You must score at least 80% to complete this chapter.1. How is PE Ratio calculated? Net Profit After Tax / No. of Equity Shares OutstandingMarket Price of Shares / Growth in EarningsMarket Price of Shares / Earnings Per ShareMarket Price of Shares / Book Value Per Share2. What will a Fundamental Analyst study to determine price target of a share? Past price behaviour of sharesFinancial Parameters like EPS, PE Ratio, etc.Volume of Shares TradedNone of the above3. Which issuing authority issues Certificate of Deposit? Banks and Financial InstitutionsPrivate Sector CompaniesPublic Sector Companies Reserve Bank of India4. How will increase in the yield in the market affect the value of existing debt securities? Increase their valueDecrease their value No change in value5. If the fund manager expects interest rates to rise where should he invest? Floating rate debt securitiesFixed rate debt securities of short tenorBoth a and b None of the above6. Real estate prices rise when the economy is unstable. True or False? TRUEFALSE7. A portfolio has Beta of more than 1. What does that mean? Portfolio is riskier than the marketPortfolio is less risky than the marketPortfolio has the same risk as the market8. Which measure of risk is relevant only for debt schemes? VarianceBetaStandard DeviationModified Duration 9. Which index is better suited to diversified equity fund which invests in large cap stocks? S&P BSE SensexNifty Midcap 5010. _______________ measures how closely an index fund tracked benchmark returns. Tracking Error AlphaBetaSharpe11. What is a driver of return and risk in a scheme? Investor profile of the schemeAUM of the schemeMarket Sector in which the scheme has investedAge of the scheme12. What will be evaluated in the Fundamental Analysis of a security? Quality of ManagementCompetitive Position of Product and ServicesAll of the above None of the above13. Which portfolio building approach involves evaluating first the economy then the industries and finally the companies? Top down approach Bottom up approach14. Which debt security has lowest default risk? Bank Fixed DepositCertificate of DepositGiltBond15. As per SEBI, which returns should be considered to check the performance of a scheme over the years? Simple ReturnCompounded ReturnCompounded Annual Growth Rate Return Annualised Return16. What is the most important factor that should concern the investor when he invests in debt security? Credit rating Interest RateSector performance of the issuer17. Which type of scheme can own higher percentage of illiquid assets? Open ended schemeClose ended scheme18. Mutual funds can hedge their portfolio on weighted average modified duration basis by investing in Interest Rate Futures (IFRs). Correct or Incorrect? CorrectIncorrect19. Though debt securities do not give as much return as equity but at least there is no chance of loss of principal if invested in debt fund. Correct or incorrect? IncorrectCorrect20. From income tax point of view, returns of arbitrage funds are treated as returns of - EquityDebt21. What is the formula of Treynor Ratio? (₹ minus Rf) ÷ Standard Deviation(₹ minus Rf) ÷ Beta22. Which of the following is a good benchmark for a long term debt fund? 1 year GoI security3 year GoI security5 year GoI security10 year GoI security 23. Which category of schemes would use 'CRISIL Composite Bond Fund Index [25% allocation] + S&P BSE 200 (TRI) [75% allocation]' as their benchmark? Aggressive Hybrid Fund Balanced Hybrid FundConservative Hybrid Fund24. What affects the choice of benchmark of a debt scheme? Scheme Type Credit Rating of SecuritiesSector ConcentrationNone of the above25. Which index is most suitable for Overnight Fund? CRISIL Composite Bond Fund IndexCRISIL Long Term Debt IndexCRISIL Corporate Bond Composite IndexCRISIL CBLO Index 26. A scheme invests in Government securities of 2 year tenure. Which index is the most suitable? Si-Bex Mi-BexLi-Bex27. Which debt mutual fund schemes hold their value despite fluctuation in interest rates? Liquid FundsIncome FundDynamic Bond FundFloating Rate Fund 28. Which index would be most suitable for a short term money market scheme? NSE's MIBOR ICICI's Si-BexS&P BSE India Sovereign Bond IndexNone of the above29. Which type of funds carry the highest risk of wrong sector selection? Thematic FundsSector Funds Diversified Funds30. What is relevant while deciding which benchmark should be chosen for an equity scheme? Scheme TypeChoice of Investment UniverseChoice of Portfolio ConcentrationAll of the above 31. Who carries out credit rating of the securities in which mutual fund schemes invest? AMFIRBISEBINone of the above 32. As per CAPM, which risk can be diversified and why? Systematic Risk, because it is market riskSystematic Risk, because it is unique to a companyNon-Systematic Risk, because it is market riskNon-Systematic Risk, because it is unique to a company 33. Risk