business day

DQuarterly

Q41 MCQ · 1 mark EasyMark to Market

What is the primary purpose of 'marking to market' a mutual fund portfolio?

ATo determine the daily trading price of units on the stock exchange.

BTo reflect the current market price of the securities held, forming the base of the NAV.

CTo calculate the dividend payout ratio for the scheme.

DTo assess the fund manager's performance against a benchmark index.

Q42 MCQ · 1 mark MediumNAV Impact

Under which of the following hypothetical scenarios would a mutual fund scheme's Net Asset Value (NAV) be directly impacted by an investor's transaction?

AAn investor buys 1,000 units when the NAV is Rs.11.11, and the units are allotted at the prevailing NAV.

BAn investor redeems 500 units when the NAV is Rs.10, and the redemption is processed at the prevailing NAV.

CAn investor buying 1,000 units when the NAV is Rs.11.11, is allotted units at the face value of Rs.10.

DThe value of the scheme's underlying portfolio falls due to market movements.

Q43 MCQ · 1 mark MediumMutual Fund Products

According to SEBI's categorization rules, which of the following is an exception to the 'only one scheme per category' rule for a mutual fund?

ALarge Cap Funds

BMid Cap Funds

CIndex Funds tracking different indices

DSector Funds (unless investing in different sectors)

Q44 MCQ · 1 mark MediumEquity Fund Categorization

An open-ended thematic fund, focusing on a specific theme like infrastructure, is required to invest a minimum percentage of its total assets in the equity and equity-related instruments of the identified theme. What is this minimum percentage?

A65%

B75%

C80%

D100%

Q45 MCQ · 1 mark EasyMark to Market

The process of valuing a mutual fund's portfolio on a daily basis at current market value is known as:

ANet Asset Valuation

BMark to Market

CPortfolio Rebalancing

DAsset Allocation

Q46 MCQ · 1 mark HardEquity Fund Categorization

An open-ended equity scheme invests in mid-cap companies, which are ranked 101st to 250th in terms of full market capitalization as per AMFI's list. To be classified as a mid-cap fund, what is the minimum percentage of its total assets that must be invested in such companies?

A80%

B65%

C35%

D75%

Q47 MCQ · 1 mark MediumNAV Impact of Transactions

According to the text, under which scenario will a redemption or additional investment *directly* affect the Net Asset Value (NAV) of a mutual fund scheme?

AWhen the transaction is conducted at the prevailing NAV.

BWhen the units are allotted at face value, which is different from the prevailing NAV.

CWhen an investor buys 1,000 units at Rs. 11.11 and the NAV remains Rs. 11.11.

DWhen the value of the portfolio falls, leading to a decrease in net assets.

Q48 MCQ · 1 mark HardEquity Funds - Investment Style (Value vs. Contra)

An Asset Management Company (AMC) is planning to launch two new equity schemes. Scheme X aims to identify companies trading below their inherent value for potential price appreciation, while Scheme Y intends to invest in fundamentally strong but currently underperforming stocks due to transitory factors. Which statement is true regarding the launch of these two schemes by the same AMC?

AThe AMC can launch both Scheme X (Value Fund) and Scheme Y (Contra Fund) as they target different investment strategies.

BThe AMC can launch Scheme X (Value Fund) but cannot launch Scheme Y (Contra Fund) if Scheme X is already offered.

CThe AMC must choose to offer either Scheme X (Value Fund) or Scheme Y (Contra Fund, but cannot offer both simultaneously.

DBoth schemes are essentially the same and would be classified under a single category, thus only one can be launched.

Q49 MCQ · 1 mark MediumEquity Fund Categorization

Which of the following statements accurately describes the difference between Multi cap funds and Flexicap funds as per SEBI classifications?

AMulti cap funds have no minimum investment limits across market caps, while Flexicap funds require a minimum of 25% in large, mid, and small caps.

BMulti cap funds require at least 75% of assets in equity with a minimum of 25% in large, mid, and small caps, whereas Flexicap funds have no minimum limits across market caps.

CBoth Multi cap and Flexicap funds must invest at least 65% of their total assets in small cap companies.

DFlexicap funds are restricted to investing only in large-cap companies, while Multi cap funds can invest across all market caps.

Q50 MCQ · 1 mark MediumSector Funds

To be classified as an open-ended sector fund, what minimum percentage of its total assets must be invested in the equity and equity-related instruments of the identified sector?

A80%

B65%

C75%

D35%

Q51 MCQ · 1 mark MediumExchange Traded Funds (ETFs)

What is a key characteristic that distinguishes Exchange Traded Funds (ETFs) from a normal open-ended mutual fund in terms of pricing and trading?

AETFs offer a single Net Asset Value (NAV) for a day, similar to open-ended funds, but are traded on a stock exchange.

BETFs are traded all day long on a stock exchange, allowing for multiple prices throughout the day, where investors trade with each other.

CETFs can only be purchased during a New Fund Offer (NFO) period and redeemed at maturity, similar to closed-end funds.

DETFs are primarily regulated by the Reserve Bank of India (RBI) due to their trading nature, unlike other mutual funds.

Q52 MCQ · 1 mark MediumScheme Types - Open-ended vs Closed-ended

Which of the following statements accurately describes a key difference in unit capital between open-ended and closed-ended mutual fund schemes?

AAn open-ended scheme has a fixed unit capital, while a closed-ended scheme has a variable unit capital.

BThe unit capital of an open-ended scheme changes with every investment or redemption, whereas a closed-ended scheme's unit capital does not change over its life.

CBoth open-ended and closed-ended schemes have fixed unit capital, but only open-ended schemes allow continuous transactions.

DBoth open-ended and closed-ended schemes have variable unit capital, but closed-ended schemes are mandatorily listed on a stock exchange.

Q53 MCQ · 1 mark MediumNAV Impact of Transactions

An additional investment or redemption in a mutual fund scheme will NOT directly affect the NAV under which condition?

AWhen the transactions are conducted at the current NAV

BWhen units are allotted at face value

CWhen the value of the portfolio falls significantly

DWhen there is a substantial decrease in outstanding units

Q54 MCQ · 1 mark EasyRegulatory Framework

Which entity is identified as the primary regulator of mutual funds in India by the provided text?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q55 MCQ · 1 mark HardInvestment Style Funds

Which of the following statements about equity funds based on investment style is accurate, according to the NISM Series X-A chapter text?

AValue Funds typically seek to identify companies with high dividend yields for stable income.

BContra Funds are characterized by investing in companies ranked 101st to 250th in market capitalization.

CAn Asset Management Company (AMC) is permitted to offer both a Contra Fund and a Value Fund simultaneously.

DContra Funds adopt a contrarian investment strategy, seeking undervalued or under-performing stocks due to transitory factors.

Q56 MCQ · 1 mark MediumEquity Fund Categories

As per SEBI classification for open-end equity schemes based on market capitalization, which of the following statements is correct regarding investment mandates?

AA Small-cap fund must invest at least 80% of its total assets in companies ranked 1 to 100th in terms of full market capitalization.

BA Mid-cap fund must invest a minimum of 35% of its total assets in large cap companies and a minimum of 35% in mid-cap companies.

CA Large and Mid-cap fund must invest at least 65% of its total assets in companies ranked 101st to 250th in terms of full market capitalization.

DA Large-cap fund must invest at least 80% of its total assets in companies ranked 1 to 100th in terms of full market capitalization.

Q57 MCQ · 1 mark MediumScheme Types

How does the trading mechanism of an Exchange Traded Fund (ETF) fundamentally differ from an open-ended fund for an investor, as described in the text?

AETFs offer only a single NAV for the day, while open-ended funds offer multiple prices.

BIn an ETF, investors trade directly with the mutual fund, whereas in an open-ended fund, they trade with other investors.

CETFs are traded like stocks on an exchange throughout the day with multiple prices, while in open-ended funds, the investor transacts with the mutual fund at a single daily NAV.

DETFs can only track commodity prices, while open-ended funds track indices.

Q58 MCQ · 1 mark MediumClosed-end Schemes

If an investor in a closed-end mutual fund scheme wishes to exit their investment before the scheme's fixed tenor is over, how can they typically do so?

ABy redeeming units directly with the mutual fund at the current NAV.

BBy selling the units to other investors on a stock exchange.

CBy requesting a switch to an open-ended scheme managed by the same fund.

DBy waiting for a specified transaction period, similar to an interval fund.

Q59 MCQ · 1 mark HardEquity Fund Categorization (Market Cap)

According to SEBI's classification for open-end equity schemes based on market capitalization, which of the following statements is INCORRECT?

ALarge cap funds must invest at least 80% of total assets in companies ranked 1st to 100th in market capitalization.

BMid-cap funds must invest at least 65% of total assets in companies ranked 101st to 250th in market capitalization.

CSmall-cap funds must invest at least 65% of total assets in companies ranked from 251st onwards in market capitalization.

DMulti cap funds are required to invest a minimum of 25% in large caps, 25% in mid-caps, and 25% in small caps, with at least 65% of total assets in equity.

Q60 MCQ · 1 mark EasyRegulatory Framework

Which of the following bodies is the primary regulator for mutual funds in India, as per the SEBI (Mutual Funds) Regulations, 1996?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance (MoF)

Q61 MCQ · 1 mark MediumClosed-end Schemes

A key difference between a closed-end scheme and an open-ended scheme is that closed-end schemes:

AAre for perpetuity unless investors decide to wind up the scheme.

BAllow continuous investment and redemption at current NAV.

CHave unit capital that changes with every investment or redemption.

DOffer units only during the New Fund Offer (NFO) and are mandatorily listed on a stock exchange for interim exit.

Q62 MCQ · 1 mark EasyRegulatory Framework

Which body is identified as the primary regulator of mutual funds in India?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q63 MCQ · 1 mark HardNAV Impact Calculation

A mutual fund scheme has net assets of Rs. 100,000 and 9,000 outstanding units, making the current NAV Rs. 11.11. If a hypothetical investor buys 1,000 units but is allotted these units at a face value of Rs. 10 instead of the NAV, what will be the new NAV of the scheme after this transaction?

ARs. 11.11

BRs. 11.00

CRs. 10.90

DRs. 10.81

Q64 MCQ · 1 mark MediumScheme Types - ETFs

Which of the following describes a key characteristic of Exchange Traded Funds (ETFs) in comparison to a normal open-ended fund?

AETFs typically have a single NAV for a day, similar to open-ended funds.

BIn an ETF, the investor is on one side of the transaction and the mutual fund is on the other side.

CETFs are listed on the stock exchange and can be traded all day long like a stock.

DETFs do not derive their value from the holdings in their portfolio.

Q65 MCQ · 1 mark MediumEquity Fund Classification

As per SEBI's classification for open-ended equity schemes based on market capitalization, what are the minimum investment requirements for a Large and Mid-cap fund?

AAt least 80% in large cap companies.

BAt least 65% in mid-cap companies.

CA minimum of 35% of total assets in large cap companies and a minimum of 35% in mid-cap companies.

DAt least 25% in large caps, 25% in mid-caps, and 25% in small caps.

Q66 MCQ · 1 mark EasyMark to Market

What is the process of valuing a mutual fund's portfolio on a daily basis at current market value called?

ANet Asset Valuation

BCut-off timing

CMark to Market

DFund Rebalancing

Q67 MCQ · 1 mark MediumImpact on NAV

Which of the following transactions will NOT directly affect the Net Asset Value (NAV) of a mutual fund scheme, assuming the transaction is conducted at the prevailing NAV?

