AMFI Registered Mutual Fund Distributor | SEBI registered Investment Adviser
Q1: Before you make your first mutual fund investment, it is important to know your level of risk tolerance
So that you can accurately predict the returns your mutual fund will yield in 2 years
So that you can predict when is the right time to sell your mutual funds
So that you can decide what type of mutual fund best matches your investment objectives.
So that you can control the value of your mutual funds
Q2: Which of the following best describes 'Time Horizon'?
How long you can afford to hold on to your investments before selling them off
The time when the sun sets over the horizon
The growth cycle of a mutual fund investment
The best time to switch from one mutual fund to the other
Q3: How would you budget for investment?
70% of each month's salary goes into investments
I invest the amount left over after taking care of all major commitments
I usually spend all my salary on other things and have to borrow to invest
Q4: If you save Rs. 5000 every month in an investment that gives you 15% annual return, in 30 years' time, how much would your savings be worth according to the principle of compounding?
I don't save
Q5: What are bonds?
Bonds are basically loans, where you are the lender.
Bonds are portfolios of mutual funds, bonds, and other investment instruments.
Bonds are derivative instruments.
Bonds are 'shares' of a company.
Q6: Which of the following is true?
Stocks are 'shares' of a company whereas dividends are non-obligatory yearly cash payments to share-owners that represent a portion of profits
Stocks are what you lend out whereas dividends are what you receive in payment for your loans
Stocks are mutual funds whereas dividends are the monthly cash-payments to owners of mutual funds
Stocks are always traded at a fixed price whereas the prices for dividends are never fixed
Q7: Which of the following best describes the investment strategy of a 'contrarian investor'?
A contrarian investor buys more units of a fund using contra
A contrarian investor buys when the market is up and sells when the market is down
A contrarian investor buys when the market is down and sells when the market is up
A contrarian investor only invests in country funds
Q8: In general, rising interest rates cause bond prices to
Remain the same
Interest rates do not affect bond prices in any way
Q9: which of the following is false?
Mutual funds are portfolios of stocks, bonds, and other investment instruments.
Mutual funds can be sold any day at the market price
Mutual funds spread the risks involved in investing because they buy into a good variety of stocks and bonds
Mutual funds are a type of insurance policy
Q10: How is the price of a stock determined before it is listed?
By the location of the company
By the company's actual and potential earnings
By the staff strength of the company
By the number of years that it has been in existence
Q11: Where do Global Funds typically invest in?
Mostly in emerging markets
In all parts of the world including the Indian market
In all parts of the world excluding the Indian market
In all types of foreign investments, including stocks, bonds and real estate
Q12: What is one thing you can be certain of when you switch mutual funds frequently?
You maximise your returns
Your risks are spread out
You will be able to catch the market timing
You incur additional costs
Q13: What factors should you consider when you invest in a mutual fund?
The fund's past performance.
The entry, exit loads and Annual expense ratios
The fund objective, the ability & experience of the fund manager in managing such funds.
All of the above.
Q14: Which one of the following describes Rupee Cost Averaging'?
The average cost of all the mutual funds in a portfolio
A constant investment into a mutual fund at predetermined times such that the investor purchases more units when the price is low and less when it is high.
The average returns of the mutual funds achieved over a period of time expressed as the annual compounded interest rate
None of the above
Q15: What is asset allocation in building a portfolio?
It is the total value of all the assets minus all the expenses in your portfolio
It is to fully expose your portfolio to only equities
It is to balance your portfolio between various types of mutual funds
It is to weight your portfolio towards one type of mutual fund
Q16: If a mutual fund is invested in only one sector
It is broadly diversified
It has a high P/E ratio
It is classified as low risk
It is narrowly focused
Q17: If past performance is not an indicator of future results, should it be totally disregarded?
Yes, since it does not help at all
No, it can still be used to predict short-term results
No, but it should be considered together with other non-quantitative factors
No, because past performance is actually an indicator of future results
Q18: If Rahul is a conservative investor and is not a big fan of risk-taking, if given a choice between a sector fund and a balanced fund, which would you recommend him to invest in?
The sector fund.
The balanced fund.
Both funds are suitable
Both funds are only suitable for aggressive investors.
Q19: An investor seeking a fund that generally buys cheap stocks of well-run unnoticed companies would be best served by a fund manager with what kind of investing style?
Q20: Mutual funds measure their performance against
Rate of depreciation
A benchmark index
Q21: As your investment horizon approaches, You will,
Switch your high risk mutual funds to low risk mutual funds.
Accumulate more high risk mutual funds.
Sell off all your mutual funds and just keep cash.
Q22: What do money market mutual funds invest in?
These invest in stocks of companies
These invest in bonds and other fixed income instruments
These invest in a combination of stocks and bonds.
These invest in short-term debt instruments comprising I Owe Yous of various kinds
Q23: If you have a short investment horizon of between 2 to 5 years,
You should hold a greater proportion of less risky mutual funds
You should hold a mixture of higher risk mutual funds, and lower risk mutual funds
You can afford to have a greater proportion of higher risk mutual funds
You should hold only narrowly focused mutual funds
Q24: what is an underlying fund?
The main fund in which a feeder fund invests in.
A fund which invests in the emerging markets
A fund which invests only in derivatives
A fund which has a contrarian investment approach
Q25: What is the difference between the bottom-up and top-down investment strategies in asset management?
A bottom-up strategy focuses on growth while the top-down strategy focuses on value.
A bottom-up strategy underweights the major world indices while the top-down strategy overweights the major world indices
A bottom-up strategy focuses on diversification while a top-down strategy focuses on specialization.
A bottom-up strategy focuses on a company's fundamentals while a top-down strategy focuses on the sector or industry and then searches for the companies within those sectors/industries to invest in.
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