of inflation, political turmoil and recession is systematic risk. True or False? TRUEFALSE34. Which type of investment performs the best when there is financial or political turmoil? EquityDebtReal EstateGold35. Which type of mutual fund scheme buys and sells the same security at the same time in different markets and takes advantage of price difference? MIPArbitrage Fund Dynamic Asset Allocation FundQuant Fund36. Which issuing authority issues debenture? Banks and Financial InstitutionsPrivate Sector Companies Public Sector Companies Reserve Bank of India37. G-Secs are guaranteed by Government, hence, they are not prone to fluctuation in value like non-Government securities. Correct or incorrect? CorrectIncorrect38. What is the PE ratio if the market price of share is Rs. 200 and EPS is Rs. 20? 100.1180400039. SEBI has made regulations about the outside liabilities of mutual fund schemes. Which of the following is False? Scheme can borrow only up to 25 percent of its net assets Scheme cannot borrow for more than 6 months40. What is the CAGR's formula? (LV 1*n ÷ IV) - 1(LV 1÷n ÷ IV) - 100(LV 1÷n ÷ IV) - 1(LV 1÷n ÷ IV) + 141. What is the key factor that determines returns in debt mutual fund schemes? Stock SelectionInterest Rate Forecast Sector SelectionNone of the above42. Under which situation will a fund manager keep scheme's funds in liquid form? When liquid schemes are performing wellWhen there is upcoming dividend payment Diversification strategy by keeping money different asset classTo earn higher return43. Under which investment style will the investor buy stocks which are priced lower than their intrinsic value? GrowthValue44. Which asset class will be impacted the most because of a bull run in stock market? GoldReal EstateEquityDebt45. Which of the following risks affect debt securities? Credit Rating DowngradeCredit RiskChanges in YieldAll of the above46. Money market securities mature within one year. Correct or incorrect? CorrectIncorrect47. Which security has lower price risk because of fluctuation in NAV - Bonds or Liquid? LiquidBond48. What is credit spread? Difference between the yield of Treasury Bill and any other debt securityDifference between the yield of two debt securitiesDifference between the yield of Gilt and other non-Government security49. An investor wants to invest in the investment option which carries least credit risk. Which of the following options is least risky? The scheme has invested in Government SecuritiesThe scheme has invested in AAA Rated Corporate Bonds.The scheme has invested in PSU Bonds.The scheme has invested in Bank CD.50. When the interest rate in the market rise, value of a debt security will _________ Fall IncreaseNot be affected51. A portfolio is less risky than the market, when - Beta is less than 1 Beta is more than 1Beta equals to 152. What is the Price to Book Value if - Net Worth =Rs. 25 Crore, Number of Equity Shares Outstanding = 10 Lakhs, Market Price of a Share = Rs. 1,250? 456753. Which of the following statement is correct as far as it pertains to scheme's liabilities? Mutual fund cannot borrow for more than 6 months.Mutual fund can borrow only to meet the cash flow needs of investor servicing.Mutual fund scheme cannot borrow more than 20 percent of its net assets.All of the above 54. What do the technical analysts study to arrive at buy/ hold/ sell recommendation? Price Volume ChartVertical Line ChartFootprint Chart55. What does EIC Framework stand for? Economy, Interest, CurrencyEquity, Interest, CountryEconomy, Industry, CompanyEquity, Industry, Currency56. Which portfolio building approach involves evaluating the company first and industry later? Top down approachBottom up approach57. If the investor wants to take low risk and earn only interest income from a debt scheme, where should he invest? Long maturity debt FundShort maturity debt fund58. Conservative Hybrid Fund is basically an equity scheme with only a small proportion of debt and large proportion of equity. True or False? TRUEFALSE59. Which measure of risk compares the fluctuation in periodic returns of the scheme with its own average return? VarianceStandard DeviationNone of the aboveBoth a and b60. If an investor wants to compare returns from two schemes, where the investment period was different and less than one year, which return would he compare? Simple ReturnAnnualised ReturnCompounded Return61. What does CAPM stand for? Current Asset Price ModelCapital Asset Pricing MechanismCash Asset Pricing MechanismCapital Asset Pricing Model62. Which among the following suitably defines the Risk - Asset classscheme expencesexit loadFinancial loss63. Role of Credit rating agencies is highest in debt funds. TRUEFALSE64. Mutual fund pay taxes on their income at the rate of - 0.05%0.50%1.00%NIL65. Once the asset allocation is decided---------------- can help us to select the good debt and equity