NISM Series V-A – Interactive Practice (Part 2: Questions 51–100)
NISM-style questions. Click an option to see instant inline feedback. This file contains Q51–Q100.
51. Which document is issued to an investor after allotment of units in a mutual fund?
a) Provisional allotment letter
b) Account statement / unit statement
c) KIM copy only
d) Dividend warrant
52. What does 'AUM' stand for?
a) Assets Under Management
b) Average Unit Market
c) Accumulated Unit Money
d) Asset Utility Measure
53. Which of the following is a feature of ELSS funds?
a) No lock-in
b) Guaranteed returns
c) Tax benefit under Section 80C
d) Higher expense ratio mandated
54. Who is responsible for ensuring the mutual fund complies with regulations?
a) Fund manager
b) Trustees and AMC jointly
c) Distributor alone
d) Registrar
55. Which formality is mandatory before an investor can transact in mutual funds?
a) PAN and KYC verification
b) Only PAN
c) Only bank account
d) None
56. What is 'systematic transfer plan' (STP)?
a) Regular withdrawal plan
b) Automatic reinvestment of dividends
c) Regular transfer from one scheme to another within same AMC
d) One-time switch during NFO
57. Which rate affects the returns of debt funds with interest-rate sensitivity?
a) Dividend rate
b) Repo/interest rate (market interest rate)
c) Expense ratio
d) Exit load
58. Which entity acts as custodian of securities for a mutual fund?
a) Registrar
b) Depository Participant
c) Custodian appointed by AMC
d) SEBI
59. Which is the short-term government borrowing instrument?
a) Equity share
b) Corporate bond
c) Municipal bond
d) Treasury bills (T-bills)
60. What does 'exit load' mean?
a) Fee paid by AMC to investors
b) Charge by distributor at entry
c) Charge levied by fund on redemption within specified period
d) Tax on dividends
61. Which option represents 'growth option' of a mutual fund?
a) No periodic payout; appreciation reflected in NAV
b) Payout of income periodically
c) Guaranteed principal
d) Fixed interest
62. The regulator that issues rules for mutual funds in India is:
a) AMFI
b) SEBI
c) RBI
d) MCA
63. Tracking error in an index fund indicates:
a) NAV calculation error
b) Difference between fund return and benchmark return
c) Expense ratio volatility
d) Tax inefficiency
64. What is the typical holding period to qualify for LTCG in equity funds?
a) More than 12 months
b) Less than 12 months
c) More than 36 months
d) Exact 24 months
65. Units held in demat form help in:
a) Easy transfer and holding similar to shares
b) Avoid KYC
c) Increase NAV
d) Reduce expense ratio
66. Who prepares the annual report of a mutual fund?
a) SEBI
b) AMFI
c) AMC
d) Distributor
67. Which is the main objective of a liquid fund?
a) Long-term capital appreciation
b) Tax saving
c) Short-term liquidity and preservation of capital
d) High equity exposure
68. 'Beta' of a fund measures:
