Assignment- A
1. Calculate the NAV for the following illustration
Name of the scheme : AB Balanced
Size of the scheme : Rs 200 Crore
Face value of share : Rs 10
Market value of the funds’ investment : Rs 280 Crore
Receivables : Rs 2 crore
Accrued income : Rs 2 crore
Liabilities : Rs 1 crore
Accrued expenses : Rs 1 crore
2. What are the advantages of mutual funds for an investor?
3. Explain types of mutual funds.
4. What do you mean by Offer document?
5. What are the different performance measures for mutual fund schemes?
Assignment- B
1. Differentiate between various performance measure of mutual funds- Sharpe, Treynor’s and Jensen’s Alpha.
2. Explain the types of risk involved in mutual fund.
3. Write down the marketing strategy for mutual funds.
Case Study
Following are the data on five mutual funds:
| Fund | Return (%) | Standard Deviation (%) | Beta |
| A | 14 | 6 | 1.5 |
| B | 12 | 4 | 0.5 |
| C | 16 | 8 | 1.0 |
| D | 10 | 6 | 0.5 |
| E | 20 | 10 | 2 |
Risk free rate is 3%
a. What is the Treynor measure and ranking?
b. What is the differential return if the market return is 13%, the standard deviation of return is 5%, and standard deviation is the appropriate measure of risk?
Assignment – C
1. A mutual fund is not
a. A portfolio of stocks, bonds and other securities
b. A company that manages investment portfolios
c. A pool of funds used to purchase securities on behalf of investors
d. A collective investment vehicle
2. After UTI, the first mutual funds were started by
a. Private sector banks
b. Public sector banks
c. Financial institutions
d. Non-banking Finance Companies
3. Mutual fund can benefit from economics of scale because of
a. Portfolio diversification
b. Risk reduction
c. Large volume of trades
d. None of the above
4. Equity Linked Savings Scheme does not have which of the following features?
a. It entitles the unit holder to tax rebate
b. The investment is locked in for 3 years
c. A minimum stated level of investments is made in equity and equity related instruments
d. None of the above
5. A close ended mutual fund has a fixed
a. NAV
b. Fund Size
c. Rate of Return
d. Number of Distributors
6. Of the following fund types, the highest risk is associated with
a. Balanced Funds
b. Gilt Funds
c. Equity Growth Funds
d. Debt Funds
7. The custodian of a mutual fund:
a. Is appointed for safekeeping of securities
b. Need not be an entity independent of the sponsors
c. Not required to be registered with SEBI
d. Does not give or receive deliveries of physical securities
8. The Mutual fund is constituted as
a. A Trust
b. A Private limited company
c. An asset management company
d. A trustee company
9. A Self Regulatory Organisation can regulate
a. All entities in the market
b. Only its own members in a limited way
c. Its own members with total jurisdiction
d. No entity at all
10. Bank owned Mutual Funds are supervised by
a. SEBI
b. RBI
c. Jointly by SEBI & RBI
d. AMFI
11. In case of merger of two AMC, 75% of the unit holders have to approve the merger in case of
a. Open ended funds
b. Both open and close ended funds
c. Close ended funds
d. None of the above
12. The first level regulator of AMCs is
a. Board of Trustees
b. Company Law Board
c. SEBI
d. RBI
13. As per SEBI guidelines, a due diligence certificate is not
a. Signed by a Compliance Officer of the mutual fund
b. A certificate that all legal formalities of a scheme are completed
c. Attached to Annual report
d. A part of offer document
14. An offer document contains an AMCs investor grievances history for the past
a. 1 fiscal year
b. 2 fiscal year
c. 3 fiscal year
d. Six months
15. For scheme to be able to change its fundamental attributes, the fund managers must obtain the consent of
a. 50% of the unit holders
b. 50% of the trustees
c. 75% of the unit holders
d. None of the above
16. SEBI does not require the following to be included in the offer document issued by a mutual fund
a. Details of the Sponsor and the AMC
b. Description of the Scheme & investment objective/strategy
c. Investors’ Rights and Services
d. Performance of other mutual funds
17. Mutual funds do not justify the need for paying commission to agents when the investors skip out of the scheme before a specified period. In India this practice is adopted by
a. Agents voluntarily paying back the commission to the Mutual fund
b. Trail commission is not paid to the agents
c. None of the above
d. The whole of commission is paid to the agents
18. An aggrieved unit-holder of a mutual fund can sue
a. The AMC
b. The trustees
c. The sponsor if returns have been guaranteed by them
d. None of the above
19. Distributors or agents
a. Can distribute several mutual funds simultaneously
b. Cannot appoint sub-agents or sub-brokers
c. Should be only individuals not companies or banks
d. Should not be an employee or associate of the AMC
20. If a charitable trust approaches a distributor with an application for investment in a mutual fund, the distributor should