AA decrease in the value of the portfolio holdings.

BAn increase in the value of the portfolio holdings.

CAn investor making an additional investment in the scheme.

DThe allotment of units at a price different from the NAV.

Q68 MCQ · 1 mark MediumEquity Funds - Market Capitalization

According to SEBI classification for open-end equity schemes based on market capitalization, what is the minimum percentage of total assets that a Large-cap fund must invest in large-cap companies?

A65%

B75%

C80%

D35%

Q69 MCQ · 1 mark EasyMutual Fund Basics

What is the primary purpose of 'Mark to Market' in mutual funds?

ATo determine the cut-off timing for transactions.

BTo reflect the current market price of the securities held in the portfolio.

CTo calculate the dividend payout for investors.

DTo identify undervalued stocks for contrarian investment.

Q70 MCQ · 1 mark MediumEquity Funds - Market Capitalisation

According to SEBI's classification of open-end equity schemes, what is the minimum investment requirement for a fund to be classified as a 'Large and Mid-cap fund'?

AAt least 80% of total assets in large-cap companies.

BAt least 65% of total assets in mid-cap companies.

CA minimum of 35% of total assets in large-cap companies AND a minimum of 35% in mid-cap companies.

DAt least 75% of assets in equity-related instruments with a minimum of 25% in large caps, 25% in mid-caps, and 25% in small caps.

Q71 MCQ · 1 mark MediumEquity Fund Categorization

According to SEBI classification, what is the minimum investment requirement for a fund to be classified as a Mid-cap fund?

AAt least 80% of the total assets should be invested in mid-cap companies.

BAt least 65% of the total assets should be invested in mid-cap companies.

CA minimum of 35% in large cap companies and 35% in mid-cap companies.

DAt least 65% of the total assets should be invested in small-cap companies.

Q72 MCQ · 1 mark EasyNAV and Investment Value

How is the value of a mutual fund investor’s investment typically calculated?

ABy multiplying the number of units held by the face value of the units.

BBy multiplying the number of units held by the Net Asset Value (NAV).

CBy adding the initial investment to the total dividends received.

DBy subtracting the redemption charges from the initial investment.

Q73 MCQ · 1 mark MediumNAV Impact

A mutual fund investor buys 1,000 units when the NAV is Rs. 11.11, but hypothetically, these units are allotted at a face value of Rs. 10. How will this transaction impact the scheme's Net Asset Value (NAV)?

AThe NAV will increase because new funds are brought into the scheme.

BThe NAV will remain unchanged because transactions are conducted at the NAV.

CThe NAV will decrease because units were allotted at a price different from the NAV.

DThe NAV will only be affected if the total units outstanding decrease.

Q74 MCQ · 1 mark EasyRegulatory Framework

Which entity is the primary regulator of mutual funds in India, governing their setting up, structure, scheme launch, portfolio management, investor protection, and services?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q75 MCQ · 1 mark EasyRegulatory Framework

Which body is identified as the primary regulator of mutual funds in India?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q76 MCQ · 1 mark EasyExchange Traded Funds (ETFs)

Which of the following is a distinguishing feature of Exchange Traded Funds (ETFs) compared to a normal open-ended mutual fund?

AETFs can be traded all day long on a stock exchange.

BETFs typically have a single NAV for a day.

CTransactions in ETFs primarily involve the investor on one side and the mutual fund on the other side.

DThe unit capital of an ETF changes with every investment or redemption made by investors.

Q77 MCQ · 1 mark MediumEquity Fund Categories

To be classified as a Large and Mid-cap fund, what is the minimum asset allocation requirement for both large-cap and mid-cap companies, as per SEBI's classification?

AAt least 80% in large-cap companies.

BAt least 65% in mid-cap companies.

CA minimum of 35% in large-cap companies AND a minimum of 35% in mid-cap companies.

DAt least 65% of the total assets invested across large, mid, and small-cap companies without specific individual limits.

Q78 MCQ · 1 mark MediumInterval Funds

Which of the following statements is TRUE regarding Interval Funds?

AThey are open-ended schemes that allow continuous transactions throughout their lifespan.

BThey offer units only during the New Fund Offer (NFO) and are not listed on a stock exchange.

CThey are a variant of closed-end funds that become open-ended during specified periods.

DThe minimum gap between two specified transaction periods for an Interval Fund is 7 days.

Q79 MCQ · 1 mark EasyRegulatory Framework

Which entity is the primary regulator of mutual funds in India, as per the provided text?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q80 MCQ · 1 mark MediumScheme Types

What is a key differentiating feature between an open-ended scheme and a closed-end scheme regarding their unit capital?

AIn open-ended schemes, the unit capital is fixed, while in closed-end schemes, it changes with investments and redemptions.

BOpen-ended schemes allow for continuous changes in unit capital, whereas the unit capital of a closed-end scheme does not change over its life.

CBoth open-ended and closed-end schemes have fixed unit capital once the NFO is closed.

DClosed-end schemes allow investors to invest in additional units continuously, thereby changing their unit capital.

Q81 MCQ · 1 mark EasyMark to Market

The process of valuing a mutual fund's portfolio on a daily basis at its current market value is known as:

ANet Asset Valuation

BCut-off Timing

CMark to Market

DAsset Under Management

Q82 MCQ · 1 mark MediumNAV Calculation Impact

AThe NAV would increase because the net assets go up by the investment amount.

BThe NAV would decrease because the units were allotted at a price different from the current NAV.

CThe NAV would remain unchanged as the addition to net assets is offset by an increase in units.

DThe NAV would fluctuate unpredictably due to the discrepancy between allotment price and NAV.

Q83 MCQ · 1 mark MediumOpen-ended vs. Closed-ended Schemes

Which of the following is a distinguishing feature of a closed-end mutual fund scheme compared to an open-ended scheme?

AInvestors can continuously invest in additional units and redeem investments at current NAV.

BThe scheme is for perpetuity unless investors decide to wind it up.

CUnits are offered to investors only during the New Fund Offer (NFO).

DThe unit capital of the scheme changes with every investment or redemption.

Q84 MCQ · 1 mark EasyMark to Market

What is the primary purpose of 'marking to market' the portfolio of a mutual fund?

ATo reduce the operational costs associated with fund management.

BTo reflect the current market price of the securities held in the portfolio.

CTo determine the dividend payout ratio for the scheme.

DTo ensure preferential treatment for certain investors over others.

Q85 MCQ · 1 mark EasyNAV Calculation

If an investor has 1,000 units in a mutual fund scheme and the Net Asset Value (NAV) is Rs. 12, what is the current value of the investor's investment?

ARs. 10,000

BRs. 11,110

CRs. 12,000

DRs. 1,000

Q86 MCQ · 1 mark EasyRegulatory Framework

Which of the following bodies is the primary regulator of mutual funds in India?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance (MoF)

Q87 MCQ · 1 mark EasyEquity Funds - Passive & Active

Which type of equity fund invests in companies represented in an index in the same proportion as their representation in the index, without selection of securities or investment decisions by the fund manager?

AActive Fund

BDiversified Equity Fund

CPassive Fund

DValue Fund

Q88 MCQ · 1 mark MediumRegulatory Framework

While SEBI is the primary regulator for mutual funds in India, the Reserve Bank of India (RBI) is also involved in specific areas such as:

ARecommending best practices to industry members.

BOverseeing the functioning of the industry body AMFI.

CRegulating foreign exchange transactions related to international investments by mutual funds.

DDefining the process of categorizing open-end mutual fund products.

Q89 MCQ · 1 mark MediumEquity Fund Categorization

To be classified as a mid-cap fund, what is the minimum percentage of total assets that must be invested in mid-cap companies, as per SEBI's classification?

AAt least 80%

BAt least 65%

CAt least 35%

DAt least 25%

Q90 MCQ · 1 mark EasyOpen-ended Schemes

Which of the following is a characteristic of an open-ended mutual fund scheme?

AIt offers units to investors only during the New Fund Offer (NFO).

BIts unit capital is fixed throughout the life of the scheme.

CIt allows investors to invest in additional units and redeem investment continuously at current NAV.

DIt is mandatorily listed on a stock exchange for interim exit.

Q91 MCQ · 1 mark MediumTypes of Mutual Fund Schemes

Which of the following characteristics is unique to a closed-end mutual fund scheme compared to an open-ended scheme?

AAllows investors to continuously invest in additional units and redeem investments at current NAV.

BIts unit capital is not fixed but changes with every investment or redemption made by investors.

CUnits are offered to investors only during the new fund offer (NFO), and they are mandatorily listed on a stock exchange for interim exit.

DIt becomes open-ended during specified periods, allowing purchases and redemptions like an open-ended fund.

Q92 MCQ · 1 mark MediumEquity Fund Classification

What is a defining characteristic of Flexicap funds according to SEBI's classification?

AThey must invest at least 75% of assets in equity, with a minimum of 25% in large, mid, and small caps each.

BThey have no minimum investment limits across market caps, provided at least 65% of the corpus is invested in equities.

CThey primarily focus on companies ranked 1 to 100th in terms of market capitalization.

DThey are mandated to invest at least 80% of total assets in a specific identified sector.

Q93 MCQ · 1 mark HardEquity Fund Investment Styles

A mutual fund house offers a scheme that seeks to identify companies trading at prices below their inherent value with the expectation of benefiting from an increase in price. Which of the following options is NOT permissible for this fund house to offer alongside this scheme, based on SEBI regulations mentioned in the text?

AA dividend yield fund

BA multi cap fund

CA contra fund

DA passive fund

Q94 MCQ · 1 mark HardNAV Impact

A mutual fund scheme has Net Assets of Rs. 100,000 and 9,000 units outstanding. If an investor hypothetically buys 1,000 units, but these units are allotted at a face value of Rs. 10 instead of the current NAV of Rs. 11.11, what will be the approximate NAV of the scheme post-transaction?

ARs. 11.11

BRs. 10.00

CRs. 11.00

DRs. 12.11

Q95 MCQ · 1 mark EasyRegulatory Framework

Which entity is the primary regulator of mutual funds in India?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q96 MCQ · 1 mark EasyRegulatory Framework

Which entity is identified as the primary regulator of mutual funds in India according to the provided text?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q97 MCQ · 1 mark MediumScheme Types

Which of the following is a distinguishing feature of Exchange Traded Funds (ETFs) compared to normal open-ended mutual funds?

AETFs have a single Net Asset Value (NAV) for the day, similar to open-ended funds.

BIn an ETF, investors trade units directly with the mutual fund.

CETFs are listed on a stock exchange and can be traded all day long, offering multiple prices throughout the day.

DETFs typically do not track any underlying index or commodity price, focusing on active management.

Q98 MCQ · 1 mark HardInvestment Style Funds

Which of the following statements is true regarding Value Funds and Contra Funds based on the provided text?

ABoth Value Funds and Contra Funds aim to identify companies trading at prices below their inherent value.

BAn Asset Management Company (AMC) can offer both a Value Fund and a Contra Fund simultaneously.

CValue Funds typically have higher risk and require a shorter investment horizon compared to Contra Funds.

DContra Funds primarily invest in stocks with a high dividend yield for income generation.

Q99 MCQ · 1 mark MediumMark to Market

What is the primary purpose of 'marking to market' in the context of mutual funds?

ATo determine the dividend payout ratio for investors.

