Mutual Fund Distributors Free Demo Test 3

Explanation

An index scheme mirrors the index. The fund manager of an index fund invests in the same securities which are in the index and in the same ratio / weightage. However there could be some minor difference and that is due to Tracking Error.

Explanation

As per model portfolio for couple in their seventies, with no immediate family support :

– 15 percent diversified equity index scheme; 10 percent gold ETF, 30 percent diversified debt fund, 30 percent MIP, 15 percent liquid schemes.

This shows some exposure can be taken in equities.

Explanation

To cater to people with small saving potential and to increase reach of mutual fund products in urban areas and smaller towns, SEBI has allowed a transaction charge per subscription of Rs. 10,000/- and above to be paid to distributors of the mutual fund products.

Explanation

The Offer Document is the most important sources of information on the core aspects of the scheme called its fundamental attributes. The fundamental attributes of the scheme includes:

• The type of scheme ie. Open ended / Close ended / Equity / Balanced etc
• Investment objective(s) ie. Growth / Income etc
• Terms of the issue ie. listing /repurchase / redemption etc.

Explanation

Tracking error is a measure of the consistency of the out-performance of the fund manager relative to the benchmark. Earlier it was used as a measure of how closely an index fund tracked the returns from the benchmark to which it was indexed.

Now, the tracking error is used to measure how consistently a fund is able to out-perform its benchmark.

Explanation

MIPs have an element of equity in its portfolio to give a boost to the fund’s return. This can typically range from 5 percent to 30 percent.

Explanation

STT is applicable only on equity transactions.

Explanation

Certificates of Deposit are issued by Banks (for 7 days to 1 year) or Financial Institutions (for 1 to 3 years)

Explanation

Securities and Exchange Board of India (SEBI), has mandated strict checks and balances in the structure of mutual funds and their activities. Mutual fund investors benefit from such protection.

Explanation

Price to Earnings Ratio (P/E Ratio) = Market Price / EPS

So Market Price = PE X EPS

= 30 x 5

= Rs 150