a. Accept the application without wasting time
b. Reject the application outright
c. Refer to the offer document
d. Accept the application as a direct application
21. One of your friends who have invested in a mutual fund is about to get Canadian citizenship. What would you advise?
a. He should transfer the investment to his relative
b. He should get RBI approval for continuing
c. If he does not need the money, he can continue
d. He should immediately redeem his investment since foreign citizens are not eligible investors
22. The AMFI code of ethics does not cover the following prescriptions
a. Adequate disclosures should be made to the investors
b. Funds should be managed in accordance with stated investment objectives
c. Conflict of interest should be avoided in dealings with directors or employees
d. Each investment decision should be approved by investors
23. Unit holders’ right to information does not include
a. Obtaining from the trustees any information having an adverse effect on their investments
b. Inspecting major documents of a fund
c. Receiving of a copy of the annual financial statements of that fund
d. Approving investment decisions of the fund
24. A Debt fund distributes 10% dividend. How much tax does the investor have to pay on this dividend?
a. 10%
b. 12%
c. 20%
d. None
25. Contingent Deferred Sales Charge (CDSC)
a. Is higher for investors who stay invested in the scheme longer
b. Is lower for investors who stay invested in the scheme longer
c. Is the same for all investors irrespective of how long they stay invested
d. Is not allowed to be charged to mutual fund investors in India
26. The amount required to buy 100 units of a scheme having an entry load of 1.5% and NAV of Rs.20 is:
a. Rs.2000
b. Rs.2015
c. Rs.1985
d. Rs.2030
27. A high P/E multiple of a fund in comparison to average market multiple could be of
a. Value fund
b. Growth fund
c. Balanced fund
d. Equity diversified fund
28. A company whose earnings are strongly related to the state of economy is a
a. Economy stocks
b. Cyclical Stocks
c. Value Stocks
d. Growth stocks
29. A value manager does not look for
a. Stocks that are currently undervalued in the market
b. Stocks whose worth will be recognized by the market in the long term
c. High current yield
d. Long term capital appreciation
30. A bond’s rating indicates its
a. Reinvestment risk
b. Default risk
c. Inflation risk
d. Interest-rate risk
31. When interest rates rise, bond prices
a. Also rise
b. Fall
c. Are not affected
d. Fluctuate either up or down
32. As per SEBI, mutual funds can borrow for short term to the extent of
a. Total net assets
b. 50% of net assets
c. 25% of net assets
d. 20% of net assets
33. A mutual fund is not allowed to invest in the sponsor company,
a. >25% of its net assets
b. >10% of its net assets
c. Not at all
d. >5% of net assets
34. Liabilities in the balance sheet of a mutual fund are
a. In the form of long-term loans
b. Strictly short term in nature
c. Combination of long term and short term
d. Not allowed as per regulations
35. A funds weekly average net assets are Rs. 1000 Crore. What is the limit on the expenses of the fund?
a. Rs. 10.5 crore
b. Rs. 10.25 crore
c. Rs. 20.5 crore
d. Rs. 17.5 crore
36. A fund’s investments at market value total Rs.700 Crores, Total liabilities stand at Rs.50 lacs and the number of units outstanding is 28 Crores. What is the NAV?
a. Rs.30.19
b. Rs.24.98
c. Rs.32.15
d. Rs.40.49
37. For valuation of traded securities, which of the following is not true?
a. The security is valued at the last quoted price
b. The security is valued on the basis of earnings capitalisation
c. Marking to market is applied
d. If the security has not been traded on valuation date, the trading price on any previous date may be used, provided that date is not more than 30 days prior to valuation date.
38. A high portfolio turnover in an equity fund means
a. The fund is very active in market
b. Transaction costs are high
c. The fund may be quite risky
d. All of the above
39. An actively managed equity fund expects to
a. Be able to beat the benchmarks
b. Earn the same returns as the benchmark
c. Have no benchmarks
d. Under-perform when compared with the benchmark
40. An Investor buys one unit of a fund at an NAV of Rs.20. He receives a dividend of Rs.3 when the NAV is Rs. 21. The unit is redeemed at an NAV of Rs.22. Total Return is
a. 25.71%
b. Rs. 27.51
c. 21.27%
d. Rs. 21.75%
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