BTo reflect the current market price of the securities held in the portfolio, forming the base of the net assets.

CTo calculate the expense ratio of the scheme on a daily basis.

DTo ensure that all transactions are processed at the face value of the units.

Q100 MCQ · 1 mark HardEquity Funds - Investment Style

Which of the following statements is TRUE regarding Value Funds and Contra Funds based on SEBI's classification of open-ended equity funds?

AContra Funds typically have lower risk compared to Value Funds.

BValue Funds primarily focus on stocks with high dividend yields.

CAn Asset Management Company (AMC) can offer both a Value Fund and a Contra Fund simultaneously.

DContra Funds invest in undervalued stocks and those underperforming due to transitory factors, adopting a contrarian investment strategy.

Q101 MCQ · 1 mark MediumMark to Market

The process of 'marking to market' for a mutual fund portfolio primarily ensures that:

Athe fund manager can frequently change the investment strategy.

Bthe portfolio reflects the current market price of the securities held.

Cinvestors receive preferential treatment in unit allocation.

Dthe fund's unit capital remains stable over time.

Q102 MCQ · 1 mark MediumEquity Fund Categorization (Thematic/Sectoral)

According to SEBI's categorization, what is the minimum percentage of total assets an open-ended thematic fund should invest in the equity and equity-related instruments of the identified theme?

A65%

B75%

C80%

D90%

Q103 MCQ · 1 mark MediumEquity Fund Classification

To be classified as a Large and Mid-cap fund, what are the minimum investment requirements in large cap and mid-cap companies, respectively?

AAt least 80% of total assets in large cap companies.

BAt least 65% of total assets in mid-cap companies.

CA minimum of 35% of total assets in large cap companies and a minimum of 35% in mid-cap companies.

DAt least 65% of total assets should be invested in equity-related instruments of such companies without specific market cap distribution.

Q104 MCQ · 1 mark EasyRegulatory Framework

Which entity is the primary regulator of mutual funds in India, governing aspects like setting up a fund, launching schemes, and investor protection?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q105 MCQ · 1 mark EasyRegulatory Framework

Who is identified as the primary regulator of mutual funds in India, according to the provided text?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance (MoF)

Q106 MCQ · 1 mark EasyRegulatory Framework

Which body is the primary regulator of mutual funds in India?

AReserve Bank of India (RBI)

BSecurities and Exchange Board of India (SEBI)

CAssociation of Mutual Funds in India (AMFI)

DMinistry of Finance

Q107 MCQ · 1 mark MediumOpen-ended vs. Closed-ended Schemes

Which of the following is a distinguishing feature of an open-ended mutual fund scheme compared to a closed-ended scheme?

AUnits are offered only during the New Fund Offer (NFO).

BThe scheme is for a fixed period or tenor.

CInvestors can continuously invest in additional units and redeem investments at current NAV.

DUnits are mandatorily listed on a stock exchange for investors to exit in the interim.

Q108 MCQ · 1 mark MediumExchange Traded Funds (ETFs)

A key difference between an Exchange Traded Fund (ETF) and a normal open-ended mutual fund is that in an ETF:

AThe value is derived from a single Net Asset Value (NAV) for the day.

BInvestors trade units directly with the mutual fund.

CThere are multiple prices throughout the day as investors trade with each other on a stock exchange.

DThe fund's unit capital is fixed and does not change with investment or redemption.

Q109 MCQ · 1 mark EasyRegulatory Framework

Which entity is identified as the primary regulator of mutual funds in India?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q110 MCQ · 1 mark HardEquity Fund Classification

As per SEBI classification, which type of equity fund requires at least 75% of its assets to be invested in equity-related instruments, with a minimum of 25% each in large caps, 25% in mid-caps, and 25% in small caps?

AMulti cap funds

BFlexicap funds

CLarge and Mid-cap funds

DSmall-cap funds

Q111 MCQ · 1 mark HardEquity Fund Categorization (Investment Style)

Regarding equity funds based on investment style, which statement is ACCURATE?

AValue Funds typically seek short-term gains by identifying overvalued stocks.

BContra Funds invest in stocks that are performing strongly and are expected to continue their upward trend.

CAn Asset Management Company (AMC) can offer both a Value Fund and a Contra Fund simultaneously.

DDividend Yield Funds focus on companies with stable earnings that pay a large portion of their profits as dividends.

Q112 MCQ · 1 mark EasyRegulatory Framework

Which entity is the primary regulator of mutual funds in India, governing their setting up, structure, scheme launch, portfolio management, and investor protection?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q113 MCQ · 1 mark EasyNAV Calculation

What is the primary method used to calculate the value of a mutual fund investor's investment?

AFace value of units

BOriginal purchase price

CNet Asset Value (NAV)

DMarket capitalization of the fund

Q114 MCQ · 1 mark MediumTypes of Mutual Fund Schemes

Which of the following statements accurately describes a key characteristic of Interval Funds?

AThey allow continuous investment and redemption at current NAV, similar to open-ended schemes.

BThey are fixed-period schemes that offer units only during the New Fund Offer (NFO) and are not listed on a stock exchange.

CThey are a variant of closed-end funds that become open-ended during specified transaction periods, with a minimum gap of 15 days between such periods.

DThey are traded on a stock exchange throughout the day, with investors trading units among themselves, similar to stocks.

Q115 MCQ · 1 mark MediumScheme Types

A key difference between an open-ended scheme and a closed-end scheme, as described in the text, relates to their unit capital. How does the unit capital typically behave for these two scheme types?

AOpen-ended scheme's unit capital is fixed, while closed-end scheme's unit capital changes with investment/redemption.

BBoth open-ended and closed-end schemes have fixed unit capital throughout their life.

COpen-ended scheme's unit capital changes with every investment or redemption, while closed-end scheme's unit capital does not change over its life.

DBoth open-ended and closed-end schemes allow continuous investment and redemption, causing their unit capital to change.

Q116 MCQ · 1 mark EasyMark to Market

The process of valuing a mutual fund's portfolio on a daily basis at current market price is called:

AMarking to Market

BPortfolio Rebalancing

CAsset Allocation

DNet Asset Valuation

Q117 MCQ · 1 mark EasyNAV Calculation

If an investor has 1,000 units in a mutual fund scheme and the Net Asset Value (NAV) is Rs. 12, what is the current value of the investor's investment?

ARs. 10,000

BRs. 11,110

CRs. 12,000

DRs. 1,000

Q118 MCQ · 1 mark MediumTypes of Mutual Fund Schemes

Which of the following statements accurately describes a key characteristic distinguishing a closed-end mutual fund scheme from an open-ended scheme?

AClosed-end schemes allow investors to invest and redeem continuously at current NAV, while open-ended schemes offer units only during NFO.

BOpen-ended schemes are for a fixed period or tenor, whereas closed-end schemes are for perpetuity.

CThe unit capital of a closed-end scheme does not change over its life, while it changes with every investment or redemption in an open-ended scheme.

DClosed-end schemes are not mandatorily listed on a stock exchange, unlike open-ended schemes.

Q119 MCQ · 1 mark MediumNAV Impact

Under normal circumstances, how does an additional investment or redemption transaction, conducted at the Net Asset Value (NAV), directly affect the NAV of a mutual fund scheme?

AAn additional investment directly increases the NAV, while a redemption directly decreases it.

BAn additional investment directly decreases the NAV, while a redemption directly increases it.

CNeither an additional investment nor a redemption directly affects the NAV.

DThe impact on NAV depends on whether the transaction volume is above a certain threshold.

Q120 MCQ · 1 mark EasyCut-off Timings

What is the primary reason for standardizing cut-off timings across all mutual funds?

ATo allow fund managers more time for portfolio adjustments.

BTo ensure equity and fairness in unit allocation and prevent preferential treatment.

CTo facilitate faster processing of all transactions.

DTo reduce the operational costs for mutual fund houses.

Q121 MCQ · 1 mark MediumScheme Types (Open-ended, ETF)

Which of the following statements accurately describes a key difference between an Open-ended scheme and an Exchange Traded Fund (ETF)?

AOpen-ended schemes are for a fixed period, while ETFs are for perpetuity.

BInvestors in open-ended schemes trade units with other investors on a stock exchange, whereas in ETFs, investors transact directly with the mutual fund.

COpen-ended schemes have a single NAV for a day, while ETFs can have multiple prices throughout the day.

DThe unit capital of an open-ended scheme is fixed, while that of an ETF changes with every investment or redemption.

Q122 MCQ · 1 mark HardEquity Fund Categorization

Based on SEBI's classification mentioned in the text, what is a key difference in asset allocation requirements between a Multi-cap fund and a Flexicap fund?

AMulti-cap funds must invest at least 65% in equities, while Flexicap funds have no overall equity investment requirement.

BMulti-cap funds require a minimum of 25% investment in large caps, mid-caps, and small caps each, within an overall 75% equity allocation, whereas Flexicap funds have no minimum investment limits across market caps but must invest at least 65% in equities overall.

CFlexicap funds are mandated to invest at least 35% in large-cap and 35% in mid-cap companies, unlike Multi-cap funds.

DMulti-cap funds invest only in large and mid-cap companies, while Flexicap funds invest across all market capitalizations without any specific percentages.

Q123 MCQ · 1 mark MediumEquity Funds - Sector and Theme

What is the minimum investment requirement for an open-ended sector fund in the equity and equity-related instruments of its identified sector?

AAt least 65% of the total assets.

BAt least 75% of the total assets.

CAt least 80% of the total assets.

DAt least 35% of the total assets.

Q124 MCQ · 1 mark MediumScheme Types

How do investors typically exit their investment in a closed-end scheme *before* its tenor ends, as compared to an Exchange Traded Fund (ETF)?

ABoth closed-end schemes and ETFs allow continuous redemption with the fund.

BInvestors sell closed-end scheme units to other investors on a stock exchange, while ETFs are also traded on a stock exchange.

CClosed-end schemes allow early redemption with the fund, while ETFs are traded with the fund.

DClosed-end schemes are traded on a stock exchange, while ETFs are redeemed directly with the AMC.

Q125 MCQ · 1 mark MediumEquity Fund Categories - Multi Cap vs Flexicap

According to SEBI's classification, what is the primary difference in investment allocation requirements between a Multi Cap fund and a Flexicap fund?

AMulti Cap funds have no minimum investment limits across market caps, while Flexicap funds require at least 65% in equities.

BMulti Cap funds require a minimum of 25% each in large, mid, and small caps, while Flexicap funds have no such minimum limits across market caps.

CFlexicap funds must invest at least 80% in large-cap companies, while Multi Cap funds have no specific large-cap requirement.

DBoth Multi Cap and Flexicap funds must invest at least 65% of total assets in mid-cap companies.

Q126 MCQ · 1 mark EasyNAV Calculation

How frequently is the Net Asset Value (NAV) of a mutual fund scheme (other than liquid schemes) calculated?

AEvery business day

BOnce a week

COnce a month

DAnnually

Q127 MCQ · 1 mark HardInterval Funds

Which statement accurately describes a characteristic of Interval Funds?

AThey are continuously open for purchase and redemption of units throughout the year.

BThey are not required to be listed on a stock exchange.

CThey become open-ended during specified transaction periods, which must have a minimum gap of 15 days between them.

DTheir unit capital changes continuously with every investment or redemption.

Q128 MCQ · 1 mark HardScheme Characteristics and Regulatory Guidelines

Which of the following statements accurately describes the characteristics and regulatory guidelines for specific types of mutual funds?

