NISM-Series-V-A: Mutual Fund Distributors Certification Examination

In a mutual fund, the money that an investor contributes is invested in a portfolio of securities held in trust on the investor's behalf. What does this make the investor?

• AA lender to the AMC under the SEBI (Mutual Funds) Regulations framework.
• BA beneficial owner of the underlying portfolio in proportion to units held
• CA creditor of the trustee as covered in the NISM Series V-A distributor workbook.
• DA guarantor of the scheme's returns per AMFI guidance for mutual fund intermediaries in I…

Which of the following is a key advantage that mutual funds offer to small retail investors?

• AA guaranteed minimum annual return under the SEBI (Mutual Funds) Regulations framework.
• BExemption from all capital gains tax as covered in the NISM Series V-A distributor workbo…
• CDirect voting control over portfolio companies per AMFI guidance for mutual fund intermed…
• DProfessional management and diversification at low investment amounts

A close-ended mutual fund scheme differs from an open-ended scheme primarily because a close-ended scheme:

• AHas a fixed maturity and a fixed number of units, with units listed on a stock exchange f…
• BCan be bought and redeemed from the AMC on any business day under the SEBI (Mutual Funds)…
• CNever declares a NAV as covered in the NISM Series V-A distributor workbook per AMFI guid…
• DIs exempt from SEBI regulation according to standard mutual fund offer-document disclosur…

What does Net Asset Value (NAV) per unit of a mutual fund scheme represent?

• AThe face value at which units were first issued under the SEBI (Mutual Funds) Regulations…
• BThe net assets of the scheme divided by the number of outstanding units
• CThe market price at which units trade on the stock exchange as covered in the NISM Series…
• DThe total commission paid to distributors per AMFI guidance for mutual fund intermediarie…

Which statement about the role of mutual funds in the economy is correct?

• AThey channel household savings into capital markets and support corporate fundraising
• BThey replace the need for banks entirely under the SEBI (Mutual Funds) Regulations framew…
• CThey only invest in government securities as covered in the NISM Series V-A distributor w…
• DThey are prohibited from investing in equity shares per AMFI guidance for mutual fund int…

An investor wants exposure to a basket of stocks that tracks the Nifty 50 index at low cost. Which scheme type is most suitable?

• AA sector fund under the SEBI (Mutual Funds) Regulations framework.
• BAn index fund or index ETF
• CA liquid fund as covered in the NISM Series V-A distributor workbook.
• DAn arbitrage fund per AMFI guidance for mutual fund intermediaries in India.

Which of the following is a limitation of mutual fund investing that a distributor should disclose to investors?

• AInvestors bear no costs at all under the SEBI (Mutual Funds) Regulations framework.
• BMutual funds eliminate market risk as covered in the NISM Series V-A distributor workbook.
• CInvestors are personally liable for the fund's debts per AMFI guidance for mutual fund in…
• DPast performance does not guarantee future returns and the fund value can fall

A New Fund Offer (NFO) for an open-ended scheme is followed by an ongoing offer period. What characterises the ongoing offer period?

• AInvestors can continuously buy and redeem units at NAV-based prices
• BUnits can only be sold back at maturity under the SEBI (Mutual Funds) Regulations framewo…
• CNo NAV is declared as covered in the NISM Series V-A distributor workbook.
• DThe scheme is converted into a close-ended scheme per AMFI guidance for mutual fund inter…

In the three-tier structure of an Indian mutual fund, which entity holds the assets of the fund in trust for the benefit of unit holders?

• AThe Asset Management Company (AMC) under the SEBI (Mutual Funds) Regulations framework.
• BThe Sponsor as covered in the NISM Series V-A distributor workbook.
• CThe Trust, overseen by the Trustees
• DThe Registrar and Transfer Agent (RTA)

Which constituent of a mutual fund is responsible for the safekeeping of the securities held by the scheme?

• AThe Distributor
• BThe Custodian
• CThe Auditor
• DThe Sponsor

The Asset Management Company (AMC) of a mutual fund is primarily responsible for:

• AHolding the fund's assets in trust under the SEBI (Mutual Funds) Regulations framework.
• BFloating schemes and managing the investments as per the investment objective
• CRegistering the mutual fund with SEBI on behalf of unit holders as covered in the NISM Se…
• DMaintaining the investor's demat account per AMFI guidance for mutual fund intermediaries…

Which body is the self-regulatory industry association of mutual funds in India that issues the ARN to distributors?

