NISM 5A Mock Test 4 (Mutual Fund Distributor Exam)

1. An investor compares equity, debt, and gold during a falling interest rate scenario and notices that one asset class consistently benefits due to inverse relationship with rates. Which asset class is most likely to outperform in such a situation?

2. True or False: Real return from an investment can turn negative even if nominal return is positive when inflation is high.

3. An investor wants exposure to multiple asset classes without directly investing in each instrument separately. Which investment avenue best suits this requirement while ensuring professional management?

4. A mutual fund scheme is being launched where the sponsor appoints an AMC and trustee. Who among them is primarily responsible for managing investments of the scheme?

5. True or False: Trustees ensure that AMC acts in the best interest of investors and complies with regulations.

6. An AMC launches a scheme but fails to disclose all material risks clearly in official documents. This would be considered violation of which principle?

7. An investor is evaluating a scheme where the document includes investment objective, asset allocation, and risk factors. Which document is he referring to?

8. An investor buys units in an open-ended scheme and later redeems them directly with AMC at NAV-based price. Which feature is being utilized?

9. True or False: Close-ended schemes provide daily liquidity directly from AMC similar to open-ended schemes.

10. An investor observes that higher expense ratio over time reduces the compounding effect on returns. What is the direct impact of expense ratio on NAV?

11. A distributor recommends a high-risk small-cap fund to a retired investor seeking stable income. This action is an example of:

12. A scheme has total assets of ₹200 crore and liabilities of ₹10 crore with 10 crore units outstanding. What is NAV?

13. True or False: Total Expense Ratio includes fund management fees and administrative expenses.

14. An investor invests in a scheme with NAV ₹50 and exit load of 1%. If redeemed immediately, what is effective value per unit (approx)?

15. An equity mutual fund qualifies for taxation benefits when minimum equity exposure is:

16. An investor holds equity mutual fund units for 14 months and sells them. The gain will be classified as:

17. True or False: SIP ensures buying more units when prices are low and fewer when prices are high.

18. An investor checks a scheme’s riskometer showing “Very High Risk”. What does this indicate?

19. A young investor with long-term horizon wants wealth creation and can tolerate volatility. Which fund category is most suitable?

20. Standard deviation of a fund primarily indicates:

21. Beta greater than 1 indicates:

22. True or False: Alpha represents the fund manager’s ability to generate excess return over benchmark.

23. A fund with higher Sharpe ratio compared to peers indicates:

24. An investor observes frequent buying and selling within a fund portfolio. This is captured by:

25. True or False: Diversification can eliminate systematic risk completely.

26. An investor wants tax deduction under Section 80C along with market-linked returns. Which option is suitable?

27. ELSS funds have a lock-in period of:

28. An investor redeems units and receives money directly into registered bank account through electronic transfer. This facility ensures:

29. True or False: KYC compliance is optional for small investments in mutual funds.

30. FATCA compliance ensures:

31. An investor transfers funds periodically from debt fund to equity fund to reduce timing risk. This strategy is known as:

32. True or False: SWP allows periodic withdrawal from mutual fund investments.

33. A fund that tracks Nifty 50 index without active stock selection is:

34. Passive funds generally have:

35. An investor calculates value of investment: NAV ₹25, units 400. Total value = ?

36. Dividend option in mutual funds provides:

37. Growth option means:

38. True or False: Higher returns always imply lower risk in mutual funds.

39. An investor selects a fund solely based on past returns ignoring risk and suitability. This behavior is:

40. AMC earns revenue primarily through:

41. Trustees ensure compliance with:

42. True or False: Mutual funds guarantee capital protection in all schemes.

43. An investor wants high liquidity with minimal risk for short-term parking of funds. Best option:

44. Benchmark of a fund is used to:

45. True or False: Exit load is charged when units are redeemed before specified period.

46. If expense ratio increases while returns remain constant, investor’s net return will:

47. An investor evaluates funds based on consistency, risk, and alignment with goals rather than only returns. This approach is:

48. True or False: Portfolio turnover ratio reflects cost efficiency indirectly.

49. An investor compares two funds where one has stable returns but lower average return, and the other has volatile but higher returns. Risk-averse investor should choose:

50. The most appropriate factor while selecting a mutual fund for long-term investment is: