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AMFI Mutual Fund Mutualfunds — practice by topic

Browse 27 questions across 2 Mutualfunds topics. Choose what you want to revise, then open a question to check its answer and worked solution.

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Mutualfunds topics

Concept and Role of a Mutual Fund (15)Legal Structure of Mutual Funds (12)

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The legal form under which a mutual fund is set up in India is aRead the answer and worked solution →The face value of a single unit of a mutual fund scheme in India is typicallyRead the answer and worked solution →Which of the following best describes the Net Asset Value of a scheme?Read the answer and worked solution →The daily process of valuing every security in a scheme portfolio at its current market price is calledRead the answer and worked solution →

Worked practice questions

The legal form under which a mutual fund is set up in India is a

  1. Trust
  2. Partnership firm
  3. Company
  4. Cooperative society
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Correct answer: A. Trust

1. SEBI (MF) Regulations, 1996 define a mutual fund as a fund established in the form of a trust. 2. The trust raises money by selling units to the public under one or more schemes. 3. The pooled money is invested in securities in line with a stated objective. 4. A partnership firm, company or cooperative society are not permitted legal forms for an Indian mutual fund. _Source: NISM Series V-A: Mutual Fund Distributors Workbook (Dec 2019), Ch 2 "Concept and Role of a Mutual Fund", §2.1_

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The face value of a single unit of a mutual fund scheme in India is typically

  1. Rs. 1
  2. Rs. 10
  3. Rs. 100
  4. Rs. 1,000
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Correct answer: B. Rs. 10

1. Every scheme unit carries a fixed face value used for accounting. 2. The workbook records the typical face value as Rs. 10 per unit. 3. Multiplying units issued by face value gives the scheme's unit capital. 4. The other rupee figures are not the standard face value. _Source: NISM Series V-A: Mutual Fund Distributors Workbook (Dec 2019), Ch 2 "Concept and Role of a Mutual Fund", §2.1.4_

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Which of the following best describes the Net Asset Value of a scheme?

  1. Face value of one unit issued today
  2. Original issue price of a unit in the NFO
  3. Fair worth per unit at current market prices
  4. Total assets minus sponsor initial stake
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Correct answer: C. Fair worth per unit at current market prices

1. NAV is defined as the true worth of one unit of the scheme. 2. It equals the net realisable value per unit if all holdings were sold today. 3. Face value stays fixed at Rs. 10 and is unrelated to daily NAV changes. 4. NAV is computed daily using mark-to-market prices of scheme holdings. _Source: NISM Series V-A: Mutual Fund Distributors Workbook (Dec 2019), Ch 2 "Concept and Role of a Mutual Fund", §2.1.4_

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