AAn AMC can offer both a Value Fund and a Contra Fund simultaneously as they represent distinct investment strategies.

BFlexicap funds are required to invest a minimum of 25% each in large-cap, mid-cap, and small-cap companies, with an overall 65% in equities.

CInterval funds, a variant of closed-end funds, must be listed on a stock exchange and allow transactions during specified periods with a minimum gap of 15 days between two such periods.

DPassive funds are characterized by fund managers actively selecting stocks to generate higher returns than the benchmark index, albeit with higher risk.

Q129 MCQ · 1 mark HardScheme Types

Regarding Interval Funds, which statement is accurate according to the provided text?

AThey are a type of open-ended fund that allows continuous transactions throughout the year.

BThey are not required to be listed on a stock exchange, unlike closed-ended funds.

CThe specified transaction periods must be for a minimum of two days, with a minimum gap of 15 days between two such periods.

DTheir unit capital changes continuously with investments and redemptions, similar to open-ended funds.

Q130 MCQ · 1 mark HardEquity Fund Categories

As per SEBI's classification mentioned in the text, what is the key difference in asset allocation requirements between a Multi-cap fund and a Flexicap fund?

AMulti-cap funds must invest a minimum of 65% in equities, while Flexicap funds have no such overall equity investment limit.

BMulti-cap funds require a minimum of 25% investment in large-caps, mid-caps, and small-caps each, whereas Flexicap funds have no minimum investment limits across market caps.

CFlexicap funds must invest at least 75% of assets in equity, while Multi-cap funds only require 65%.

DMulti-cap funds can invest across large, mid, and small-cap companies without any specific percentages, while Flexicap funds have fixed percentages for each market cap.

Q131 MCQ · 1 mark MediumClosed-end Schemes

Which of the following statements is true regarding a closed-end mutual fund scheme?

AIts unit capital does not change over the life of the scheme.

BInvestors can continuously invest in additional units.

CIt allows investors to redeem investments continuously at current NAV.

DThe scheme is for perpetuity.

Q132 MCQ · 1 mark EasyRegulatory Framework

What is the primary regulatory body for mutual funds in India?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q133 MCQ · 1 mark EasyRegulatory Framework

Which entity is the primary regulator of mutual funds in India, governing their setting up, structure, scheme launch, portfolio management, and investor protection?

ASecurities and Exchange Board of India (SEBI)

BReserve Bank of India (RBI)

CAssociation of Mutual Funds in India (AMFI)

DMinistry of Finance

Q134 MCQ · 1 mark EasyExchange Traded Funds (ETFs)

Which of the following is a distinguishing feature of Exchange Traded Funds (ETFs) compared to a normal open-ended fund, as mentioned in the text?

AETFs are not listed on a stock exchange, unlike open-ended funds.

BETFs typically have a single NAV for the day, whereas open-ended funds have multiple prices throughout the day.

CIn an ETF, investors primarily trade with each other, while in an open-ended fund, the investor trades with the mutual fund.

DETFs do not track any indices or commodities, focusing solely on active management.

Q135 MCQ · 1 mark MediumScheme Types

Which of the following statements accurately describes a key difference between open-ended and closed-end mutual fund schemes?

AOpen-ended schemes are for a fixed period, while closed-end schemes are for perpetuity.

BUnits of open-ended schemes are mandatorily listed on a stock exchange, unlike closed-end schemes.

CIn open-ended schemes, unit capital changes with investment/redemption, whereas in closed-end schemes, it does not change over the life of the scheme.

DClosed-end schemes allow investors to invest in additional units and redeem continuously at current NAV.

Q136 MCQ · 1 mark MediumEquity Fund Categories - Sector Funds

What is a characteristic feature of an open-ended Sector fund as per the provided text?

AIt invests in companies across various sectors to achieve broad diversification.

BIt must invest at least 80% of its total assets in equity and equity-related instruments of the identified sector.

CIt focuses on identifying undervalued stocks trading below their inherent value.

DIts risk profile is generally lower due to concentration in stable, high-dividend paying companies.

Q137 MCQ · 1 mark MediumScheme Features

Which type of mutual fund scheme allows investors to invest in additional units and redeem investments continuously at the current NAV, and its unit capital is not fixed but changes with every transaction?

AClosed-end scheme

BInterval scheme

CExchange Traded Fund (ETF)

DOpen-ended scheme

Q138 MCQ · 1 mark MediumInterval Funds

Which statement accurately describes a key feature of Interval funds?

AThey are open-ended schemes that allow continuous transactions throughout the year.

BThey are structured for perpetuity and are not required to be listed on a stock exchange.

CThey are a variant of closed-end funds that become open-ended during specified periods.

DThey exclusively track market indices and trade like stocks on an exchange.

Q139 MCQ · 1 mark MediumEquity Funds - Market Capitalisation

As per SEBI classification, what is the minimum investment requirement for a Multi Cap fund in equity and equity-related instruments across large, mid, and small caps?

AAt least 65% of total assets in equity, with no specific minimums for market caps.

BAt least 75% of total assets in equity, with a minimum of 25% each in large-cap, mid-cap, and small-cap companies.

CAt least 80% of total assets in large-cap companies.

DAt least 35% in large-cap and 35% in mid-cap companies.

Q140 MCQ · 1 mark HardEquity Funds - Investment Style

If a mutual fund house offers a 'Value Fund', which other type of fund from the options below is it explicitly prohibited from offering concurrently, as per SEBI regulations mentioned in the text?

AFlexicap Fund

BContra Fund

CDiversified Equity Fund

DLarge and Mid-cap Fund

Q141 MCQ · 1 mark HardNAV Impact

An investor buys 1,000 units in a mutual fund scheme. If these units are allotted at a face value of Rs. 10 when the prevailing Net Asset Value (NAV) is Rs. 11.11, how would this transaction impact the scheme's NAV?

AThe NAV of the scheme would increase because new assets are brought in.

BThe NAV of the scheme would remain unchanged as transactions are conducted at NAV.

CThe NAV of the scheme would decrease because units were allotted at a price lower than the NAV.

DThe NAV of the scheme would increase, but only for the new investor, not existing ones.

Q142 MCQ · 1 mark HardEquity Funds - Multi cap

As per SEBI's classification for Multi cap funds, what is the minimum investment requirement in equity and equity-related instruments across different market capitalizations?

AAt least 65% of total assets in equity, with no specific minimums for large, mid, or small caps.

BAt least 75% of total assets in equity, with a minimum of 25% each in large-cap, mid-cap, and small-cap companies.

CAt least 80% of total assets in equity, with a minimum of 35% each in large-cap and mid-cap companies.

DAt least 65% of total assets in equity, with a minimum of 25% each in large-cap and mid-cap companies, and the rest in small-cap.

Q143 MCQ · 1 mark HardEquity Fund Categories

As per SEBI's classification, what is the key distinction between a Multi Cap fund and a Flexicap fund based on their investment allocation rules for market capitalization?

AMulti Cap funds must invest at least 65% in equities, while Flexicap funds have no such overall equity investment requirement.

BMulti Cap funds have specific minimum investment percentages across large, mid, and small caps, while Flexicap funds have no such minimum limits across market caps.

CFlexicap funds must invest a minimum of 25% in large, mid, and small caps each, whereas Multi Cap funds have no such specific allocation.

DMulti Cap funds can only invest in large and mid-cap companies, while Flexicap funds can invest in all three market caps.

Q144 MCQ · 1 mark MediumNAV Calculation & Impact

An investor hypothetically buys 1,000 units in a mutual fund scheme when the Net Asset Value (NAV) is Rs. 11.11. If these units are allotted at a face value of Rs. 10 instead of the prevalent NAV, what would be the immediate impact on the scheme's NAV?

AThe NAV will increase because the net assets go up by the investment amount.

BThe NAV will remain unchanged as the increase in net assets is offset by an increase in units.

CThe NAV will decrease because the units were allotted at a price different from the NAV, impacting all investors.

DThe NAV will increase because the fund receives funds at a lower price, creating value for existing investors.

Q145 MCQ · 1 mark MediumEquity Fund Categories

To be classified as a 'Large Cap fund' by SEBI, what is the minimum percentage of total assets that must be invested in large cap companies?

AAt least 65%

BAt least 75%

CAt least 80%

DAt least 35%

Q146 MCQ · 1 mark EasyNAV Calculation

How is the value of a mutual fund investor's investment primarily calculated?

AUsing the face value of the units.

BUsing the Net Asset Value (NAV).

CUsing the initial investment amount.

DUsing the market capitalization of the underlying assets.

Q147 MCQ · 1 mark EasyRegulatory Framework

Which body is the primary regulator of mutual funds in India, governing their setting up, structure, and investor protection?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q148 MCQ · 1 mark HardEquity Funds - Investment Style

A mutual fund house offers a scheme that seeks to identify companies trading at prices below their inherent value with the expectation of benefiting from an increase in price. Which of the following statements is true regarding this fund house's offerings?

AThe fund house can also offer a Contra Fund simultaneously.

BThe fund house must invest at least 80% of its total assets in equity and equity-related instruments.

CThe fund is likely a Value Fund, which generally has lower risk and requires a longer investment horizon.

DThe fund's primary objective is to invest in high dividend yield stocks.

Q149 MCQ · 1 mark MediumNAV Impact

An investor buys 1,000 units when the NAV is Rs.11.11, but hypothetically, the units are allotted at a face value of Rs.10. If the net assets before this transaction were Rs.100,000 and outstanding units were 9,000, what will be the NAV of the scheme post this transaction?

ARs. 11.11

BRs. 10.00

CRs. 11.00

DRs. 9.09

Q150 MCQ · 1 mark HardEquity Fund Categories - Investment Style

A mutual fund house is considering launching two new equity schemes. Based on SEBI's classification and restrictions mentioned, which combination of investment styles is NOT permitted for a single Asset Management Company (AMC)?

AA Large Cap Fund and a Small Cap Fund.

BA Passive Fund and an Active Fund.

CA Value Fund and a Contra Fund.

DA Sector Fund and a Thematic Fund.

Q151 MCQ · 1 mark MediumOpen-ended vs. Closed-ended Schemes

Which of the following is a distinguishing feature of an open-ended mutual fund scheme compared to a closed-ended scheme?

AUnits are offered only during a New Fund Offer (NFO).

BThe scheme has a fixed period or tenor.

CInvestors can continuously invest in additional units and redeem investment at current NAV.

DUnits are mandatorily listed on a stock exchange for interim exit.

Q152 MCQ · 1 mark EasyRegulatory Framework

What is the primary regulatory body for mutual funds in India?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q153 MCQ · 1 mark HardEquity Funds - Market Capitalisation

Which of the following statements accurately describes the current SEBI classification requirements for Multi Cap and Flexicap funds?

AMulti Cap funds must invest at least 65% of total assets in equity, with no specific minimum allocation to large, mid, or small caps, similar to Flexicap funds.

BFlexicap funds have a minimum overall equity investment of 75% and must allocate at least 25% each to large, mid, and small caps, while Multi Cap funds have no such sub-segment limits.

CMulti Cap funds must invest at least 75% of assets in equity, with a minimum of 25% each in large, mid, and small caps; Flexicap funds require at least 65% in equities overall but have no minimum investment limits across market caps.

DBoth Multi Cap and Flexicap funds are required to invest a minimum of 65% of their total assets in equity-related instruments, with an equal allocation of 25% to large, mid, and small caps.