a) Expense sensitivity
b) Sensitivity/volatility relative to market
c) Liquidity
d) Credit risk
69. An NFO stands for:
a) New Fund Offering
b) National Fund Order
c) Net Fund Offer
d) None
70. Which is a characteristic of a gilt fund?
a) Invests in government securities
b) Only invests in equities
c) High credit risk
d) Guaranteed returns
71. Which option describes 'systematic withdrawal plan' (SWP)?
a) Regular inflows into SIP
b) Periodic withdrawal of fixed amounts from investment
c) Switching between schemes
d) Dividend reinvestment
72. Securities transaction by mutual funds is recorded by:
a) Fund manager verbally
b) Registrar and Transfer Agent (RTA) / AMC records
c) Distributor
d) Bank only
73. Which document contains fees, charges and investment objective of a scheme?
a) Key Information Memorandum (KIM) / SID
b) Distributor brochure
c) Investor's bank statement
d) AMC's internal memo
74. Which of these is NOT a risk for mutual funds?
a) Market risk
b) Liquidity risk
c) Credit risk
d) Guaranteed return risk
75. What does 'AMC' mean in mutual funds?
a) Asset Management Company
b) Account Management Committee
c) Association of Mutuals
d) Authorized Market Custodian
76. Which is true about index ETFs?
a) They are actively managed
b) They guarantee outperforming the index
c) They aim to replicate index performance and trade on exchanges
d) They are closed only to institutions
77. Who pays distributor commission?
a) Investors directly
b) AMC out of its revenues / trail/ upfront as per scheme
c) SEBI
d) Depository
78. Which is an example of a money market instrument used by liquid funds?
a) Equity futures
b) Long-term bonds
c) Commercial Paper (CP)
d) Real estate
79. 'Average maturity' in a debt portfolio indicates:
a) Weighted average time to maturity of securities in portfolio
b) Fund's NAV frequency
c) Expense ratio
d) Exit load period
80. What is a 'folio number' in mutual funds?
a) Unique identifier for investor's holdings in a scheme
b) Distributor's registration id
c) AMC license number
d) SEBI registration number
81. Which of the following is true about 'dividend reinvestment'?
a) Investor receives cash dividends only
b) Dividends are used to buy additional units
c) Dividends are tax-free always
d) No NAV changes occur
82. SEBI's SCORES is used for:
a) Buying mutual funds
b) Lodging and tracking investor complaints
c) Tax filing
d) Distributors registration
83. 'Sharpe ratio' is used to measure:
a) Liquidity
b) Expense ratio
c) Risk-adjusted returns
d) Tracking error
84. A 'fund of funds' primarily invests in:
a) Direct equities
b) Government bonds
c) Other mutual fund schemes
d) Real estate
85. What does 'STP' help an investor do?
a) Withdraw money systematically
b) Switch lumpsum to multiple schemes automatically
c) Transfer from one scheme to another periodically
d) Get tax exemption
86. Which of the following is a regulatory requirement for distributor conduct?
a) Maintaining client confidentiality and disclosure
b) Setting fund NAV
c) Deciding expense ratios
d) Approving SID
87. Which entity maintains the unit-holder registry and processes transactions?
a) Custodian
b) Registrar and Transfer Agent (RTA)
c) Trustee
d) SEBI
88. Which option best describes 'tracking error' causes?
a) Perfect replication of index
b) Sampling differences and costs leading to deviation
c) Regulator-imposed gap
d) Investor behavior
89. 'Duration' of a bond portfolio measures:
a) Time to next coupon
b) Sensitivity of bond price to interest rate changes
c) NAV volatility
d) Credit risk
90. 'Alpha' of a fund indicates:
a) Expense ratio
b) Excess return over benchmark attributable to manager skill
c) NAV calculation method
d) Tax efficiency
91. FATCA/CRS information is collected to:
a) Reduce fund expenses
b) Comply with international tax reporting and identify foreign accounts
c) Increase NAV
d) Approve SIPs
92. 'Front-end load' means:
a) Fee charged at entry/purchase of units
b) Fee charged at redemption
c) Ongoing trail commission
d) Tax on gains
93. Which instrument is commonly used for short-term corporate borrowing?
a) Equity shares
b) Treasury bills
c) Commercial Paper (CP)
d) Preference shares
94. The trustee's primary responsibility is to:
a) Manage day-to-day portfolio
b) Protect interests of unit-holders and ensure compliance
c) Set market benchmarks
d) Register distributors
95. A 'scheme's NAV' increases when:
a) Assets decrease
b) Net asset value calculation is wrong
c) Market value of scheme's assets increases
d) Investors redeem in large numbers
96. 'Expense ratio' excludes which of the following usually?
a) Fund management fees
b) Brokerage on transactions
c) Transaction costs and taxes on securities (often excluded from TER depending on reporting)
d) Distribution commissions (can be included)
97. Which is an advantage of investing in mutual funds?
a) Guaranteed returns
b) Professional management and diversification
c) No market risk
d) Tax-free gains always
98. 'NAV per unit' is calculated by:
a) Total assets / number of units
b) Market value of assets minus liabilities divided by number of units outstanding
c) Liabilities / assets
d) Total sales of the fund
99. 'Reinvestment of dividends' means:
a) Dividends are paid as cash
b) Dividends are used to buy more units, increasing NAV impact
c) Dividends are credited to SEBI
d) Dividends are returned to AMC
100. Which is true about 'sectoral funds'?
a) They invest across all sectors equally
b) They focus on a specific sector and are higher risk
c) They guarantee returns linked to the sector
d) They are always low-risk