• ASEBI
• BRBI
• CIRDAI
• DAMFI

The Registrar and Transfer Agent (RTA) of a mutual fund performs which of the following functions?

• AAudits the scheme's financial statements under the SEBI (Mutual Funds) Regulations framew…
• BDecides which securities the scheme buys as covered in the NISM Series V-A distributor wo…
• CSets the total expense ratio per AMFI guidance for mutual fund intermediaries in India.
• DMaintains investor records, processes transactions, and issues account statements

Under SEBI (Mutual Funds) Regulations, who appoints the Asset Management Company?

• AThe Trustees, with SEBI approval
• BThe unit holders by vote under the SEBI (Mutual Funds) Regulations framework.
• CAMFI as covered in the NISM Series V-A distributor workbook.
• DThe custodian per AMFI guidance for mutual fund intermediaries in India.

Which regulation is the principal legal framework governing mutual funds in India?

• AThe Companies Act, 2013 under the SEBI (Mutual Funds) Regulations framework.
• BSEBI (Mutual Funds) Regulations, 1996
• CThe Banking Regulation Act, 1949 as covered in the NISM Series V-A distributor workbook.
• DThe Insurance Act, 1938 per AMFI guidance for mutual fund intermediaries in India.

A distributor must complete which requirement before being permitted to sell mutual funds and earn commission in India?

• APass the NISM-Series-V-A certification and obtain an ARN from AMFI
• BObtain a CFA charter under the SEBI (Mutual Funds) Regulations framework.
• CRegister as a stockbroker with NSE as covered in the NISM Series V-A distributor workbook.
• DHold a banking licence from RBI per AMFI guidance for mutual fund intermediaries in India.

What is the purpose of the Know Your Customer (KYC) process for mutual fund investors?

• ATo guarantee a minimum return under the SEBI (Mutual Funds) Regulations framework.
• BTo verify investor identity and address and help prevent money laundering
• CTo fix the NAV of the scheme as covered in the NISM Series V-A distributor workbook.
• DTo exempt the investor from taxation per AMFI guidance for mutual fund intermediaries in…

SEBI's SCORES platform is primarily used by investors to:

• ABuy mutual fund units online under the SEBI (Mutual Funds) Regulations framework.
• BCompute capital gains tax as covered in the NISM Series V-A distributor workbook.
• CApply for an ARN per AMFI guidance for mutual fund intermediaries in India.
• DLodge and track complaints against SEBI-registered intermediaries

Under the AMFI Code of Conduct, a mutual fund distributor should:

• ARecommend the scheme that pays the highest commission regardless of suitability under the…
• BGuarantee returns to close a sale as covered in the NISM Series V-A distributor workbook…
• CEncourage frequent churning to increase commission according to standard mutual fund offe…
• DProvide full and accurate information and recommend products suitable to the investor's n…

Which Act in India forms the basis of anti-money-laundering obligations applicable to mutual fund transactions?

• AThe Negotiable Instruments Act, 1881 under the SEBI (Mutual Funds) Regulations framework.
• BThe Indian Contract Act, 1872 as covered in the NISM Series V-A distributor workbook.
• CThe Prevention of Money Laundering Act (PMLA), 2002
• DThe Foreign Exchange Management Act, 1999 per AMFI guidance for mutual fund intermediarie…

The Board of Trustees of a mutual fund owes its primary fiduciary duty to:

• AThe sponsor under the SEBI (Mutual Funds) Regulations framework.
• BThe unit holders of the scheme
• CThe AMC's shareholders as covered in the NISM Series V-A distributor workbook.
• DThe distributors per AMFI guidance for mutual fund intermediaries in India.

SEBI's scheme categorization and rationalization norms require that within a given category, such as Large Cap Fund, mutual funds:

• ACan define the category however they wish under the SEBI (Mutual Funds) Regulations frame…
• BAre exempt from disclosing their portfolio as covered in the NISM Series V-A distributor…
• CMay launch unlimited similar schemes per category per AMFI guidance for mutual fund inter…
• DMust follow SEBI's standard definitions so that schemes are comparable across AMCs

An investor who has completed KYC with one SEBI-registered intermediary generally:

• AMust repeat full KYC separately for every mutual fund under the SEBI (Mutual Funds) Regul…
• BIs exempt from KYC for life as covered in the NISM Series V-A distributor workbook.
• CCan use the centralised KYC (CKYC/KRA) record across SEBI-registered intermediaries
• DLoses KYC validity after one transaction per AMFI guidance for mutual fund intermediaries…