Mutual Funds MCQ | JAIIB Principles & Practices of Banking

April 17, 2021
Mutual Funds MCQ JAIIB

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 Funds MCQ and SEBI MCQ. Answers are given at the end of the quiz.

Q1. 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only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.

Q2. 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.

Q3. 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

Q4. SEBI was established the purpose of regulating which market?
  1. Banking
  2. Insurance
  3. Pension
  4. Securities

Answer: (4)
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

Q5. 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;
Q6. 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

Q7. 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

Q8. 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

Q9. 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.

Q10. 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.

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