Here is the next quiz in the quiz/MCQ series for Principles and Practices of Banking subject of JAIIB. This post covers the topics of Mutual Fund MCQ Part 2. Answers are given at the end of the quiz.
Q1. Income scheme mutual funds invests primarily in __________?
- Fixed income securities
- Equities
- Other Mutual Funds
- 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.
Q2. The Gilt funds invest exclusively in ___________?
- Certificate of Deposits
- Debentures
- Corporate Bonds
- 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
Q3. Name the mutual fund scheme that provides tax benefits under 80C?
- Gilt Funds
- Fixed Income Fund
- Equity Linked Saving Scheme (ELSS)
- 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.
Q4. What is the maximum period for which New Fund Offer (NFO) can remain open in market?
- 45 days
- 30 days
- 15 days
- 10 days
Answer: (3)
As per SEBI regulations, a new fund offering can remain active in the market for a maximum of 15 days.
Q5. Which color code represents lowest level of risk in a mutual fund scheme?
- Blue
- Green
- Yellow
- 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.
Q6. The NAV of mutual fund scheme must by mutual fund on ___basis
- Yearly
- Monthly
- Weekly
- 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
Q7. For index funds and all debt money market, the mutual funds have to round off NAV upto ___ decimal points.
- Two
- Three
- Four
- 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
Q8. For equity oriented and balanced fund schemes, the mutual funds have to round off NAV upto ___ decimal points.
- Two
- Three
- Four
- None of the Above
Answer: (1)
Mutual funds round off NAVs upto two decimals in case of equity-oriented and balanced fund schemes.
Q9. Who conducts the certification that have to be passed by persons/entities engaged in marketing and selling of mutual funds?
- SEBI
- AMFI
- IRDAI
- PFRDA
Answer: (2)
Q10. Fund of funds (FoF) mutual funds invests in _________
- Equities
- Corporate Bonds
- G-Sec
- 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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