Schemes. PE RatioSharp RatioBetaSD66. The P/E ratio is an important measure of - a company's past performancea company's anticipated performancea company's financial policiesNone of these67. Which of the following is done through technical analysis? Mark to marketbook value analysisProfit analysisVolume & price behavior68. An investor holds 1200 units of a scheme , scheme declares 1:3 bonus. How many units the investor will get? 20030040060069. What is the market price of a share if its PE Ratio is 20 and EPS is ₹12.5? ₹1.6 ₹0.625 ₹250 ₹20070. When will a company pay high dividend yield? High dividend payout Low Market Price of ShareBoth the aboveNone of the above71. Under which investment style will the investor buy stocks which are priced lower than their intrinsic value? growthvalue72. Which asset class will be impacted the most because of a bull run in stock market GoldReal estateEquityDebt73. Which credit rating means lowest credit risk? AAAAAA74. When the interest rate in the market rise, value of a debt security will _________ - FallIncreaseDo not effect75. What does modified duration of security indicate? Tenor of the securityCredit risk of the securityhow much will the value of a debt security fluctuate in response to change in interest rate None of the above76. If the fund manager expects interest rates to fall where should he invest? Floating rate debt securitiesFixed rate debt securities of short tenorFixed rate debt securities of long tenorNone of the above77. Weakening of rupee will lead to increase in price of gold. True or False? TRUEFalse 78. How are interest rate and real estate prices related? Interest Rates fall, Real Estate prices fall Interest Rates rise, Real Estate prices fall79. What is the basic assumption of CAGR? Dividend will be paid to the investorDividend will be invested at ex-dividend NAVDividend will be invested at cum-dividend NAV80. Investments in mutual funds are subject to market risks. Therefore the fund – Will provide guaranteed returns Will guarantee capital protection in long run Will not provide guarantee of returns or capital appreciation81. Which factors lead to difference between scheme returns and investor returns? Exit LoadAdditional Investment Part Redemption All of the above 82. Which of the following statement is correct as far as it pertains to scheme’s liabilities? Mutual fund cannot borrow for more than 6 months. Mutual fund can borrow only to meet the cash flow needs of investor servicing. Mutual fund scheme cannot borrow more than 20 percent of its net assets. All of the above83. Mutual funds can invest in derivatives. However, investment for one of the following purposes is disallowed by SEBI. Which one is it? Hedging against risk Leveraging Re-balancing the portfolio84. SEBI has stipulated that every scheme should have at least _____ investors and no investor should represent more than _________ percent of net assets of a scheme. 25, 20 20, 25 20, 2025, 2585. Fixed Maturity Plans align the maturity of their portfolio to the maturity of the scheme. Correct or incorrect? CorrectIncorrect86. Fluctuations in returns of a security does not make it riskier than any other security if over a long period the average returns of both are same. Correct or incorrect? Correctincorrect87. Which measure of risk is used to identify total risk in an investment? Standard Deviation Modified DurationVariance Beta88. Which measure of risk compares the fluctuation in periodic returns of the scheme with its own average return? Variance Standard Deviation None of the aboveBoth a and b 89. A portfolio is less risky than the market, when - Beta is less than 1 Beta is more than 1 Beta equals to 190. Which measure of risk is relevant only for equity schemes ? Variance Beta Standard Deviation Modified Duration91. Which measure of risk measures the sensitivity of value of debt security to change in interest rate? Weighted Average MaturityModified Duration Credit Rating92. To which variant of index are the mutual fund schemes benchmarked? Price Return variant of Index (PRI) Total Return variant of Index (TRI) 93. Which index is most suitable for Dynamic Bond Fund? CRISIL Composite Bond Fund Index CRISIL Long Term Debt IndexCRISIL Corporate Bond Composite Index CRISIL CBLO Index94. An investor who wants to invest in foreign markets, he should invest in – International Funds Arbitrage Funds Large Cap FundsMid Cap Funds95. Can Indian mutual funds invest in Gold? YesNo96. Which of the following is a good benchmark for a short term debt fund? 10 yearGoI security 1 year T-Bill 3 yearGoI security 5 yearGoI security97. Which of the following ratio measures risk -adjusted performance? BetaAlpha Standard Deviation R-Squared98. Mutual Funds are permitted to participate in Exchange Traded Commodity Derivatives through Gold ETFs subject to prescribed regulations. TRUEFALSE Loading... Categories: Top Debt Funds