300+ TOP Mutual Funds MCQs and Answers Online Quiz

Mutual Funds Multiple Choice Questions

1. Name the application process that allow an investor to apply for issue using his bank account.  Under this process, the application money is debited from applicant bank account only if his application is selected for allotment.  

  1. ASBA
  2. BSBDA
  3. BCCMA
  4. FIMC

Answer: 1
ASBA means “Applications Supported by Blocked Amount”. ASBA is an application containing an authorization to block the application money in the bank account, for subscribing to an issue. If an investor is applying through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.

2. Name the term given to banks who are capable of providing ASBA services to its customers. 
  1. Stock Certified Banking Entity
  2. Equity Certified Banking Company
  3. Self Certified Syndicate Bank
  4. ASBA Certified Bank

Answer: 1
Banks which are certified by SEBI to allow retail individual investor to apply in IPO’s using ASBA payment method, are known as ‘Self Certified Syndicate Banks (SCSBs)’. These banks has capability to block the IPO Application amount until IPO allotments are done.

3. In which year Securities and Exchange Board of India Act (SEBI) was enacted?  
  1. 1990
  2. 1992
  3. 1994
  4. 2000

Answer: 2
The Securities and Exchange Board of India Act, 1992 was act passed to provide for the establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto. Accordingly the Security and Exchange Board of India was established on 12 April 1992

4. SEBI was established the purpose of regulating which market?
  1. Banking
  2. Insurance
  3. Pension
  4. Securities

Answer: 4

5. What is the minimum corpus of  fund that a Pension Fund must have to act as Qualified Institutional Buyers (QIB)?
  1. Rs 15 crore
  2. Rs 25 crore
  3. Rs 50 crore
  4. Rs 75 crore

Answer: 2
Qualified Institutional Buyers are those institutional investors who are generally perceived to possess expertise and the financial muscle to evaluate and invest in the capital markets. In terms of clause 2.2.2B (v) of DIP Guidelines, a ‘Qualified Institutional Buyer’ shall mean:

  • Scheduled commercial banks;
  • Mutual funds;
  • Foreign institutional investor registered with SEBI;
  • Multilateral and bilateral development financial institutions;
  • Venture capital funds registered with SEBI.
  • Foreign Venture capital investors registered with SEBI.
  • State Industrial Development Corporations.
  • Insurance Companies registered with the Insurance Regulatory and Development Authority (IRDA).
  • Provident Funds with minimum corpus of Rs.25 crores
  • Pension Funds with minimum corpus of Rs. 25 crores
  • Public financial institution as defined in Companies Act, 2013;
6. Name the authority with which a mutual fund has to get registered before making any offer to public?  
  1. SEBI
  2. RBI
  3. Department of Financial Services
  4. FIMMA

Answer: 1
A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) before it can collect funds from the public

7. SEBI Regulations require that at least _____ of the directors of trustee company or board of trustees must be independent
  1. 1/3rd
  2. 1/4th
  3. 2/5th
  4. 2/3rd

Answer: 4
SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors

8. SEBI Regulations requires that _____ % of the directors of AMC must be independent.
  1. 20%
  2. 35%
  3. 50%
  4. 75%

Answer: 3
SEBI Regulations require 50% of the directors of AMC must be independent

9. Which out of the following term represents market value per unit of a mutual fund?  
  1. Alpha
  2. NAV
  3. Sharpe Ratio
  4. SD

Answer: 2
Net Asset Value (NAV) is a fund’s market value per unit. It is calculated by dividing the total value of all the assets in a portfolio, minus all its liabilities.

10. The Growth mutual funds invests primarily in _______?  
  1. Equities
  2. G-Secs
  3. Corporate Bonds
  4. None of the Above

Answer: 1
A mutual fund that invests in growth stocks/equities (an emerging company) to attain maximum capital appreciation is a growth mutual fund.

11. Income scheme mutual funds invests primarily in __________?  

  1. Fixed income securities
  2. Equities
  3. Other Mutual Funds
  4. Commercial Papers

Answer:1
A debt mutual fund scheme invests a significant portion of its portfolio in fixed-income securities like government securities (G-Sec), debentures, corporate bonds and other money-market instruments. Fixed income mutual funds aim to generate returns by investing in bonds and other fixed-income securities which means that these funds buy the bonds and earn interest income on the investments.

12. The Gilt funds invest exclusively in ___________?
  1. Certificate of Deposits
  2. Debentures
  3. Corporate Bonds
  4. Government securities

Answer: 4
Gilt funds are debt funds that invest in government securities. The government bonds used to be issued in golden-edged certificates

13. Name the mutual fund scheme that provides tax benefits under 80C?  
  1. Gilt Funds
  2. Fixed Income Fund
  3. Equity Linked Saving Scheme (ELSS)
  4. Growth Funds

Answer: 3
An equity-linked savings scheme or ELSS is a tax-saving investment under Section 80C of the Income Tax Act, 1961. By investing in ELSS, you can claim a tax rebate of up to Rs 1,50,000 a year. An ELSS is the only kind of mutual fund eligible for tax benefits under Section 80C.

14. What is the maximum period for which New Fund Offer (NFO) can remain open in market?
  1. 45 days
  2. 30 days
  3. 15 days
  4. 10 days

Answer: 3

15. Which color code represents lowest level of risk in a mutual fund scheme?  
  1. Blue
  2. Green
  3. Yellow
  4. Brown

Answer: 1
The various risk levels and the corresponding colour codes are:

  • Blue: The blue colour coded box will be used to indicate low risk
  • Yellow: The yellow colour coded box will indicate medium risk. All hybrid products such as monthly income plans (MIPs), balanced funds and unit-linked insurance plans which typically invest in both equity and debt products will be given a yellow colour.
  • Brown: The brown colour coded box indicates that one’s money is being put into a high-risk instrument. All equity funds such as diversified funds, sectoral funds, index funds, large-cap funds and small-cap funds will carry a brown colour code as these have a significant risk component and are prone to market fluctuations.
16. The NAV of mutual fund scheme must by mutual fund on ___basis
  1. Yearly
  2. Monthly
  3. Weekly
  4. Daily

Answer: 4
NAV is required to be disclosed by the mutual funds on a daily basis. The NAV per unit of all mutual fund schemes have to be updated on AMFI‟s website and the Mutual Funds‟ website by 9 p.m. of the same day. Fund of Funds are allowed time till 10 a.m. the following business day to update the information

17. For index funds and all debt money market,  the mutual funds have to round off NAV upto ___ decimal points.  
  1. Two
  2. Three
  3. Four
  4. None of the Above

Answer: 3
Mutual funds round off NAVs upto four decimals in respect of index funds and all types of debt-oriented schemes like liquid/money market, gilt, income, short term plan, fixed maturity plan, monthly income plans, etc

18. For equity oriented and balanced fund schemes,  the mutual funds have to round off NAV upto ___ decimal points.  
  1. Two
  2. Three
  3. Four
  4. None of the Above

Answer: 1
Mutual funds round off NAVs upto two decimals in case of equity-oriented and balanced fund schemes.

19. Who conducts the certification that have to be passed by persons/entities engaged in marketing and selling of mutual funds?
  1. SEBI
  2. AMFI
  3. IRDAI
  4. PFRDA

Answer: 2

20. Fund of funds (FoF) mutual funds invests in _________

  1. Equities
  2. Corporate Bonds
  3. G-Sec
  4. Other Mutual Funds

Answer: 4
Fund of funds is a Mutual Fund which utilises its pool of resources to invest in various other kinds of mutual funds available in the market. Alternatively, investment in hedge funds can also be made via this Mutual Fund.

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