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Practice Test (AMFI)

Description: AMFI MOCK TEST PAPER PREPARATION AND PRACTICE STUDY MATERIAL
Number of Questions: 25
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Tags: AMFI MOCK TEST PAPER Test AMFI MOCK TEST PAPER AMFI MOCK TEST AMFI MOCK PAPER MOCK TEST AMFI EXAM AMFI TEST Mutual Funds
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The amount an insurance company would pay to the nominee, if a policyholder died is known as the

  1. premium

  2. sum assured

  3. face value

  4. real value


Correct Option: B

Dividends distributed by mutual funds are

  1. Taxed at source

  2. Taxed in the hands of the investors

  3. Subject to capital gains tax

  4. Tax-free in the hands of the investor


Correct Option: D

Most individuals invest in life insurance policies for

  1. risk protection

  2. tax benefits

  3. easy liquidity

  4. high returns


Correct Option: B

Investing through mutual fund is a better option than investing directly in the stock market because

  1. identifying stocks is a difficult process

  2. agents get commissions on mutual fund investment

  3. returns are guaranteed by mutual funds

  4. All of the above


Correct Option: A

A small investor can build a diversified portfolio by

  1. Buying one share each of all listed companies

  2. Investing in a mutual fund

  3. Borrowing enough money to buy shares of well-managed companies

  4. None of the above


Correct Option: B

Which of the following is not an advantage of mutual fund investment over direct investment?

  1. Higher liquidity

  2. Lower transaction costs

  3. Greater convenience

  4. Guaranteed returns


Correct Option: D

There is no contractual guarantee for repayment of principal or interest to an investor in

  1. bank deposit

  2. debt fund

  3. secured debentures

  4. All of the above


Correct Option: B

Which of the following debt investments is not rated?

  1. Corporate Bonds

  2. Commercial Paper

  3. Company Deposit

  4. Debt mutual fund


Correct Option: D

Direct investment in stock market can be a better option than investing through mutual funds if the investor

  1. Wants better returns than those offered by mutual funds

  2. Has large capital, knowledge and resources for research

  3. Has identified a bullish phase in the stock market

  4. Wants to invest for the long term


Correct Option: B

The risk tolerance of investors is independent of

  1. His age

  2. His income

  3. The stock market movements

  4. His job security


Correct Option: C

Greater returns come only from assuring higher risks, and a higher risk portfolio guarantees higher returns.

  1. True

  2. False


Correct Option: B

International funds invest in various countries therefore they are low risk funds.

  1. True

  2. False


Correct Option: B

Deciding on strategies such as cost averaging, value averaging, active switching, all depend on the

  1. Stock market situation on date

  2. Amount of money to be invested

  3. Investor's risk tolerance

  4. Phase through which the economy is passing


Correct Option: C

A sectoral fund is a

  1. low risk fund

  2. moderate risk fund

  3. high risk fund

  4. low-to-moderate risk fund


Correct Option: C

Short Term bond funds are

  1. low risk funds

  2. moderate risk funds

  3. high risk

  4. None of the above


Correct Option: B

Risk is equated with

  1. volatility of earnings

  2. level of earnings

  3. the number of investors in a fund

  4. the number of schemes of a fund family


Correct Option: A

Diversification reduces

  1. Company specific risk

  2. Market risk

  3. Both of the above

  4. None of the above


Correct Option: A

Equity price risks are

  1. Company specific

  2. Market level

  3. Sector specific

  4. All of the above


Correct Option: D

As compared to a fund with fluctuating total returns, a fund with stable positive earnings

  1. Gives higher returns

  2. Is less risky

  3. Gives lower returns

  4. Is more risky


Correct Option: B

Which of the following is the most risky?

  1. Investing in a money market mutual fund

  2. Investing in an index fund

  3. Short term investment in an equity fund

  4. Long term investment in an equity fund


Correct Option: C

A fund with a high beta coefficient gives greater returns in a rising market, and is more risky in a falling market.

  1. True

  2. False


Correct Option: A

Volatility of an equity fund portfolio is independent of the

  1. kind of stocks in the portfolio

  2. degree of diversification of the portfolio

  3. fund manager's success at market timing

  4. number of investors in the scheme


Correct Option: D

The role of an advisor is to

  1. point out the features and benefits of various investments options

  2. help the investor develop the right approach to investing

  3. recommend some investment option available

  4. offer adhoc advice whenever the investor has surplus money available


Correct Option: B

One of the most effective ways to invest through mutual funds is to

  1. develop a model portfolio

  2. buy a few units of every mutual fund scheme available

  3. invest all the money in one fund scheme

  4. invest all the money in different schemes of the same fund family


Correct Option: A

Which of the following is a disadvantage of Standard Deviation as a measure of risk?

  1. Standard Deviation measures total risk, not just market risk

  2. It is based on past returns, which does not necessarily indicate further performance

  3. It is an independent number

  4. All types of funds can be measured with standard deviation


Correct Option: B
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