Q154 MCQ · 1 mark HardEquity Funds - Large & Mid-cap

To be classified as a Large and Mid-cap fund, what is the minimum investment requirement in large-cap and mid-cap companies, respectively, as per SEBI classification?

AA minimum of 65% in large-cap companies and a minimum of 35% in mid-cap companies.

BA minimum of 35% in large-cap companies and a minimum of 35% in mid-cap companies.

CA minimum of 80% in large-cap companies and the rest in mid-cap companies.

DA minimum of 25% in large-cap companies and a minimum of 25% in mid-cap companies, with the remainder in small-cap.

Q155 MCQ · 1 mark MediumScheme Types - Closed-end

A distinctive feature of a closed-end mutual fund scheme is that:

AIt allows investors to redeem investment continuously at current NAV.

BIts unit capital changes with every investment or redemption made by investors.

CIt offers units to investors only during the New Fund Offer (NFO) period.

DIt is structured for perpetuity unless investors decide to wind up the scheme.

Q156 MCQ · 1 mark HardEquity Fund Categorization (Market Cap)

A mutual fund scheme is classified as a 'Large and Mid-cap fund'. According to SEBI's classification, what is the minimum investment requirement for such a fund?

AAt least 80% of total assets in large-cap companies.

BAt least 65% of total assets in mid-cap companies.

CA minimum of 35% of total assets in large-cap companies AND a minimum of 35% in mid-cap companies.

DAt least 75% of assets in equity, with a minimum of 25% in large caps, 25% in mid-caps, and 25% in small caps.

Q157 MCQ · 1 mark EasyMark to Market

What is the primary purpose of 'marking to market' in mutual funds?

ATo determine the cut-off timings for transactions.

BTo reflect the current market price of the securities held in the portfolio.

CTo calculate the fund manager's performance bonus.

DTo identify stale prices for illiquid securities.

Q158 MCQ · 1 mark HardInvestment Style Funds

Regarding investment style-based equity funds, which of the following combinations can a single Asset Management Company (AMC) offer?

ABoth a Value Fund and a Contra Fund.

BOnly a Value Fund, but not a Contra Fund.

COnly a Contra Fund, but not a Value Fund.

DEither a Value Fund or a Contra Fund, but not both.

Q159 MCQ · 1 mark MediumNAV Impact

According to the text, under what specific circumstance would an additional investment by an investor directly lead to a fall in the scheme's Net Asset Value (NAV)?

AWhen the investor buys units at the current NAV.

BWhen the investor redeems units at the current NAV.

CWhen the units are allotted to the investor at a price different from the current NAV.

DWhen the value of the portfolio falls after the investment.

Q160 MCQ · 1 mark EasyRegulatory Framework

Which entity serves as the primary regulator for mutual funds in India?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q161 MCQ · 1 mark EasyEquity Funds - Sectors and Industries

What is the minimum percentage of total assets an open-ended sector fund should invest in the equity and equity-related instruments of its identified sector?

A35%

B65%

C75%

D80%

Q162 MCQ · 1 mark HardInvestment Style

A mutual fund house plans to launch a 'Contra Fund' which adopts a contrarian investment strategy. Based on SEBI's regulations mentioned, what restriction applies to this fund house?

AThe fund must invest at least 80% of its total assets in a single identified sector.

BThe fund house can offer either a Contra Fund or a Value Fund, but not both.

CThe fund must maintain a minimum of 35% investment in large cap companies.

DThe fund is considered a passive fund and cannot make active investment decisions.

Q163 MCQ · 1 mark EasyMark to Market

What is the primary purpose of 'marking to market' in mutual funds, as described in the text?

ATo determine the cut-off timings for transactions.

BTo reflect the current market price of the securities held in the portfolio.

CTo calculate the dividend yield of the fund.

DTo identify under-valued stocks for value investing.

Q164 MCQ · 1 mark MediumScheme Types

An investor wishes to trade mutual fund units throughout the day on a stock exchange, similar to stocks. Which type of mutual fund would best suit this requirement?

AOpen-ended scheme

BClosed-ended scheme

CInterval fund during its specified transaction period

DExchange Traded Fund (ETF)

Q165 MCQ · 1 mark HardInvestment Style Funds

An equity fund that seeks to identify companies trading at prices below their inherent value, has lower risk, and typically requires a longer investment horizon for the strategy to play out, is classified as a:

AValue Fund

BContra Fund

CDividend Yield Fund

DGrowth Fund

Q166 MCQ · 1 mark MediumEquity Fund Classification (Market Cap)

According to SEBI classification, what is the minimum percentage of total assets that a 'Large and Mid-cap fund' must invest in large cap companies?

A80%

B65%

C35%

D25%

Q167 MCQ · 1 mark MediumCut-off Timings

The NAV applicable for a purchase or redemption request in a mutual fund is determined by the time the request is received by the mutual fund, provided that:

AThe investor has a long-term investment horizon.

BThe fund manager approves the transaction.

CClear funds hit the account of the fund by the cut-off time.

DThe transaction is for a closed-ended scheme.

Q168 MCQ · 1 mark HardEquity Fund Categorization (Market Capitalisation)

According to SEBI classification for open-end equity schemes based on market capitalization, which of the following accurately describes the investment mandate for a Multi Cap fund?

AAt least 80% of total assets must be invested in large cap companies.

BAt least 65% of total assets must be invested in mid cap companies.

CAt least 75% of assets must be invested in equity-related instruments, with a minimum of 25% each in large caps, mid-caps, and small caps.

DA minimum of 35% of total assets must be invested in large cap companies and a minimum of 35% in mid-cap companies.

Q169 MCQ · 1 mark HardEquity Fund Categorization & Investment Style

A fund house offers an equity scheme that aims to identify companies trading below their inherent value with an expectation of price increase over a longer investment horizon. The fund also states it has lower risk compared to active funds focused on timing strategies. Based on SEBI's classification, which specific type of fund is this, and what other type of fund is the AMC prohibited from offering simultaneously?

APassive Fund; Multi cap fund.

BValue Fund; Contra Fund.

CContra Fund; Value Fund.

DDiversified Equity Fund; Sector Fund.

Q170 MCQ · 1 mark MediumExchange Traded Funds (ETFs)

A key characteristic distinguishing Exchange Traded Funds (ETFs) from open-ended mutual funds is that ETFs:

AAllow investors to invest and redeem continuously at current NAV.

BAre valued only once a day at a single NAV.

CInvolve investors trading with each other on a stock exchange throughout the day.

DTypically have a fixed period or tenor, after which units are redeemed by the fund.

Q171 MCQ · 1 mark EasyValuation

What is the process of valuing a mutual fund's portfolio on a daily basis at its current market value called?

ANet Asset Valuation

BCut-off Timing

CMark to Market

DAsset Under Management

Q172 MCQ · 1 mark EasyMark to Market

The process of valuing a mutual fund's portfolio on a daily basis at current market value is known as:

ANet Asset Valuation

BCut-off Timing

CMark to Market

DFund Accounting

Q173 MCQ · 1 mark HardScheme Differences

Identify the INCORRECT statement regarding the features of mutual fund schemes.

AClosed-end schemes are mandatorily listed on a stock exchange to provide an exit route for investors.

BInterval funds are a variant of closed-end funds that become open-ended during specified periods, with a minimum gap of 15 days between two transaction periods.

CExchange Traded Funds (ETFs) typically have a single NAV for a day, similar to a normal open-ended fund.

DThe unit capital of a closed-end fund does not change over the life of the scheme, as transactions between investors on the stock exchange do not affect the fund.

Q174 MCQ · 1 mark MediumExchange Traded Funds (ETFs)

In the context of investor transactions, what is a fundamental difference between an Exchange Traded Fund (ETF) and an open-ended fund?

AIn an ETF, transactions occur only during the New Fund Offer (NFO) period, unlike open-ended funds.

BIn an ETF, investors trade with each other on a stock exchange, while in an open-ended fund, the investor transacts with the mutual fund.

CETFs offer a single NAV for the day, whereas open-ended funds have multiple prices throughout the day.

DOpen-ended funds are mandatorily listed on a stock exchange, while ETFs are not.

Q175 MCQ · 1 mark HardInvestment Style

A mutual fund house, according to SEBI's classification on investment styles, is permitted to offer which of the following combinations of funds?

ABoth a Contra Fund and a Value Fund.

BA Contra Fund but not a Value Fund.

CA Value Fund but not a Contra Fund.

DEither a Value Fund or a Contra Fund, but not both.

Q176 MCQ · 1 mark MediumScheme Types

Which of the following statements accurately describes a characteristic of Interval Funds, according to the provided text?

AThey are purely open-ended schemes with no fixed tenor.

BThey are not required to be listed on a stock exchange.

CTheir specified transaction periods must be for a minimum of two days, with a minimum gap of 15 days between periods.

DInvestors can only invest during the New Fund Offer (NFO) period, similar to closed-end schemes.

Q177 MCQ · 1 mark EasyOpen-ended Schemes

A key characteristic of an open-ended mutual fund scheme is that its unit capital:

Aremains fixed throughout the life of the scheme.

Bchanges continuously with investments and redemptions.

Cis determined only during the New Fund Offer (NFO) period.

Dis fixed for a specified period, after which it changes.

Q178 MCQ · 1 mark EasyNAV Calculation

If an investor has 1,000 units in a mutual fund scheme and the NAV is Rs. 12, what is the current value of their investment?

ARs. 10,000

BRs. 11,110

CRs. 12,000

DRs. 13,000

Q179 MCQ · 1 mark MediumFeatures of Mutual Fund Schemes

How does the unit capital of an open-ended scheme typically differ from that of a closed-end scheme?

AAn open-ended scheme has a fixed unit capital, while a closed-end scheme's unit capital changes with investment and redemption.

BBoth open-ended and closed-end schemes maintain a fixed unit capital throughout their life.

CAn open-ended scheme's unit capital changes continuously with investment or redemption, whereas a closed-end scheme's unit capital does not change over its life.

DThe unit capital of both schemes is determined solely by the Net Asset Value (NAV) and not by transactions.

Q180 MCQ · 1 mark EasyScheme Types

Which type of mutual fund scheme allows investors to continuously invest in additional units and redeem investments at the current NAV, and is generally for perpetuity?

AClosed-end scheme

BInterval scheme

COpen-ended scheme

DExchange Traded Fund

Q181 MCQ · 1 mark MediumInterval Funds

According to the provided text, what is the minimum gap required between two transaction periods for an Interval Fund?

A15 days

B2 days

C7 days

D30 days

Q182 MCQ · 1 mark MediumRegulatory Framework

Which body is described as the industry body that oversees the functioning of the mutual fund industry, recommends best practices, and represents industry requirements to regulators and stakeholders?

ASecurities and Exchange Board of India (SEBI)

BReserve Bank of India (RBI)

CAssociation of Mutual Funds in India (AMFI)

DMinistry of Finance

Q183 MCQ · 1 mark MediumRegulatory Framework

What is the primary role of the Association of Mutual Funds in India (AMFI), as described in the provided text?

ATo act as the primary regulator for all mutual funds in India.

BTo manage and create mutual fund portfolios for investors.

CTo oversee the functioning of the industry and recommend best practices to its members.

DTo define the process of categorizing open-end mutual fund products.

Q184 MCQ · 1 mark HardInvestment Style

Regarding 'Value Funds' and 'Contra Funds', which statement is true as per the NISM curriculum?

AContra Funds generally have lower risk compared to Value Funds.

BBoth Value Funds and Contra Funds aim to identify companies trading at prices below their inherent value.

CAn Asset Management Company (AMC) can offer both a Value Fund and a Contra Fund simultaneously.

DValue Funds typically require a shorter investment horizon for their strategy to play out.

Q185 MCQ · 1 mark EasyEquity Funds - Market Capitalisation

As per SEBI's classification for open-end equity schemes, what is the minimum percentage of total assets that a 'Large Cap fund' must invest in large-cap companies?

A65%

B75%

C80%

D50%

Q186 MCQ · 1 mark EasyRegulatory Framework

Which entity is the primary regulator of mutual funds in India?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q187 MCQ · 1 mark MediumScheme Types

Which of the following statements accurately describes a key difference between open-ended and closed-ended mutual fund schemes?

AOpen-ended schemes are for a fixed period, while closed-ended schemes are for perpetuity.

BOpen-ended schemes offer units only during the New Fund Offer (NFO), while closed-ended schemes allow continuous investment.

COpen-ended schemes have a unit capital that changes with investment/redemption, whereas closed-ended schemes have a fixed unit capital.

DClosed-ended schemes are not mandatorily listed on a stock exchange, unlike open-ended schemes.

Q188 MCQ · 1 mark EasyMark to Market

The process of valuing a mutual fund's portfolio on a daily basis at its current market value is referred to as:

AAsset Under Management (AUM) calculation

BNet Asset Value (NAV) determination

CMarking to Market

DFund Accounting

Q189 MCQ · 1 mark MediumExchange Traded Funds (ETFs)

Which statement accurately describes a key characteristic of Exchange Traded Funds (ETFs) as per the provided text?

AETFs typically have a single Net Asset Value (NAV) for the entire trading day.

BIn an ETF, transactions primarily involve the investor on one side and the mutual fund on the other.

CETFs are not listed on a stock exchange, similar to traditional open-ended funds.

DETFs can be traded all day long like a stock and have their value derived from the holdings in their portfolio.

Q190 MCQ · 1 mark HardEquity Fund Categorization

As per the updated SEBI classification mentioned in the text for Multi Cap funds, what is the minimum asset allocation requirement?

AAt least 65% of total assets in equity and equity-related instruments, with no specific market cap allocation.

BAt least 80% of total assets in equity and equity-related instruments, with at least 25% each in large, mid, and small caps.

CAt least 75% of total assets in equity and equity-related instruments, with a minimum of 25% in large caps, 25% in mid-caps, and 25% in small caps.

DAt least 35% in large cap companies and a minimum of 35% in mid-cap companies.

Q191 MCQ · 1 mark EasyNAV Calculation

If an investor has 1,000 units in a mutual fund scheme and the NAV goes up to Rs. 12, what is the current value of their investment?

ARs. 10,000

BRs. 11,110

CRs. 12,000

DRs. 1,200

Q192 MCQ · 1 mark EasyScheme Types

An open-ended mutual fund scheme is primarily characterized by which of the following features?

AUnits are offered only during a New Fund Offer (NFO) and redeemed at the end of a fixed tenor.

BInvestors can continuously invest in additional units and redeem existing investments at the current NAV.

CThe unit capital of the scheme remains fixed throughout its life as transactions occur only on a stock exchange.

DIt operates as a closed-end fund but becomes open-ended during specified transaction periods with a minimum gap of 15 days.

Q193 MCQ · 1 mark HardEquity Fund Categorization (Market Cap)

To be classified as a Large and Mid-cap fund, what is the minimum investment allocation requirement in large-cap and mid-cap companies?

AAt least 80% of total assets in large-cap companies.

BAt least 65% of total assets in mid-cap companies.

CA minimum of 35% of total assets in large-cap companies AND a minimum of 35% in mid-cap companies.

DAt least 65% of total assets in a combination of large and mid-cap companies without specific individual minimums.

Q194 MCQ · 1 mark HardInvestment Styles

Which of the following statements is true regarding a mutual fund house offering Value Funds and Contra Funds?

AAn AMC can offer both a Value Fund and a Contra Fund simultaneously.

BAn AMC can offer a Value Fund or a Contra Fund, but not both.

CAn AMC must offer both a Value Fund and a Contra Fund to provide diversification.

DValue Funds and Contra Funds are essentially the same and are categorized interchangeably.

Q195 MCQ · 1 mark MediumEquity Fund Categorization

According to SEBI classification, what is a key difference in investment allocation between a Multi Cap fund and a Flexicap fund?

AMulti Cap funds have no minimum investment limits across market caps, while Flexicap funds require at least 65% in equities.

BMulti Cap funds must invest a minimum of 25% each in large, mid, and small caps, while Flexicap funds have no such minimum limits across market caps.

CFlexicap funds only invest in large and mid-cap companies, whereas Multi Cap funds invest across all market caps.

DBoth Multi Cap and Flexicap funds have the same minimum allocation of 65% in equity-related instruments without specific market cap distribution.

Q196 MCQ · 1 mark MediumNAV Calculation

An investor buys 1,000 units in a mutual fund scheme when the NAV is Rs. 11.11, but hypothetically, the units are allotted at a face value of Rs. 10. If the initial net assets were Rs. 100,000 with 9,000 outstanding units, what will be the NAV after this transaction?

ARs. 11.11

BRs. 10.00

CRs. 11.00

DRs. 10.90

Q197 MCQ · 1 mark MediumScheme Types

What is a defining characteristic of an Interval fund, according to the text?

AIt allows continuous investment and redemption, and its unit capital changes with transactions.

BIt is a variant of closed-end funds that becomes open-ended during specified periods, with a minimum gap of 15 days between transaction periods.

CIt is listed on a stock exchange and can be traded throughout the day at multiple prices.

DIt offers units only during the New Fund Offer (NFO) and redeems them at maturity without interim transactions.

Q198 MCQ · 1 mark MediumCut-off Timings

What is the primary reason for having standard cut-off timings for mutual fund transactions, according to the text?

ATo allow mutual funds to calculate NAV accurately at the end of the day.

BTo ensure equity and fairness in unit allocation and prevent preferential treatment.

CTo facilitate quicker processing of all purchase and redemption requests.

DTo determine the daily trading hours for mutual fund units on stock exchanges.

Q199 MCQ · 1 mark EasyEquity Fund Categorization

According to SEBI's classification based on market capitalization, what is the minimum investment requirement in large cap companies for a fund to be classified as a 'Large cap fund'?

AAt least 65% of the total assets

BAt least 35% of the total assets

CAt least 80% of the total assets

DAt least 25% of the total assets

Q200 MCQ · 1 mark HardEquity Fund Categorization

According to the current classification provided, what are the minimum investment requirements for a Multi-cap fund?

AAt least 65% of total assets in equity and related instruments, with no specific allocation across market caps.

BAt least 75% of total assets in equity and related instruments, with a minimum of 25% each in large-cap, mid-cap, and small-cap companies.

CAt least 80% of total assets in large-cap companies.

DAt least 35% in large-cap companies and at least 35% in mid-cap companies, with the remainder in small-cap.

Q201 MCQ · 1 mark EasyMark to Market

What is the process called when a mutual fund portfolio is valued on a daily basis at its current market price?

APortfolio Rebalancing

BAsset Allocation

CMarking to Market

DNet Asset Valuation

Q202 MCQ · 1 mark EasyRegulatory Framework

Which entity is identified as the primary regulator of mutual funds in India?

AReserve Bank of India (RBI)

BAssociation of Mutual Funds in India (AMFI)

CSecurities and Exchange Board of India (SEBI)

DMinistry of Finance

Q203 MCQ · 1 mark EasyNAV Calculation

If an investor holds 1,000 units in a mutual fund scheme and the Net Asset Value (NAV) is Rs. 12, what is the current value of their investment?

ARs. 10,000

BRs. 11,110

CRs. 12,000

DRs. 1,000

Q204 MCQ · 1 mark EasyMutual Fund Scheme Types

Which type of mutual fund scheme is characterized by continuous investment and redemption at current NAV, and has a unit capital that changes with every investment or redemption made by investors?

AClosed-end scheme

BInterval scheme

COpen-ended scheme

DExchange Traded Fund (ETF)

Q205 MCQ · 1 mark MediumScheme Types

Which of the following is a key characteristic of a closed-end mutual fund scheme?

AIt allows investors to invest in additional units and redeem continuously at current NAV.

BIts unit capital is not fixed but changes with every investment or redemption.

CIt offers units to investors only during the new fund offer (NFO) and is mandatorily listed on a stock exchange.

DIt is for perpetuity unless the investors decide to wind up the scheme.

Q206 MCQ · 1 mark HardEquity Fund Investment Style

Regarding the offering of Value Funds and Contra Funds by mutual fund houses, what specific regulatory guideline is mentioned in the text?

AMutual fund houses are encouraged to offer both Value and Contra Funds to diversify investor options.

BAn Asset Management Company (AMC) can offer either a Value Fund or a Contra Fund, but not both.

CThere are no restrictions on an AMC offering both Value and Contra Funds simultaneously.

DContra Funds are a sub-category of Value Funds, so AMCs can offer both under a single scheme.

Q207 MCQ · 1 mark EasyNAV Calculation

According to the text, what is the direct effect on a scheme's Net Asset Value (NAV) when an investor makes an additional investment or redemption, assuming transactions are conducted at the prevailing NAV?

AThe NAV will increase with an additional investment and decrease with a redemption.

BThe NAV will decrease with an additional investment and increase with a redemption.

CThe NAV will not be directly affected by additional investments or redemptions.

DThe NAV will fluctuate unpredictably based on the volume of transactions.

Q208 MCQ · 1 mark MediumNet Asset Value (NAV)

If an investor buys 1,000 units when the NAV is Rs.11.11, but is hypothetically allotted units at the face value of Rs.10, what will be the immediate impact on the scheme's Net Asset Value (NAV)?

AThe NAV will increase because the net assets go up by more than the increase in units.

BThe NAV will decrease because the units were allotted at a price different from the prevailing NAV.

CThe NAV will remain unchanged as the addition to net assets is perfectly offset by an increase in units.

DThe NAV will adjust to Rs.10, reflecting the face value at which units were allotted.

Q209 MCQ · 1 mark MediumScheme Features

What is a key differentiating feature of a closed-end mutual fund scheme compared to an open-ended scheme?

AClosed-end schemes allow continuous investment and redemption at current NAV.

BThe unit capital of a closed-end scheme changes with every investment or redemption.

CClosed-end schemes are listed on a stock exchange for investors to exit their investment in the interim.

DClosed-end schemes are for perpetuity unless investors decide to wind up the scheme.

Q210 MCQ · 1 mark MediumScheme Types

Which of the following statements accurately describes a key characteristic of a closed-end mutual fund scheme?

AInvestors can continuously invest in additional units and redeem investments at current NAV.

BThe scheme is for perpetuity unless investors decide to wind it up.

CThe unit capital of the scheme changes with every investment or redemption made by investors.

DUnits are offered only during the New Fund Offer (NFO), and for interim exit, units are sold on a stock exchange.

Q211 MCQ · 1 mark MediumEquity Funds - Market Capitalization

According to SEBI's classification for open-end equity schemes based on market capitalization, what is the minimum investment requirement for a Large and Mid-cap fund?

