NISM Series V-A – Interactive Practice Quiz (Part 1A: Questions 1–25)

Style: NISM-like questions covering core syllabus areas. Click an option to get instant inline feedback.

1. Which document provides investors with the principal features and risks of a mutual fund scheme?

a) Annual report of AMC
b) Scheme Information Document (SID) / Key Information Memorandum (KIM)
c) Trustee report
d) Broker memo

2. NAV of an open-ended mutual fund is normally calculated:

a) Daily, after market close
b) Weekly
c) Monthly
d) Quarterly

3. Who is responsible for safekeeping of the assets of a mutual fund?

a) Asset Management Company (AMC)
b) Custodian appointed by the AMC
c) Registrar and Transfer Agent (RTA)
d) SEBI

4. An investor redeems units of an open-ended scheme. Which statement is correct about payout?

a) Redemption proceeds are paid by the distributor in cash immediately
b) Redemption proceeds are paid by the AMC/RTA to investor's bank account after processing
c) Payout is made to SEBI and then to investor
d) Distributor holds the payout indefinitely

5. Which of the following funds is most suitable for short-term parking of surplus funds?

a) Equity fund
b) Gilt fund
c) Liquid fund
d) Sectoral equity fund

6. Which one of the following statements about SIP is correct?

a) SIP allows investing a fixed sum at regular intervals, promoting disciplined investing
b) SIP guarantees positive returns annually
c) SIP requires lump sum payment only
d) SIP is available only for debt funds

7. Which of the following is a money market instrument?

a) Equity shares
b) Treasury bills (T-bills)
c) Equity index futures
d) Real estate

8. An index fund is designed to:

a) Outperform the benchmark through active stock selection
b) Invest only in government securities
c) Replicate the composition and performance of a specified market index
d) Provide guaranteed returns equivalent to the index

9. Exit load in a mutual fund scheme is charged to:

a) SEBI for regulatory compliance
b) Distributors when they sell units
c) Investors who redeem units within the specified period
d) AMC employees as performance bonus

10. LTCG tax on equity mutual funds above ₹1 lakh (holding >12 months) is:

a) 10% on gains above ₹1 lakh (without indexation)
b) 15% flat
c) 20% with indexation
d) Fully exempt

11. The Key Information Memorandum (KIM) is intended to:

a) Replace the SID entirely
b) Provide detailed accounting policies
c) Present key facts and risks in a concise manner for quick investor reference
d) Be used only by distributors for training

12. Why is KYC mandatory for mutual fund investments?

a) To prevent money laundering and ensure investor identity
b) To increase NAV
c) To reduce volatility
d) To calculate dividends

13. A balanced fund typically invests in:

a) Only equity
b) A mix of equity and debt
c) Only commodities
d) Only cash instruments

14. Which type of risk is systematic and affects the whole market?

a) Market risk (systematic risk)
b) Company-specific risk (unsystematic)
c) Operational risk
d) Settlement risk

15. Dividend option in a mutual fund means:

a) Units will be redeemed at maturity automatically
b) Income (if any) is distributed to unitholders as dividend
c) Principal is returned periodically
d) Dividends are guaranteed by AMC

16. Index funds generally have:

a) High active management costs to beat the index
b) Exposure only to debt securities
c) Lower expense ratios and passive replication of index
d) Guaranteed to match index returns exactly

17. One benefit of SIP is:

a) Eliminates all investment risk
b) Helps in rupee-cost averaging over time
c) Gives tax exemption always
d) Requires no KYC

18. A close-ended fund usually:

a) Has a fixed corpus and is open for subscriptions only during NFO
b) Is continuously open for fresh purchase at NAV
c) Redeems units daily like open-ended funds
d) Is only for SIP investors

19. Which is an example of a money market instrument?

a) Equity shares
b) Long-term corporate bonds
c) Mutual fund units
d) Treasury bills (short-term government papers)

20. Expense ratio of a fund represents:

a) The broker's commission only
b) Entry load charged to investors
c) Annual percentage of fund assets used to cover operating expenses
d) Tax on dividend distribution

21. ELSS funds are known for:

a) Tax benefits under Section 80C and a lock-in period
b) Investing only in debt instruments
c) Providing guaranteed returns
d) No lock-in period

22. Who appoints the trustees of a mutual fund?

a) Unit-holders directly through voting
b) Sponsor/AMC as per trust deed and regulatory requirements
c) SEBI directly
d) Registrar and Transfer Agent

23. AMFI stands for:

a) Association of Mutual Funds in India
b) Association of Market Fund Investors
c) Asset Management Federation of India
d) Association of Mutual Fund Investors

24. Systematic Withdrawal Plan (SWP) allows investors to:

a) Withdraw a fixed amount periodically from their investment
b) Invest lumpsum at periodic intervals
c) Switch automatically between schemes
d) Defer KYC formalities

25. Which option corresponds to income being paid out to investors?

a) Growth option (no periodic payout)
b) Dividend option (income is distributed)
c) Both options always
d) None of the above