AAt least 80% of total assets in large-cap companies.

BAt least 65% of total assets in mid-cap companies.

CA minimum of 35% of total assets in large-cap companies and a minimum of 35% in mid-cap companies.

DAt least 75% of total assets in equity, with a minimum of 25% in large caps, 25% in mid-caps, and 25% in small caps.

Q212 MCQ · 1 mark EasyMark to Market

What is the primary purpose of 'Mark to Market' in mutual funds, as described in the text?

ATo determine the cut-off timings for transactions.

BTo reflect the current market price of the securities held in the portfolio.

CTo calculate the dividend yield of the fund.

DTo identify undervalued stocks for investment.

Q213 MCQ · 1 mark EasyScheme Types

A distinguishing feature of an open-ended mutual fund scheme, as per the text, is that it allows investors to:

AInvest only during the New Fund Offer (NFO) period.

BRedeem investments only at the end of a fixed tenor.

CContinuously invest in additional units and redeem investments at the current NAV.

DTrade units only on a stock exchange.

Q214 MCQ · 1 mark EasyOpen-ended Schemes

A distinguishing feature of an open-ended mutual fund scheme, as described in the text, is that it allows investors to:

AInvest only during a New Fund Offer (NFO) period.

BRedeem investments only at the end of a fixed tenor.

CContinuously invest in additional units and redeem investments at current NAV.

DTrade units with other investors exclusively on a stock exchange.

Q215 MCQ · 1 mark MediumMutual Fund Schemes Classification

According to SEBI classification, what is the key difference in investment allocation between a Multi-cap fund and a Flexicap fund?

AMulti-cap funds invest only in large-cap companies, while Flexicap funds invest across all market caps.

BMulti-cap funds have specific minimum investment limits across large, mid, and small caps, whereas Flexicap funds have no such minimum limits across market caps.

CFlexicap funds must invest at least 75% in equity, while Multi-cap funds have no such overall equity requirement.

DMulti-cap funds are actively managed, while Flexicap funds are passively managed.

Q216 MCQ · 1 mark HardEquity Fund Categorization

According to SEBI classification for open-end equity schemes based on market capitalization, which of the following statements is INCORRECT?

ALarge cap funds must invest at least 80% of total assets in companies ranked 1st to 100th by market capitalization.

BMid-cap funds must invest at least 65% of total assets in companies ranked 101st to 250th by market capitalization.

CLarge and Mid-cap funds require a minimum of 35% investment in large cap companies and a minimum of 35% in mid-cap companies.

DMulti cap funds must invest at least 65% of total assets in equity-related instruments, with no specific minimum allocation to large, mid, or small caps.

Q217 MCQ · 1 mark EasyExchange Traded Funds (ETFs)

How do transactions in Exchange Traded Funds (ETFs) typically differ from those in open-ended mutual funds?

AETFs involve the investor trading with the mutual fund, similar to open-ended funds.

BETFs are traded like stocks on an exchange throughout the day, with investors trading with each other.

CETFs have a single Net Asset Value (NAV) for a day, similar to open-ended funds.

DETFs cannot track an index or commodity price.

Q218 MCQ · 1 mark MediumEquity Fund Categorization

According to SEBI classification based on market capitalization, what is the minimum percentage of total assets that a 'Large and Mid-cap fund' must invest in large cap companies?

A80%

B65%

C35%

D25%

Q219 MCQ · 1 mark MediumNAV Impact

According to the text, what is the direct impact on a scheme's Net Asset Value (NAV) if an investor buys 1,000 units when the NAV is Rs. 11.11 but is hypothetically allotted units at the face value of Rs. 10?

AThe NAV will increase because new funds are brought in.

BThe NAV will remain unchanged as transactions are conducted at NAV.

CThe NAV will decrease because units were allotted at a price different from the NAV.

DThe NAV will fluctuate based on the market performance of the portfolio.

Q220 MCQ · 1 mark EasyNAV Calculation

A redemption or additional investment in a mutual fund scheme will generally not directly affect the NAV under normal circumstances because:

AThe NAV is only calculated annually.

BThese transactions are conducted at the prevailing NAV.

CThe fund manager adjusts the portfolio immediately to stabilize the NAV.

DOnly market movements impact the NAV.

Q221 MCQ · 1 mark MediumCut-off Timings

What determines the applicable NAV for a purchase, redemption, or switch request received by a mutual fund?

AThe NAV at the close of the previous business day.

BThe NAV determined by the fund house's internal policy, irrespective of the request time.

CThe NAV determined by the time the request is received, provided clear funds hit the account by cut-off time.

DThe highest NAV recorded during the entire day of the transaction.

Q222 MCQ · 1 mark MediumNAV Impact

A mutual fund scheme's NAV is Rs. 11.11. An investor hypothetically buys 1,000 units, which are allotted at a face value of Rs. 10. What will be the immediate impact on the scheme's NAV for all investors?

AThe NAV will increase because new funds are brought into the scheme.

BThe NAV will decrease because units were allotted at a price lower than the current NAV.

CThe NAV will remain unchanged as transactions are conducted at the NAV.

DThe NAV will increase only if the new investment amount exceeds the previous net assets.

Q223 MCQ · 1 mark MediumScheme Types

Which of the following is a characteristic of Interval funds?

AThey are open-ended schemes that allow continuous transactions throughout their life.

BThey are a variant of closed-end funds that become open-ended during specified periods.

CThey are not required to be listed on a stock exchange.

DThe minimum gap between two transaction periods for an Interval fund is 7 days.

Q224 MCQ · 1 mark MediumScheme Types - Closed-ended

Which of the following is a distinguishing feature of a closed-end mutual fund scheme?

AInvestors can continuously purchase and redeem units at the current NAV.

BThe unit capital of the scheme changes with every investment or redemption.

CUnits are offered to investors only during the New Fund Offer (NFO) period.

DThe scheme is for perpetuity unless investors decide to wind it up.

Q225 MCQ · 1 mark EasyMark to Market

What is the primary purpose of 'marking to market' in the context of mutual funds?

ATo determine the daily cut-off timings for transactions.

BTo reflect the current market price of the securities held in the portfolio.

CTo calculate the dividend yield for income-seeking investors.

DTo identify under-performing stocks for a contra investment strategy.

Case-Based Questions (5 sets)

Case 1 Case-Based · 1 mark each Mutual Fund Scheme Types and Categorization

Rohan, 30, and Priya, 28, are a young couple based in Mumbai, looking to start their investment journey. They have accumulated savings of ₹1,00,000 and can invest ₹20,000 monthly. Their primary goal is to build long-term wealth, but they also anticipate needing a significant portion of their investment for a house down payment in about 7 years. They are new to mutual funds and want to understand the different types of schemes available, how they operate, and the regulatory guidelines governing them. Rohan is particularly interested in schemes that allow him to invest and redeem units continuously, offering flexibility for his future financial needs. Priya, on the other hand, is keen on understanding how fund managers select stocks and the various categories of equity funds based on market capitalization and investment style. They recently heard about a 'new fund offer' (NFO) for a scheme that promises a fixed tenure and mandatory listing on a stock exchange, which has added to their confusion about how different funds operate.

Medium Sub-question 1

Priya is confused between Multi-cap funds and Flexi-cap funds, as both invest across large, mid, and small-cap companies. What is the key regulatory difference in their minimum allocation requirements across market capitalizations according to SEBI?

AMulti-cap funds have no minimum allocation limits across market caps, while Flexi-cap funds must invest a minimum of 25% in each market cap segment.

BMulti-cap funds must invest a minimum of 25% in large-cap, 25% in mid-cap, and 25% in small-cap companies, whereas Flexi-cap funds have no minimum investment limits across market caps (though at least 65% in equities overall).

CBoth Multi-cap and Flexi-cap funds must invest at least 65% in equity and have no specific minimum allocation across market caps.

DFlexi-cap funds are only allowed to invest in large and mid-cap companies, while Multi-cap funds can invest in all three.

Medium Sub-question 2

Rohan and Priya are considering investing in a New Fund Offer (NFO) for a scheme that is for a fixed period and will be mandatorily listed on a stock exchange after the NFO closes. If they need to exit their investment before the scheme's maturity, how can they typically do so?

ABy redeeming units directly with the mutual fund at the prevailing NAV.

BBy selling their units to other investors on a stock exchange.

CThey cannot exit before maturity as it's a fixed-period scheme.

DBy converting their units into an open-ended scheme.

Hard Sub-question 3

Priya is considering two types of funds: a 'Technology Sector Fund' and a 'Sustainable Infrastructure Thematic Fund'. She wants to understand their regulatory minimum equity allocation and which one typically offers better diversification. Which of the following statements is correct?

AThe Technology Sector Fund requires 65% equity allocation, while the Thematic Fund requires 80%. The Thematic Fund is less diversified.

BBoth funds require at least 80% of total assets in their identified sector/theme. The Thematic Fund is generally more diversified than the Sector Fund.

CThe Technology Sector Fund requires 80% equity allocation, while the Thematic Fund has no specific minimum. Both offer similar diversification.

DBoth funds require at least 65% of total assets in their identified sector/theme. The Sector Fund is generally more diversified.

Easy Sub-question 4

Priya is interested in an equity fund that focuses primarily on large, liquid blue-chip companies with stable performance. According to SEBI classification, which category of fund should she consider if she wants at least 80% of the total assets to be invested in companies ranked 1 to 100 in terms of full market capitalization?

AMid-cap fund

BSmall-cap fund

CLarge-cap fund

DLarge and Mid-cap fund

Easy Sub-question 5

Rohan prioritizes flexibility to invest additional amounts or redeem his investment continuously at the current Net Asset Value (NAV). Which type of mutual fund scheme is best suited for his requirement?

AOpen-ended scheme

BClosed-ended scheme

CInterval scheme

DExchange Traded Fund (ETF)

Case 2 Case-Based · 1 mark each Mutual Fund Types and Regulations

Mr. and Mrs. Sharma, both 38 years old, are reviewing their investment portfolio to align with their financial goals. They aim to save for their child's higher education in 15 years and their own retirement. Mr. Sharma is keen on long-term growth through equity-oriented mutual funds, while Mrs. Sharma values liquidity and the ability to trade investments during market hours. They currently hold 3,000 units of an open-ended diversified equity fund, "Alpha Growth Fund," which they acquired at an average NAV of Rs. 28 per unit. The fund's current NAV is Rs. 35. Mrs. Sharma is contemplating an additional investment of Rs. 75,000 and is particularly interested in a fund that tracks a specific index and can be bought or sold throughout the day. She has also heard about "Dynamic Opportunities Fund," which invests across large, mid, and small-cap companies with no minimum limits, and "Sustainable Future Fund," an ESG-focused thematic fund.

Medium Sub-question 1

If Mr. Sharma decides to redeem 1,000 units from the "Alpha Growth Fund" at its current NAV of Rs. 35, what will be the direct impact of this transaction on the NAV of the remaining units in the fund?

AThe NAV will increase as the fund's assets decrease.

BThe NAV will decrease as the number of outstanding units decreases.

CThe NAV will remain unchanged as the transaction is conducted at the current NAV.

DThe NAV will fluctuate based on the market conditions at the time of redemption.

Easy Sub-question 2

Mrs. Sharma is interested in a fund that tracks a specific index and can be bought or sold throughout the day on a stock exchange. Which type of mutual fund product best fits this description according to the chapter text?

AOpen-ended scheme

BClosed-end scheme

CExchange Traded Fund (ETF)

DInterval fund

Easy Sub-question 3

What is the current total value of Mr. and Mrs. Sharma's investment in the "Alpha Growth Fund"?

ARs. 84,000

BRs. 105,000

CRs. 90,000

DRs. 98,000

Hard Sub-question 4

The "Dynamic Opportunities Fund" invests across large, mid, and small-cap companies with no minimum investment limits across market caps, provided at least 65% of the corpus is invested in equities. Which specific SEBI category does this fund belong to, and which regulatory body is primarily responsible for governing the setting up and structure of such a mutual fund in India?

AMulti Cap Fund; Reserve Bank of India (RBI)

BFlexicap Fund; Securities and Exchange Board of India (SEBI)

CLarge and Mid Cap Fund; Association of Mutual Funds in India (AMFI)

DDiversified Equity Fund; Securities and Exchange Board of India (SEBI)

Medium Sub-question 5

The "Sustainable Future Fund" is described as an ESG-focused thematic fund. According to SEBI's categorization, what is a key characteristic of a thematic fund, and what is the minimum investment requirement in its identified theme?

AIt invests in a particular sector; minimum 65% of total assets.

BIt invests in multiple sectors forming part of a theme; minimum 80% of total assets.

CIt invests based on market capitalization; minimum 75% of total assets.

DIt adopts a contrarian investment strategy; minimum 65% of total assets.

Case 3 Case-Based · 1 mark each Mutual Fund Operations and Classification

Mr. and Mrs. Sharma, a couple in their late 30s, are actively managing their investment portfolio. Mr. Sharma (40) and Mrs. Sharma (38) recently made several mutual fund investments. They invested ₹50,000 in the New Fund Offer (NFO) of 'Alpha Growth Fund', a diversified equity scheme, which allotted units at its face value of ₹10 per unit. At the time of allotment, the scheme's Net Asset Value (NAV) was ₹12 per unit based on its underlying portfolio. They also hold 2,000 units in 'Dynamic Equity Fund', an open-ended large-cap scheme. On a specific business day, they decided to redeem 500 units from 'Dynamic Equity Fund'. The request was submitted at 1:30 PM, and clear funds hit the fund's account by 2:30 PM. The published NAV for that day was ₹28. Furthermore, they are considering an additional investment of ₹25,000 in 'Infra Builders Fund', a sector-specific equity scheme. Their financial advisor explained that this fund invests at least 80% of its total assets in the infrastructure sector. The advisor also mentioned that their AMC, 'Wealth Creators AMC', recently launched two new equity schemes: 'Value Seekers Fund' and 'Contrarian Bet Fund', both aiming to identify undervalued companies.

Hard Sub-question 1

If 'Alpha Growth Fund' had existing net assets of ₹1,000,000 and 83,333 units outstanding *before* the Sharma's NFO investment, what was the *new* NAV of 'Alpha Growth Fund' immediately after Mr. and Mrs. Sharma's ₹50,000 investment where units were allotted at face value of ₹10 per unit?

A₹11.89

B₹12.00

C₹11.11

D₹12.11

Easy Sub-question 2

What was the immediate impact on the Net Asset Value (NAV) of 'Alpha Growth Fund' after Mr. and Mrs. Sharma's units were allotted at face value, given the scheme's NAV was ₹12 per unit at the time of allotment?

AThe NAV increased because new money came into the fund.

BThe NAV decreased because units were allotted at a price lower than the existing NAV.

CThe NAV remained unchanged because new units were issued.

DThe NAV increased to reflect the higher market value of the underlying portfolio.

Medium Sub-question 3

Wealth Creators AMC launched 'Value Seekers Fund' and 'Contrarian Bet Fund'. Both aim to identify undervalued companies. According to SEBI regulations for open-ended equity schemes, what is the rule regarding an Asset Management Company (AMC) offering both a Value Fund and a Contra Fund?

AAn AMC can offer both a Value Fund and a Contra Fund, provided they have different fund managers.

BAn AMC can offer both a Value Fund and a Contra Fund, but they must be in different categories (e.g., Value fund is large-cap, Contra fund is mid-cap).

CAn AMC can offer either a Value Fund or a Contra Fund, but not both.

DAn AMC can offer both, as their investment strategies, though similar, are distinct.

Easy Sub-question 4

Based on its investment mandate, what type of fund is 'Infra Builders Fund'?

AA thematic fund

BA diversified equity fund

CA sector fund

DA large-cap fund

Medium Sub-question 5

Assuming the cut-off time for equity fund transactions is 3:00 PM on a business day, which NAV would be applicable for the redemption of 500 units from 'Dynamic Equity Fund' by the Sharmas?

AThe NAV of the previous business day.

BThe NAV of the next business day.

CThe published NAV of ₹28 for the day the request was made.

DAn estimated NAV calculated at the time of the request (1:30 PM).

Case 4 Case-Based · 1 mark each Mutual Fund Basics and Product Classification

Mr. and Mrs. Sharma, both 45 years old, are reviewing their investment portfolio. They have accumulated savings of ₹50 lakhs and are looking to invest a significant portion of it in mutual funds for their long-term goals, including their child's higher education and retirement. Currently, they hold 5,000 units in an existing open-ended diversified equity fund, 'Growth Seeker Fund', which they bought at an NAV of ₹20 per unit. The current Net Asset Value (NAV) of 'Growth Seeker Fund' is ₹25. They are exploring various mutual fund options with their investment adviser. Mrs. Sharma is interested in funds that invest in companies with stable performance and high dividend payouts, while Mr. Sharma is keen on exploring opportunities in specific high-growth sectors like technology. They are also considering a new investment of ₹10 lakhs into a fund that tracks a major equity index. Their adviser explained the differences between open-ended, closed-ended, and Exchange Traded Funds (ETFs), and the importance of cut-off timings for transactions.

Medium Sub-question 1

Mr. Sharma is considering a new investment. If he opts for an open-ended 'Large and Mid-cap fund', what is the minimum percentage of its total assets that must be invested in mid-cap companies according to SEBI regulations?

A25%

B35%

C50%

D65%

Easy Sub-question 2

What is the current value of Mr. and Mrs. Sharma's existing investment in 'Growth Seeker Fund'?

A₹100,000

B₹125,000

C₹150,000

D₹200,000

Hard Sub-question 3

If Mr. Sharma invests ₹10 lakhs in an open-ended fund and, hypothetically, units are allotted at a face value lower than the prevailing NAV, how would this impact the NAV for existing investors? Additionally, what is a key regulatory difference between a 'Value Fund' and a 'Contra Fund' that an AMC can offer?

AThe NAV would increase; An AMC can offer both Value and Contra funds simultaneously.

BThe NAV would decrease; An AMC can offer either a Value or a Contra fund, but not both.

CThe NAV would remain unchanged; An AMC can offer both Value and Contra funds if they track different indices.

DThe NAV would decrease; An AMC can offer both Value and Contra funds if they have different fund managers.

Medium Sub-question 4

If Mr. Sharma considers investing in a closed-ended fund, how would he typically exit his investment before the scheme's maturity period?

ABy redeeming units directly with the Asset Management Company (AMC) at the prevailing NAV.

BBy selling the units to other investors on a stock exchange where they are mandatorily listed.

CBy switching his units to an open-ended scheme offered by the same AMC.

DBy waiting for a specified interval period during which the fund becomes open-ended.

Easy Sub-question 5

Based on Mrs. Sharma's preference for companies with stable performance and high dividend payouts, which type of equity fund would be most suitable for her?

ASmall-cap Fund

BDividend Yield Fund

CContra Fund

DSector Fund

Case 5 Case-Based · 1 mark each Mutual Fund Basics and Product Categories

Mr. and Mrs. Khanna, both aged 42, are reviewing their investment portfolio. They have an existing investment of Rs. 3,00,000 in 'Growth Multi-Cap Fund', an open-ended scheme, which they initially invested in at an NAV of Rs. 30. Recently, the NAV of this fund went up to Rs. 33. They are considering an additional investment of Rs. 60,000 into the same fund. Mrs. Khanna is also interested in a 'Tech Sector Fund' NFO that just launched, while Mr. Khanna is exploring 'XYZ Gold ETF' he heard about. They want to understand how different fund structures and investment styles might impact their portfolio and the regulatory aspects involved in mutual funds.

Easy Sub-question 1

What is the current value of Mr. and Mrs. Khanna's existing investment in 'Growth Multi-Cap Fund', given the NAV has risen to Rs. 33?

ARs. 3,00,000

BRs. 3,30,000

CRs. 3,60,000

DRs. 3,90,000

Easy Sub-question 2

When Mr. and Mrs. Khanna make their additional investment of Rs. 60,000 into the 'Growth Multi-Cap Fund' (an open-ended scheme), how will this transaction typically affect the scheme's Net Asset Value (NAV) immediately after their investment?

AThe NAV will increase proportionally to the additional investment.

BThe NAV will decrease slightly due to dilution.

CThe NAV will remain unchanged as transactions are conducted at the NAV.

DThe NAV will only change if the investment is made at face value.

Medium Sub-question 3

Mrs. Khanna is interested in the 'Tech Sector Fund' NFO. Based on the chapter text, what is a primary characteristic of a sector fund in terms of diversification and risk compared to a diversified equity fund?

ASector funds offer higher diversification and lower risk due to focused investment.

BSector funds have lower diversification and higher risk due to concentration in a specific sector.

CSector funds have similar diversification and risk as multi-cap funds.

DSector funds are always closed-ended, limiting liquidity but reducing risk.

Hard Sub-question 4

If the 'Growth Multi-Cap Fund' is an open-ended multi-cap fund as per SEBI regulations, what minimum percentage of its total assets must be invested in large-cap, mid-cap, and small-cap companies respectively? Additionally, if the AMC launching the 'Tech Sector Fund' NFO already manages a 'Contra Fund', what other specific investment style fund is it prohibited from offering?

ALarge-cap: 25%, Mid-cap: 25%, Small-cap: 25%; It cannot offer a Value Fund.

BLarge-cap: 35%, Mid-cap: 35%, Small-cap: No minimum; It cannot offer a Flexicap Fund.

CLarge-cap: 80%, Mid-cap: No minimum, Small-cap: No minimum; It cannot offer a Dividend Yield Fund.

DLarge-cap: 20%, Mid-cap: 20%, Small-cap: 20%; It cannot offer a Sector Fund.

Medium Sub-question 5

Mr. Khanna is exploring the 'XYZ Gold ETF'. Which statement accurately describes a key operational difference between an ETF and a traditional open-ended mutual fund based on how investors transact?

AETFs are traded only at the end of the day based on a single NAV, similar to open-ended funds.

BETFs are traded on a stock exchange throughout the day, allowing investors to trade with each other, unlike open-ended funds which transact with the fund house at a single daily NAV.

COpen-ended funds allow trading throughout the day, while ETFs only allow redemptions at fixed intervals.

DBoth ETFs and open-ended funds are mandatorily listed on a stock exchange for continuous trading.

About this content: These practice questions are based on the NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination Workbook published by the National Institute of Securities Markets (NISM), Mumbai. NISM is a SEBI-established institution. Questions cover Mutual Fund with verified answers and explanations. BullWiser is an independent exam preparation platform — not affiliated with NISM or SEBI. Last updated: July 08, 2026.

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Ch.11: Mutual Fund

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Multiple Choice Questions (225)

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